The Purpose of Derivatives Is To

question 73

Multiple Choice

The purpose of derivatives is to:

• A) increase the risk so the return is larger.
• B) eliminate risk for both parties in the transaction.
• C) postpone the risk for both parties in the transaction.
• D) transfer the risk from one person to another.

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Definitions:

Operational Excellence

Creates a competitive advantage by holding down costs to provide customers with the lowest-priced products.

Corridor Principle

The idea that opportunities become available to an entrepreneur only after the entrepreneur has started a business.

Windows of Opportunity

Specific time periods during which a certain action can be taken or an event can occur, often leading to new possibilities or success.

Secondary Opportunities

Secondary opportunities refer to additional chances or prospects that arise from the initial set of circumstances or activities, potentially leading to more benefits.