Pre Session Quiz - Introduction To Derivatives

5 Questions | By Anurag_quiz | Last updated: Mar 19, 2022 | Total Attempts: 199

Questions and Answers

1.

Derivatives are financial instruments used for
- A.
  
  Speculation ("bets")
- B.
  
  To hedge ("insurance").
- C.
  
  Provide leverage
- D.
  
  All the three options
2.

Value for derivatives is derived from?
- A.
  
  Underlying asset
- B.
  
  Face value of the stock
- C.
  
  Liquidity in the market
3.

Which one is not a derivative product?
- A.
  
  Forwards
- B.
  
  Futures
- C.
  
  Options
- D.
  
  Equity
4.

Hedging
- A.
  
  Is the process of diversifying risk.
- B.
  
  Is the process of reducing risk by buying risk-free government bonds
- C.
  
  Is the process of reducing risk by engaging in a financial transaction which offsets a position already taken.
- D.
  
  Is the process of trading financial derivatives
5.

Arbitrage is an attempt to make risk-free profits
- A.
  
  True
- B.
  
  False

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