Which of the following financial risk management instruments to use for hedging requires both margin accounts and daily resettlement?

Question

Quizplus · Accepted Answer

Futures contracts require both margin accounts and daily resettlement. Margin accounts are used to ensure that the parties involved have enough funds to cover potential losses, and daily resettlement involves adjusting the margin accounts based on the change in the value of the underlying asset being hedged. Forwards contracts, swaps, and options do not necessarily require margin accounts or daily resettlement.

Which of the Following Financial Risk Management Instruments to Use