Welcome to your • Currency Derivatives: A Beginner's Module
1. Which of the following is not a type of currency derivative?
2. In a currency swap, the two parties involved agree to:
3. What is a carry trade in currency derivatives trading?
4. What is the role of a market maker in currency derivatives trading?
5. Which of the following is a disadvantage of using currency derivatives?
6. Which of the following is a role of central banks in currency derivatives markets?
7. Which party in a currency derivative contract agrees to buy the underlying currency at a future date?
8. Which of the following is not a motivation for companies to use currency derivatives?
9. What is a cross-currency swap?
10. What is the settlement mechanism for currency futures contracts?
11. Currency futures are typically traded on:
12. What is a currency basket?
13. How can a company use currency derivatives to hedge against currency risk?
14. Which of the following is a disadvantage of using currency options?
15. Currency options provide the holder with the:
16. Which of the following statements is true about the concept of mark-to-market in currency derivatives?
17. What is the primary purpose of using currency derivatives in hedging?
18. What is a currency derivative?
19. Which of the following is a characteristic of an over-the-counter (OTC) currency derivative?
20. The main purpose of currency derivatives is to:
21. Which of the following is an example of a non-deliverable currency forward?
22. What is the purpose of a currency swap line between central banks?
23. In a currency swap, what is the role of the notional principal?
24. Which of the following is not a major factor affecting the pricing of currency options?
25. How does a currency forward contract differ from a spot transaction?
26. Which of the following statements about currency options is true?
27. What is the purpose of a currency overlay program in an investment portfolio?
28. Which of the following statements is true about the counterparty risk in currency derivatives?
29. A currency forward contract is:
30. How does a long position in a currency futures contract differ from a short position?
31. Which of the following is not a factor influencing currency derivative pricing?
32. How does a currency futures contract differ from a currency forward contract in terms of flexibility?
33. Which of the following is an example of an exchange rate risk that can be hedged using currency derivatives?
34. What is the role of a currency board in managing a country's currency?
35. What is a currency basis swap?
36. What is the purpose of a currency collar?
37. Which of the following is a key difference between currency futures and currency options?
38. How does a currency option's strike price affect its premium?
39. Which of the following is a potential risk associated with currency derivatives?
40. What is the purpose of margin requirements in currency derivatives trading?
41. What is the main difference between a currency swap and a currency option?
42. How does a European-style currency option differ from an American-style option?
43. What is the purpose of a currency overlay strategy?
44. What is the role of a clearinghouse in currency derivatives trading?
45. What is a currency call option?
46. Which of the following is a similarity between currency swaps and interest rate swaps?
47. What is a forward rate agreement (FRA)?
48. Which of the following is an advantage of using currency derivatives?
49. What is the primary difference between a currency futures contract and a currency forward contract?
50. What is the role of a hedge fund in currency derivatives markets?