6.

In the futures markets, when the initial margin of a futures account is topped up daily to cover adverse futures price movements, this is called:

a.

maintenance margin call.

b.

closing-out.

c.

short call.

d.

marked-to-market.

7.

For the writer of a put option, if the underlying share price:

a.

moves above the strike price, the potential profits are limited to the premium.

b.

moves above the strike price, the potential profits are unlimited.

c.

drops below the strike price, the potential profits are unlimited.

d.

moves above the strike price, the premium is reduced by the difference.

8.

If an FRA dealer quotes 6Mv9M 7.25 to 20', this means that the dealer is prepared to:

a.

borrow three-month money at 7.05% per annum.

b.

lend three-month money at 7.05% per annum.

c.

lend three-month money at 7.25% per annum.

d.

borrow three-month money at 7.25% per annum.

9.

In the futures markets the buyer of a financial futures contract:

a.

has the obligation to deliver the underlying financial asset at the specified future date.

b.

takes the short position.

c.

takes the long position.

d.

has to record the contract with the clearing house.

10.

In an interest swap contract, the exchange of cash flow calculated in each period is based upon the:

a.

notional principal.

b.

present value of notional principal.

c.

swap principal.

d.

face value of interest-bearing bond.