Which of the following statements about derivatives is false?
A)Derivatives are financial contracts the values of which are derived from the values of other underlying assets.
B)Examples of derivatives include futures, options, and combinations thereof.
C)Bank participation in derivative markets is severely limited because of the inherent riskiness of the instruments.
D)Derivatives can be used to hedge or to speculate.

Question

Quizplus · Accepted Answer

This statement is false. While derivatives do involve inherent risks, banks have continued to participate heavily in derivative markets for both their own trading purposes and to provide derivative-based products to their clients.

Which of the Following Statements About Derivatives Is False