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In the context of a derivative trading firm that operates in a niche market by trading derivatives on rare commodities, and which holds a dominant market position alongside a few other firms with significant notional outstanding contracts, which of the following strategies would be the most effective in reducing the overall counterparty exposure to nearly zero?
A
Ensuring that sufficient collateral is posted by counterparties
B
Diversifying among counterparties
C
Cross-product netting on a single counterparty basis
D
Purchasing credit derivatives, such as credit default swaps