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Derivative Products and Risk Management Quiz

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Derivative Products and Risk Management Quiz

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Questions and Answers

What is the basic principle behind using a derivative product to manage an identified risk exposure?

Guaranteeing a profit from the derivative product

Ignoring the current market conditions

Speculating on future market movements

Locking in a price today that will apply at a specified future date (correct)

What determines the price of a derivative contract?

Specified underlying commodity or financial instrument traded in the physical markets (correct)

Historical price movements

Government regulations

Current market sentiment

Which of the following is a generic derivative product?

Stocks

Real estate

Futures (correct)

Bonds

If commodity prices, interest rates, exchange rates, or share market prices move, what happens to the value of related derivative contracts?

<p>The value of related derivative contracts also moves</p> Signup and view all the answers

What does an interest rate futures contract derive its price from?

<p>Financial instrument such as the 90-day bank-accepted bill, or the 3-year or 10-year Australian treasury bonds</p> Signup and view all the answers

Derivative Products and Risk Management Quiz

Choose a study mode

Podcast

Questions and Answers

What is the basic principle behind using a derivative product to manage an identified risk exposure?

What determines the price of a derivative contract?

Which of the following is a generic derivative product?

If commodity prices, interest rates, exchange rates, or share market prices move, what happens to the value of related derivative contracts?

What does an interest rate futures contract derive its price from?

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