The Effect to an FI of Default by the Counterparty

question 102

Multiple Choice

The effect to an FI of default by the counterparty to a derivative contract is LEAST serious with

• A)options contracts.
• B)futures contracts.
• C)swap agreements.
• D)forward contracts.

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Definitions:

Minimize Losses

A strategy or approach aimed at reducing the amount of losses incurred in a business or investment.

Highly Differentiated

Refers to products, services, or markets where there is significant variation in features, quality, or branding, making each distinct from others.

Marginal Revenue

The extra income a company gains by selling an additional unit of a product or service.

Average Revenue

The revenue a company receives per unit of sales, calculated by dividing total revenue by the number of units sold.