Financial Derivatives

The buyer of a forward contract:

• will be taking delivery of the good(s) today at today's price.

• will be making delivery of the good(s) at a later date at that date's price.

• will be making delivery of the good(s) today at today's price.

• will be taking delivery of the good(s) at a later date at pre-specified price.

A _____ is a derivative security that gives the owner the right, but not the obligation, to buy an asset at a fixed price for a specified period of time.

• futures contract

• call option

• put option

• swap

The main difference between a forward contract and a cash transaction is:

• only the cash transaction creates an obligation to perform.

• a forward is performed at a later date while the cash transaction is performed immediately.

• only one involves a deliverable instrument.

• neither allows for hedging.

A trading opportunity that offers a riskless profit is called a(n):

• put option.

• call option.

• market equilibrium.

• arbitrage.

A potential disadvantage of forward contracts versus futures contracts is:

• the extra liquidity required to cover the potential outflows that occur prior to delivery and caused by marking to market.

• the incentive for a particular party to default.

• that the buyers and sellers don't know each other and never meet

• All of the above.

A financial contract that gives its owner the right, but not the obligation, to buy or sell a specified asset at an agreed-upon price on or before a given future date is called a(n) _____ contract.

• option

• future

• forward

• swap

The act where an owner of an option buys or sells the underlying asset, as is his right, is called ______ the option.

• striking

• exercising

• opening

• splitting

The fixed price in an option contract at which the owner can buy or sell the underlying asset is called the option's:

• opening price.

• intrinsic value.

• strike price.

• market price.

The last day on which an owner of an option can elect to exercise is the _____ date.

• ex-payment

• ex-option

• opening

• expiration

who played in 2018 FIFA World Cup final?

• Germany vs Argentina

• France vs Italy

• Spain vs Netherland

• France vs Croatia