HKSI Paper 9 (Derivatives) English Free Trial

Which of the following statements is true regarding Futures contract specifications items?

I. Contract price is not included in the list

II. Contract months not included in the list

III. Final settlement day and delivery day are 2 different things

IV. None of the above

Which of the following statements is true regarding Final settlement day

I. The last day of a year

II. The first day of a month

III. The second last day of a month

IV. None of the above

Which of the following statements is true regarding the settlement method ?

I. Futures contracts are settled at the beginning

II. Futures contracts are settled at the end

III. Futures contracts are settled on the expiry

IV. None of the above

Which of the following statements is true regarding swaps?

I. Not used to change a company’s exposure to fixed or floating rates of interest

II. Interest-rate swaps can be used by companies to achieve a better rate of borrowing

III. Can be used to change a company’s exposure to fixed or floating rates of interest

IV. None of the above

Which of the following statements is true regarding the credit default swap ?

I. Here the buyer receives credit protection

II. The buyer makes a series of payments to the seller

III. When bankruptcy occurs, the buyer becomes benefited

IV. It’ a system of payment between seller and buyer

Forwards enable both buyer and seller to tailor the agreement to suit their respective needs. What are they?

I. Price, Period & Profit

II. Price, Period &  Loss

II. Price, Quantity, Type & Quality

IV. price, Period, Quantity & Type

Which of the following statements is true regarding Swaps exchange?

I. A pays floating rate to B

II. B pays fixed rate to A

III.  A pays fixed rate to B

IV. B pays floating rate to A

By whom can derivatives be used to achieve a variety of financial outcomes ?

I. An individual

II. A portfolio manager

III. A large financial institution

IV. None of the above

Which aren’t the basic types of derivative instruments?
I. Futures
II. Forwards
III. Swaps
IV. Yield
V. Options

Which instruments are considered “plain vanilla”?
I. Futures
II. Forwards
III. Swaption
IV. Options

Which one is one of the most actively traded interest-rate futures in the global financial market?
I. Brent crude oil future
II. Commodity futures
III. Copper futures
IV. CME Eurodollar futures

What does SWAP refer to?
I. A swap is an agreement similar in nature to futures except that they are traded over-the-counter, and not on an exchange.
II. A swap is an agreement between two parties to exchange (or literally swap) their income streams or financial obligations derived from a portfolio of assets or liabilities.
III. Swap represent an agreement to buy or sell a standardized asset or index of a specified quantity and quality on a specified date at a specified price.
IV. Swaps are agreements that give the buyer the right, but not the obligation, to buy or sell an asset at a specified price (referred to as the “strike price”), on or sometimes before – depending on the style of option – a specified date (also referred to as the “expiry date”).

Which of the following statements is true regarding OTC derivatives characteristics?

I. flexible products

II. trading in a decentralized

III. Both of the above

IV. None of the above

Which of the following statements is true regarding Warrants ?

I. They can have a longer expiry

II. Subscription warrants have between 1 and 5 years expiry

III. Some warrants give an investor exposure to a  certain sector or sub-sector

IV. Derivative warrants have a longer expiry

Which of the following statements is true regarding equity swap?

I. It is similar in concept to the interest-rate swap

II. 2 parties agree to swap the cash flows for a specified period of time

III. The Hang Seng Index is dissimilar to equity swap

IV. All equity swaps involve an underlying equity portfolio on both sides

Which of the following statements is false regarding Exotic equity derivatives?

I. They are traded on indexes

II. They are traded on stocks

III. They are traded on baskets of stock

IV. They are traded on indices

Which of the following statements is true regarding ELI ?

I. An ELI calculator has been posted on the website by the government

II. An ELI calculator helps investors calculate their profit only

III. An ELI calculator helps investors understand the pricing of ELIs

IV. An ELI calculator allows investors to calculate the theoretical value of an ELI

Which of the following statements is true regarding box spread?

I. It’s riskless

II. It’ s a combination of call bull spread and put bear spread

III. The purpose of executing a box spread is to capture an arbitrage profit if there is any mispricing

IV. It has no relation with options

Which of the following statements is true regarding risks of the protective put strategy?

I. An increase in the break-even price of the underlying asset

II. The fund manager will need to pay out the put option premium

III. The fund manager will incur a loss if the volatility of the underlying asset goes down

IV. The fund manager will earn a profit if the volatility of the underlying asset goes down.

Which of the following statements is true regarding standard HSI futures/options?

I. They are too expensive for them to achieve their goals

II. A smaller (or mini) HSI futures/options contract can solve the problem

III. Both of the above

IV. None of the above