Deck 4: Financial Management: Derivative Instruments and Information Sources

Question 1

Contracts for difference (CFDs)enable traders to participate in either bull or bear markets.

Answer 1

True
Explanation: CFDs are exchange-traded leveraged investments that allow exposure to shares,indices,commodities and currencies.Traders can take positions in either rising or falling markets.

Question 2

ASX 24 operates 24-hour per-day,seven days per week.

Answer 2

False
Explanation: The trading platform for the ASX 24 market is called ASX Trade 24.It operates 24-hours per day,six-days per week,from Monday to Saturday.

Question 3

Options contracts mainly differ from futures contracts in that they:

Answer 3

B
Explanation: Put options provide the right to sell shares of a particular company on or before some future expiry date.Call options provide the right to buy shares of a particular company on or before some future expiry date.Futures contracts,on the other hand,provide an obligation to sell or buy on some future expiry date.

Question 4

Which of the following corporations has maintained databases on individual shares and market indices since the 70s?

Question 5

Which of the following is not a provider of share price information?

Question 6

Which of the following is an average of a basket of currencies measured against the Australian dollar?

Question 7

Which of the following is often used as a market indicator,rather than the S&P/ASX 200?

Question 8

Which of the following securities are not traded on ASX 24?

Question 9

The Consumer Price Index (CPI)is designed to capture price movements in the general economy.

Question 10

Forward rate agreements (FRA)allow parties to exchange interest rate exposures.

Question 11

With futures the All Ordinaries Index (AOI)can be traded as separate security.

Question 12

Much of the security-specific information is publicly available through sources such as the ASX and the world wide web.

Question 13

Equity futures contracts,warrant contracts and option contracts are all forms of non-standardised forms of derivatives.

Question 14

The Trade-weighted Index (TWI)is a weighted average of a basket of currencies measured against the Australian dollar.

Question 15

Please see the Table 4.2 Warrants are traded on the ASX market.
Which information is specified for those highly standardised contracts?

Question 16

Please see the Table 4.2 Warrants are traded on the ASX market.
In which year did option trading begin in Australia?

Question 17

Earnings information released by companies in Australia has evidence suggesting the existence of intra-industry information transfers.This research has been confirmed by the Australian researches:

Question 18

Capital expenditure is an example of market information.

Question 19

Which of the following indices is designed to capture price movements in the general economy?

Question 20

The OTC market is much more formal than the exchange-based markets such as the SFE and CME.

Question 21

See Table 4.6.
Which information source specialises in emerging market data?

Question 22

See Table 4.6.
Which futures contract is generally used as an indicator of long-term interest rates?

Question 23

How could investors obtain private information?

Question 24

Which is the largest market for currency futures trading?

Question 25

Repurchase agreements are traded:

Question 26

One of the objectives of the Corporations Act is:

Question 27

An intra-industry information transfer occurs:

Question 28

See Table 4.6.
What is the most heavily traded derivative on the ASX?

Question 29

The main derivative contract used for foreign exchange is

Question 30

See Table 4.6.
Security-specific information does not include:

Question 31

Refer Table 4.1,options are the most heavily traded derivatives over the period.
Non-exchange-traded derivatives are said to be traded:

Question 32

See Table 4.6.
The existence of intra-industry information transfer means that unexpected bad news is associated with a relative decline:

Question 33

See Table 4.6.
Which index is a measure of the level of inflation in an economy?

Question 34

See Table 4.6.
Why is it difficult to compute the unrealised return on a futures contract?

Question 35

See Table 4.6.
Which organisation has been established to work with derivative exchanges to reduce costs and incidences of fraud?

Question 36

See Table 4.6.
Which source of share price information provides access to tick data on both formal and OTC exchanges?

Question 37

Which type of contract is highly standardised?

Question 38

In the year ended December 2012,the largest exchange was .

Question 39

The second party to a 'swap' is known as a:

Question 40

In a 'plain vanilla' swap,the variable reference rate is generally the: