1. Forward commitments are contracts entered in which the outcome is dependent on the outcome of an underlying asset
2. Contingent claims are contracts entered into at one point in time that require both parties to engage in a transaction at a later point in time on agreed upon at the start

Capital Markets Chapters 6,7,8

Quiz
•
Financial Education
•
University
•
Hard
Geraldyn Borbe
FREE Resource
33 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Both statements are true
Both statements are false
1 is true & 2 false
1 is false & 2 is true
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
1. The underlying in a forward rate agreement is interest rate
2. 3x6 FRA means entering in a three-month waiting period and a six-month contract period
Both statements are true
Both statements are false
1 is true & 2 false
1 is false & 2 is true
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
1. The payoffs of a long position in a forward contract value are computed as: Vt(T) = [St - F0(T)]
2. The payoffs of a short position in a forward contract value are computed as: Vt(T) = —[St - F0(T)]
Both statements are true
Both statements are false
1 is true & 2 false
1 is false & 2 is true
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
1. FRA buyer receives the settlement amount when settlement rate is greater than the contract rate
2. FRA seller receives the settlement amount when contact rate is less than the settlement rate
Both statements are true
Both statements are false
1 is true & 2 false
1 is false & 2 is true
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
1. It is possible to have a gain in a margin account after a 10-day period even if the investor receives a margin call 9 times during that span
2. The likelihood that the margin account balance of a long futures position will receive a margin call increases as the futures price of the underlying assets decreases
Both statements are true
Both statements are false
1 is true & 2 false
1 is false & 2 is true
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
1. The future price goes up, the long position will realize a gain and the margin account will decrease
2. If the futures price goes down, the short position will realize a gain and the margin account will increase
Both statements are true
Both statements are false
1 is true & 2 false
1 is false & 2 is true
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
1. The investor receives a margin call if the balance falls above the maintenance margin
2. Maintenance margin is always significantly lower than the required initial margin
Both statements are true
Both statements are false
1 is true & 2 false
1 is false & 2 is true
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