Derivatives Quiz

Quiz
•
English
•
University
•
Medium
Namrata Uppal
Used 5+ times
FREE Resource
10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a derivative in financial markets?
A type of equity share
A financial instrument whose value is derived from an underlying asset
A direct investment in a company
A government-issued bond
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is a characteristic of a forward contract?
Traded on an exchange
Standardized terms
Customized contract between two parties
No counterparty risk
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A futures contract is best described as:
A customized agreement between two parties to buy or sell an asset at a future date
A standardized contract traded on an exchange to buy or sell an asset at a future date
A short-term loan
An insurance policy against market risks
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Which of the following is a key difference between options and futures contracts?
Options give the holder the right, but not the obligation, to buy or sell an asset
Futures contracts are non-standardized
Options must be exercised at the end of the contract period
Futures contracts have no underlying assets
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
In a swap agreement, two parties typically exchange:
Physical assets
Interest rate payments or cash flows
Stock shares
Currency notes
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is the primary goal of speculation in financial markets?
To minimize risk exposure
To lock in future prices
To earn profit from price fluctuations
To reduce transaction costs
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Hedging in financial markets is mainly used to:
Increase potential gains
Protect against the risk of adverse price movements
Avoid paying taxes
Speculate on currency fluctuations
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