Derivatives Can Be Used to Reduce Risk, but They Also

question 36

True/False

Derivatives can be used to reduce risk, but they also can be a source of risk in themselves.

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Definitions:

Current Obligations

Short-term financial liabilities or debts that are due for payment within one year.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed in the business cycle within one year.

Current Liabilities

Short-term financial obligations due within one year or less, typically including accounts payable, short-term loans, and other similar liabilities.

Obligations

The responsibilities or liabilities a company has, typically financial in nature, that it is required to pay to others.