Derivatives - Derivatives Section 1
- Option : C
- Explanation : A riskless arbitrage can be done through both, financial asset and nonfinancial asset.
52. An attribute common to both forward and futures contracts is:
- Option : C
- Explanation : Both forward and futures contracts are used for hedging and speculation purposes. Futures are marked to market every day and are standardized, whereas forward contracts are customized and are settled at expiry (there is no mark-to-market in between).
53. When the implied volatility on equity market index options goes up, it is safe to assume that:
- Option : B
- Explanation : The implied volatility represents the risk of the underlying. So an increase in the implied volatility on equity market index options indicates that the market uncertainty has gone up.
- Option : C
- Explanation : The price recently paid by other investors is past information and does not affect the spot price.
55. Which of the following is least likely a benefit of holding an asset?
