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?

<p>The first derivatives market was developed in Japan near Osaka for rice futures. (C)</p> Signup and view all the answers

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

<p>To protect producers and sellers from risks related to their products or assets (C)</p> 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?

<p>To facilitate trading in currency futures (B)</p> Signup and view all the answers

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

<p>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 (D)</p> Signup and view all the answers

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

<p>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. (B)</p> Signup and view all the answers

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

<p>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. (D)</p> 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?

<p>The CBOE introduced options on stock indexes with the S&amp;P 100® (OEX) and S&amp;P 500® (SPXSM) Indexes (B)</p> Signup and view all the answers

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