Test Bank for An Introduction to Derivative
Securities, Financial Markets, and Risk
Management, 2nd endition Robert Jarrow,
Arkadev Chatterjea
CHAPTER 1: Derivatives and Risk Management
MULTIPLE CHOICE
1. The following is NOT a feature of current
derivatives markets:
a. there is a huge variety in the number and type of derivatives
contracts that are traded
b. the derivatives markets are now global and measured in trillions
of dollars
c. commodity derivatives have emerged as the most popular kind of
derivatives traded in the new millennium
d. colleges and universities now offer many kinds of derivative
courses
e. Wall Street firms hire graduate degree holders in finance and
quantitative methods for designing and trading derivatives
,ANS: C DIF: Easy REF: 1.1 TOP: Introduction MSC: Factual
2. A derivative security:
3.
a. is useful only for speculation
b. is useful only for hedging
c. is useful only for manipulating markets
d. can be used for all of these purposes
e. is useful for none of these purposes
ANS: D DIF: Easy REF: 1.2 TOP: Financial Innovation MSC:
Factual
3. Foreign exchange prices became volatile
during the 1970s mainly because of:
4.
a. an end of the policy of fixing interest rates by the US Federal
Reserve Bank
b. the demise of the Bretton Woods system of fixed exchange rates
c. supply shocks of the 1970s
d. technology that helped us overcome the vagaries of Mother Earth
,e. hedge funds manipulating exchange trades
ANS: B DIF: Easy REF: 1.2 TOP: Financial Innovation MSC:
Factual
4. Interest rates in the United States
became volatile during the late 1970s
mainly due to:
5.
a. an end of the policy of fixing interest rates by the US Federal
Reserve Bank
b. the demise of the Bretton Woods system of fixed exchange rates
c. technological changes that enabled banks to modify interest rates
d. hedge funds manipulating interest rates
ANS: A DIF: Easy REF: 1.2 TOP: Financial Innovation MSC:
Factual
5. The International Monetary Market is:
6.
a. an OTC market where money market instruments trade
b. a part of the World Bank that lends funds to developing countries
, c. a division of the Chicago Mercantile Exchange created for trading
foreign currency futures
d. a London-based market for interbank lending
e. None of these answers are correct.
ANS: C DIF: Easy REF: 1.2 TOP: Financial Innovation MSC:
Factual
6. In the United States, the Great
Moderation refers to:
7.
a. a 15-year-long period that began around 1900 during which the
growth of real output fluctuated, inflation declined, stock market
volatility was reduced, and business cycles were moderated
b. the time period between 1920 and 1933 when sale, manufacture,
and transportation of alcohol was prohibited
c. a time period that began in 1955 and lasted for nearly a decade
during which business cycle fluctuations declined and inflation was
under control
d. a time period that began after World War II and lasted for nearly a
decade during the growth of real output fluctuated, inflation
declined, stock market volatility was reduced, and business cycles
were moderated
Securities, Financial Markets, and Risk
Management, 2nd endition Robert Jarrow,
Arkadev Chatterjea
CHAPTER 1: Derivatives and Risk Management
MULTIPLE CHOICE
1. The following is NOT a feature of current
derivatives markets:
a. there is a huge variety in the number and type of derivatives
contracts that are traded
b. the derivatives markets are now global and measured in trillions
of dollars
c. commodity derivatives have emerged as the most popular kind of
derivatives traded in the new millennium
d. colleges and universities now offer many kinds of derivative
courses
e. Wall Street firms hire graduate degree holders in finance and
quantitative methods for designing and trading derivatives
,ANS: C DIF: Easy REF: 1.1 TOP: Introduction MSC: Factual
2. A derivative security:
3.
a. is useful only for speculation
b. is useful only for hedging
c. is useful only for manipulating markets
d. can be used for all of these purposes
e. is useful for none of these purposes
ANS: D DIF: Easy REF: 1.2 TOP: Financial Innovation MSC:
Factual
3. Foreign exchange prices became volatile
during the 1970s mainly because of:
4.
a. an end of the policy of fixing interest rates by the US Federal
Reserve Bank
b. the demise of the Bretton Woods system of fixed exchange rates
c. supply shocks of the 1970s
d. technology that helped us overcome the vagaries of Mother Earth
,e. hedge funds manipulating exchange trades
ANS: B DIF: Easy REF: 1.2 TOP: Financial Innovation MSC:
Factual
4. Interest rates in the United States
became volatile during the late 1970s
mainly due to:
5.
a. an end of the policy of fixing interest rates by the US Federal
Reserve Bank
b. the demise of the Bretton Woods system of fixed exchange rates
c. technological changes that enabled banks to modify interest rates
d. hedge funds manipulating interest rates
ANS: A DIF: Easy REF: 1.2 TOP: Financial Innovation MSC:
Factual
5. The International Monetary Market is:
6.
a. an OTC market where money market instruments trade
b. a part of the World Bank that lends funds to developing countries
, c. a division of the Chicago Mercantile Exchange created for trading
foreign currency futures
d. a London-based market for interbank lending
e. None of these answers are correct.
ANS: C DIF: Easy REF: 1.2 TOP: Financial Innovation MSC:
Factual
6. In the United States, the Great
Moderation refers to:
7.
a. a 15-year-long period that began around 1900 during which the
growth of real output fluctuated, inflation declined, stock market
volatility was reduced, and business cycles were moderated
b. the time period between 1920 and 1933 when sale, manufacture,
and transportation of alcohol was prohibited
c. a time period that began in 1955 and lasted for nearly a decade
during which business cycle fluctuations declined and inflation was
under control
d. a time period that began after World War II and lasted for nearly a
decade during the growth of real output fluctuated, inflation
declined, stock market volatility was reduced, and business cycles
were moderated
