
Forward Future and Option Contract Quiz
Authored by ANKIT WALIA
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Professional Development
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10 questions
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1.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Explain the concept of a forward contract.
A forward contract is a type of loan agreement between two parties
A forward contract is a type of insurance policy for stocks
A forward contract is a customized contract between two parties to buy or sell an asset at a specified price on a future date.
A forward contract is a government-issued financial security
2.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What are hedging strategies in the context of forward future and option contracts?
Ways to increase risk in asset price movements
Methods to predict asset price movements accurately
Strategies to maximize profit in asset price movements
Strategies to reduce risk in asset price movements
3.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What are the key characteristics of a call option contract?
The key characteristics of a call option contract include the right to buy an underlying asset at any price within a certain time frame
The key characteristics of a call option contract include the obligation to buy an underlying asset at a specified price within a certain time frame
The key characteristics of a call option contract include the right to sell an underlying asset at a specified price within a certain time frame
The key characteristics of a call option contract include the right to buy an underlying asset at a specified price within a certain time frame, and the payment of a premium for this right.
4.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
How do forward contracts differ from futures contracts?
Forward contracts are customized agreements between two parties, while futures contracts are standardized and traded on an exchange.
Forward contracts are publicly traded, while futures contracts are private agreements.
Forward contracts have fixed expiration dates, while futures contracts have flexible expiration dates.
Forward contracts are settled in cash, while futures contracts are settled in physical delivery.
5.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What are the different types of derivatives in the market?
Stocks, bonds, and mutual funds
Credit cards, loans, and mortgages
Real estate, commodities, and cryptocurrencies
Options, forwards, futures, and swaps
6.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
Explain the concept of hedging in the context of financial markets.
Hedging is a risk management strategy used to offset potential losses in investments by taking an opposite position in a related asset.
Hedging is only used in the context of personal finance, not in financial markets
Hedging has no impact on potential losses in investments
Hedging is a strategy to maximize potential losses in investments
7.
MULTIPLE CHOICE QUESTION
1 min • 1 pt
What are the advantages of using call option contracts?
They require the holder to own the asset before benefiting from price increases.
They limit the potential profit for the holder.
They are only beneficial when the asset's price decreases.
They allow the holder to benefit from potential price increases without owning the asset.
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