An Introduction to Derivative Securities 1st Edition by Robert A. Jarrow - Test Bank
CHAPTER 1: Derivatives and Risk Management
MULTIPLE CHOICE
1. The following is NOT a feature of current derivatives markets:
|
a. |
there is a huge variety in the number and type of derivatives contracts that are traded |
|
b. |
the derivatives markets are now global and measured in trillions of dollars |
|
c. |
commodity derivatives have emerged as the most popular kind of derivatives traded in the new millennium |
|
d. |
colleges and universities now offer many kinds of derivative courses |
|
e. |
Wall Street firms hire graduate degree holders in finance and quantitative methods for designing and trading derivatives |
ANS: C DIF: Easy REF: 1.1 TOP: Introduction
MSC: Factual
2. A derivative security:
|
a. |
is useful only for speculation |
|
b. |
is useful only for hedging |
|
c. |
is useful only for manipulating markets |
|
d. |
can be used for all of these purposes |
|
e. |
is useful for none of these purposes |
ANS: D DIF: Easy REF: 1.2 TOP: Financial Innovation
MSC: Factual
3. Foreign exchange prices became volatile during the 1970s mainly because of:
|
a. |
an end of the policy of fixing interest rates by the US Federal Reserve Bank |
|
b. |
the demise of the Bretton Woods system of fixed exchange rates |
|
c. |
supply shocks of the 1970s |
|
d. |
technology that helped us overcome the vagaries of Mother Earth |
|
e. |
hedge funds manipulating exchange trades |
ANS: B DIF: Easy REF: 1.2 TOP: Financial Innovation
MSC: Factual
4. Interest rates in the United States became volatile during the late 1970s mainly due to:
|
a. |
an end of the policy of fixing interest rates by the US Federal Reserve Bank |
|
b. |
the demise of the Bretton Woods system of fixed exchange rates |
|
c. |
technological changes that enabled banks to modify interest rates |
|
d. |
hedge funds manipulating interest rates |
ANS: A DIF: Easy REF: 1.2 TOP: Financial Innovation
MSC: Factual
5. The International Monetary Market is:
|
a. |
an OTC market where money market instruments trade |
|
b. |
a part of the World Bank that lends funds to developing countries |
|
c. |
a division of the Chicago Mercantile Exchange created for trading foreign currency futures |
|
d. |
a London-based market for interbank lending |
|
e. |
None of these answers are correct. |
ANS: C DIF: Easy REF: 1.2 TOP: Financial Innovation
MSC: Factual
6. In the United States, the Great Moderation refers to:
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