Derivatives Instruments Quiz

Securities that represent ownership in a company.

Securities that represent a loan to a company or government.

Financial instruments whose value is derived from the price of an underlying asset, like stocks or bonds.

A contract that obligates parties to buy or sell an asset at a predetermined price on a specific date.

A standardized contract traded on an exchange, obligating the buyer to buy and seller to sell an asset at a specified price on a future date.

A contract giving the holder the right, not the obligation, to buy or sell an underlying asset at a specific price within a certain time frame.

An agreement where two parties exchange financial instruments, like cash flows or interest rates, at predetermined times.

A contract that gives the holder the right to buy or sell an underlying asset at a specified price within a certain time frame.

An agreement between two parties to exchange cash flows based on a specific underlying asset or interest rate.

A forward contract is typically negotiated between two parties privately, often with customized terms.

Futures contracts are standardized and traded on a centralized exchange, making them more liquid than forwards.

Options can be traded on exchanges or over-the-counter, offering more flexibility in terms of contract specifications.

Swap contracts are usually negotiated privately between two parties, allowing for custom-made terms and agreements.

A currency exchange transaction where the exchange rate is agreed upon and the transaction is executed immediately.

Financial instruments whose value depends on the price of an underlying asset, like stocks, bonds, or currencies.

The process of buying and selling currencies in the foreign exchange market. It involves converting one currency into another at the prevailing exchange rate.

The risk of losing money due to fluctuations in exchange rates.

When a company, like ION Company, uses a futures contract to buy gold from Mines Company, it guarantees a stable price for their production needs, even if gold prices fluctuate in the market.

An instrument for buying and selling different currencies, aiming to profit from their fluctuating exchange rates. Think of exchanging dollars for euros, or euros for yen.

The immediate exchange of one currency for another at the current exchange rate, usually completed within 1-2 business days.

A forward contract where two parties agree to exchange foreign currencies at a specified rate on a future date.

A contract where two parties exchange currencies, often of equal value, at pre-determined rates on predetermined dates. Think of companies exchanging dollars for euros, but also agreeing to reverse the exchange in the future.

A financial instrument where two parties exchange the cash flows (interest payments) on a future date. Imagine companies exchanging interest payments on a loan, based on different interest rates.

An agreement or contract between parties where one party holds an asset and the other party has a liability.

Financial instruments whose value is directly determined by the market, such as stocks and bonds.

Financial instruments whose value is based on the value of another financial asset, such as stocks or bonds.

An over-the-counter market where investors buy and sell currencies. (OTC means that trading happens directly between parties, not through an exchange.)

Securities that represent ownership in a company.

Financial instruments that help low-income households acquire housing.

They provide financial services and products to low-income populations.

They are a source of funding for housing microfinance solutions, working with MFIs to provide affordable loans.

The study shows how both private and government institutions in the Philippines can assist individuals in accessing home finance opportunities.

They allow individuals with limited financial resources to access home loans.

These instruments can include microloans, mortgage financing, and other financing plans tailored to low-income needs.

Microfinance institutions work with financial institutions to cater loans to the needs of low-income individuals seeking housing.

The study highlights the importance of a collaborative approach between institutions to promote affordable housing solutions for those in need.