Extra questions – topics 9 and 10
• Barrier options are popular with FX traders
True or false?
• Binary options have pay outs either 0 or 100
True or false?
• Advantages of ETFs are:
• Low cost
• Passive investing approach
• Track underlying asset
• Risk free
[all true bar one]
• Advantages of CFDs as traded in London are:
• Not taxed
• Margin product
• No maturity
• Passive investing approach
[all true bar one]
• CDS pay outs are triggered by:
• Rating downgrades
• Bankruptcy
• Recessions
• Debt restructuring
[all true bar one]
• The agreement to exchange coupons, interest and capital gain on a bond for a Libor based cash flow is known as a:
• CDS
• ETF
• Basket swap
• Total return swap
The FTSE 100 is 6200. I enter into a digital spread bet option where I buy £10 / point of the close above 6250 strike 1-week maturity option at 40. If the FTSE 100 is trading at 6450 in a week, how much £ do I make or lose?
• Lose £600
• Make £600
• Make £400
• Make £2100
What was my risk-return ratio?
• 2 to 3
• 3 to 2
• 4 to 1
• 6 to 1