Finance Questions
Question 1 of 25
… markets are public financial markets in which the price you pay for a product is the current price for immediate delivery.
- Futures
- Forward
- CFD
- Spot
Question 2 of 25
… contract is an agreement to buy a product at a future date at an already specified price.
- Futures
- Gentlemen's
- CFD
- Spot
Question 3 of 25
Which of the following assets can be traded as futures?
- All answers provided are correct
- Commodities
- Stock indices
- Interest rates
Question 4 of 25
The spot price for metal is $1,400 a tonne, but there is a futures contract for $1,500 a tonne in a year from now. In what circumstance will the futures contract not be beneficial?
- If in one year the price of metal will be $1,600 a tonne
- If in one year the price of metal will be $1,500 a tonne
- No answers provided are correct
- If in one year the price of metal will be $1,700 a tonne
Question 5 of 25
What are the two types of options?
- Call and Put
- Be and Not to be
- Short-term and Long-term
- Buy and Sell
Question 6 of 25
In an option you’re entering into a contract with a vendor to purchase or sell a specified quantity of a security at an agreed price at a certain point in the future.
- False
- True
Question 7 of 25
What is a specified price of a security in an options contract called?
- Strike price
- Spot price
- Security price
- Option price
Question 8 of 25
In what case is the vendor obliged to sell or buy the underlying security at the strike price at the expiration of the contract?
- Futures
- Options
- Forwards
- Never
Question 9 of 25
Sigma corps is currently trading at $20 and you agree at the same strike price. You decide to buy 100 shares and you have to pay $1 per share to the vendor. If the stock rises to $25, how much will you lose/make?
- Will lose $400
- Will make $400
- Will make $500
- Will lose $500
Question 10 of 25
Sigma corps is currently trading at $20 and you agree at the same strike price. You decide to buy 100 shares and you have to pay $1 per share to the vendor. If the stock falls to $15, how much will you lose/make?
- Will make $400
- Will lose $500
- Will lose $600
- Will make $500
Question 11 of 25
Sigma corps is currently trading at $20 and you agree at the same strike price. You decide to buy 100 shares and you have to pay $1 per share to the vendor. If the stock rises to $20.50, how much will you lose/make?
- Will make $100
- Will lose $50
- Will lose $100
- Will make $50
Question 12 of 25
What does CDS stand for?
- Canadian Depository for Securities
- Consumer Debt Solutions
- Central Depository System
- Credit Default Swaps
Question 13 of 25
The seller of the CDS receives regular payments from the buyer to cover the possibility that the bond issuer will fail to meet repayments and thereby default.
- False
- True
Question 14 of 25
Who wins if the bond reaches maturity?
- The CDS issuer
- The investor
- The company that has issued the bond
- Everyone loses
Question 15 of 25
Who wins if the bond goes into default?
- Everyone loses
- The CDS issuer
- The company that has issued the bond
- The investor
Question 16 of 25
What does CLO stand for in asset-backed securities?
- Cat Lovers Organisation
- Cash Loan Organisation
- Collateralised Loan Obligation
- Chief Legal Officer
Question 17 of 25
What is the minimum investment amount for mortgage-backed securities?
- $10,000
- No minimum
- $1,000
- $5,000
Question 18 of 25
Who wins in the mortgage-backed security if there is no crash in the property market?
- Mortgage originators
- Those who securitise the loans
- All answers provided are correct
- Investors
Question 19 of 25
A forward contract is a private agreement between two parties obliging either the buyer or seller to purchase or offer an asset at a set price at a specified time.
- True
- False
Question 20 of 25
How do forward contracts differ from futures market?
- All answers provided are correct
- Futures are largely standardised and transparent
- Forwards are custom built and will usually vary from contract to contract
- Forwards can’t be traded on exchanges
Question 21 of 25
What does IRS stand for?
- Increasing Returns to Scale
- Internal Revenue Service
- International Riot Society
- Interest Rate Swap
Question 22 of 25
Are interest rate swaps traded on exchanges?
- No
- Yes
Question 23 of 25
Who wins in interest rate swaps?
- The side that will gain a better cash flow from a swapped rate
- No one wins
- The side that will gain a worse cash flow from a swapped rate
- Often mutual benefits, as one side must pay an agreed premium (to gain a better cash flow)
Question 24 of 25
What is thought to be the biggest risk for retail investors?
- Getting it wrong
- Credit risk
- Liquidity risk
- Inflation risk
Question 25 of 25
Which of the following statements is false?
- All statements are true
- Investing in derivatives is now more transparent than it has ever been
- Institutional investors are required to set up margin accounts to trade many derivatives
- Introduction of clearing houses have made the trading environment insecure
