Introduction to Derivatives and Risk Management Exam Questions Answered Correctly Latest Version
2025
Derivatives - Answers Financial instruments based on underlying asset values.
Market Volatility - Answers Prices' unpredictable movement affecting investment returns.
Hedging - Answers Offsetting risk to protect against adverse price movements.
Speculation - Answers Betting on price changes for potential profit.
Underlying Asset - Answers Asset whose value determines a derivative's performance.
Forward Contract - Answers Customized agreement to exchange assets at future date.
Futures Contract - Answers Standardized agreement traded on exchanges for future delivery.
Long Position - Answers Expecting asset price to increase in value.
Short Position - Answers Expecting asset price to decrease in value.
Initial Margin - Answers Percentage of underlying value required to open a futures position.
Variation Margin - Answers Daily adjustments to margin accounts based on market changes.
Clearing House - Answers Central counterparty ensuring transaction integrity in futures trading.
Call Option - Answers Right to buy an underlying asset at a specified price.
Put Option - Answers Right to sell an underlying asset at a specified price.
Price Speculation - Answers Predicting future price movements for profit opportunities.
Contract Size - Answers Amount of underlying asset specified in a futures contract.
Settlement Price - Answers Closing price used to determine contract values at maturity.
Risk Exposure - Answers Potential financial loss due to market fluctuations.
Liquidity - Answers Ease of buying/selling an asset without affecting its price.
Standardized Contracts - Answers Futures contracts with fixed terms traded on exchanges.
Tailor-Made Contracts - Answers Custom forward contracts negotiated between parties.
Market Efficiency - Answers Prices reflect all available information in a market.
Income Yield - Answers Return from dividends or interest payments on an asset.
Capital Gain Yield - Answers Return from asset price appreciation over time.
2025
Derivatives - Answers Financial instruments based on underlying asset values.
Market Volatility - Answers Prices' unpredictable movement affecting investment returns.
Hedging - Answers Offsetting risk to protect against adverse price movements.
Speculation - Answers Betting on price changes for potential profit.
Underlying Asset - Answers Asset whose value determines a derivative's performance.
Forward Contract - Answers Customized agreement to exchange assets at future date.
Futures Contract - Answers Standardized agreement traded on exchanges for future delivery.
Long Position - Answers Expecting asset price to increase in value.
Short Position - Answers Expecting asset price to decrease in value.
Initial Margin - Answers Percentage of underlying value required to open a futures position.
Variation Margin - Answers Daily adjustments to margin accounts based on market changes.
Clearing House - Answers Central counterparty ensuring transaction integrity in futures trading.
Call Option - Answers Right to buy an underlying asset at a specified price.
Put Option - Answers Right to sell an underlying asset at a specified price.
Price Speculation - Answers Predicting future price movements for profit opportunities.
Contract Size - Answers Amount of underlying asset specified in a futures contract.
Settlement Price - Answers Closing price used to determine contract values at maturity.
Risk Exposure - Answers Potential financial loss due to market fluctuations.
Liquidity - Answers Ease of buying/selling an asset without affecting its price.
Standardized Contracts - Answers Futures contracts with fixed terms traded on exchanges.
Tailor-Made Contracts - Answers Custom forward contracts negotiated between parties.
Market Efficiency - Answers Prices reflect all available information in a market.
Income Yield - Answers Return from dividends or interest payments on an asset.
Capital Gain Yield - Answers Return from asset price appreciation over time.
