QUIZ 1

What is a futures contract?

• A legally binding agreement to buy or sell an asset at a predetermined price in the future, traded on an exchange

• A contract that can only be executed on a specific date in the future

• A non-binding agreement to buy an asset whenever the buyer wants

• A contract that only hedge funds and banks can use

What is a forward contract?

• A standardized contract traded on an exchange

• A private agreement between two parties to buy or sell an asset at a future date at an agreed price

• A contract that must be settled daily with the exchange

• A government-issued contract for international trade only

What is an option contract?

• A contract that gives the holder the right, but not the obligation, to buy or sell an asset at a specific price within a set time frame

• A mandatory agreement between two parties to trade an asset in the future

• A contract that only allows the holder to sell an asset, not buy it

• A type of insurance contract against price fluctuations

What is a swap contract?

• A contract where two parties exchange financial instruments, such as interest rate payments or currencies

• A contract used only in the real estate market

• A short-term contract used for quick trades

• A contract that only involves the exchange of physical goods

What is a long position in futures?

• A position where an investor agrees to sell an asset at a future date

• A position where an investor agrees to buy an asset at a future date

• A position where an investor holds an asset indefinitely

• A position taken by only institutional investors

What is a short position in a forward contract?

• A position where an investor agrees to buy an asset at a future date

• A position where an investor agrees to sell an asset at a future date

• A strategy used only for hedging

• A contract that can be canceled at any time without penalty

What is a call option?

• An option contract that gives the holder the right to buy an asset at a specified price within a certain period

• An option that requires the holder to sell an asset at a predetermined price

• An agreement to exchange interest rate payments between two parties

• A contract that can only be executed on the expiration date

What is a put option?

• An option contract that gives the holder the right to sell an asset at a specified price within a certain period

• An option that allows the holder to buy an asset at any price they choose

• A financial contract that guarantees profits for the investor

• A contract that can only be exercised after 5 years

What is the spot market?

• A market where financial instruments are traded for immediate delivery

• A market where all transactions are settled in the future

• A special trading area only for institutional investors

• A market where only commodities are traded

What is the bid price?

• The price at which a buyer is willing to purchase an asset

• The price at which a seller is willing to sell an asset

• The highest price an asset has reached in a trading day

• The price set by the government for trading