Smart Contracts for Finance BFC Practice Questions (Page 6)

Questions 26–30

1. 26application · medium

   A bank is planning to deploy a smart contract for syndicated loans, where multiple banks fund a single borrower. The contract must comply with banking regulations that require a clear audit trail and the ability to freeze assets if a court order is issued. Which feature is essential to include?

   • AA public transaction history visible to anyone.
   • BA self-destruct function that can be called by any participant.
   • CA time-lock that delays all transactions by one week.
   • DAn administrative role that can freeze and unfreeze the contract or specific assets.
   Reveal Solution Discussion Select an answer first
2. 27application · medium

   A nonprofit organization wants to use smart contracts to manage donations and ensure funds are released only when specific project milestones are verified. The organization operates in a jurisdiction where smart contracts are not explicitly recognized in law. Which approach best balances transparency and legal enforceability?

   • AAvoid smart contracts entirely and use a manual approval process to ensure legal compliance.
   • BDeploy the smart contract on a private blockchain and assume that private networks are exempt from legal scrutiny.
   • CUse a smart contract for automated release of funds, but also maintain a traditional legal agreement that references the smart contract's logic.
   • DRely solely on the smart contract code as the final agreement, assuming code is law.
   Reveal Solution Discussion Select an answer first
4. 28expert · hard

   A team is building a smart contract for a decentralized options market. The contract must allow users to exercise their options before expiration, but the team is concerned about the contract being exploited by a malicious user who repeatedly calls the exercise function to drain the contract's funds. Which design is most appropriate?

   • AAllow unlimited exercise attempts but require a high gas fee for each call.
   • BUse a random number to decide whether the exercise is valid.
   • CLet the contract owner manually approve each exercise request.
   • DUse a state machine that marks an option as exercised and prevents further exercise, and include a reentrancy guard.
   Reveal Solution Discussion Select an answer first
5. 29application · medium

   A developer is writing a smart contract for a crowdfunding campaign. The contract should allow backers to request a refund if the funding goal is not met. Which security practice is most important to implement in the refund function?

   • AAllow the contract owner to manually approve each refund.
   • BUse a pull-payment pattern where backers initiate the refund withdrawal.
   • CUse a push-payment pattern where the contract sends refunds automatically.
   • DStore refund amounts in a public variable for transparency.
   Reveal Solution Discussion Select an answer first
6. 30application · medium

   A fintech company is deploying a smart contract for a loyalty rewards program. The program must comply with consumer protection laws that require users to be able to withdraw their rewards at any time. Which feature should the contract include?

   • AA lock-up period that prevents withdrawals for a year.
   • BA withdrawal function that allows users to redeem their rewards on demand.
   • CA function that converts rewards to company stock automatically.
   • DA function that only allows the company to initiate withdrawals.
   Reveal Solution Discussion Select an answer first