CCPS C123

What is Initial Margin in a futures contract?

• Extra amount after a loss
• The amount needed to initiate a position
• Money kept to avoid default
• Extra profit withdrawn

What is a derivative?

• A stock
• A bond
• A financial instrument whose value depends on other assets
• A bank account

Which of the following is an example of an underlying variable?

• Software
• Gold
• Lebron JAMES
• Vehicles

Which of the following is a financial asset?

• Electricity
• Oil
• Bonds
• Weather

Which of these is NOT a type of derivative?

• Futures
• Options
• Swaps
• Insurance

Which of the following derivatives are traded in the exchange-traded market?

• Swaps and Forwards
• Futures and Options
• Options and Swaps
• Forwards and Futures

What defines the exchange-traded market?

• No centralized trading facility
• Terms set by counterparties
• Standardized contracts defined by the exchange
• Decentralized system

Which of the following is a characteristic of the OTC market?

• Centralized market
• No counterparty credit risk
• Terms set by exchange
• Decentralized market

What role does the exchange play in an exchange-traded market?

• Acts as a broker
• Acts as an intermediary to reduce default risk
• Provides private deals
• Eliminates margins

Which exchange was established in 1848?

• CME
• CBOE
• CBOT
• NYSE