Derivative Markets and Instruments

Question 1

Derivatives consist of two general classes: ______ and _________.

Answer 1

forward commitments, contingent claims

Question 2

A call is an option that provides the right to _____ the underlying.

Answer 2

buy

Question 3

A put is an option that provides the right to ____ the underlying.

Answer 3

sell

Question 4

A _________ is the most widely used credit derivative. It is a derivative
contract between two parties, a credit protection buyer and a credit protection
seller, in which the buyer makes a series of payments to the seller and receives
a promise of compensation for credit losses resulting from the default of a third
party

Answer 4

credit default swap