6. Which of the following least likely describes over-the-counter (OTC)
derivatives relative to exchange-traded derivatives? OTC derivatives are:
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7. Analyst 1: Market makers earn a profit in both exchange and over-the counter derivatives markets by charging a commission on each trade.
Analyst 2: Market makers earn a profit in both exchange and over-the counter derivatives markets by buying at one price, selling at a higher price,
and hedging any risk. Which analyst’s statement is most likely correct?
Neither of them.
8. As compared to exchange-traded derivatives, over-the-counter derivatives
are more likely to have:
lower credit risk.
customized contract terms.
lower risk management uses.
9. As compared to over-the-counter options, futures contract:
are private, customized transactions.
represent a right rather than a commitment.
are not exposed to default risk.
10. Which of the following statements is least accurate?
An asset-backed security is a contingent claim.
An interest rate swap is a forward commitment.
A credit default swap is a forward commitment.
UGC NET PAPER 1
UGC NET Management
UGC NET COMPUTER SCIENCE
UGC NET COMMERCE
GATE COMPUTER SCIENCE
CFA Level 1
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