Financial Derivatives

Derivatives are used for purposes of risk Management

• True

• False

Forward contracts are not guaranteed to performance

• True

• False

A party with a long position in a futures contract is one which agrees to buy a specified quantity

• True

• False

Short in futures means

• buy the underlying

• sell the underlying

• hold the underlying

Call option is the right to

• Buy

• Sell

• Hold

Select the correct one about the Option contracts

• Right to buy or sell the underlying

• Traded in Exchanges

• Option Premium is the price paid to the option contract

• All of the above

What is key difference between futures and forwards?

• Meaning

• Contract between two parties

• Predetermined price

• Place of Trading

Which option is exercised at any day from the date of initiation to date of expiry?

• European Option

• Call Option

• Put Option

• American Option

If the Market price on the expiry date is more than the contract price. What will you do if you hold a call option?

• Exercise the option

• Do not Exercise the option

If the market price on the expiry date is more than the contract price, what will you do if you hold a put option

• Exercise the Option

• Do not Exercise the option