Explanation:
If the investment company does not approve the trading of over-the-counter derivatives, then the trading of forwards and swaps is not allowed. Generally, forwards and swaps trade on over-the-counter markets while futures contracts and options trade on exchanges.
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Q.43 Barbara Stapleton has recently joined Ace Investments as an investment manager. Her new boss told her that she would only be trading derivatives on exchanges, and the firm does not approve the use of over-the-counter derivatives. Which of the following derivative instruments is she allowed to trade?
I. Forwards
II. Options
III. Swaps
IV. Futures
A
I and II only
B
II and IV only
C
I, II and IV only
D
All of the above
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