<<12345678910111213141516171819202122232425>> 1. The value of a derivative is determined byThe value of the underlyingFIMMDANotional principal amountFEDAIQuestion 1 of 25 2. One of the essential differences between an OTC and an Exchange traded derivative isOTC derivatives are cheaper while Exchange traded derivatives are costlyOTC derivatives are for customers while Exchange traded derivatives are for banksIn OTC derivatives, counter party risk is prominent, whereas in exchange traded derivatives, counter party risk is totally absentOTC derivatives are for hedging risks whereas Exchange traded derivatives are used for speculationQuestion 2 of 25 3. In case of free currencies, forward premium or discount is exactly equal to the difference betweenRisk-free interest rates of the two currenciesInflation rates in both the countriesSpot rate and Tom ratealternate reference rate and RBI reference rateQuestion 3 of 25 4. A put option is in the money (ITM) ifthe strike price is less than market pricethe strike price is more than the market pricethe market price is equal to the strike pricea put option can never be in the moneyQuestion 4 of 25 5. In India, market for currency futures commenced inAugust 2008August 1993The market yet to commence operationsThe currency futures markets were existing for a long time but were lying dormantQuestion 5 of 25 6. Why do bank treasuries chiefly use derivatives?To increase market riskTo speculate on price changesTo manage risk, cater to client requirements, and take trading positionsTo reduce liquidity in the marketQuestion 6 of 25 7. What is the primary characteristic of a derivative?It has an independent valueIt is derived from an underlying market/exposureIt is not related to financial marketsIt has a fixed settlement termQuestion 7 of 25 8. Which markets are examples of where derivative products may be based?Only financial marketsOnly commodity marketsBoth financial and commodity marketsNeither financial nor commodity marketsQuestion 8 of 25 9. What does the value of a derivative depend on?Future market pricesPast market pricesCurrent market pricesSpot marketQuestion 9 of 25 10. What are standardized derivative contracts, traded on a futures exchange, known as?Over-the-Counter (OTC) ProductsCustom ContractsExchange Traded DerivativesForward ContractsQuestion 10 of 25 11. What is a forward contract traded on a futures exchange called?Spot ContractOptions ContractFuture ContractStandard ContractQuestion 11 of 25 12. Which of the following is an example of an exchange traded derivative?Over-the-Counter (OTC) optionsCustomized forward contractsStock futuresPrivate swap agreementsQuestion 12 of 25 13. Where are some futures exchanges organized?Only independentlyOnly associated with stock exchangesBoth independently and associated with stock exchangesOnly in developing countriesQuestion 13 of 25 14. What is the primary purpose of a forward contract in foreign exchange?SpeculationHedgingArbitrageInvestmentQuestion 14 of 25 15. In a forward sale contract, what rate is fixed for the exchange of currency?Prevailing market rateForward rateSpot rateDiscount rateQuestion 15 of 25 16. What does the forward rate represent?The spot rate at a future dateThe interest rate differential of the two currenciesThe current market rateThe rate set by the central bankQuestion 16 of 25 17. What is the disadvantage of holding a forward contract?Uncertainty in the exchange rateRequirement of collateralOpportunity costLimited liquidityQuestion 17 of 25 18. When was Financial Benchmarks India Pvt Ltd (FBIL) formed?December 2013December 2014December 2015December 2016Question 18 of 25 19. What is the primary responsibility of FBIL?Trading government securitiesAdministering foreign exchange marketsDeveloping and administering benchmarksProviding financial advisory servicesQuestion 19 of 25 20. Which of the following benchmarks is announced by FBIL on a daily basis?Equity indicesForeign exchange ratesOvernight Mumbai Interbank Outright Rate (MIBOR)Corporate bond yieldsQuestion 20 of 25 21. What is the source of data for calculating the Overnight Mumbai Interbank Outright Rate (MIBOR) announced by FBIL?Foreign exchange dealersStock exchangesNDS-call platform of Clearing Corporation of India Ltd (CCIL)Reserve Bank of India (RBI)Question 21 of 25 22. In addition to Overnight MIBOR, which other benchmark rates are announced by FBIL?Corporate bond yieldsStock market indicesTerm MIBOR, FC-Rupee Options Volatilities, Certificates of Deposit (FBIL-CD), and Treasury Bills (FBIL-TBILL)Government bond yieldsQuestion 22 of 25 23. What are the primary differences between Over-the-Counter (OTC) and Exchange Traded derivatives?OTC derivatives are standardized products, while Exchange Traded derivatives are customizable.OTC derivatives have definite delivery dates, while Exchange Traded derivatives do not.OTC derivatives are traded on exchanges, while Exchange Traded derivatives are negotiated directly between parties.OTC derivatives involve direct negotiation between parties, while Exchange Traded derivatives are standardized contracts traded on organized exchanges.Question 23 of 25 24. What is the main characteristic of options contracts?They involve exchange of cash flows between parties.They have definite delivery dates.They offer the right, but not the obligation, to buy or sell an underlying asset.They are standardized contracts traded on exchanges.Question 24 of 25 25. What is the purpose of interest rate swaps?To fix interest rates for a single interest payment period.To benefit from interest rate differentials between currencies.To hedge exchange rate risks.To exchange cash flows and shift the basis of interest rate calculation.Question 25 of 25 Loading...
