#1
Which financial instrument represents a contractual claim on the assets of a company?
Common stock
Corporate bond
Options
Futures
#2
Which financial instrument provides the holder with the right to sell an underlying asset at a specified price before a certain expiration date?
Put option
Call option
Futures contract
Swaption
#3
Which market structure is characterized by a large number of buyers and sellers, homogeneous products, and ease of entry and exit?
Monopoly
Oligopoly
Perfect competition
Monopolistic competition
#4
In the context of options, what does the term 'in-the-money' mean?
The option is worthless
The option's exercise price is equal to the current market price
The option's exercise price is below the current market price (for a call option)
The option's exercise price is above the current market price (for a put option)
#5
Which factor is typically used to assess the credit risk of a bond issuer?
Historical stock prices
Market capitalization
Credit rating
Implied volatility
#6
What is the primary purpose of derivatives in financial markets?
Generate interest income
Transfer risk
Provide voting rights
Facilitate mergers
#7
Which type of option gives the holder the right to buy an underlying asset at a specified price before a certain expiration date?
Call option
Put option
Forward contract
Swap contract
#8
What is the main function of a clearinghouse in the context of derivative markets?
Issuing new securities
Facilitating direct trades
Providing a centralized counterparty
Conducting market research
#9
Which factor is used to calculate the Black-Scholes option pricing model?
Interest rate
Dividend yield
Historical volatility
All of the above
#10
What is the primary purpose of a swap in financial markets?
Speculating on future prices
Transferring interest rate risk
Issuing new securities
Facilitating stock buybacks
#11
What is the primary function of a market maker in financial markets?
Providing liquidity by facilitating trades
Issuing new securities
Enforcing trading regulations
Conducting monetary policy
#12
What is the role of a regulator in financial markets?
Executing trades
Providing investment advice
Enforcing rules and regulations
Issuing new securities
#13
In the context of financial markets, what does the term 'hedging' refer to?
Speculative trading for profit
Minimizing the impact of price fluctuations
Borrowing money to invest
Issuing new securities
#14
What is the key characteristic of a futures contract?
Customizable terms
Traded on secondary markets
Settlement at a future date
No expiration date
#15
What is the primary risk associated with holding a naked (uncovered) call option position?
Credit risk
Market risk
Liquidity risk
Counterparty risk
#16
In the context of bond markets, what does the term 'duration' measure?
Time to maturity
Interest rate sensitivity
Credit risk
Liquidity risk
#17
In the context of options, what does 'implied volatility' represent?
Historical price movements
Expected future price movements
The delta of the option
The theta of the option
#18
Which financial instrument is designed to protect against inflation by adjusting its value based on an underlying inflation index?
Treasury bond
Index fund
TIPS (Treasury Inflation-Protected Securities)
Corporate bond
#19
What is the purpose of a margin requirement in futures trading?
To limit trading to specific hours
To provide collateral and mitigate default risk
To establish a fixed expiration date
To determine the settlement price