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Derivatives and Risk Management

Energy Risk Management - Eligibility Pre-Test

Princeton Energy Programme's Energy Risk Management is an intermediate level workshop which requires that delegates enter with an understanding of certain basic concepts. Entering this workshop without a grasp of the prerequisites may keep you from getting the most out of the class. In addition, since a good portion of the course is devoted to team exercises, it is important that all team members enter on a similar level.

The test below is not "graded". It is meant to give you and your training coordinator an idea of how comfortable you are with the prerequisite material. If this test comfortably takes you one hour or less, you are well prepared to enter the course. If, however, this test takes you more than one and a half hours to complete, we strongly urge you to consider the Fundamentals of Energy Futures and the Fundamentals of Energy Options prior to taking the Energy Risk Management course. Our two fundamental courses are geared to prepare participants for the intermediate level Energy Risk Management course.

We will review all of these tests to ensure all delegates are entering at a similar level.

If you would prefer to fax your completed questionnaire to us rather than submit it on-line, please click here for a printer-friendly version of the questionnaire.

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Have you already taken "Fundamentals of Energy Futures"?
YES
NO

Have you already taken "Fundamentals of Energy Options"?
YES
NO

  1. A Futures contract standardizes:
    1. Volatility, price, payment and quantity
    2. Delivery location, quality, payment and quantity
    3. Delivery location, payment, liquidity and timing

  2. A market situation in which futures prices are progressively lower in the distant delivery months is known as:
    1. Contango
    2. Convergence
    3. Backwardation

  3. A spread where you take equal and offsetting positions in crude oil on one side and refined products on the other is known as a:
    1. Crack Spread
    2. Basis Spread
    3. Straddle

  4. The method of public auction for making verbal bids and offers for contracts in the trading pits or rings of commodity exchanges is known as:
    1. Liquidity
    2. Open Outcry
    3. Clearing House

  5. An individual who invest in commodity futures with the objective of achieving profits by successfully anticipating price movements is called a:
    1. Fool
    2. Speculator
    3. Hedger

  6. The simultaneous purchase of one futures contract and sale of a different futures contract is known as a:
    1. Spread
    2. Basis
    3. Liquidation

  7. A market with a level of trading high enough to allow the buying and selling of contracts with minimal price changes is said to be:
    1. Volatile
    2. Regulated
    3. Liquid

  8. Which of the following is NOT a variable of the Black-Scholes model?
    1. Volatility
    2. Interest Rates
    3. Open Interest

  9. You purchase a $22 put for $0.47 and sell a $21 put for $0.19. What will your profit or loss be at expiration with a final futures price of $21.76?
    1. - $ 0.04
    2. + $ 0.04
    3. There is insufficient data to calculate the answer

  10. What type of volatility is calculated from past futures prices?
    1. Implied
    2. Look-Back
    3. Historical

  11. With a futures price of $21.61, which of the following options is in-the-money?
    1. $22 Call
    2. $21 Put
    3. $20 Call

  12. An advantage of buying an option is:
    1. You do not suffer time decay
    2. You can limit risk
    3. You can collect a premium

  13. With a futures price of $14.99, which of the following options can be called out-of-the-money?
    1. $19 Call
    2. $16 Put
    3. $15 Put

  14. With a futures price of $23.37, implied volatility of 23% and the premium of a $24 Put at $0.96, what is the extrinsic value of a $24 Put?
    1. $0.63
    2. $0.96
    3. $0.33

  15. Which of the following options positions could be converted to a profitable position in the underlying futures contract on exercise?
    1. Long Put Options
    2. Short Put Options
    3. Short Call Options

  16. A long call, upon exercise, would result in which type of a futures position?
    1. Long Futures
    2. Short Futures
    3. Depends on whether the call is in or out of the money
     

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