Top 150+ Solved Financial Derivatives and Risk Management MCQ Questions Answer
Q. The option contract which gives the seller the obligation to buy is
a. Put option
b. Call option
c. American option
d. European option
Q. The option contract that can be exercised at any time before the maturity date is known as
a. European option
b. American option
c. Bermudan option
d. None of the above
Q. The option contract which can be exercised on a few dates before the maturity date
a. Bermudan option
b. American option
c. European option
d. All the above
Q. The amount to be deposited by buyer and seller of future contarct at the time of entering futurecontract
a. Future margin
b. Future premium
c. Future payoff
d. None of the above
Q. The option contract that can be exercised only at the date of maturity is called
a. European option
b. American option
c. Bermudan option
d. Call option
Q. Option strategy with combination of selling one put option at low strike price and buying put optionat a high strike price
a. Put bear spread
b. Call bear spread
c. Long call butterfly
d. Short call butterfly
Q. An option that would lead to negative cash flow if it were exercised immediately is
a. In the money option
b. Out of the money option
c. At the money option
d. With money option
Q. Asian option and look back options are types of
a. Vanilla option
b. Exotic option
c. Real option
d. Warrants
Q. Which of the following is long dated option traded generally traded over the counter
a. Warrants
b. LEAPS
c. Baskets
d. Real option
Q. A contract that confers the right to buy or sell foreign currency at a specified price at some future date
a. Currency forwards
b. Currency futures
c. Currency options
d. Currency Swaps
Q. An option contract with underlying asset commoditiesis
a. Commodity option
b. Currency option
c. Stock index option
d. None of the above
Q. The risk arising from counterparty’sfailure to meet its fianacial obligation is
a. Market risk
b. Liquidity risk
c. Operation risk
d. Credit risk
Q. The difference between the future price and cash price is
a. Basis
b. Margin
c. Premium
d. Strike price
Q. The additional amount that has to deposited by the trader with broker to bring the balance of marginaccount to initial margin
a. Initial margin
b. Maintenance margin
c. Variation margin
d. Additional margin
Q. The system of daily settlement in the future market is
a. Marking to market
b. Market making
c. Market backwardation
d. Market moving