All of the following are problems cited by Warren Buffet as problems with derivatives not traded on exchanges EXCEPT
A)they are thinly traded which makes it difficult to determine their value.
B)firms do not set aside reserves against potential losses.
C)they involve substantial counterparty risk.
D)they were not flexible enough due to lack of standardization.

Question

Quizplus · Accepted Answer

Warren Buffet did cite the problems with thin trading, lack of reserves, and counterparty risk as concerns with OTC derivatives in his 2002 letter to Berkshire Hathaway shareholders, but he did not mention lack of flexibility as a problem. In fact, he argued that the lack of standardization in OTC derivatives made them too flexible and allowed for excessive complexity and risk-taking.

All of the Following Are Problems Cited by Warren Buffet