Top 150+ Solved Financial Derivatives and Risk Management MCQ Questions Answer
Q. Hedging by buying an option
a. Limits gain
b. Limits losses
c. Limits gain & losses
d. Has no limit on losses
Q. All other things held constant premium on options will increase when the
a. Exercise price increases
b. Volatility of the underlying assets fails
c. Term to maturity increases
d. Both B & C
Q. An option allowing the owner to sell an asset at a future date is a ……………
a. Put option
b. Call option
c. Forward option
d. Future contract
Q. Composite value of traded stocks group of secondary market is classified as
a. Stock index
b. Primary index
c. Stock market index
d. Limited liability index
Q. ………….. is the minimum amount which must be remained in a margin account
a. Maintenance margin
b. Variation margin
c. Initial margin
d. None of these
Q. The number of future contract outstanding is called ………….?
a. Liquidity
b. Float
c. Volume
d. Turnover
Q. Futures contracts are more successful than interest rate forward contracts because they :
a. are less liquid
b. have greater default risk
c. are more liquid
d. have an interest rate tied to the discount rate
Q. The payoffs for financial derivatives linked to
a. Securities that will be issued in the future
b. The volatality of interest rates
c. previously issued securities
d. none of the above.
Q. Which of the following is not a problem with an interest rate forward contract?
a. Low interest rate
b. default risk
c. lack of liquidity
d. finding a counterparty