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6. Why are market participants encouraged to "cross" orders away from the central market?

  • Because it improves liquidity on the main market venue
  • They are not encouraged to do this – in fact, the reverse is true
  • Because it gives market participants a better price
  • Because it eliminates counterparty risk

7. Which of the following best describes how the exchange-traded and OTC markets have evolved since the 2008 financial crisis?

  • Banks are now greatly disadvantaged in terms of regulatory capital when using exchange traded products as compared to OTC.
  • 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.

8. Are interest rate swaps a type of derivative?

  • No, because they are a security
  • Perhaps not in the very strictest sense but, for practical purposes, they are usually included in the category.
  • No, because they are off-balance sheet instruments for most users.
  • Yes, they are very similar to short-term rate futures.