Which of the Following Is/are True

question 69

Multiple Choice

Which of the following is/are true?

• A)A derivative is a financial instrument whose value changes in response to changes in an underlying observable variable, such as a stock price, an interest rate, a currency exchange rate, or a commodity price.
• B)Unlike equity securities, which have no definite settlement date, firms settle a derivative at a date that the terms of the instrument specify.
• C)A derivative requires an investment that is small, relative to the investment in a contract that is similarly exposed to changes in market factors, or requires no investment at all.
• D)Firms use derivative instruments to hedge the risks that arise from changes in interest rates, foreign exchange rates, and commodity prices.
• E)all of the above

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Definitions:

Colonialism

The policy or practice of acquiring full or partial political control over another country, occupying it with settlers, and exploiting it economically.

Financial Losses

The negative financial result from business operations, investment activities, or other financial transactions, where expenses exceed revenues or costs outweigh benefits.

French Revolution

A period of radical social and political upheaval in France (1789–1799) that fundamentally changed the course of French history.

German Nationalism

Refers to the nationalist movement that promoted the unity of German-speaking peoples and the creation of a nation state by the 19th century.