Which of the Following Statements Best Describe a Derivative Contract

question 74

Multiple Choice

Which of the following statements best describe a derivative contract?

• A)Contractual commitments to make a loan up to a stated amount at a given interest rate in the future.
• B)Contingent guarantees sold by an FI to underwrite the performance of the buyer of the guaranty.
• C)Agreement between two parties to exchange a standard quantity of an asset at a predetermined price at a specified date in the future.
• D)Trading in securities prior to their actual issue.
• E)Loans originated by an FI and then sold to other investors with recourse.

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Definitions:

Inverted-U Theory

A hypothesis that suggests there is a relationship between the level of some activity and the effect it has on performance, which looks like an inverted U, indicating optimal performance at an intermediate level of the activity.

Technologically Progressive

Pertaining to the consistent application and incorporation of new technologies to improve processes, products, or services.

Perfectly Elastic

Describes a situation where the quantity demanded or supplied responds infinitely to changes in price.

Expected Rates

Predicted percentages or values in various contexts, such as interest rates, growth rates, or return on investment.