True with regard to financial derivatives

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Reference no: EM131980842

1. Which of the following statement is true with regard to financial derivatives?

a. forward contract is a forward-based derivative that obligates two parties to trade a series of cash flows at specified future settlement dates.

b. due to their extreme risk, extensive purchase of derivatives are more likely to occur when markets are stable.

c. use of derivatives should eliminate risk.

d. using derivatives divides financial risk into separate elements that can be exchanged between entities.

2. Fluid company’s current assets increased by $120 and current liabilities decreased by $200. Fluid’s net working capital

a. decreased by $320

b. decreased by $80

c. did not change

d. increased by $320

Reference no: EM131980842

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