Class 10 IFM Unit 5 Derivatives Most Imp MCQ | Financial Markets
📈 Unit 5: Derivatives
Introduction to Financial Markets – Class X
Multiple Choice Questions (MCQs)
Question 1
What is a Derivative?
Answer: B – A financial instrument whose value is derived from an underlying asset
Question 2
What are the two main types of derivatives?
Answer: B – Futures and Options
Question 3
What is a Futures contract?
Answer: B – An obligation to buy or sell an asset at a predetermined price on a future date
Question 4
What is an Options contract?
Answer: B – A right, but not an obligation, to buy or sell an asset at a specified price
Question 5
What is the main difference between Futures and Options?
Answer: B – Futures create an obligation to trade, Options give the right but not obligation
Question 6
What is a Commodity Derivative?
Answer: B – A derivative based on physical commodities like gold, oil, wheat, etc.
Question 7
What is a Financial Derivative?
Answer: B – A derivative based on financial assets like stocks, bonds, currencies, interest rates
Question 8
What is the primary purpose of derivatives?
Answer: B – For hedging risk and speculation
Question 9
What does ‘hedging’ mean in derivatives trading?
Answer: B – Protecting against potential losses by taking an offsetting position
Question 10
Which of the following is an example of a commodity?
Answer: B – Gold, Silver, Crude Oil, Wheat
Question 11
What is the underlying asset in a derivative?
Answer: B – The asset on which the derivative’s value is based (stock, commodity, currency, etc.)
Question 12
Who are the participants in the derivatives market?
Answer: B – Hedgers, Speculators, and Arbitrageurs
Question 13
What is speculation in the context of derivatives?
Answer: B – Taking calculated risks to profit from price movements
Question 14
What are the risks associated with derivative trading?
Answer: B – Market risk, credit risk, liquidity risk, and high leverage risk
Question 15
What is the key feature of commodity derivatives?
Answer: A – They are based on physical goods that can be traded
Question 16
What is the difference between Commodity and Financial Derivatives?
Answer: B – Commodity derivatives are based on physical goods; Financial derivatives are based on financial assets
Question 17
What is a ‘Call Option’?
Answer: B – The right to buy an asset at a specified price
Question 18
What is a ‘Put Option’?
Answer: B – The right to sell an asset at a specified price
Question 19
What does ‘leverage’ mean in derivative trading?
Answer: B – Controlling a large position with a relatively small amount of capital
Question 20
Where are derivatives traded in India?
Answer: B – On recognized stock exchanges like NSE and BSE
