TEST BANK
AN INTRODUCTION TO DERIVATIVES AND RISK
MANAGEMENT 10TH EDITION (CENGAGE, 2015) BY
DON M. CHANCE AND ROBERT BROOKS, ISBN NO;
9781305104976, ALL 15 CHAPTERS COVERED
1|P ag e
, Test Bank for An Introduction to Derivatives and Risk Management 10th Edition (Cengage,
2015) by Don M. Chance and Robert Brooks, Isbn no; 9781305104976, all 15 Chapters Covered
TABLE OF CONTENTS
1. Introduction
2. Derivatives Markets
3. Principles of Options Pricing
4. Option Pricing Models: The Binomial Model
5. Option Pricing Models: The Black-Scholes-Merton Model
6. Basic Option Strategies
7. Advanced Option Strategies
8. Principles of Pricing Forwards, Futures, and Options on Futures
9. Futures Arbitrage Strategies
10. Hedging
11. Swaps
12. Interest Rate Forwards and Options
13. Advanced Derivatives and Strategies
14. Financial Risk Management Techniques and Applications
15. Managing Risk
16. Appendix A: List of Important Formulas
17. Appendix B: References
18. Appendix C: Solutions to Concepts
19. Glossary
20. Index
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, Test Bank for An Introduction to Derivatives and Risk Management 10th Edition (Cengage,
2015) by Don M. Chance and Robert Brooks, Isbn no; 9781305104976, all 15 Chapters Covered
CHAPTER 1: INTRODUCTION
MULTIPLE CHOICE TEST QUESTIONS
1. The market value of the derivatives contracts worldwide totals
a. less than a trillion dollars
b. in the hundreds of trillion dollars
c. over a trillion dollars but less than a hundred trillion
d. over quadrillion dollars
e. none of the above
2. Cash markets are also known as
a. speculative markets
b. spot markets
c. derivative markets
d. dollar markets
e. none of the above
3. A call option gives the holder
a. the right to buy something
b. the right to sell something
c. the obligation to buy something
d. the obligation to sell something
e. none of the above
4. Which of the following instruments are contracts but are not securities
a. stocks
b. options
c. swaps
d. a and b
e. b and c
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, 5. The positive relationship between risk and return is called
a. expected return
b. market efficiency
c. the law of one price
d. arbitrage
e. none of the above
6. A transaction in which an investor holds a position in the spot market and sells a
futures contract or writes a call is
a. a gamble
b. a speculative position
c. a hedge
d. a risk-free transaction
e. none of the above
7. Which of the following are advantages of derivatives?
a. lower transaction costs than securities and commodities
b. reveal information about expected prices and volatility
c. help control risk
d. make spot prices stay closer to their true values
e. all of the above
8. A forward contract has which of the following characteristics?
a. has a buyer and a seller
b. trades on an organized exchange
c. has a daily settlement
d. gives the right but not the obligation to buy
e. all of the above
9. Options on futures are also known as
a. spot options
b. commodity options
4|P ag e
AN INTRODUCTION TO DERIVATIVES AND RISK
MANAGEMENT 10TH EDITION (CENGAGE, 2015) BY
DON M. CHANCE AND ROBERT BROOKS, ISBN NO;
9781305104976, ALL 15 CHAPTERS COVERED
1|P ag e
, Test Bank for An Introduction to Derivatives and Risk Management 10th Edition (Cengage,
2015) by Don M. Chance and Robert Brooks, Isbn no; 9781305104976, all 15 Chapters Covered
TABLE OF CONTENTS
1. Introduction
2. Derivatives Markets
3. Principles of Options Pricing
4. Option Pricing Models: The Binomial Model
5. Option Pricing Models: The Black-Scholes-Merton Model
6. Basic Option Strategies
7. Advanced Option Strategies
8. Principles of Pricing Forwards, Futures, and Options on Futures
9. Futures Arbitrage Strategies
10. Hedging
11. Swaps
12. Interest Rate Forwards and Options
13. Advanced Derivatives and Strategies
14. Financial Risk Management Techniques and Applications
15. Managing Risk
16. Appendix A: List of Important Formulas
17. Appendix B: References
18. Appendix C: Solutions to Concepts
19. Glossary
20. Index
2|P ag e
, Test Bank for An Introduction to Derivatives and Risk Management 10th Edition (Cengage,
2015) by Don M. Chance and Robert Brooks, Isbn no; 9781305104976, all 15 Chapters Covered
CHAPTER 1: INTRODUCTION
MULTIPLE CHOICE TEST QUESTIONS
1. The market value of the derivatives contracts worldwide totals
a. less than a trillion dollars
b. in the hundreds of trillion dollars
c. over a trillion dollars but less than a hundred trillion
d. over quadrillion dollars
e. none of the above
2. Cash markets are also known as
a. speculative markets
b. spot markets
c. derivative markets
d. dollar markets
e. none of the above
3. A call option gives the holder
a. the right to buy something
b. the right to sell something
c. the obligation to buy something
d. the obligation to sell something
e. none of the above
4. Which of the following instruments are contracts but are not securities
a. stocks
b. options
c. swaps
d. a and b
e. b and c
3|P ag e
, 5. The positive relationship between risk and return is called
a. expected return
b. market efficiency
c. the law of one price
d. arbitrage
e. none of the above
6. A transaction in which an investor holds a position in the spot market and sells a
futures contract or writes a call is
a. a gamble
b. a speculative position
c. a hedge
d. a risk-free transaction
e. none of the above
7. Which of the following are advantages of derivatives?
a. lower transaction costs than securities and commodities
b. reveal information about expected prices and volatility
c. help control risk
d. make spot prices stay closer to their true values
e. all of the above
8. A forward contract has which of the following characteristics?
a. has a buyer and a seller
b. trades on an organized exchange
c. has a daily settlement
d. gives the right but not the obligation to buy
e. all of the above
9. Options on futures are also known as
a. spot options
b. commodity options
4|P ag e
