Question 1

Section A (1 Mark)Which of the following is not a Key Benefit of the In-kind process used by the ETFs?

Options :

A : Only I

B : Only II

C : Only III

D : None of These

Answer: B

Question 2

Section A (1 Mark)A(n) _____________ is related to the credit option and is usually aimed at lenders able to handle comparatively limited declines in value but wants insurance against serious losses.

Options :

A : credit risk option

B : standby letter of credit

C : credit linked note

D : credit swap

Answer: D

Question 3

Section A (1 Mark)When loans are securitized they are passed on to a ____________who pools the loans and sells securities.

Options :

A : Multi Purpose Vehicle

B : Deemed Entity

C : Special Purpose Entity

D : None of the Above

Answer: C

Question 4

Section A (1 Mark)A European call option allows the buyer to

Options :

A : Sell the underlying asset at the exercise price on the expiration date.

B : Sell the option in the open market prior to expiration.

C : Buy the underlying asset at the exercise price on the expiration date.

D : C and D.

Answer: D

Question 5

Section A (1 Mark)______________ is based on a particular (theoretical) lottery game that leads to a random variable with infinite expected value, i.e., infinite expected payoff, but would nevertheless be considered to be worth only a very small amount of money.

Options :

A : Alias Paradox

B : St. Petersburg Paradox

C : Cramer-s Solution

D : The Friedman-Savage Puzzle

Answer: B

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