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Question 1 of 30
1. Question
Interest rates or thresholds and fixed-rate lending contracts have related ideas to alternatives because:
Correct
Interest-rate limits or floors and fixed-rate debt contracts have identical conceptions of options because: they provide the lender with the benefits of advantageous fluctuations in the price of the underlying commodity or index and, in exchange, they allow the borrower to offer the writer (issuer) a premium at the outset.
Incorrect
Interest-rate limits or floors and fixed-rate debt contracts have identical conceptions of options because: they provide the lender with the benefits of advantageous fluctuations in the price of the underlying commodity or index and, in exchange, they allow the borrower to offer the writer (issuer) a premium at the outset.
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Question 2 of 30
2. Question
With respect to derivatives-related financial statements, it is no mystery that banks, treasurers, creditors, financial analysts and regulators face interrelationships and uncertainty found in current financial instruments. There’s also the reality that discoveries in several countries are:
Correct
There is also the fact that reports are dispersed in the annual reporting statements of many countries and therefore only known by a fairly limited number of experienced citizens.
Incorrect
There is also the fact that reports are dispersed in the annual reporting statements of many countries and therefore only known by a fairly limited number of experienced citizens.
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Question 3 of 30
3. Question
The majority of banks, treasurers, managers and accountants remain mystified and confused about the impact of derivatives on their balance sheets and, by implication, on their firms, as derivative instruments do nothing than encourage them to accept risks or mitigate risks. We require the holder to pretty much simulate any financial operation not by:
Correct
They require the manager to mimic practically every financial operation b Reduction of assets and liabilities, isolation and recombination of risks, and bypassing what regulators can prohibit.
Incorrect
They require the manager to mimic practically every financial operation b Reduction of assets and liabilities, isolation and recombination of risks, and bypassing what regulators can prohibit.
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Question 4 of 30
4. Question
During the case of volatile investors, and much more so during business panics or recession, it is very important to compensate for reasonable value. Banks are expected to do so for:
Correct
During the case of volatile investors, and much more so during business panics or recession, it is very important to compensate for reasonable value. Banks would do so with their own portfolio, their clients ‘portfolio, and their counterparties’ awareness.
Calculating the credit equivalent value of portfolio positions as the substitution value, including add-on value variables, is a standard strategy among banks.Incorrect
During the case of volatile investors, and much more so during business panics or recession, it is very important to compensate for reasonable value. Banks would do so with their own portfolio, their clients ‘portfolio, and their counterparties’ awareness.
Calculating the credit equivalent value of portfolio positions as the substitution value, including add-on value variables, is a standard strategy among banks. -
Question 5 of 30
5. Question
Anything other than the substitute attraction, PV and existing net (NPV) value joins, is arbitrary. A far more realistic approach to continue, which makes research and stress processing possible, is to demodulate the notional principal number to the main risk, or hazardous financial waste. The definition is one of downsizing into a divisor the notional principally:
Correct
The idea is to minimize the notional principal by means of a divisor that accounts for the predominant risk trend in relation to a specific instrument and its underlying conditions and allows it possible to use historical and/or hypothetical virtual economic and financial conditions effectively applicable.
Incorrect
The idea is to minimize the notional principal by means of a divisor that accounts for the predominant risk trend in relation to a specific instrument and its underlying conditions and allows it possible to use historical and/or hypothetical virtual economic and financial conditions effectively applicable.
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Question 6 of 30
6. Question
Factors of first order are the form of method (or combination of instruments in a portfolio), prevailing market uncertainty, prevailing market visibility and check target. This target can be conveyed by two bullets; the former has three choices and the latter two. Choose the right one.
Correct
Factors of first order are the form of method (or combination of instruments in a portfolio), prevailing market uncertainty, prevailing market visibility and check target. Two bullets will convey this goal; the first has three options and the second has two options: standard, decreased, tightened examination and Classical form or stress check.
Incorrect
Factors of first order are the form of method (or combination of instruments in a portfolio), prevailing market uncertainty, prevailing market visibility and check target. Two bullets will convey this goal; the first has three options and the second has two options: standard, decreased, tightened examination and Classical form or stress check.
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Question 7 of 30
7. Question
Classical assessments tackle the following:
Correct
Classical experiments of the form deal with high incidence and comparatively low effect cases. The stress checks, on the other side, address low incidence yet high effect cases.
Incorrect
Classical experiments of the form deal with high incidence and comparatively low effect cases. The stress checks, on the other side, address low incidence yet high effect cases.
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Question 8 of 30
8. Question
Factors of second order which impact on the demodulation of the notional principal sum exclude:
Correct
Factors of second order concerning the demodulation of the notional principal sum avoid high or low gearing of the company, consistency characterizing the disclosed roles, tacit uncertainty and proliferation as well as expected consumer psychology.
