
S6 Derivatives Post assessment
Authored by MUJIB MUNDEWADI
Professional Development
Professional Development
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10 questions
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1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Derivatives are highly leveraged, which implies that _____
You can take a position with smaller investments (margin) using derivatives
You can take a lower position with higher investments using derivatives
You can take a higher position if you buy the underlying assets instead of buying derivatives
You should buy the underlying assets as you might make more profit on them rather than derivatives
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a key difference between OTC and listed derivatives?
OTC have no counterparty risk; listed do
OTC are customized and negotiated; listed are standardized and exchange-traded
OTC require margin payments; listed do not
OTC are exchange-traded; listed are OTC
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is a Forward Rate Agreement (FRA)?
An option to buy stocks
A futures contract on commodities
An OTC contract to lock in an interest rate for a future date
A swap agreement between two parties
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What does closing out a futures contract mean?
Paying the initial margin
Letting the contract expire without action
Entering an opposite contract to offset the original position before expiry
Exercising the option to buy the underlying asset
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
A put option buyer will exercise the put if _____
Strike > spot
Strike < spot
Strike = spot
Spot > strike
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
An investor buys a call option on a stock selling for $90, with a strike price of $75 for a premium of $16.
The option is in the money
The option is at the money
The option is out of the money
None of the above
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What distinguishes an option contract from other derivatives?
It always requires delivery of the underlying asset
The buyer has a right but no obligation to buy or sell
It has no premium
It is always traded OTC
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