Top 150+ Solved Financial Derivatives and Risk Management MCQ Questions Answer
Q. The persons who enter into derivative contract with the objective of covering risk
a. Hedgers
b. Speculators
c. Spreaders
d. Arbitrageurs
Q. The persons who enter into derivative contract in anticipation of lower expected return at thereduced risk
a. Hedgers
b. Speculators
c. Spreaders
d. Arbitrageurs
Q. The approach which assumesthat the expected basis would be equal to zero
a. Normal backwardation approach
b. Contago
c. Expectation hypothesis
d. None of the above
Q. The type of hedge used by those who are short on the underlying asset
a. Long hedge
b. Short hedge
c. Perfect hedge
d. Imperfect hedge
Q. when the gains or losses in the futures do not exactly offset the loss/gainsin the physical market
a. Long hedge
b. Short hedge
c. Perfect hedge
d. Imperfect hedge
Q. The hedging strategy which results in exact offsetting of gains and losses in the futures market andphysical market is known as
a. Short hedge
b. Long hedge
c. Imperfect hedge
d. Perfect hedge
Q. If the maturity of futures contract mismatchesfuture hedging is known as
a. Short hedge
b. Delta hedge
c. Cross hedge
d. Imperfect hedge
Q. When the maturity matches but the size of the futures does not match, the hedge can be
a. Long hedge
b. Short hedge
c. Cross hedge
d. Delta cross hedge
Q. The total number of futures/option contracts outstanding at the close of the previous day’s trading is
a. Open interest
b. Outstanding contract
c. Closed interest
d. None of the above
Q. Which of the following is Non varience based models of computation of VaR
a. Historical method
b. Monte carlo simulation
c. Delta noramal
d. All the above
Q. The person who takes short position in option contract
a. Option writer
b. Option purchaser
c. Option investor
d. None of the above
Q. The option contract whose underlying asset consist of stock market indices
a. Stock option
b. Stock index option
c. Currency option
d. Equity option
Q. Which of the following is not used in Future pricing
a. Cost of carry model
b. Expectation model
c. CAPM
d. Binomial model
Q. The option contract that would lead to zero cash flow if it were exercised immediately
a. At the money option
b. In the money option
c. Out of the money option
d. None of the above
Q. The option contract that would lead to positive cash flow if it were exercised immediately
a. In the money option
b. Out of the money option
c. At the money option
d. None of the above