Derivatives - Intro
- Created by: axzolanski
- Created on: 16-01-22 16:48
Other questions in this quiz
2. Which of the following best describes how the exchange-traded and OTC markets have evolved since the 2008 financial crisis?
- The infrastructure of OTC markets has moved a long way toward convergence with that of exchange-traded markets.
- Most OTC products have been made illegal since the crisis.
- Banks are now greatly disadvantaged in terms of regulatory capital when using exchange traded products as compared to OTC.
3. How have CCPs impacted counterparty risks in the derivatives market?
- It has not had any noticeable impact.
- Wider use of CCPs has served to greatly reduce counterparty risk exposures.
- CCPs have forced weaker counterparties away from the market, which is now only available to the strongest credits.
- Wider use of CCPs is considered to have greatly increased systemic counterparty risk.
4. Why are market participants encouraged to "cross" orders away from the central market?
- Because it eliminates counterparty risk
- They are not encouraged to do this – in fact, the reverse is true
- Because it improves liquidity on the main market venue
- Because it gives market participants a better price
5. Which of the following best describes the difference between market values and nominal values for derivatives?
- Market values are almost always smaller than nominal values.
- Nominal values describe replacement cost, market values do not.
- Market values are always more substantial than nominal values.
- Market values and nominal values are essentially the same thing, just different terminology.
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