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QUESTION
8. Which of the following statements about derivatives is correct?
8. Which of the following statements about derivatives is correct?
- a) In an efficient market, derivatives can be used to arbitrage and achieve excess return.
- b) Derivatives have high real value certainty.
- c) Derivatives are not always more liquid than their underlying basic securities.
- d) Derivatives are designed to provide higher returns as compensation to high
risk.
9. Which of the following can banks use to manage liquidity?
a) Purchasing market able securities.
b) Borrowing from the inter-bank market.
c) Issuing capital.
d) All of the above.
10. Which of the following about debt covenants is incorrect?
a) Covenants reduce risks to debt holders.
b) Covenants are derivatives designed based on debt. c) Covenantsreduceborrowingcosts.
d) Covenants can be affirmative or restrictive.
