Standardization of Derivative Contracts

question 33

Multiple Choice

Standardization of derivative contracts

• A)increases their liquidity.
• B)is the rule with respect to contracts whose underlying asset is a financial security, but not for contracts whose underlying asset is a commodity.
• C)is the rule with respect to contracts whose underlying asset is a commodity, but not for contracts whose underlying asset is a financial asset.
• D)has been proposed many times by financial analysts, but has not yet been carried out by the SEC.

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Definitions:

General Ledger

A comprehensive accounting record of all transactions of a business, summarizing all accounts and transactions in one place.

General Ledger Accounts

These are the main accounts where all the business transactions of a company are recorded, serving as a permanent record organized by account.

Trial Balance

A financial worksheet that gathers the balances from all accounts into debit and credit columns, verifying the mathematical accuracy of a company's accounting system.

Recording Process

The method of capturing and documenting financial transactions in the accounting records.