Question 1

Which of the following markets is/are said to provide price discovery?

Accepted Answer

A) forwards 
B) futures 
C) options 
D) a and b 
E) b and c 
A) forwards 
B) futures 
C) options 
D) a and b 
E) b and c B,C

Question 2

The absence of a daily settlement is one of the factors distinguishing a forward contract from a futures contract.

Accepted Answer

A) True 
 B)False  True

Question 3

A market in which the price equals the true economic value

Accepted Answer

A) is risk-free 
B) has high expected returns 
C) is organized 
D) is efficient 
E) all of the above 
A) is risk-free 
B) has high expected returns 
C) is organized 
D) is efficient 
E) all of the above D

Question 4

A forward contract has which of the following characteristics?

Accepted Answer

A) has a buyer and a seller 
B) trades on an organized exchange 
C) has a daily settlement 
D) gives the right but not the obligation to buy 
E) all of the above 
A) has a buyer and a seller 
B) trades on an organized exchange 
C) has a daily settlement 
D) gives the right but not the obligation to buy 
E) all of the above

Question 5

Uncertainty of future sales and cost of inputs are examples of financial risks businesses may face.

Accepted Answer

A) True 
 B)False

Question 6

Derivatives permit investors to manage their risk more efficiently.

Accepted Answer

A) True 
 B)False

Question 7

Short selling is a high risk activity.

Accepted Answer

A) True 
 B)False

Question 8

Options on futures are also known as

Accepted Answer

A) spot options 
B) commodity options 
C) exchange options 
D) security options 
E) none of the above 
A) spot options 
B) commodity options 
C) exchange options 
D) security options 
E) none of the above

Question 9

Swaps obligate delivery of either bonds or stocks.

Accepted Answer

A) True 
 B)False

Question 10

Derivatives are securities and not contracts.

Accepted Answer

A) True 
 B)False

Question 11

Options,forwards,swaps,and futures are financial assets.

Accepted Answer

A) True 
 B)False

Question 12

Which of the following trade on organized exchanges?

Accepted Answer

A) caps 
B) forwards 
C) options 
D) swaps 
E) none of the above 
A) caps 
B) forwards 
C) options 
D) swaps 
E) none of the above

Question 13

Most derivative contracts terminate with delivery of the underlying asset.

Accepted Answer

A) True 
 B)False

Question 14

Derivative markets make stock and bond markets more efficient.

Accepted Answer

A) True 
 B)False

Question 15

The law of one price states that the price of an asset cannot change.

Accepted Answer

A) True 
 B)False

Question 16

The expected return minus the risk-free rate is called

Accepted Answer

A) the risk premium 
B) the percentage return 
C) the asset's beta 
D) the return premium 
E) none of the above 
A) the risk premium 
B) the percentage return 
C) the asset's beta 
D) the return premium 
E) none of the above

Question 17

Arbitrage is a transaction designed to capture profits resulting from market efficiency.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following instruments are contracts but are not securities

Accepted Answer

A) stocks 
B) options 
C) swaps 
D) a and b 
E) b and c 
A) stocks 
B) options 
C) swaps 
D) a and b 
E) b and c

Question 19

Cash markets are also known as

Accepted Answer

A) speculative markets 
B) spot markets 
C) derivative markets 
D) dollar markets 
E) none of the above 
A) speculative markets 
B) spot markets 
C) derivative markets 
D) dollar markets 
E) none of the above

Question 20

The positive relationship between risk and return is called

Accepted Answer

A) expected return 
B) market efficiency 
C) the law of one price 
D) arbitrage 
E) none of the above 
A) expected return 
B) market efficiency 
C) the law of one price 
D) arbitrage 
E) none of the above

Which of the following markets is/are said to provide price discovery?

The absence of a daily settlement is one of the factors distinguishing a forward contract from a futures contract.

A market in which the price equals the true economic value

A forward contract has which of the following characteristics?

Uncertainty of future sales and cost of inputs are examples of financial risks businesses may face.

Derivatives permit investors to manage their risk more efficiently.

Short selling is a high risk activity.

Options on futures are also known as

Swaps obligate delivery of either bonds or stocks.

Derivatives are securities and not contracts.

Options,forwards,swaps,and futures are financial assets.

Which of the following trade on organized exchanges?

Most derivative contracts terminate with delivery of the underlying asset.

Derivative markets make stock and bond markets more efficient.

The law of one price states that the price of an asset cannot change.

The expected return minus the risk-free rate is called

Arbitrage is a transaction designed to capture profits resulting from market efficiency.

Which of the following instruments are contracts but are not securities

Cash markets are also known as

The positive relationship between risk and return is called

Structure of Options Markets

Principles of Option Pricing

Option Pricing Models: the Binomial Model

Option Pricing Models: the Black-Scholes-Merton Model

Basic Option Strategies

Advanced Option Strategies

Principles of Pricing Forwards,futures and Options on Futures

Futures Arbitrage Strategies

Forward and Futures Hedging,spread,and Target Strategies

Swaps

Interest Rate Forwards and Options

Advanced Derivatives and Strategies

Financial Risk Management Techniques and Appplications

Managing Risk in an Organization

Filters

Exam 1: Introduction

Which of the following markets is/are said to provide price discovery?

The absence of a daily settlement is one of the factors distinguishing a forward contract from a futures contract.

A market in which the price equals the true economic value

A forward contract has which of the following characteristics?

Uncertainty of future sales and cost of inputs are examples of financial risks businesses may face.

Derivatives permit investors to manage their risk more efficiently.

Short selling is a high risk activity.

Options on futures are also known as

Swaps obligate delivery of either bonds or stocks.

Derivatives are securities and not contracts.

Options,forwards,swaps,and futures are financial assets.

Which of the following trade on organized exchanges?

Most derivative contracts terminate with delivery of the underlying asset.

Derivative markets make stock and bond markets more efficient.

The law of one price states that the price of an asset cannot change.

The expected return minus the risk-free rate is called

Arbitrage is a transaction designed to capture profits resulting from market efficiency.

Which of the following instruments are contracts but are not securities

Cash markets are also known as

The positive relationship between risk and return is called

Structure of Options Markets

Principles of Option Pricing

Option Pricing Models: the Binomial Model

Option Pricing Models: the Black-Scholes-Merton Model

Basic Option Strategies

Advanced Option Strategies

Principles of Pricing Forwards,futures and Options on Futures

Futures Arbitrage Strategies

Forward and Futures Hedging,spread,and Target Strategies

Swaps

Interest Rate Forwards and Options

Advanced Derivatives and Strategies

Financial Risk Management Techniques and Appplications

Managing Risk in an Organization

Filters