McqMate
| 101. |
…………. risk is a loss may occur from the failure of another party to perform according to the terms of a contract? |
| A. | Credit |
| B. | Currency |
| C. | Market |
| D. | Liquidity |
| Answer» A. Credit | |
| 102. |
Financial derivatives includes? |
| A. | Stock |
| B. | Bonds |
| C. | Future |
| D. | None of these |
| Answer» C. Future | |
| 103. |
By hedging a portfolio ; a bank manager |
| A. | Reduces interest rate risk |
| B. | Increases re investment risk |
| C. | Increases exchange rate risk |
| D. | None of these |
| Answer» A. Reduces interest rate risk | |
| 104. |
A long contract requires that the investor |
| A. | Sell securities in the future |
| B. | Buy securities in the future |
| C. | Hedge in the future |
| D. | Close out his position in the future |
| Answer» B. Buy securities in the future | |
| 105. |
The disadvantage of swaps is that they |
| A. | Lack of liquidity |
| B. | Suffer from default risk |
| C. | Both A & B |
| D. | B only |
| Answer» C. Both A & B | |
| 106. |
Hedging by buying an option |
| A. | Limits gain |
| B. | Limits losses |
| C. | Limits gain & losses |
| D. | Has no limit on losses |
| Answer» B. Limits losses | |
| 107. |
All other things held constant premium on options will increase when the |
| A. | Exercise price increases |
| B. | Volatility of the underlying assets fails |
| C. | Term to maturity increases |
| D. | Both B & C |
| Answer» C. Term to maturity increases | |
| 108. |
An option allowing the owner to sell an asset at a future date is a …………… |
| A. | Put option |
| B. | Call option |
| C. | Forward option |
| D. | Future contract |
| Answer» A. Put option | |
| 109. |
Composite value of traded stocks group of secondary market is classified as |
| A. | Stock index |
| B. | Primary index |
| C. | Stock market index |
| D. | Limited liability index |
| Answer» C. Stock market index | |
| 110. |
………….. is the minimum amount which must be remained in a margin account |
| A. | Maintenance margin |
| B. | Variation margin |
| C. | Initial margin |
| D. | None of these |
| Answer» C. Initial margin | |
| 111. |
The number of future contract outstanding is called ………….? |
| A. | Liquidity |
| B. | Float |
| C. | Volume |
| D. | Turnover |
| Answer» A. Liquidity | |
| 112. |
The amount paid for an option is the |
| A. | Strike price |
| B. | Discount |
| C. | Premium |
| D. | Yield |
| Answer» C. Premium | |
| 113. |
Futures contracts are more successful than interest rate forward contracts because they : |
| A. | are less liquid |
| B. | have greater default risk |
| C. | are more liquid |
| D. | have an interest rate tied to the discount rate |
| Answer» C. are more liquid | |
| 114. |
The payoffs for financial derivatives linked to |
| A. | Securities that will be issued in the future |
| B. | The volatality of interest rates |
| C. | previously issued securities |
| D. | none of the above. |
| Answer» C. previously issued securities | |
| 115. |
Which of the following is not a problem with an interest rate forward contract? |
| A. | Low interest rate |
| B. | default risk |
| C. | lack of liquidity |
| D. | finding a counterparty |
| Answer» A. Low interest rate | |
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