Objective Questions
1. A derivative is a financial instrument or contract that settles at a
a. Current date.
b. Trade date.
c. Future date.
d. None of the above.
2. An equity instrument is a contract that evidences
a. Bank interest.
b. Fixed interest.
c. Residual interest.
d. Money market interest.
3. Investments in equity shares, futures, and equity options are classified as
a. Either held-to-maturity or available-for-sale securities.
b. Either available-for-sale securities or loans and receivables.
c. Either loans and receivables or held-to-maturity.
d. Either fair value through profit and loss or as available-for-sale securities.
4. An entity should recognize a financial asset on its balance sheet when, and only when,
a. The financial liability becomes the contractual provision of the instrument.
b. The entity becomes a party to the residual provisions of the instrument.
c. The entity becomes a party to the contractual provisions of the instrument.
d. The financial liability becomes the residual provision of the instrument.
5. Speculation is the assumption of
a. Risk of profit, return for the certain possibility of a reward.
b. Risk of loss, return for the certain possibility of a reward.
3. Risk of loss, return for the uncertain possibility of a reward.
4. None of the above.
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