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WorksheetsDERIVATIVES QUIZ2
Total questions: 12
Worksheet time: 7mins
The cash market is called “cash” because
Trades are settled in cash settlement and not physical settlement
Products traded are plain vanilla and liquid as cash
Most of the trades are based on cash and carry strategy
The difference between money markets and bond markets
Money market is a market where we trade money while we trade bonds in bond markets
Money market is the market where trades are settle in money while bonds market is a market where trades are settled through bonds delivery
Money market is a short term market while bond market is a long term market
What is the difference between OTC and exchange traded market
OTC is a non regulated, liquid transparent market while exchange traded market is the opposite
OTC market is a customized, low liquid and less transparent market while the exchange traded market is the opposite
OTC market is an illiquid, cleared market while the exchange traded market is the opposite
If you buy a put option what is your view on the underlying stock
The price of the stock will increase
The price of the stock will decrease
The price of the stock will be less volatile
If you want to hedge a position, what is the cheapest instrument
Futures
Forward
Options
If you are trading for clients solely on a commission based you are a
Broker
Broker Dealer
Interdealer broker
‘Buying a put option on a stock when the stock is owned ’’ is as if you
Sell a call
Have a form of insurance
Bet on price decrease of the stock price
We need clean prices because
They give the trader the right trading price
They make the market movements analysis easier
They are more accurate than dirty prices
The difference between futures and forwards is
Forwards are more liquid
Forwards are cheaper than futures
Forwards could be non-standard contracts
The clearing house is important for futures markets because
It decreases counterparty risk
It allows a better regulatory supervision
It helps customize the settlement of trades
Futures contracts are specified with the following items
Contract size, maturity and net results
Asset, contract size, delivery arrangement
Contract size, delivery months, margin calls
Maintenance margin is
A margin below which the trader’s margin may not fall
Funds deposited to provide capital to absorb losses
A margin to insurance the maintenance of each trade
