WorksheetsBasics of Derivatives
Total questions: 15
Worksheet time: 8mins
The buyer of a forward contract:
will be taking delivery of the good(s) today at today's price.
will be making delivery of the good(s) at a later date at that date's price.
will be making delivery of the good(s) today at today's price.
will be taking delivery of the good(s) at a later date at pre-specified price.
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 trading opportunity that offers a riskless profit is called a(n):
put option.
call option.
market equilibrium.
arbitrage.
The purchase of a share in one market and the simultaneous sale in a different market to benefit from price differentials is known as ____________.
Mortgage
Arbitrage
Hedging
Speculation
Derivatives help to manage possible future risks especially against the fluctuation of price risk. This is
Speculation
Arbitraging
Hedging
None is correct
What is a (Financial) Derivative?
A financial contract that gives the owner a way to manage against market risk.
A financial contract whose value is derived from the value of an underlying asset.
A financial contract whose payoff depends on an event occurring.
A financial contract that gives the owner a way to manage against financial risks.
Forward contracts are not guaranteed to performance
True
False
The buyer in the derivative contract is also known as
Deep in the Contract
Long in the contract
Seller in the contract
In a ……………. derivatives, the underlying instrument is a commodity which may be wheat, cotton, pepper, sugar, jute, turmeric, corn, soybeans, crude oil, natural gas, gold, silver, copper and so on
Commodity Derivatives
Currency Derivatives
Financial Derivatives
Equity Derivatives
Forwards are _____.
over-the-counter derivatives.
absolutely the same as futures.
exchange-traded derivatives.
standard as futures
Derivatives came into existence for :
Speculation
Arbitrage
Hedging
Gambling
M2M margin is settled on:
Weekly Basis
Daily Basis
Monthly Basis
Fortnightly Basis
What kind of options can be exercised on any date before the day of expiration?
a. American
b. European
c. Bermudan
d. None of these
Which of the following is a financial asset?
Gold
Share
Silver
Land
Contracts that are standardized in nature
Future Contracts
Forward Contracts
Interest Rate Swaps
Foreign Currency Exchange
