Firms Engage in Transactions Involving Derivatives

question 93

Multiple Choice

Firms engage in transactions involving derivatives.For the most part, the complex parts of these transactions occur _____, but those transactions do _____ until, possibly, their settlement.

• A)after the firm has acquired the derivative; not affect cash flows
• B)before the firm has acquired the derivative; not affect cash flows
• C)when the firm has acquired the derivative; not affect cash flows
• D)after the firm has acquired the derivative; not affect net income
• E)before the firm has acquired the derivative; not affect net income

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Definitions:

Mixed Numbers

A number consisting of an integer and a fraction, used to represent quantities greater than a whole but less than two wholes.

Lowest Terms

Lowest terms refer to a fraction that has been simplified to its smallest possible integer numerator and denominator.

Fractions

Fractions represent parts of a whole or any number of equal parts, typically written with a numerator and a denominator, separated by a slash.

Acres

A unit of land area measurement used in the U.S. customary and imperial systems, equal to 43,560 square feet or about 4,047 square meters.