2025 – ECS2605 – ASSESSMENT 1 – Q&A
Assessment 1
Started on Thursday, 27 March 2025,
State Finished
Completed on Thursday, 27 March 2025,
Time taken
Marks 10.00/10.00
Grade 100.00 out of 100.00
Question 1
Which one of the following statements is correct?
Select one:
a.
An exchange is an informal marketplace where financial instruments are bought and
sold.
b.
Non-centrally cleared derivatives require the transfer of margin.
c.
Fair price discovery is a benefit of over-the-counter (OTC) markets.
d.
Shares are traded OTC in South Africa.
Feedback
An exchange is a formal marketplace where financial instruments are bought and
sold. General equities (shares) are exchange-traded, the majority of equities in
South Africa are traded through the JSE although other, smaller, exchanges for
equities are licenced. In an OTC market, a group of dealers privately quote their
different bid and offer prices. This is in contrast to an exchange which is designed to
1
,2025 – ECS2605 – ASSESSMENT 1 – Q&A
achieve market transparency and fair price discovery. Excessive risk-taking and
counterparty credit risk opacity in OTC derivatives markets were at the centre of the
great financial crisis. In an effort to improve transparency and risk transfer in the
OTC market, the G20 issued a directive in 2009 for the establishment of trade
repositories, the central clearing and/or central trading of appropriate derivatives,
and higher capital requirements for non-centrally cleared derivatives. In November
2011, the G20 further agreed to add margin requirements for non-centrally cleared
derivatives.
The correct answer is: Non-centrally cleared derivatives require the transfer of
margin.
Question 2
Which one of the following statements is correct?
Select one:
a.
Non-centrally cleared derivatives are subject to higher capital requirements than
those traded on an exchange or centrally cleared.
b.
Securities traded on an exchange are tailor-made to meet the specific needs of
trading partners.
c.
Shares are traded OTC in South Africa.
d.
Fair price discovery is a benefit of over-the-counter (OTC) markets.
Feedback
Securities traded on OTC markets are tailor-made to meet the specific needs of
trading partners, securities traded on an exchange are standardised. General
equities (shares) are exchange-traded, the majority of equities in South Africa are
2
, 2025 – ECS2605 – ASSESSMENT 1 – Q&A
traded through the JSE although other, smaller, exchanges for equities are licenced.
In an OTC market, a group of dealers privately quote their different bid and offer
prices. This is in contrast to an exchange that is designed to achieve market
transparency and fair price discovery. Excessive risk-taking and counterparty credit
risk opacity in OTC derivatives markets were at the centre of the great financial
crisis. In an effort to improve transparency and risk transfer in the OTC market, the
G20 issued a directive in 2009 for the establishment of trade repositories, the central
clearing and/or central trading of appropriate derivatives, and higher capital
requirements for non-centrally cleared derivatives. In November 2011, the G20
further agreed to add margin requirements for non-centrally cleared derivatives.
The correct answer is: Non-centrally cleared derivatives are subject to higher capital
requirements than those traded on an exchange or centrally cleared.
Question 3
Which one of the following is an example of indirect financing?
Select one:
a.
The SARB sells short-term bonds to Bank X.
b.
Company A takes out a loan from Bank Y.
c.
Company C issues bonds to finance a long-term investment project.
d.
Company B issues shares to obtain capital.
Feedback
Direct and indirect financing are discussed in sections 1.3.1 and 1.3.2 and figure 1.1
of the prescribed book. A bank is a financial intermediary that accepts deposits from
3
Assessment 1
Started on Thursday, 27 March 2025,
State Finished
Completed on Thursday, 27 March 2025,
Time taken
Marks 10.00/10.00
Grade 100.00 out of 100.00
Question 1
Which one of the following statements is correct?
Select one:
a.
An exchange is an informal marketplace where financial instruments are bought and
sold.
b.
Non-centrally cleared derivatives require the transfer of margin.
c.
Fair price discovery is a benefit of over-the-counter (OTC) markets.
d.
Shares are traded OTC in South Africa.
Feedback
An exchange is a formal marketplace where financial instruments are bought and
sold. General equities (shares) are exchange-traded, the majority of equities in
South Africa are traded through the JSE although other, smaller, exchanges for
equities are licenced. In an OTC market, a group of dealers privately quote their
different bid and offer prices. This is in contrast to an exchange which is designed to
1
,2025 – ECS2605 – ASSESSMENT 1 – Q&A
achieve market transparency and fair price discovery. Excessive risk-taking and
counterparty credit risk opacity in OTC derivatives markets were at the centre of the
great financial crisis. In an effort to improve transparency and risk transfer in the
OTC market, the G20 issued a directive in 2009 for the establishment of trade
repositories, the central clearing and/or central trading of appropriate derivatives,
and higher capital requirements for non-centrally cleared derivatives. In November
2011, the G20 further agreed to add margin requirements for non-centrally cleared
derivatives.
The correct answer is: Non-centrally cleared derivatives require the transfer of
margin.
Question 2
Which one of the following statements is correct?
Select one:
a.
Non-centrally cleared derivatives are subject to higher capital requirements than
those traded on an exchange or centrally cleared.
b.
Securities traded on an exchange are tailor-made to meet the specific needs of
trading partners.
c.
Shares are traded OTC in South Africa.
d.
Fair price discovery is a benefit of over-the-counter (OTC) markets.
Feedback
Securities traded on OTC markets are tailor-made to meet the specific needs of
trading partners, securities traded on an exchange are standardised. General
equities (shares) are exchange-traded, the majority of equities in South Africa are
2
, 2025 – ECS2605 – ASSESSMENT 1 – Q&A
traded through the JSE although other, smaller, exchanges for equities are licenced.
In an OTC market, a group of dealers privately quote their different bid and offer
prices. This is in contrast to an exchange that is designed to achieve market
transparency and fair price discovery. Excessive risk-taking and counterparty credit
risk opacity in OTC derivatives markets were at the centre of the great financial
crisis. In an effort to improve transparency and risk transfer in the OTC market, the
G20 issued a directive in 2009 for the establishment of trade repositories, the central
clearing and/or central trading of appropriate derivatives, and higher capital
requirements for non-centrally cleared derivatives. In November 2011, the G20
further agreed to add margin requirements for non-centrally cleared derivatives.
The correct answer is: Non-centrally cleared derivatives are subject to higher capital
requirements than those traded on an exchange or centrally cleared.
Question 3
Which one of the following is an example of indirect financing?
Select one:
a.
The SARB sells short-term bonds to Bank X.
b.
Company A takes out a loan from Bank Y.
c.
Company C issues bonds to finance a long-term investment project.
d.
Company B issues shares to obtain capital.
Feedback
Direct and indirect financing are discussed in sections 1.3.1 and 1.3.2 and figure 1.1
of the prescribed book. A bank is a financial intermediary that accepts deposits from
3
