Topic 7 Derivative

The type of contract which involves the future exchange of assets at a specified price is classified as

• Futures contract

• Present contract

• Forward Contract

The type of unit which guarantees that all the buying and selling will be made by traders of exchange is called

• Trading House

• Guarantee House

• Clearing House

• Professional House

An example of derivative securities is

• Return back security

• Mortgage back security

• Cash flow backed security

• Interest Back Security

Which of the following is false?

• Futures contracts are more liquid than forward contracts.

• Futures contracts are marked to market

• Futures contracts trade on a financial exchange.

• Futures contracts allow fewer delivery options than forward contracts.

Using futures contracts to transfer price risk is called:

• Diversifying

• Hedging

• Speculating

• Arbitrage

Which of the following has the right to sell an asset at a predetermined price?

• Put writer

• Call buyer

• Cal Writer

• Put Buyer

Which of the following is potentially obligated to sell an asset at a predetermined price?

• Put writer

• Call Buyer

• Put Buyer

• Call Writer

Why is the asset class called DERIVATIVE?

In a forward contract on gold, does the storage costs add or subtract the value (price) of the futures contract?

• Add

• Subtract