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Derivative liabilities are financial obligations that arise from derivative contracts, such as options, futures, and swaps. These liabilities represent the potential future outflows of cash or other assets that a company might face if the market moves against its position in the derivative. They are recorded on the balance sheet at fair value and can fluctuate based on changes in market conditions. Essentially, they reflect the company's exposure to market risks and are an important aspect of managing financial risk.

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3w ago

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What is volatile liabilities?

Volatile liabilities refer to financial obligations that can fluctuate significantly in value or amount over time, often due to changes in market conditions, interest rates, or other economic factors. These liabilities can include items such as floating-rate debt or derivative contracts, where the costs can vary based on underlying asset prices or rates. Managing volatile liabilities is crucial for maintaining financial stability, as unexpected changes can impact cash flow and overall financial health.


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