Top 150+ Solved Financial Derivatives and Risk Management MCQ Questions Answer
Q. Which of the following is most similar to a stock broker?
a. Pit trader.
b. Local.
c. Floor broker.
d. Futures commission merchant.
Q. Using futures contracts to transfer price risk is called:
a. hedging.
b. diversifying
c. arbitrage.
d. speculating.
Q. Which of the following is best described as selling a synthetic asset and simultaneouslybuying the actual asset?
a. Diversifying.
b. Arbitrage.
c. Speculating.
d. Hedging.
Q. Which of the following has the right to sell an asset at a predetermined price?
a. A put writer.
b. A put buyer.
c. A call buyer.
d. A call writer.
Q. Which of the following is potentially obligated to sell an asset at a predetermined price?
a. A put buyer.
b. A call buyer.
c. A put writer.
d. A call writer.
Q. Which of the following actions will not close a long position in a call option?
a. Selling a call with the same strike price, expiration, and underlying asset.
b. Buying a put with the same strike price, expiration, and underlying asset.
c. Exercising the call.
d. Allowing the call to expire.
Q. Which of the following strategies will be profitable if the price of the underlying asset is expectedto decrease?
a. Selling a call.
b. Selling a put.
c. Buying a put.
d. Buying a call.
Q. Which of the following investment strategies has unlimited profit potential?
a. Writing a call.
b. Bull spread.
c. Protective put.
d. Covered call.
Q. A swap deal wherein floating rate payer pays the floating rate square or cubic or any power of therate to the counter party
a. Leveraged swap
b. Quanto swap
c. Power swap
d. Overnight index swap
Q. A swap agreement that pays and resets at the same time.
a. Constant maturity swap
b. In-arrear swap
c. Roller coaster swap
d. Amortizing swap
Q. …………. risk is a loss may occur from the failure of another party to perform according tothe terms of a contract?
a. Credit
b. Currency
c. Market
d. Liquidity
Q. By hedging a portfolio ; a bank manager
a. Reduces interest rate risk
b. Increases re investment risk
c. Increases exchange rate risk
d. None of these
Q. A long contract requires that the investor
a. Sell securities in the future
b. Buy securities in the future
c. Hedge in the future
d. Close out his position in the future
Q. The disadvantage of swaps is that they
a. Lack of liquidity
b. Suffer from default risk
c. Both A & B
d. B only