This download link is referred from the post: Calicut University M.Com 2020 Important Questions (Question Bank) || (University of Calicut)
MULTIPLE CHOICE QUESTIONS FOR MCOM (MC4C14)
FINANCIAL DERIVATIVES & RISK MANAGEMENT
--- Content provided by FirstRanker.com ---
1. ............. risk is a loss may occur from the failure of another party to perform according to the terms of a contract?
a) Credit
b) Currency
c) Market
d) Liquidity
--- Content provided by FirstRanker.com ---
2. Financial derivatives includes?
a) Stock
b) Bonds
c) Future
d) None of these
--- Content provided by FirstRanker.com ---
3. By hedging a portfolio ; a bank manager
a) Reduces interest rate risk
b) Increases re investment risk
c) Increases exchange rate risk
d) None of these
--- Content provided by FirstRanker.com ---
4. A long contract requires that the investor
a) Sell securities in the future
b) Buy securities in the future
c) Hedge in the future
d) Close out his position in the future
--- Content provided by FirstRanker.com ---
5. The disadvantage of swaps is that they
a) Lack of liquidity
b) Suffer from default risk
c) Both A & B
d) B only
--- Content provided by FirstRanker.com ---
6. Hedging by buying an option
a) Limits gain
b) Limits losses
c) Limits gain & losses
d) Has no limit on losses
--- Content provided by FirstRanker.com ---
7. 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
--- Content provided by FirstRanker.com ---
8. An option allowing the owner to sell an asset at a future date is a ...............
a) Put option
b) Call option
c) Forward option
--- Content provided by FirstRanker.com ---
d) Future contract
9. Composite value of traded stocks group of secondary market is classified as
a) Stock index
b) Primary index
c) Stock market index
--- Content provided by FirstRanker.com ---
d) Limited liability index
10. ............... is the minimum amount which must be remained in a margin account
a) Maintenance margin
b) Variation margin
c) Initial margin
--- Content provided by FirstRanker.com ---
d) None of these
11. The number of future contract outstanding is called ............. ?
a) Liquidity
b) Float
c) Volume
--- Content provided by FirstRanker.com ---
d) Turnover
12. The amount paid for an option is the
a) Strike price
b) Discount
c) Premium
--- Content provided by FirstRanker.com ---
d) Yield
13. 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
--- Content provided by FirstRanker.com ---
d) have an interest rate tied to the discount rate
14. 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
--- Content provided by FirstRanker.com ---
d) none of the above.
15. 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
--- Content provided by FirstRanker.com ---
d) finding a counterparty
Answer key : 1.(a). 2.(c). 3 .(a). 4.(b). 5.(c). 6.(b). 7.(c). 8.(a). 9.(c). 10.(c). 11.(a). 12.(c) 13. (c) 14.(c) 15.(a)
--- Content provided by FirstRanker.com ---
This download link is referred from the post: Calicut University M.Com 2020 Important Questions (Question Bank) || (University of Calicut)