Fin 470 exam 1 Study Guide Solutions
derivative - Ans:-an instrument whose value depends on the values of other more basic underlying
variables
hedge risks - Ans:-change nature of a liability
speculate - Ans:-make bet on future direction of market
arbitrage - Ans:-lock in arbitrage profits
tr...
futures options - Ans:✔✔-options on future contracts
hedges - Ans:✔✔-seek to reduce risk, futures obligates trade-immunize risk, options gives right to
exercise- provides insurance
speculators - Ans:✔✔-assume risk for expected return,
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