Financial Quiz

Question 1 of 14

Who are derivatives mainly available to?

Pension Funds

All answers provided are correct

Asset management firms

Hedge Funds

Question 2 of 14

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

Via mutual funds and exchange-traded funds

Via the derivatives exchange

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

Derivatives have a very high tax levied on them

Some derivatives are illegal in certain countries

Derivatives are at the more speculative end of the risk spectrum

Question 4 of 14

What are the two main reason for buying derivatives?

Speculation and hedging

Speculation and dividends

Dividends 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?

True

False

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

Indices

Commodities

Question 9 of 14

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

Contract expiry date

Contract size

Contract type

No answers provided are correct

Question 10 of 14

What does a ‘long’ position mean in CFDs?

When an investor buys a long range of different assets to minimise risk

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

When an investor buys an asset

No answers provided are correct

Question 11 of 14

What does a ‘short’ position mean in CFDs?

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

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

No answers provided are correct

When an investor sells an asset

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 $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?

Made $250

None, because ‘going short’ is not investing

Lost $50

Lost $250

Looking for more?

Education Hub

You’ll find everything you need to know here; from how-to guides to investment strategies.

Trading Guides

Our in-depth guides will provide you some insights into the wide variety of financial instruments, their unique features and how to use them in your trading portfolio.

Trading Glossary

1988

That's the number of terms in our glossary.

Do you know your CFDs from your IPOs or ETFs? Remove the mystery with our definitions glossary.

See all

Term of the day

Derivative

Derivative definition: Financial derivatives are contracts that ‘derive’ their value from the market performance of an underlying asset. Instead of the actual asset being exchanged, agreements are made that involve the exchange of cash or...

The most common word

Market Risk

Looking for a market risk definition? The place to start is the name itself. Market risk is a type of risk associated with the market as a whole rather than with individual stocks or business sectors. In other words, it is the risk that the...

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?

Looking for more?

Trading Glossary

Derivative

Market Risk

Still looking for a broker you can trust?