11.

The advantage of over-the-counter products such as swaps or forwards contracts, relative to exchange-traded products such as options or futures, is:

a.

regulation.

b.

standardisation.

c.

flexibility.

d.

all of the given answers.

12.

In the futures markets, arbitrageurs are mainly interested in:

a.

reducing their exposure to risk of price changes.

b.

increasing market liquidity.

c.

reducing the spread between the bid and ask prices on bonds.

d.

attempting to make a profit by taking advantage of price differentials between different markets.

13.

An option that gives the option buyer the right to buy the commodity or financial instrument specified in the contact at the exercise price is called:

a.

a call option.

b.

an American option.

c.

a European option.

d.

a put option.

14.

The term loanable funds' refers to:

a.

only those funds loaned by one bank to another bank.

b.

only those funds loaned to banks by the public.

c.

only those funds loaned to banks by the central bank.

d.

all those funds changing hands between the lenders and borrowers in the financial markets.

15.

At the end of six months for a wheat farmer who sold previously a six-month wheat futures contract, he may:

a.

deliver the wheat as per the contract and pay out the original agreed-upon price.

b.

can sell the wheat via the spot grain market and at the same time sell a futures contract identical to the contract originally taken out.

c.

will make a profit if the price of wheat has gone up on the day the farmer closes out his contract.

d.

can sell the wheat via the spot grain market and at the same time buy a futures contract identical to the contract originally taken.