Derivatives - Derivatives Section 1
11. Which of the following is not a forward commitment?
- Option : C
- Explanation : An asset-backed security is a contingent claim not a forward commitment.
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12. Which of the following statements is least accurate about contingent claims?
- Option : C
- Explanation : Only one party, the short, can default.
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13. Which of the following is best classified as a forward commitment?
- Option : B
- Explanation : A swap agreement is equivalent to a series of forward agreements, which are described as forward commitments.
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14. Which of the following statements about futures is least accurate?
- Option : C
- Explanation : Payoffs for future contracts are received daily
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15. Which of the following statements is most accurate?
- Option : C
- Explanation : A swap is a series of multiple payments at scheduled dates, whereas a forward has only one payment, made at its expiration date.
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