Derivative Instruments Exist Because

question 101

Multiple Choice

Derivative instruments exist because

• A) they help shift risk from risk-averse investors to risk-takers.
• B) they help in forming prices.
• C) they have lower investment costs.
• D) allow investors to hedge portfolio risk.
• E) All of these are correct.

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Definitions:

Respondeat Superior

Latin for “let the superior speak”; the principle by which liability for harm caused by an agent/employee is held by the principal/employer.

Pierce the Corporate Veil

A legal concept where the courts set aside limited liability afforded by the corporation status to hold the shareholders personally liable for the corporation's debts and obligations.

Statutory Mandates

Legal requirements or orders enacted by a legislative body that must be followed by entities or individuals subject to its jurisdiction.

Corporate Business

An organization engaged in commercial, industrial, or professional activities, structured as a corporation providing limited liability to its owners.