Q1.
The most popular and liquid benchmark, especially in the interbank market is:
Q2.
(I) Interest Rate Swaps are Exchange traded derivative contracts.
(II) The primary advantage offered by Interest Rate Swaps is the facility to hedge interest rate risk.
Q3.
(I) Swaps having explicit/implicit option features such as caps/floors/collars are not permitted.
(II) There are no restrictions on the minimum or maximum size of “notional principal” amounts of FRAs/IRS.
Q4.
Each contract of Interest Rate Futures is of ___________ value.
Q5.
The maximum maturity of Interest Rate Futures is __________ months.
Q6.
The contract of Interest Rate Futures is based on 10-year government bonds bearing a notional coupon of 7.5% per annum, compounded every 12 months.
Q7.
(I) An interest rate put option is an option that grants the holder the right to make a fixed or known interest payment and receive a variable or unknown interest payment.
(II) Interest Rate Futures are standardized forward contracts that are traded on exchanges.
Q8.
An option granting the right to buy is referred to as a “Put” whereas an option granting a right to sell is referred to as a “Call”.
Q9.
The advantage/s of Interest rate Swaps is/are:
Q10.
Participants in FRAs are:
Q11.
(I) There are restrictions on the minimum or maximum tenor of the FRAs/IRS.
(II) Price risks refer to bid-offer spreads and ease of unwinding or reversing swaps.
Q12.
The option Seller pays a premium up-front for obtaining the right to buy or sell the asset during a specific period of time.
Q13.
(I) The MITOR benchmark that has developed into a proxy for AAA Corporation funding cost in India.
(II) The Floating benchmark is known as MIBOR, which is computed daily by the National Stock Exchange (NSE) against which the swap is settled.
Q14.
Deliverable securities under the Interest Rate Futures should mature between 7 – ½ years and 15 years.
Q15.
(I) Counter party risk refers to risks of default or delay in payment settlement.
(II) Basis risk is the risk of mismatch.
Q16.
(I) Buyer of a FRA looks for protection against fall in interest rates.
(II) Seller of a FRA looks for protection against rise in interest rates.
|