Top 150+ Solved Financial Derivatives and Risk Management MCQ Questions Answer
Q. The test used to check the validity of VaR estimate
a. Black testing
b. Back testing
c. Back end test
d. Back to back test
Q. The tendency of spot price and future price to come together is
a. Principle of divergence
b. Principle of convergence
c. Principle of backwardation
d. Principle of contango
Q. The condition where future prices are greater than cashprice resulting in positive basis is
a. Normal backwardation
b. Contango
c. Expectation hypothesis
d. Cost of carry
Q. ------------ are formed by using the options on the same asset with same strike price but withdifferent expiration dates
a. Box spread
b. Ratio spread
c. Calendar spread
d. Call put spread
Q. The difference between option premium and intrinsic value
a. Time value
b. Intrinsic value
c. Money value
d. Premium
Q. Option pricing model developed John Cox,Stephen Ross and Mark Rubinstein is
a. Binomial Option pricing Model
b. Black schools model
c. Cost of carry model
d. Backwardation model
Q. The type of swap agreement which gives seller the chance to terminate swap at any time beforematurity.
a. Coupan swap
b. Callable swap
c. Putable swap
d. Rate capped swap
Q. When Swap is combined with Option it is called
a. Swaption
b. Forwad Swaps
c. Swap options
d. All the above
Q. What is the time value of option at expiration
a. Zero
b. Same as strike price
c. Same as exercise price
d. Same as market price
Q. A option that provides a fixed payoff depending on the fulfilment of some condition
a. Asian option
b. Barrier option
c. Binary option
d. Lookback option
Q. Which of the following is a way to settle option contracts
a. By exercising
b. By letting option expire
c. By offsetting
d. All the above
Q. The date on which option expires is known as
a. Exercise date
b. Expiration date
c. Contract date
d. Maturity date
Q. The risk that arises due to adverse movementsin the price of a financial asset or commodity
a. Credit risk
b. Market risk
c. Legal risk
d. Liquidty risk