Incorrect
Factors of second order concerning the demodulation of the notional principal sum avoid high or low gearing of the company , consistency characterizing the disclosed roles, tacit uncertainty and proliferation as well as expected consumer psychology.
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Question 9 of 30
9. Question
A device that offers the seller the opportunity to buy the underlying asset; a put option allows the buyer the ability to offer the commodity as:
Correct
An choice is an contract that grants the investor the ability to purchase and sell the underlying asset at a fixed amount, on the day of execution or expiration, but not on the commitment. A call option requires the lender to obtain the underlying asset; a put option grants the investor the opportunity to offer it.
Incorrect
An choice is an contract that grants the investor the ability to purchase and sell the underlying asset at a fixed amount, on the day of execution or expiration, but not on the commitment. A call option requires the lender to obtain the underlying asset; a put option grants the investor the opportunity to offer it.
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Question 10 of 30
10. Question
Assuming that the underlying commodity is a securities exchanged which do not allow payoffs during the maturity phase, the forward price shall be supplied by:
Correct
Assuming that the underlying commodity is a stock exchanged that do not allow payoffs over the maturity phase, the market price is provided by the actual purchase value and the interest rate received on that value over the contract’s maturity era.
Incorrect
Assuming that the underlying commodity is a stock exchanged that do not allow payoffs over the maturity phase, the market price is provided by the actual purchase value and the interest rate received on that value over the contract’s maturity era.
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Question 11 of 30
11. Question
In 1973 Black and Scholes established the most widely used method for pricing European type choices in conjunction with products. A deal for a European right can only be executed on the expiry date. The worth of an alternative like this is calculated by five variables. Which one is incorrect?
Correct
The valuation of such an option is calculated by five factors: existing market price, strike price, option expiry date, risk-free interest rate over the period of the option, underlying asset reward variability.
Incorrect
The valuation of such an option is calculated by five factors: existing market price, strike price, option expiry date, risk-free interest rate over the period of the option, underlying asset reward variability.
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Question 12 of 30
12. Question
Of special concern to Law was the fact that when Law came to Paris, Louis XIV, who died just before 1715, had been surviving on loans, renting from his people, and granting meaningless certificates of various titles. Louis XIV had invested 2 billion livres in the last dozen years of his rule, more than he had received in income. So what hasn’t happened?
Correct
As a result: The coinage had become so debased that it became almost useless, a multitude of employees were unemployed, commerce was at a standstill and farming in trouble.
Incorrect
As a result: The coinage had become so debased that it became almost useless, a multitude of employees were unemployed, commerce was at a standstill and farming in trouble.
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Question 13 of 30
13. Question
From 1717 to 1720 there were three glory-years, with every share of Mississippi reaching 10 000 livres. When share values displayed signs of softening, Rule, which has lately been elevated to France’s controller general, released edicts intended to protect investors:
Correct
When equity values displayed signs of softening, Rule, who had meanwhile been elevated to France’s controller general, released edicts aimed at preventing investors: from stamping out Mississippi stock, and from selling their paper currency.
These edicts prohibited the sale of underlying coinage and gold, silver or other precious metals possession or acquisition.Incorrect
When equity values displayed signs of softening, Rule, who had meanwhile been elevated to France’s controller general, released edicts aimed at preventing investors: from stamping out Mississippi stock, and from selling their paper currency.
These edicts prohibited the sale of underlying coinage and gold, silver or other precious metals possession or acquisition. -
Question 14 of 30
14. Question
They will have to file with the SEC in the United States. If hedge funds are subject to heightened regulatory oversight, that is because of fears that other companies have overreached. The SEC is holding a ‘really watchful eye’ on hedge funds, according to Stephen Cutler, the head of compliance at SEC.
There are 2 explanations in the context. Which choice does better explain?Correct
The SEC is holding a ‘really watchful eye’ on hedge funds, according to Stephen Cutler, the director of compliance at SEC.
There are 2 explanations in the context. Hedge fund growth and the reality that competition has risen on them to sustain high returns.Incorrect
The SEC is holding a ‘really watchful eye’ on hedge funds, according to Stephen Cutler, the director of compliance at SEC.
There are 2 explanations in the context. Hedge fund growth and the reality that competition has risen on them to sustain high returns. -
Question 15 of 30
15. Question
Hedge funds have been a perfect way to buy whatever’s on the table. Indeed, recent data highlight the rising value of hedge funds and other skilled non-bank traders to:
Correct
Hedge funds have been a perfect way to buy whatever’s on the table. Indeed, recent statistics demonstrate the increasing significance of hedge funds and other skilled non-bank traders to increasingly rising amounts of trading, and possibly disruptive trading trends.
