Quiz FO - Tutorial 1a

Quiz FO - Tutorial 1a

University

8 Qs

quiz-placeholder

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Quiz FO - Tutorial 1a

Quiz FO - Tutorial 1a

Assessment

Quiz

Business

University

Medium

Created by

kelvin lee

Used 3+ times

FREE Resource

8 questions

Show all answers

1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is a derivative instrument?

An asset that has intrinsic value

A financial instrument that derives its value from an underlying asset

A type of stock

A government bond

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following is a disadvantage of forward contracts?

Guaranteed performance

Lack of liquidity and default risk

Standardized features

High liquidity

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the primary role of a clearinghouse in futures trading?

To provide market analysis

To act as an intermediary and manage counterparty risk

To set prices for futures contracts

To facilitate open outcry trading

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is basis risk?

The risk of price changes in the underlying asset

The risk of market manipulation

The risk of default by a counterparty

The risk associated with the difference between cash price and futures price

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

Which of the following best describes hedgers in the derivatives market?

They seek to profit from price movements

They aim to reduce risk associated with price fluctuations

They are market makers

They only trade options

6.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the main difference between commodity derivatives and financial derivatives?

Commodity derivatives are cash-settled

Financial derivatives have tangible underlying assets

Financial derivatives are traded over-the-counter

Commodity derivatives have tangible underlying assets

7.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does 'contango' refer to in futures trading?

A type of arbitrage opportunity

A method of trading options

Futures prices lower than expected spot prices

Futures prices higher than the expected spot price

8.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the purpose of an option contract?

To provide the obligation to buy or sell an asset

To provide the right but not the obligation to buy or sell an asset

To guarantee delivery of an asset

To standardize trading conditions