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WorksheetsFIN435 C.5:DERIVATIVE MARKET
Total questions: 11
Worksheet time: 6mins
Which of the following is NOT a derivative
Single Stock Futures (SSFs)
Swap
Crude Palm Oil
Put Options
What kind of settlement usually applied if the investors are trading the derivatives for speculation purposes?
Physical settlement
Cash settlement
Hedging
Return
A call option is a right to
force another party to buy the underlying security.
repurchase a previously sold underlying security.
sell the underlying security.
buy the underlying security.
Derivatives help to manage possible future risks especially against the fluctuation of price risk. This is
Speculation
Arbitraging
Hedging
None is correct
From the following which is the riskiest..
Future
Put option
Call option
Cash segment
An option contract giving the owner the right, but not the obligation, to buy a stock in the future is
a Put
a Call
a Commodity
an Alternative
Which is NOT an example of a Commodity?
Coffee
Oil
Automobiles
Gold
Commodities are generally viewed as a lower risk investment than a stock and bonds.
True
False
What is a good definition of a derivative?
The principal amount of debt between two parties
The difference between the cost and value of stock
A contract to borrow money for a business
A contract between two or more parties whose value is based on an agreed-upon underlying financial asset
The main difference between a forward contract and a cash transaction is:
only the cash transaction creates an obligation to perform.
a forward is performed at a later date while the cash transaction is performed immediately.
only one involves a deliverable instrument.
neither allows for hedging.
A financial contract that gives its owner the right, but not the obligation, to buy or sell a specified asset at an agreed-upon price on or before a given future date is called a(n) _____ contract.
option
future
forward
swap
