Smart Contract Applications Across FinTech BFC Practice Questions (Page 2)

Questions 6–10

1. 6application · medium

   A startup wants to tokenize a portfolio of fine art to allow fractional ownership. They plan to use a smart contract to manage ownership and secondary trading. Which additional feature is essential to ensure the tokenized asset remains legally enforceable?

   • AA smart contract that automatically revalues the artwork daily based on market data.
   • BA legal agreement that links each token to a specific share of the underlying artwork and is recognized in the relevant jurisdiction.
   • CA feature that allows token holders to physically possess the artwork on a rotating basis.
   • DA mechanism to burn tokens when the artwork is sold.
   Reveal Solution Discussion Select an answer first
2. 7foundation · easy

   What is yield farming in the context of DeFi?

   • AA method where users provide liquidity to protocols and earn rewards in return
   • BA regulatory requirement for DeFi platforms to report farming income
   • CA technique for mining Bitcoin using smart contracts
   • DA way to store physical crops as collateral on the blockchain
   Reveal Solution Discussion Select an answer first
4. 8foundation · easy

   How do smart contracts enable fractional ownership of real-world assets?

   • ABy creating a legal contract that transfers full ownership to a single buyer
   • BBy storing the physical asset in a blockchain node
   • CBy requiring all investors to jointly manage the asset in person
   • DBy issuing digital tokens that represent a share of the asset on a blockchain
   Reveal Solution Discussion Select an answer first
5. 9foundation · easy

   In trade finance, which of the following is a primary application of smart contracts?

   • AProviding a centralized database for all global trade regulations
   • BAutomatically releasing payment to the exporter when a digital bill of lading confirms goods shipment
   • CEliminating the role of banks entirely from trade finance
   • DReplacing the need for any documentary evidence in international trade transactions
   Reveal Solution Discussion Select an answer first
6. 10application · medium

   A real estate investment firm wants to allow small investors to buy a share of a commercial property worth $10 million. The firm wants to avoid the high minimum investment thresholds typical of traditional real estate funds and provide investors with the ability to trade their shares on a secondary market. Which smart contract application best meets this need?

   • ACreate a smart contract that only records the property title on-chain, while ownership transfers continue to be processed manually through traditional legal channels.
   • BTokenize the property into fungible tokens on a blockchain, with each token representing a fractional ownership stake, and enable trading via a decentralized exchange.
   • CIssue a single non-fungible token (NFT) representing the entire property and sell it to one investor.
   • DUse a smart contract to automate rental income distribution to a single owner, but keep the property as a single indivisible asset.
   Reveal Solution Discussion Select an answer first