Incorrect
Hedge funds have been a perfect way to buy whatever’s on the table. Indeed, recent statistics demonstrate the increasing significance of hedge funds and other skilled non-bank traders to increasingly rising amounts of trading, and possibly disruptive trading trends.
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Question 16 of 30
16. Question
The Bank for International Settlements credits this rise in foreign exchange trade to three major reasons: growing Forex recognition as a distinct tradable asset class; substantial growth in hedge fund investment; and speculation behavior amid a global pattern such as dollar weakening. That phenomenon has encouraged:
Correct
Such trend-following has allowed Momentum traders to ride a trade as long as it goes, and traders to go on selling, raise a low-cost currency, and spend elsewhere in higher returning securities.
Incorrect
Such trend-following has allowed Momentum traders to ride a trade as long as it goes, and traders to go on selling, raise a low-cost currency, and spend elsewhere in higher returning securities.
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Question 17 of 30
17. Question
George Soros, the well-known and influential hedge fund founder, once said there are so many derivatives with exotic features that they pose investors with a dilemma. In fact, the dangers involved are not fully known in certain situations, while in many instances derivative instruments masquerade as ‘no risk,’ which is not the case at all. What does this actually mean?
Correct
It ensures that supposedly cautious investors take big chances, which encourages retail investors to create games that their laws do not require.The idea that apparently easy and transparent management choices may become unsound investment activities, with negative consequences on creditors and structural impact on capital markets, lies in the backdrop of these two factors.
Incorrect
It ensures that supposedly cautious investors take big chances, which encourages retail investors to create games that their laws do not require.The idea that apparently easy and transparent management choices may become unsound investment activities, with negative consequences on creditors and structural impact on capital markets, lies in the backdrop of these two factors.
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Question 18 of 30
18. Question
Hidden under all kinds of derivatives, significant exposures may lead to commercial failures and losses with catastrophic financial repercussions for individuals and organizations, except for:
Correct
Significant exposures concealed behind all kinds of derivatives may result in commercial failures and damages with catastrophic financial implications for individuals and organizations, particularly for: pension plans, mutual funds, and insurance firms covering the finances and protection of ordinary people.
Incorrect
Significant exposures concealed behind all kinds of derivatives may result in commercial failures and damages with catastrophic financial implications for individuals and organizations, particularly for: pension plans, mutual funds, and insurance firms covering the finances and protection of ordinary people.
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Question 19 of 30
19. Question
Returns from gambling with financial instruments today generate 30 percent of all Our company earnings, up from 21 percent in the mid-1990s, according to an report in BusinessWeek released in March 2005. Any of these revenues come from distributors and producers that depend on financial dealing for:
Correct
Returns from gambling with financial instruments today generate 30 percent of all Our company earnings, up from 21 percent in the mid-1990s, according to an report in BusinessWeek released in March 2005. Many of these gains come from suppliers and distributors who depend on their earnings from financial trading and equity market appreciation.
Incorrect
Returns from gambling with financial instruments today generate 30 percent of all Our company earnings, up from 21 percent in the mid-1990s, according to an report in BusinessWeek released in March 2005. Many of these gains come from suppliers and distributors who depend on their earnings from financial trading and equity market appreciation.
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Question 20 of 30
20. Question
‘Financial markets will not be able to explicitly predict the future, since they are not necessarily discounting the future. They aid form it ‘suggests Soros. Business players can:
Correct
‘Financial markets will not be able to explicitly predict the future, since they are not necessarily discounting the future. They aid form it ‘suggests Soros. Market participants will influence the basics and drive a complex disequilibrium condition.
Incorrect
‘Financial markets will not be able to explicitly predict the future, since they are not necessarily discounting the future. They aid form it ‘suggests Soros. Market participants will influence the basics and drive a complex disequilibrium condition.
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Question 21 of 30
21. Question
Which are the most important factors to find a modern financial offering attractive?
Correct
The key explanations that a new financial idea is appealing are because individuals and entrepreneurs like to think there is something better for them, that this new innovation they dreamed of will make them wealthy in a short period.
Incorrect
The key explanations that a new financial idea is appealing are because individuals and entrepreneurs like to think there is something better for them, that this new innovation they dreamed of will make them wealthy in a short period.
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Question 22 of 30
22. Question
While they have broadened their consumer base in the European market since 2002, in America they have performed less well.
‘Investors are increasingly active in stocks as the US is a developed stock industry,’ said one of the investment bankers participating in this study. None of the above is not included as the underlying Certain Structured Products?Correct
Some standardized goods used as underlying goods Some organized items used as underlying products: equities Foreign rate assets such as base metals and oil.
