Which of the Following Is/are Elements of a Derivative

question 29

Multiple Choice

Which of the following is/are elements of a derivative?

• A)Many derivatives require no initial investment, that is, no initial cash payment to the counterparty.
• B)A derivative may have zero initial cost, but potentially large positive or negative fair values later.
• C)Both U.S.GAAP and IFRS require that firms record derivatives at their fair values on the balance sheet date.
• D)The firm usually acquires a derivative by exchanging promises with a counterparty, such as a commercial or investment bank.The exchange of promises is a mutually unexecuted contract.
• E)all of the above