A derivative is a contract whose value is based on ____.
a government-issued currency
a real estate property
a stock index fund
an underlying asset
Which of the following is NOT a common reason to use derivatives?
Speculation
Hedging
Arbitrage
Borrowing capital
Derivatives are most commonly used in traditional finance by ___.
gamers and artists
startups and small businesses
banks and institutions
crypto traders
Which of the following is a key difference between futures and forward contracts?
Futures are settled in cryptocurrency while forwards are settled in cash
Forwards are traded on exchanges while futures are traded OTC
Futures are traded on exchanges while forwards are traded OTC
Forward contracts never expire while futures do
Long options give the holder the _____ to buy or sell an asset at a set price before expiration.
duty
right but not the obligation
ability
legal requirement
Swaps are primarily used to manage which of the following?
Transaction fees
Memecoins
Game item scarcity and NFTs
Interest rates and currency fluctuations
A trader expecting a price increase in Tesla but not wanting to buy the stock might use ____.
an interest rate swap
a long put option
a long call option
a currency swap
When trading with leverage, a 10% price drop against your position on 10x leverage means:
getting added leverage
complete loss of your margin
you have to pay more fees
no change to your position
Donald expects wheat prices to fall but is contractually obligated to buy it in three months. What kind of derivative could he use to reduce risk?
A stock index fund
A currency swap
A futures contract
A leveraged token
Joe owns Apple stock and is worried about a market crash. He wants to limit losses without selling the stock. Which derivative should he consider?
A long put option
A long call option
A perpetual swap
A governance token
https://bitskwela.com/quiz/introduction-to-derivatives
Introduction to Derivatives
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