Smart Contracts for Finance BFC Practice Questions (Page 2)

Questions 6–10

1. 6foundation · easy

   Which practice is considered a best practice for securing smart contracts in financial systems?

   • AConducting thorough code audits and formal verification before deployment
   • BUsing a single administrator account to manage all contract functions
   • CStoring the contract code on a private server to keep it secret
   • DDeploying the contract directly to the main network without testing
   Reveal Solution Discussion Select an answer first
2. 7application · medium

   A bank is deploying a smart contract for automated bond coupon payments. The contract must be able to pause payments during a regulatory investigation and later resume them without redeploying. Which lifecycle feature should the contract include?

   • AA self-destruct function that terminates the contract permanently.
   • BAn upgradeable proxy pattern without any pause mechanism.
   • CA circuit breaker that can be triggered by an authorized admin role.
   • DA time-lock that delays all transactions by 24 hours.
   Reveal Solution Discussion Select an answer first
4. 8expert · hard

   A consortium of banks is deploying a smart contract for trade finance that automates letter of credit issuance and settlement. The contract must be able to handle disputes between parties and comply with the legal requirement that a contract can be terminated by mutual agreement. Which lifecycle feature should be included?

   • AA time-based expiration that automatically terminates the contract after a fixed period.
   • BA multi-signature termination function that requires approval from all involved parties.
   • CAn upgradeable proxy that allows the contract logic to be changed during disputes.
   • DA self-destruct function that can be called by the contract deployer.
   Reveal Solution Discussion Select an answer first
5. 9application · medium

   A financial institution is deploying a smart contract for automated dividend payments to shareholders. The legal team requires that the contract be able to restrict transfers of shares during a lock-up period. Which design element is necessary?

   • AA dividend payment function that ignores the lock-up period.
   • BA transfer restriction function that checks the lock-up period before allowing any share transfer.
   • CA proxy contract that allows the lock-up period to be changed after deployment.
   • DA public announcement on the company website about the lock-up period.
   Reveal Solution Discussion Select an answer first
6. 10expert · hard

   A global insurance consortium wants to deploy a smart contract for cross-border travel insurance claims. The contract must comply with GDPR data protection rules, which restrict the transfer of personal data outside the EU. The consortium operates nodes in multiple regions. Which approach best balances compliance and operational efficiency?

   • ADeploy on a public blockchain and encrypt all personal data on-chain.
   • BUse a permissioned blockchain with nodes located only in EU jurisdictions and store personal data off-chain in EU-based storage.
   • CStore all personal data on-chain in the smart contract to ensure transparency.
   • DUse a private blockchain with nodes in every country where the insurer operates.
   Reveal Solution Discussion Select an answer first