MCQOPTIONS
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MCQOPTIONS
This section includes 18 Mcqs, each offering curated multiple-choice questions to sharpen your Master of Commerce (MDotcom) knowledge and support exam preparation. Choose a topic below to get started.
| 1. |
The contract where buyer and seller agrees to exchange asset on future date without the involvement of stock exchange |
| A. | Options |
| B. | Futures |
| C. | Forwards |
| D. | Swaps |
| Answer» D. Swaps | |
| 2. |
The hedging strategy which results in exact offsetting of gains and losses in the futures market and physical market is known as |
| A. | Short hedge |
| B. | Long hedge |
| C. | Imperfect hedge |
| D. | Perfect hedge |
| Answer» E. | |
| 3. |
There is no arbitrage between the value of a European call and put options with same strike price and expiry date on the same underlying asset. This is shown by |
| A. | Put-call parity pricing relationship |
| B. | Principle of convergence |
| C. | Principle of divergence |
| D. | All the above |
| Answer» B. Principle of convergence | |
| 4. |
The main advantage of using options on futures contractsrather than the futures contracts themselvesis that |
| A. | interest rate risk is controlled while preserving the possibility of gains. |
| B. | interest rate risk is controlled, while removing the possibility of losses. |
| C. | interest rate risk is not controlled, but the possibility of gains is preserv |
| D. | d. interest rate risk is not controlled, but the possibility of gains is lost. |
| Answer» B. interest rate risk is controlled, while removing the possibility of losses. | |
| 5. |
A swap agreement created through the synthesis of two swaps differing in duration for the purpose of fulfilling the specific time frame needed of an investor |
| A. | Forward starting swap |
| B. | Roller coaster swap |
| C. | Amortizing swap |
| D. | Accreting swap |
| Answer» B. Roller coaster swap | |
| 6. |
The persons who enter into derivative contract in anticipation of lower expected return at the reduced risk |
| A. | Hedgers |
| B. | Speculators |
| C. | Spreaders |
| D. | Arbitrageurs |
| Answer» D. Arbitrageurs | |
| 7. |
Which measure is used to indicate the maximum loss that an investor could incur on an exposure at a point in time, determined at a certain confidence level. |
| A. | VaR |
| B. | VaM |
| C. | VaG |
| D. | VaK |
| Answer» B. VaM | |
| 8. |
Swaps whose notional accretes when a certain floating rate,often a different rate from the one used to pay,lies within a range. |
| A. | Range accrual swaps |
| B. | Asian swaps |
| C. | Index amortizing swap |
| D. | Bermudan swaps |
| Answer» B. Asian swaps | |
| 9. |
A fixed-for-floating interest rate swap with the floating rate leg tied to an index of daily interbank rates or overnight |
| A. | Power swap |
| B. | Leveraged swap |
| C. | Quanto swap |
| D. | Overnight index swaps |
| Answer» E. | |
| 10. |
Which of the following is best described as selling a synthetic asset and simultaneously buying the actual asset? |
| A. | Diversifying. |
| B. | Arbitrage. |
| C. | Speculating. |
| D. | Hedging. |
| Answer» C. Speculating. | |
| 11. |
Which of the following strategies will be profitable if the price of the underlying asset is expected to decrease? |
| A. | Selling a call. |
| B. | Selling a put. |
| C. | Buying a put. |
| D. | Buying a call. |
| Answer» B. Selling a put. | |
| 12. |
A swap deal wherein floating rate payer pays the floating rate square or cubic or any power of the rate to the counter party |
| A. | Leveraged swap |
| B. | Quanto swap |
| C. | Power swap |
| D. | Overnight index swap |
| Answer» D. Overnight index swap | |
| 13. |
. 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 |
| Answer» B. Currency | |
| 14. |
The type of swap agreement which gives seller the chance to terminate swap at any time before maturity. |
| A. | Coupan swap |
| B. | Callable swap |
| C. | Putable swap |
| D. | Rate capped swap |
| Answer» D. Rate capped swap | |
| 15. |
The additional amount that has to deposited by the trader with broker to bring the balance of margin account to initial margin |
| A. | Initial margin |
| B. | Maintenance margin |
| C. | Variation margin |
| D. | Additional margin |
| Answer» D. Additional margin | |
| 16. |
The difference between strike price and current market price of underlying security in option contract is |
| A. | Time value |
| B. | Intrinsic value |
| C. | Exchange value |
| D. | Trade value |
| Answer» C. Exchange value | |
| 17. |
The amount to be deposited by buyer and seller of future contarct at the time of entering future contract |
| A. | Future margin |
| B. | Future premium |
| C. | Future payoff |
| D. | None of the above |
| Answer» B. Future premium | |
| 18. |
Option strategy with combination of selling one put option at low strike price and buying put option at a high strike price |
| A. | Put bear spread |
| B. | Call bear spread |
| C. | Long call butterfly |
| D. | Short call butterfly |
| Answer» B. Call bear spread | |