An Airlines Company Is Unlikely to Use the Following Derivative

question 13

Multiple Choice

An airlines company is unlikely to use the following derivative for risk management:

• A) a commodity swap
• B) a credit default swap
• C) an interest rate swap
• D) an oil futures contract
• E) an option on oil futures contract

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Definitions:

Price Received

Price received is the amount of money paid to a seller for goods or services, as agreed upon by the seller and the buyer.

Rent Control

Government-imposed restrictions on the amounts that landlords can charge their tenants, intended to keep housing affordable.

Housing Market

The supply and demand for residential properties, influenced by factors such as interest rates, economic conditions, and government policies.

Elastic

A term used to describe a situation in which the demand or supply for a good or service changes significantly when its price changes.