How does hedging affect the flow of funds in the financial system?
A) It reduces it since it is a sign that investors do not like risk.
B) It reduces it because it increases risk by encouraging speculation.
C) It increases it because it reduces risk thus encouraging more people to make financial investments.
D) It increases it by encouraging more speculation.
Correct Answer:
Verified
Q4: Forward transactions
A)provide little risk sharing.
B)are very liquid.
C)have
Q6: Forward contracts are often illiquid because
A)any capital
Q14: Describe two useful purposes served by speculators
Q15: Derivative instruments are
A)assets such as bonds or
Q17: If insurance is available on an activity
A)
Q18: Suppose you are a manager for a
Q19: Investors who buy and sell oil derivatives
Q20: Speculators in derivatives markets
A) reduce the efficiency
Q44: Profits from speculation arise because of
A)the spread
Q57: Hedgers are primarily interested in
A)betting on anticipated
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents