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Basics of Derivatives

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Questions and Answers

Which of the following is NOT an example of an underlying asset for derivatives?

Sugar

Natural Gas

Aluminium

Real Estate (correct)

In which century did the Tulip Mania occur in Holland, leading to fortunes being lost in a speculative boom in tulip futures?

17th Century (correct)

16th Century

18th Century

19th Century

Which of the following statements about the history of derivatives is NOT true?

The Chicago Board of Trade facilitated trading of forward contracts on various commodities in 1848.

The first exchange-traded derivative contract in the US was listed by the New York Stock Exchange in 1865. (correct)

In the 13th century, English Cistercian Monasteries frequently sold their wool up to 20 years in advance to foreign merchants.

In the 12th century, sellers in European trade fairs signed contracts promising future delivery of items they sold.

Based on the information provided, which of the following statements is true?

The first derivatives market was developed in Japan near Osaka for rice futures. Signup and view all the answers

What is the underlying principle behind the development of derivatives markets?

To protect producers and sellers from risks related to their products or assets Signup and view all the answers

What was the primary reason for the introduction of the International Monetary Market (IMM) by the Chicago Mercantile Exchange (CME) in 1972?

To facilitate trading in currency futures Signup and view all the answers

Which of the following statements accurately describes the factors influencing the growth of the derivative market globally?

Increased fluctuations in underlying asset prices in financial markets, integration of financial markets globally, and use of latest technology in communications to reduce transaction costs Signup and view all the answers

Which of the following events occurred first in the chronological order of developments in the Indian derivatives market?

SEBI set up a 24-member committee under the Chairmanship of Dr. L.C. Gupta to develop a regulatory framework for derivatives trading in India. Signup and view all the answers

Which of the following statements is not true about the developments in the Indian derivatives market?

The Securities Contract Regulation Act was amended to include derivatives as 'securities' based on the recommendations of the committee under the Chairmanship of Prof. J.R. Verma. Signup and view all the answers

According to the passage, which of the following events occurred after the introduction of the Eurodollar futures contract by the CME in 1982?

The CBOE introduced options on stock indexes with the S&P 100® (OEX) and S&P 500® (SPXSM) Indexes Signup and view all the answers