Which of the Following Is NOT Correct with Respect to Derivative

question 30

Multiple Choice

Which of the following is NOT correct with respect to derivative securities?

• A) They are among the riskiest of securities in the financial securities markets.
• B) They can be used for hedging purposes.
• C) Examples of derivatives include futures, options, and swaps.
• D) All of these choices are correct.

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Definitions:

Mental Accounting

A psychological phenomenon where people treat money differently depending on its origin, intended use, or other subjective criteria.

Gold Futures

Contracts to buy or sell gold at a future date at a price that is agreed upon today, used for speculation or hedging.

Conservatism

In finance, it refers to a risk-averse approach to investing or managing assets, prioritizing safety and preservation of capital.

Beliefs

The conviction or acceptance that something exists or is true, especially without proof, often informing decision-making processes in various contexts, including investing.