The Reasons for the Use of Financial Instruments Such as Futures

question 18

Multiple Choice

The reasons for the use of financial instruments such as futures contracts,options and swaps include all of the following except:

• A) to provide 'off-balance-sheet' financing opportunities
• B) to reduce the amount of outstanding accounts receivable
• C) to assist in the management of interest rate and foreign currency exchange risks
• D) to enable the raising of funds by businesses

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Definitions:

Net Income

The total profit or loss a company, generates after all expenses, taxes, and costs have been deducted from total revenue.

Salary Allowances

Specific amounts allocated regularly, often monthly, for salaries, including any adjustments for benefits or deductions.

Capital Account Increase

A rise in the value of an entity’s capital account, representing either an influx of capital or an increase in the overall value of the entity's assets.

Income and Losses

The financial results of a company's operations, with income indicating profit and losses reflecting expenses that exceed revenues.