Systemic Risk Reflects the Risk That a Particular Event Could

question 66

Multiple Choice

Systemic risk reflects the risk that a particular event could

• A)cause losses at a firm due to inadequate management control.
• B)spread adverse effects among several firms or among financial markets.
• C)cause a loss in value due to market conditions.
• D)have a larger effect on the futures position than on the position being hedged.

---

Definitions:

Interest Rate Futures

Financial derivatives contracts that lock in the future delivery of an asset with an interest-bearing instrument at a specified price.

Eurodollars

Deposits held in banks outside the US but denominated in US Dollars, not under jurisdiction of the Federal Reserve.

Actively Traded

Describes securities or assets that are frequently bought and sold, often indicating high liquidity and market interest.

Reversing Trade

The process of undoing or closing out a trading position, often used to correct an incorrect trade or take profits.