Question 1

The basis in futures is positive when we observe that the futures price is below the spot price.

Accepted Answer

A) True 
 B)False

Question 2

A credit derivative is a contract agreeing an exchange where at least one leg of the cash flow depends on the performance of a specified underlying credit- sensitive asset or liability.

Accepted Answer

A) True 
 B)False

Question 3

The phrase 'yield pick- up' refers to:

Accepted Answer

A)  a capital gain that the holder of a swap enjoys when the RBA decreases interest rates. 
B)  a gain that comes by switching from interest bearing to dividend bearing derivatives. 
C)  an arbitrage profit that a trader picks up by buying and selling two swap contracts simultaneously. 
D)  an increased floating rate yield obtained by investing in a high- yield bond and swapping into a floating- rate investment. 
A)  a capital gain that the holder of a swap enjoys when the RBA decreases interest rates. 
B)  a gain that comes by switching from interest bearing to dividend bearing derivatives. 
C)  an arbitrage profit that a trader picks up by buying and selling two swap contracts simultaneously. 
D)  an increased floating rate yield obtained by investing in a high- yield bond and swapping into a floating- rate investment.

Question 4

Futures are traded over- the- counter.

Accepted Answer

A) True 
 B)False

Question 5

Contracts for difference (CFDs) are contracts on shares, indices, foreign exchange and commodities bought or sold at the current market price, where settlement depends on the difference between the purchase or sale price and the price on settlement day.

Accepted Answer

A) True 
 B)False

Question 6

In interest rate futures trading, margin calls are made on a player holding a sell contract when interest rates are falling.

Accepted Answer

A) True 
 B)False

Question 7

SIMEX is the abbreviation for Seoul Futures Exchange.

Accepted Answer

A) True 
 B)False

Question 8

A fixed- rate derivative:

Accepted Answer

A)  creates an obligation to transact at an agreed price in the future. 
B)  is also known as an option. 
C)  cannot be used by speculators because its price is fixed. 
D)  none of the above. 
A)  creates an obligation to transact at an agreed price in the future. 
B)  is also known as an option. 
C)  cannot be used by speculators because its price is fixed. 
D)  none of the above.

Question 9

A forward contract involves:

Accepted Answer

A)  a buyer who is willing to bear all the risk of the agreement. 
B)  a seller who agrees to deliver a certain amount of a commodity on a specified future date. 
C)  a trader who will act as broker for the client on the floor of the exchange. 
D)  a clearing house institution that agrees to guarantee all contracts. 
A)  a buyer who is willing to bear all the risk of the agreement. 
B)  a seller who agrees to deliver a certain amount of a commodity on a specified future date. 
C)  a trader who will act as broker for the client on the floor of the exchange. 
D)  a clearing house institution that agrees to guarantee all contracts.

Question 10

We can create a synthetic 90- day bill from (180- day bill +90- day bill futures).

Accepted Answer

A) True 
 B)False

The basis in futures is positive when we observe that the futures price is below the spot price.

A credit derivative is a contract agreeing an exchange where at least one leg of the cash flow depends on the performance of a specified underlying credit- sensitive asset or liability.

The phrase 'yield pick- up' refers to:

Futures are traded over- the- counter.

Contracts for difference (CFDs) are contracts on shares, indices, foreign exchange and commodities bought or sold at the current market price, where settlement depends on the difference between the purchase or sale price and the price on settlement day.

In interest rate futures trading, margin calls are made on a player holding a sell contract when interest rates are falling.

SIMEX is the abbreviation for Seoul Futures Exchange.

A fixed- rate derivative:

A forward contract involves:

We can create a synthetic 90- day bill from (180- day bill +90- day bill futures).

Financial Markets

Debt Securities and Markets

Introduction to Financial Calculations

Banks and Other Deposit Taking Institutions

The Payments System

Managed and Superannuation Funds

Interest Rates, the Yield Curve and Monetary Policy

The Foreign Exchange Market

Listed Securities

Options

Global Financial Crisis

Managing Foreign Exchange Risk

Managing Interest Rate Risk

Filters

Exam 10: Fixed Rate Derivatives

The basis in futures is positive when we observe that the futures price is below the spot price.

A credit derivative is a contract agreeing an exchange where at least one leg of the cash flow depends on the performance of a specified underlying credit- sensitive asset or liability.

The phrase 'yield pick- up' refers to:

Futures are traded over- the- counter.

Contracts for difference (CFDs) are contracts on shares, indices, foreign exchange and commodities bought or sold at the current market price, where settlement depends on the difference between the purchase or sale price and the price on settlement day.

In interest rate futures trading, margin calls are made on a player holding a sell contract when interest rates are falling.

SIMEX is the abbreviation for Seoul Futures Exchange.

A fixed- rate derivative:

A forward contract involves:

We can create a synthetic 90- day bill from (180- day bill +90- day bill futures).

Financial Markets

Debt Securities and Markets

Introduction to Financial Calculations

Banks and Other Deposit Taking Institutions

The Payments System

Managed and Superannuation Funds

Interest Rates, the Yield Curve and Monetary Policy

The Foreign Exchange Market

Listed Securities

Options

Global Financial Crisis

Managing Foreign Exchange Risk

Managing Interest Rate Risk

Filters