E-PolyLearning

1. The markets in which the derivatives are traded, are classified as
a. assets backed market
b. cash flow backed markets
c. mortgage backed markets
d. derivative securities markets
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Answer: (d).derivative securities markets

2. Consider the buying of put option, the probability that a buyer would have negative payoff increases with the
a. increase in stock price
b. decrease in stock price
c. increase in maturity duration
d. decrease in maturity duration
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Answer: (a).increase in stock price

3. The price of an option is subtracted form time value of option to calculate
a. book value index
b. market index
c. intrinsic value
d. extrinsic value
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Answer: (c).intrinsic value

4. If the intrinsic value of an option is $450 and the price of an option is $560 then the time value of an option is
a. 110
b. 1010
c. 450
d. 560
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Answer: (a).110

5. The type of swaps in which the fixed payments of interest are exchanged by two counterparties for floating payments of interest are called
a. float-fixed swaps
b. interest rate swaps
c. indexed swaps
d. counter party swaps
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Answer: (b).interest rate swaps

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