Financial Quiz

Question 1 of 14

Who are derivatives mainly available to?

Pension Funds

Hedge Funds

All answers provided are correct

Asset management firms

Question 2 of 14

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

On eBay or Amazon

Via the derivatives exchange

Via stock market

Via mutual funds and exchange-traded funds

Question 3 of 14

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

Derivatives are at the more speculative end of the risk spectrum

Derivatives have a very high tax levied on them

Some derivatives are illegal in certain countries

Derivatives are very illiquid

Question 4 of 14

What are the two main reason for buying derivatives?

Dividends and hedging

All answers provided are correct

Speculation and hedging

Speculation and dividends

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”.

Hedging

Statement is wrong

Speculation

Standard trading flow

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 size

Contract type

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 buys a short (small) range of different assets

No answers provided are correct

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

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?

None, because ‘going long’ is not investing

Made $250

Made $50

Lost $250

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

Lost $50

None, because ‘going short’ is not investing

Lost $250

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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.

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Term of the day

Ask Price

The ask price is like the reserve price at an auction: it's basically a price that someone has agreed to sell a security for. It differs from the bid price, which is basically the price a buyer is happy to pay for a security. Thus,...

The most common word

Illiquidity

In the investment world, illiquidity refers to assets which can't be exchanged for cash easily. This might be because there aren't enough investors willing to buy them. In business, the term can describe a company that doesn't have...

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

Ask Price

Illiquidity

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