NISM Series XIII Common Derivatives Certification Exam Notes

Page 248 Of 303

Go to:

  • Cash Settlement Limitation: Leads to imperfect hedging outcomes.
  • Leverage Risk: High leverage amplifies potential losses.
  • Liquidity Risk: May affect ability to enter/exit positions.
  • Hedging Effectiveness: Depends on correlation with underlying exposure.
  • Speculative Risk: High leverage increases loss potential.

NISM Common Derivatives

MODELEXAM MODELEXAM®