National Board of Examinations 2008 Diploma Accounting

c) Hedging
d) None of the above.


Q12. Derivatives are highly leveraged, which implies that?

a) You can take a higher position with smaller investments using derivatives.
b) You can take a lower position with higher investments using derivatives.
c) You can take a higher position if you the underlying assets instead of buying derivatives.
d) You should buy the underlying assets as you might make more profit on them rather than derivatives.


Q13. At the point of entering into the futures contract?

a) Both the buyer & the seller pay initial margin to the exchange.
b) The buyer alone pays initial margin to the exchange.
c) The seller alone pays initial margin to the exchange.
d) No margins are payable to the exchange by the buyer or the seller.


Q14. If you have bought a futures contract & the price drops, you will be making a profit?

a) True
b) False
c) Sometimes actual
d) Sometimes false


Q15. every forward contract

a) Can be structured as needed by the buyer and seller
b) Will have the identical specifications
c) Specifications are decided by the RBI
d) None of the above




Q16. Cash market is a market with immediate or near immediate delivery?

a) True
b) False
c) True only in USA
d) True only in Europe


Q17. On line trading is a system where is accomplished through terminals which are connected to a central computer?

a) True
b) False
c) Sometimes actual
d) Partially false


Q18. In futures contracts, the contract maturity period is defined?

a) By the exchange
b) By the RBI
c) By the parties to the contract
d) By the Government


Q19. A forward contract is an agreement to enter into a contract at a pre-specified future date?

a) True
b) False
c) True only in Europe
d) True only in Africa


Q20. A forward contract is an agreement to buy a certain asset at a certain future date for a price to be determined in the future?

a) True
b) False
c) True only in Europe
d) True only in Africa


Q21. If you have a long position in a forward contract & the underlying price falls, you will make a profit?

a) True
b) False
c) True only in Europe
d) True only in Africa


Q22. The greater the number of participants in any market, generally lower the liquidity?

Earning:   Approval pending.