KSHITIZ INT’L COLLEGE

Quiz I, Set A
Sub: Financial Derivatives Semester: VIII
Name: Roll No.:
1. Forward contract is an agreement to buy or sell an asset at a certain future time for a
certain price.
(a) True (b) False
2. One party on a forward contract assumes a short position and agrees to ……. the
underlying asset on a certain specified future date for a certain specified price.
(a) Buy (b) Sell (c) take no action on
3. Which of the following are not standardized features of futures contract?
(a) Standardization (b) Clearinghouse
(c) OTC market (d) Marking to market
4. When contracts begin trading, open interest is …...
(a) Very large (b) Very small (c) Zero
5. The margin deposited by clearing firm is known as ……… margin.
(a) Initial (b) Maintenance
(c) Clearing (d) Variation
6. Once the futures contract is opened, they are brought to the market every day and
gain or loss on that day due to change in futures price is settled …….
(a) At the end of contract maturity (b) Monthly
(c) Weekly (d) Daily
7. The holder of the short position in the contract who intends to make delivery of
underlying asset must notify the clearinghouse of its desire to deliver. This day is
called ……..
(a) Delivery day (b) Intention day (c) Position day
8. For an investment asset that provides the holder with no income, futures price is
determined by…
(a) F0 = (So – I)erT (b) F0 = SoerT (c) F0 = Soe(r – q)T
9. The value of a forward contract at the time it is first entered into is equal to…….
(a) Forward price (b) Spot price (c) Zero
10 . ……… measures the storage cost plus the interest that is paid to finance the asset
less the income earned on the asset.
(a) Convenience yield (b) Cost of carry
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 KSHITIZ INT’L COLLEGE
Quiz I, Set B
Sub: Financial Derivatives Semester: VIII
Name: Roll No.:

1. One of the parties to a forward contract assumes a ………… and agrees to buy the
underlying asset on a certain specified future date for a certain specified price.
(a) Long position (b) Short position (c) Spread position
2. The futures contract created on wheat is called…..
(a) Financial futures (b) Currency futures
(c) Interest rate futures (d) Commodity futures
3. In futures contract traders are not required to follow certain procedures fixed by
futures exchange.
(a) True (b) False
4. Almost all traders liquidate their positions before the contract maturity date in ………
contract.
(a) Forward (b) Futures (c) Swap
5. The default risk and credit risk is ………. in forward contract than futures contract.
(a) Higher (b) Lower (c) Equal
6. If the investor continuously bears loss, s/he has to come up with….. margin.
(a) Initial (b) Maintenance
(c) Clearing (d) Variation
7. Futures markets in Nepal have come under the regulation of …..
(a) NRB (b) SEBON
(c) MEX (d) NEPSE
8. An investor assumes short-position on the asset and long position on the futures, if ….
(a) F0 = So erT (b) F0 > SoerT (c) F0 < Soer T
9. Which of the following is not the basic source of difference in forward and futures
price?
(a) Taxes (b) Transaction costs
(c) Treatment of margins (d) Spot price.
10. The greater the possibility that shortages will occur, the higher the……….
(a) Convenience yield (b) Cost of carry
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