FMS PGDM BATCH 23-25 Division C T2

Financial derivatives include

• Forwards

• Options

• Futures

• All of the above

A contract that requires the investor to buy securities on a future date is called a

• short contract

• long contract

• hedge

• cross

The advantage of forward contracts over future contracts is that they

• are standardized

• have lower default risk

• are more liquid

• none of the above

The number of futures contracts outstanding is called

• liquidity

• volume

• float

• open interest

Futures differ from forwards because they are

• used to hedge portfolios

• used to hedge individual securities

• used in both financial and foreign exchange markets

• a standardized contract

Options are contracts that give the purchasers the

• option to buy or sell an underlying asset

• the obligation to buy or sell an underlying asset

• the right to hold an underlying asset

• the right to switch payment streams

A put option gives the seller

• the right to sell the underlying security

• the obligation to sell the underlying security

• the right to buy the underlying security

• the obligation to buy the underlying security

If you buy a put option on treasury futures at 110, and at expiration the market price is 115,

• the call will be exercised

• the put will be exercised

• the call will not be exercised

• the put will not be exercised.

Options on individual stocks are referred to as

• stock options

• futures options

• American options

• individual options

An option allowing the owner to sell an asset at a future date is a

• put option

• call option

• swap

• forward contract