Alternative Investments MCQ - Alternative Investments Section 1
Strong and sustainable cash flow is an attractive feature of a target
company in a leveraged buyout
- A Investors deal in commodity derivatives because holding commodities in physical form incurs costs for transportation and storage.
- B Commodity derivatives are attractive because of potential profits, but are not effective hedges against inflation.
- C Commodity derivatives can only be traded on exchanges and include obligations.
B is incorrect because commodity derivatives are effective hedges against
inflation. C is incorrect because commodity derivatives can be traded over
the counter. Furthermore, commodity derivatives include options and
swaps.
