Derivative Markets Quiz

Derivative Markets Quiz

University

10 Qs

quiz-placeholder

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Derivative Markets Quiz

Derivative Markets Quiz

Assessment

Quiz

Business

University

Medium

Created by

Luke Gu

Used 10+ times

FREE Resource

10 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Which of the following is a characteristic of both a forward contract and a contingent claim?

The derivative contract has a positive value at contract initiation

The payoff of the derivative contract is dependent on the payoff of an underlying asset

Each party of the derivative contract is required to engage in a transaction at a later point in time

2.

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

As compared to exchange-traded derivative markets, over-the-counter derivative markets are typically more:

liquid.

flexible.

transparent.

3.

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

In a credit default swap, the party that receives a series of cash payments in return for promising to pay compensation for credit losses resulting from a third party’s default is most likely the:

clearinghouse.

seller of the swap.

buyer of the swap.

4.

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

An investor makes the following statements: Which of the statements is correct? Statement 1: swaps are contingent claim. Statement 2: swaps are characterized by a series of cash flows.

Statement 1 only

Statement 2 only

Both Statement 1 and Statement 2

5.

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

Consider a put option selling for $4 in which the exercise price is $58. What is the profit for a put buyer if the price of the underlying at expiration is $57?

–$3

$1

$3

6.

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

An investor buys a call for $24.70 that has a strike price of $650. If the payoff at expiration for this call is $47.60, the price of the underlying at expiration is closest to:

$602.40.

$672.90.

$697.60.

7.

MULTIPLE CHOICE QUESTION

3 mins • 1 pt

A put option has a strike price of $20.50. The option premium is $1.00. If the price of the underlying at expiration is $21.50, the put option is:

in the money.

at the money.

out of the money.

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