Multiple Choice Questions (For each multiple-choice question, select the best answer) (1) Which of the following is not a financial derivative? 1. (10 marks) (A) Stock (B) Futures (C) Options (D) Forward contracts. (2 marks) (2) Which option type allows the user to exercise the option any time prior to expiration? (A) European option (B) American option (C) Call option (D) All of the above (2 marks) (3) Which of the following is a reason to hedge a portfolio? (A) To increase the probability of gains. (B) To limit exposure to risk. (C) To profit from capital gains when interest rates fall. (D) All of the above. (2 marks) (4) A long contract requires that the investor (A) hedge in the future (B) sell securities in the future. (C) buy securities in the future. (D) close out his position in the future. (2 marks) (6) What is the trader who takes ofsetting positions in two or more instruments to lock in a profit? (A) Hedger (B) Writter (C) Speculator (D) Arbitrager (2 marks)