Financial Quiz

Question 1 of 14

Who are derivatives mainly available to?

All answers provided are correct

Asset management firms

Hedge Funds

Pension Funds

Question 2 of 14

What is the simplest way for a retail investor to buy into derivatives?

Via the derivatives exchange

Via mutual funds and exchange-traded funds

On eBay or Amazon

Via stock market

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?

Speculation and hedging

Speculation and dividends

All answers provided are correct

Dividends and hedging

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”.

Statement is wrong

Hedging

Standard trading flow

Speculation

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:

All answers provided are correct

Commodities

Indices

Question 9 of 14

Described as one of CFDs disadvantages, which of the following is fixed?

Contract type

Contract expiry date

Contract size

No answers provided are correct

Question 10 of 14

What does a ‘long’ position mean in CFDs?

When an investor buys an asset

No answers provided are correct

When an asset is bought/sold as a long-term investment

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

When an asset is bought/sold as a short-term investment

No answers provided are correct

When an investor buys a short (small) range of different assets

Question 12 of 14

Do investors actually own the shares of the companies that they’ve bought in CFDs?

Yes

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 $250

Made $50

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

Made $250

Lost $250

Lost $50

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Financial Quiz

Who are derivatives mainly available to?

What is the simplest way for a retail investor to buy into derivatives?

Why is it especially important to know what derivatives you are investing?

What are the two main reason for buying derivatives?

Is the quote “Institutional investors tend to make up their core portfolio with derivatives, to provide a secure annual income” true or false?

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”.

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.

CFDs offer the ability to trade the following assets:

Described as one of CFDs disadvantages, which of the following is fixed?

What does a ‘long’ position mean in CFDs?

What does a ‘short’ position mean in CFDs?

Do investors actually own the shares of the companies that they’ve bought in CFDs?

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?

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?

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