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Quiz on Financial Instruments Quiz

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1. Which of the following is considered a derivative financial instrument?

2. What is the primary purpose of hedging in financial markets?

3. Which of the following financial instruments has no initial cost?

4. Which of the following is not a type of bond?

5. In terms of a financial derivative, what does 'underlying' refer to?

6. In the context of financial instruments, what is the 'face value'?

7. What is the primary role of a mutual fund?

8. What financial instrument is issued by a bank to pay a stated amount of money to a company at a future date?

9. What is the contract called that gives the holder the right, but not the obligation, to buy or sell an amount of some underlying asset at a predetermined price within a specified time period?

10. What term describes the risk that a borrower will not pay back a loan according to the terms of a contract?