Question: Answer PROBLEMS: PROBLEM 1: MULTIPLE CHOICE - THEORY 1. It is a financial instrument or other contract that derives its value from the changes in

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PROBLEMS: PROBLEM 1: MULTIPLE CHOICE - THEORY 1. It is a financial instrument or other contract that derives its value from the changes in value of some other underlying asset or other instrument. a. embedded derivative c. derivative b. financial asset d. all of these 2. Which of the following is not among the characteristics of a derivative? a. it must have at least two or more notional amounts b. its value changes in response to the change in an underlying c. requires no initial net investment or a very minimal initial net investment d. it is settled at a future date 3. Which of the following can be an underlying for a derivative? a. temperature or climate c. interest or exchange rate b. specified price d. all of these 4. Which of the following can be a notional amount for a derivative? a. share price c. number of currency units b. interest rate d. exchange rate 5. Which of the following can be a notional amount for a derivative? a. number of pesos c. bushels of wheat b. number of shares d. all of these 6. Derivatives are obtained a. as hedging instrument to hedge some kind of risk b. for speculation c. either a or b d. neither a nor b

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