1. What are Derivatives 2. What is Reconciliation 3. How will you reconcile discrepancies

Question

Accepted Answer

Derivatives are financial contracts that derive their value from an underlying asset. Reconciliation is the process of comparing two sets of records to ensure they are in agreement.

Derivatives are used to manage risk or speculate on price movements of an underlying asset
Reconciliation involves comparing two sets of records to identify and resolve discrepancies
Discrepancies can be reconciled by identifying the root cause and taking corrective action
Examples of derivatives include futures, options, and swaps
Examples of reconciliation include bank statement reconciliation and trade confirmation reconciliation