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choose the correct answer.
choose the correct answer.
financia instruments 1) The reasons for the use of financial instruments such as futures contracts,
options and swaps include all of the following except: A) to prowide 'ofl-balance-sheet' finaning
opportunities 8) to reduce the amount of cutstanding accounts receivable Q) to assiat in the
management of interest rate and forelgn currency exchange risks: D) to enable the raiding of
funds by businesses 2) Financial instruments indude accounts receivable, accounts payable,
futures contracts equity securities and options. Which of the following statements is correct? A)
Accounts teceivable, accounts payable and options are primary financial instruments B) Equity
secuities and futures contracts are primary financial instruments C) Accounts receivable and
accounts payable are derivative (secondary) financial instruments: D) None of the above is
correct 3) Which of the following best describes the difference between a simple financial
instrument and a compound financial instrument? A) A simple financial instrument consists of
only one financial asreufinancial Eablitylequity instrument while a compound finsncial
instrument contains both a liability and an equily elemvent B) A simple financial instrument
accrues interest using simple interest formula while the compound financial instrument
calculates interest on the compound formela Q) The fair value of a simple instrument is
calculated quarterly while the far value of a compound instrument accrues dsily D) A simple
financial instrument has a less complex fee structure 4) What is the deciding factor when
determining how a financial instrument should be classified? A) The anticlpated date of
settlement B) Substance of the transaction C) Legal form of the transaction D) The delinery of
cash on the sentement date 5) How should a financial instrument be classified if the issuer of the
instrument is bearing the residual risk aspociated with holding equity? A) Put option B) Call
option C) Debt instrument D) Equity instrument

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choose the correct answer- choose the correct answer- financia instrum.docx

  • 1. choose the correct answer. choose the correct answer. financia instruments 1) The reasons for the use of financial instruments such as futures contracts, options and swaps include all of the following except: A) to prowide 'ofl-balance-sheet' finaning opportunities 8) to reduce the amount of cutstanding accounts receivable Q) to assiat in the management of interest rate and forelgn currency exchange risks: D) to enable the raiding of funds by businesses 2) Financial instruments indude accounts receivable, accounts payable, futures contracts equity securities and options. Which of the following statements is correct? A) Accounts teceivable, accounts payable and options are primary financial instruments B) Equity secuities and futures contracts are primary financial instruments C) Accounts receivable and accounts payable are derivative (secondary) financial instruments: D) None of the above is correct 3) Which of the following best describes the difference between a simple financial instrument and a compound financial instrument? A) A simple financial instrument consists of only one financial asreufinancial Eablitylequity instrument while a compound finsncial instrument contains both a liability and an equily elemvent B) A simple financial instrument accrues interest using simple interest formula while the compound financial instrument calculates interest on the compound formela Q) The fair value of a simple instrument is calculated quarterly while the far value of a compound instrument accrues dsily D) A simple financial instrument has a less complex fee structure 4) What is the deciding factor when determining how a financial instrument should be classified? A) The anticlpated date of settlement B) Substance of the transaction C) Legal form of the transaction D) The delinery of cash on the sentement date 5) How should a financial instrument be classified if the issuer of the instrument is bearing the residual risk aspociated with holding equity? A) Put option B) Call option C) Debt instrument D) Equity instrument