Derivative Securities May Be Used to Speculate on the Future

question 41

True/False

Derivative securities may be used to speculate on the future price direction of the underlying financial assets or to reduce price risk associated with holding the underlying financial assets.

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Definitions:

Implied Authority

Authority of an agent that is not expressly granted but rather implied by the actions, situation, or responsibilities given to the agent.

Implied Ratification

The act of accepting or endorsing a previously unauthorized action or agreement through behavior that implies approval, rather than through explicit consent.

Agent's Act

Refers to actions taken by an agent on behalf of a principal, where the agent has the authority to affect the principal's legal position.

Principal's Conduct

Actions or behaviors of a principal (party who has authorized an agent to act on their behalf) that can affect the principal's legal rights and liabilities.