Valid 2016-FRR Dumps shared by ExamDiscuss.com for Helping Passing 2016-FRR Exam! ExamDiscuss.com now offer the newest 2016-FRR exam dumps, the ExamDiscuss.com 2016-FRR exam questions have been updated and answers have been corrected get the newest ExamDiscuss.com 2016-FRR dumps with Test Engine here:
In additional to the commodity-specific risks, which of the following risks represent the main commodity derivative risks? I. Basis II. Term III. Correlation IV. Seasonality
Correct Answer: D
Commodity derivative risks encompass a variety of factors, and among the main risks are: * Basis Risk: This arises from the difference between the spot price of the commodity and the futures price of the commodity. * Term Risk: This refers to the risk associated with the time to maturity of the derivative contract. * Correlation Risk: This involves the risk that the price of the commodity does not move in correlation with the derivative being used to hedge. * Seasonality Risk: This arises from the predictable fluctuations in commodity prices due to seasonal patterns. All these risks are essential in understanding the complete risk profile associated with commodity derivatives. ReferencesInformation verified based on the financial risk and regulation context provided in the book "How Finance Works".