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Test Bank For Introduction To Derivatives And Risk Management, 9th Edition

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9thEdition: Chapter 1Test Bank© 2012Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website,in wholeor in part.151CHAPTER 1: INTRODUCTIONMULTIPLE CHOICE TEST QUESTIONS1.The market value of the derivatives contracts worldwide totalsa.less than a trillion dollarsb.in the hundreds of trillion dollarsc.over a trillion dollars but less than a hundred trilliond.over quadrillion dollarse.none of the above2.Cash markets are also known asa.speculative marketsb.spot marketsc.derivative marketsd.dollar marketse.none of the above3.A call option gives the holdera.the right to buy somethingb.the right to sell somethingc.the obligation to buy somethingd.the obligation to sell somethinge.none of the above4.Which of the following instruments are contracts but are not securitiesa.stocksb.optionsc.swapsd.a and be.b and c5.The positive relationship between risk and return is calleda.expected returnb.market efficiencyc.the law of one priced.arbitragee.none of the above6.A transaction in which an investor holds a position in the spot market and sells a futures contract or writes acall isa.a gambleb.a speculative positionc.a hedged.a risk-free transactione.none of the above7.Which of the following are advantages of derivatives?a.lower transaction costs than securities and commoditiesb.reveal information about expected prices and volatilityc.help control riskd.make spot prices stay closer to their true values

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Introduction To Derivatives And Ris...

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