Which of the following is CORRECT? A. Derivatives can only be used in investments but not in corporate finance. B. Derivatives are traded by institutions but not by individual investors. C. Hedgers use derivatives to bet on the price movement of underlying assets. D. Investors must maintain a margin account to trade the futures contract. E. During the life of a futures contract, an arbitrage opportunity arises if the spot price deviates away from the futures price. F. The delivery period only allows for one day and the settlement must be made fast.

Which of the following statements BEST describes financial derivatives and their uses? Select one: a. A financial derivative is defined as a financial instrument whose value depends on (or derives from) the values of other, more basic, underlying variables b. Financial derivatives can be used to hedge risk (i.e. reduce risk) but they can also increase risk and even be used for pure speculation. c. A business can hedge its profit by taking an opposite position in the financial derivative market relative to its natural position. d. All of the other choices are correct.

What best describes the primary purpose of derivatives in financial markets?(2 Points)HedgingSpeculationArbitrageInvestment

Which of the following is NOT a type of equity derivative?*1 pointa) Stock optionsb) Stock bondsc) Stock futuresd) Stock swaps

Which of the following does not include a derivative?a.a buyer of index futures who anticipates an increase in the index.b.a foreign exporter making a dollar sale on the open marketc.a farmer who will later sell his harvestd.A copper fabricator buying his annual needs for copper through futures contracts.

Financial derivatives includea.stockb.bondc.futuresd.all of the above