Incorrect
Some standardized goods used as underlying goods Some organized items used as underlying products: equities Foreign rate assets such as base metals and oil.
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Question 23 of 30
23. Question
Since they are primarily derivatives-based, and derivatives offer an variety of options in the nature of financial securities, structured products offered by commercial and investment firms, hedge funds and other organizations are joining an increasing amount of frameworks. The diversity helps experienced customers to meet their financial ambitions and risk appetite.Nonetheless, not all customers have the expertise about:
Correct
However, not all consumers are aware of: what is a regulated commodity, and the amount of exposure it gives to the assets of a individual or an organization.
Incorrect
However, not all consumers are aware of: what is a regulated commodity, and the amount of exposure it gives to the assets of a individual or an organization.
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Question 24 of 30
24. Question
Financial creativity, rising securitisation costs and growing market participants maturity have allowed the issuance of securities to:
Correct
Financial progress, reducing securitization rates and growing awareness of market investors have allowed the issuance of securities to substitute bank loans as the primary source of funding for large companies, and Create a flood of innovative financial products that find their way through investor portfolios.
Incorrect
Financial progress, reducing securitization rates and growing awareness of market investors have allowed the issuance of securities to substitute bank loans as the primary source of funding for large companies, and Create a flood of innovative financial products that find their way through investor portfolios.
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Question 25 of 30
25. Question
Worldwide debt and equity issuance reached $4 trillion per annum between 1998 and 2000. Though the issuance rate slowed in late 2001, it picked up again in subsequent twenty-first century years. In this time span the discrepancy is:
Correct
The distinction is that during this time frame: Capital redemption took the back seat.
Conversely, growing focus has been put on securitized liabilities.Incorrect
The distinction is that during this time frame: Capital redemption took the back seat.
Conversely, growing focus has been put on securitized liabilities. -
Question 26 of 30
26. Question
Capital security is a versatile term, and with this function, standardized instruments operate on three markets. What alternative aren’t correct?
Correct
Capital security is a versatile term, with regulated instruments in three markets; equity, fixed income and currencies.The main consumers of such items are private banks purchasing them for their clients, as well as retail investors determining the nature of the instruments they purchase in compliance with their mandate.
Incorrect
Capital security is a versatile term, with regulated instruments in three markets; equity, fixed income and currencies. The main consumers of such items are private banks purchasing them for their clients, as well as retail investors determining the nature of the instruments they purchase in compliance with their mandate.
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Question 27 of 30
27. Question
A synthetic instrument is a financial device developed, obtained and retained to mimic the characteristics of another instrument according to the International Financial Reporting Standard (IFRS) by the International Accounting Standards Board (IASB). This is the case for long-term debt floating rate associated with an interest rate swap which involves:
Correct
That is the case of long-term debt variable rate coupled of interest rate exchange concerning obtaining free payments and making fixed payments.
This device synthesizes long-term debt at a fixed pace.Incorrect
That is the case of long-term debt variable rate coupled of interest rate exchange concerning obtaining free payments and making fixed payments.
This device synthesizes long-term debt at a fixed pace. -
Question 28 of 30
28. Question
Bloomberg describes a standardized note as hybrid protection, mixing one or more derivative components with a fixed income instrument. As a result of this mixture the existence and/or redemption interest of the coupon will be subject to market conditions such as forward momentum not in:
Correct
Since of this mix, the existence and/or redemption interest of the coupon will be vulnerable to market movements such as forward movement of stock price indices, currency exchange rates, and mortgage-backed securities pre-payment levels.
Incorrect
Since of this mix, the existence and/or redemption interest of the coupon will be vulnerable to market movements such as forward movement of stock price indices, currency exchange rates, and mortgage-backed securities pre-payment levels.
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Question 29 of 30
29. Question
The prime choice reduces the inherent market-value loss due to market error. Choose the right statement to that effect.
Correct
If the actual market value on maturity is greater than the purchase price, a defined cash sum is charged to the buyer as payment.
He or she earns direct distribution of the underlying commodity whether it is below the strike level.Incorrect
If the actual market value on maturity is greater than the purchase price, a defined cash sum is charged to the buyer as payment.
He or she earns direct distribution of the underlying commodity whether it is below the strike level. -
Question 30 of 30
30. Question
What of these is derived from a collection of indices or companies, from a specific region?
Correct
Index certificates are focused on an approved index and represent a whole sector.
A variety of indexes or organizations obtain national certificates from a particular field.Incorrect
Index certificates are focused on an approved index and represent a whole sector.
A variety of indexes or organizations obtain national certificates from a particular field.