1. Forward contracts are:
a. All of them
b. Not standard contracts
c. Private contracts.
d. Legally binding
2. The characteristics of a future market are:
a. Leverage
b. All of them
c. Booking Date and Clearing date are different
d. Need an underlying asset
3. The buyer of a PUT option:
a. Has the right to sell the underlying asset
b. Has the obligation to buy the underlying asset if the seller of the PULL Option wants
c. Has the obligation to sell the underlying asset if the seller of the PULL Option wants
d. Has the right to buy the underlying asset
4. When investors use a derivate instrument to reduce his exposure to the price volatility of certain underlying assets, he is said to be:
a. Investing
b. Hedging
c. Speculating
d. Arbitrating
5. Most preferred stocks have a feature that requires all last unpaid dividend payments to paid before any common stock dividends can be paid. What is the name of this feature?
a. participating
b. cumulative
c. convertible
d. provisional
6. Future Markets are the evolution of Forward contracts because of:
a. Introduce three innovations; standardization of size, standardization of delivery dates, a centralized exchange and a clearing house
b. Introduce three innovations; standardization of size, standardization of delivery dates and clearing house
c. Introduce three innovations; standardization of contract, standardization of delivery dates and clearing house
d. Introduce three innovations; standardization of size, standardization of delivery dates and mark to market
7. If you are SHORT in a Future contract:
a. You can get limited profits and unlimited losses
b. You can get unlimited profits and limited losses
c. You can get unlimited profits and unlimited losses
d. None of them
8. Imagine that you are the seller of a forward contract. At the maturity date, you want to compare Spot Price and the Forward Price signed in the contract to check and happened in case of not signing the forward contract. What do you need to take into account regarding to the contract?
a. If Spot Price is lower than the Forward Price you will ask for the difference to the buyer.
b. Peace of mind
c. None of them
d. If Sport Price is higher than the forward Price you will not deliver the underlying asset
9. Select the CORRECT statement about option sellers. They have:
a. The right to exercise their options.
b. Significant or Unlimited risk
c. Unlimited profit potential
d. Limited risk
10. Put Options and Call Options
a. Only Call Option can be bought and sold
b. Only Put Option can be bought and sold
c. Both can be bought and sold
d. It doesn’t matter, to be bought