Reviewer for Written Work 1 BusFin

Which of the following is NOT an example of a debt-based financial instrument?

• T-Bills

• Bonds

• Commercial Paper

• Equity Shares

What is the typical return type for bonds?

• Lump sum

• Interest only

• Interest + principal

• Dividend

Compare the return types of T-Bills and Bank Deposits. How do they differ?

• T-Bills offer interest only, while Bank Deposits offer lump sum.

• T-Bills offer lump sum, while Bank Deposits offer interest.

• Both offer interest only.

• Both offer lump sum.

What is a common feature shared by stocks, exchange traded funds (ETFs), and mutual funds as shown in the image?

• They all represent ownership in an asset

• They all guarantee fixed returns

• They are all issued by the government

• They are all forms of debt instruments

Which of the following tasks would require a deeper understanding of equity-based financial instruments?

• Explaining how mutual funds pool money from investors to buy a diversified portfolio of assets

• Memorizing the definition of an equity-based instrument

• Listing examples of equity-based instruments

• Identifying the word "ownership" in a definition

Explain how currency swaps differ from options on currency pairs as foreign exchange instruments.

• Currency swaps involve exchanging principal and interest in different currencies, while options give the right but not the obligation to exchange at a set rate.

• Currency swaps are only used for commodities, while options are used for stocks.

• Currency swaps are short-term, while options are always long-term.

• Currency swaps are not derivatives, while options are.

What is the main purpose of using a Forward Contract in foreign exchange?

• To exchange currency immediately

• To lock in a rate for a future exchange

• To exchange now and reverse later

• To have flexible protection in forex

Which foreign exchange instrument gives you the right, but not the obligation, to exchange at a set rate?

• Spot Transaction

• Forward Contract

• Forex Swap

• Currency Option

A business wants to buy $10,000 at ₱56 even if the rate increases to ₱60 in the future. Which instrument should they use?

• Spot Transaction

• Forward Contract

• Forex Swap

• Currency Option

Which instrument is best for flexible protection in the foreign exchange market?

• Spot Transaction

• Forward Contract

• Forex Swap

• Currency Option