Financial Quiz
Question 1 of 14
Who are derivatives mainly available to?
- Hedge Funds
- Pension Funds
- Asset management firms
- All answers provided are correct
Question 2 of 14
What is the simplest way for a retail investor to buy into derivatives?
- Via stock market
- Via mutual funds and exchange-traded funds
- Via the derivatives exchange
- On eBay or Amazon
Question 3 of 14
Why is it especially important to know what derivatives you are investing?
- Derivatives are very illiquid
- Some derivatives are illegal in certain countries
- Derivatives are at the more speculative end of the risk spectrum
- Derivatives have a very high tax levied on them
Question 4 of 14
What are the two main reason for buying derivatives?
- Dividends and hedging
- Speculation and dividends
- Speculation and hedging
- All answers provided are correct
Question 5 of 14
Is the quote “Institutional investors tend to make up their core portfolio with derivatives, to provide a secure annual income” true or false?
- False
- True
Question 6 of 14
What is the following case an example of: “If a portfolio contains corporate bonds, credit default swaps can be used as insurance against default on those bonds”.
- Speculation
- Standard trading flow
- Statement is wrong
- Hedging
Question 7 of 14
A CFD is an agreement between two parties that guarantees the difference between an asset’s current price and its price at contract expiry will be settled by the losing party.
- False
- True
Question 8 of 14
CFDs offer the ability to trade the following assets:
- Shares
- Commodities
- All answers provided are correct
- Indices
Question 9 of 14
Described as one of CFDs disadvantages, which of the following is fixed?
- Contract type
- Contract size
- Contract expiry date
- No answers provided are correct
Question 10 of 14
What does a ‘long’ position mean in CFDs?
- When an asset is bought/sold as a long-term investment
- No answers provided are correct
- When an investor buys an asset
- When an investor buys a long range of different assets to minimise risk
Question 11 of 14
What does a ‘short’ position mean in CFDs?
- When an investor sells an asset
- No answers provided are correct
- When an investor buys a short (small) range of different assets
- When an asset is bought/sold as a short-term investment
Question 12 of 14
Do investors actually own the shares of the companies that they’ve bought in CFDs?
- Yes
- No
Question 13 of 14
Imagine if you’ve called a long position for 50 Rocking shares when they were at $20 in CFD and at contract expiry they went to $25. How much money did you make/lose?
- Lost $250
- Made $50
- Made $250
- None, because ‘going long’ is not investing
Question 14 of 14
Imagine if you’ve called a short position for 50 Rocking shares when they were at $20 in CFD and at contract expiry they went to $25. How much money did you make/lose?
- None, because ‘going short’ is not investing
- Lost $50
- Made $250
- Lost $250
