NISM Currency Derivatives – 1

1. Question

1 points

Nifty is a ________ index

well diversified
poorly diversified
balanced
volatile

2. Question

1 points

________can be bought and sold on an exchange like shares.

ETFs
Index Funds
Fixed deposits
None of the above

3. Question

1 points

Financial derivatives provide the facility for __________.

Speculation
Hedging
Arbitraging
All of the above

4. Question

1 points

The first exchange traded financial derivative in india commenced with the trading of

index futures
index futures
stock options
stock options

5. Question

1 points

In case of open position of any mutual fund scheme exceeding the specified limit , the penalty charged on the clearing member for each day of violation would be

1 percent of the total quantity in violation per client or Rs.1,00,000 per client, whichever is lower
1 percent of the value of the quantity in violation per client or Rs.1,00,000 per client, whichever is lower
1 percent of the value of the quantity in violation per client or Rs.5,00,000 per client, whichever is lower
1 percent of the total quantity in violation per client or Rs.1,00,000 per client, whichever is higher

6. Question

1 points

For an index to be eligible for trading in derivatives segment, weightage of constituent stocks of the index, which are individually eligible for derivatives trading, should be __________

atleast 20 percent
atleast 50 percent
atleast 80 percent
atleast 90 percent

7. Question

1 points

In case of open position of any Client exceeding the specified limit , the penalty charged on the clearing member for each day of violation would be

1 percent of the total quantity in violation per client or Rs.1,00,000 per client, whichever is lower
1 percent of the total quantity in violation per client or Rs.1,00,000 per client, whichever is higher
1 percent of the value of the quantity in violation per client or Rs.1,00,000 per client, whichever is lower
1 percent of the value of the quantity in violation per client or Rs.5,00,000 per client, whichever is lower

8. Question

1 points

Margin percentage and lot size is decided by

Stock Exchanges
Stock Brokers
RBI
SEBI

9. Question

1 points

An investor is bearish about Tata Motors and sells ten one-month ABC Ltd. futures contracts at Rs.6,06,000. On the last Thursday of the month, Tata Motors closes at Rs.600. He makes a _________. (assume one lot = 100)

Profit of Rs. 6,000
Loss of Rs. 6,000
Profit of Rs. 8,000
Loss of Rs. 8,000

10. Question

1 points

The total number of outstanding contracts (long/short) at any point in time is called the ‘Open interest’

Option
FALSE

11. Question

1 points

Mark-to-market margins are collected ___________.

On a weekly basis
Every 2 days
Every 3 days
On a daily basis

12. Question

1 points

The operating range applicable in the Index futures is _____

5 percent only
20 percent only
10 percent only
No operating range is applicable

13. Question

1 points

The maximum penalty for any member or client who increased the existing positions or created a new position in the security under f/o ban is __________

Rs.50000
Rs.10000
Rs.100000
Rs.5000

14. Question

1 points

For equity derivatives, carrying cost is the interest paid to finance the purchase less (minus) dividend earned

TRUE
FALSE

15. Question

1 points

Scrips or portfolios having beta greater than 1 are called aggressive scrips or portfolios respectively.

TRUE
FALSE

16. Question

1 points

Which is the ratio of change in option premium for the unit change in interest rates?

Gamma
Rho
Vega
Theta

17. Question

1 points

An investor is long on 1 contract of Nifty futures purchased at Rs. 9035. Nifty Futures closes at Rs. 8855 next day. What is the mark to market for the investor? (1 Nifty contract is 75 shares).

Rs. -13500
Rs. 13500
Rs. -15000
Rs. 15500

18. Question

1 points

What could be the maximum profit for a Seller of Options Contract

Unlimited
Premium Received
Depends on the Strike Price
Depends on the type of the option like CALL or PUT

19. Question

1 points

Which of the following are derivatives?

Forex rate
Interest rate
Swaption
All of the above

20. Question

1 points

Long Straddle is a strategy with __________

Unlimited Profit & Unlimited Loss
Limited Profit & Limited Loss
Unlimited Profit @ Limited Loss
Limited Profit & Unlimited Loss

21. Question

1 points

In case of open position of any sub account of FII exceeding the specified limit , the penalty charged on the clearing member for each day of violation would be

1 percent of the value of the quantity in violation per client or Rs.5,00,000 per client, whichever is lower
1 percent of the total quantity in violation per client or Rs.1,00,000 per client, whichever is higher
1 percent of the value of the quantity in violation per client or Rs.1,00,000 per client, whichever is lower
1 percent of the total quantity in violation per client or Rs.1,00,000 per client, whichever is lower

22. Question

1 points

An option which gives the holder the right to sell a stock at a specified price at some time in the future is called a

Naked option
Call option
Out-of-the-money option
Put option

23. Question

1 points

What could be the maximum loss for a Seller of Options Contract

Unlimited
Premium Paid
Depends on the Strike Price
Depends on the type of the option like CALL or PUT

24. Question

1 points

Diagonal spreads are more suitable for ___________

Only Spot Markets
Only Exchange Traded Market
Only OTC Markets
Both OTC & Exchange Traded Markets

25. Question

1 points

Which of the following is traded in exchanges?

Forward Contract
Futures Contract
Weekly Options
Swaptions

26. Question

1 points

nvestor A wants to sell 20 contracts of August series at Rs.4500 and Investor B wants to sell 17 contracts of September series at Rs.4550. Lot size is 50 for both these constracts. The Initial Margin is fixed at 6%. How much Initial Margin is required to be collected from both these investors (sum of initial margins of A and B) by the broker?

270000
232050
502050
410000

27. Question

1 points

The theoretical futures price is based on the ________.

strike price
underlying spot price
the price at which a futures contract trades in the market
the price set by the exchange

28. Question

1 points

The___________of a portfolio of options is the rate of change of the value of the portfolio with respect to the interest rate.

Theta
Beta
Rho
Rho

29. Question

1 points

__________ of the option is the one who receives the option premium and is thereby obliged to sell/buy the asset if the buyer exercises on him.

Buyer
Seller
Both Buyer and Sellers
None

30. Question

1 points

Strike price has to be adjusted for stocks for which ___________ is declared.

Ordinary dividend
AGM
Extra ordinary dividend
None of the above

31. Question

1 points

A calendar spread becomes a naked or open position, when the near month contract expires or either of the legs of spread is closed

TRUE
FALSE

32. Question

1 points

Which of the following prices is used to compute MTM of a futures contract in case it is not traded on a given day?V

closing price of the underlying
closing price of the futures contract
theoritical price
MTM is not levied in such cases.

33. Question

1 points

Client A has purchased 10 contracts of December series and sold 7 contracts of January series of the NSE Nifty futures. How many lots will get categorised as regular (non-spread) open positions?

17
7
3
10

34. Question

1 points

Daily settlement price of futures contracts on expiry day is ______________________

the closing price of the respective underlying on such day
the closing price of the respective contracts on such day
the 6 month average closing price of the respective contracts on such day
None of the above

35. Question

1 points

A member has two clients C1 and C2. C1 has purchased 800 contracts and C2 has sold 900 contracts in August XYZ futures series. What is the outstanding liability (open position) of the member towards Clearing Corporation in number of contracts?

900
100
800
1700

36. Question

1 points

Bearish Vertical Spreads can be implemented by the use of _________

Only Puts
Only Calls
Both calls and puts
None of the above

37. Question

1 points

Securities Transaction Tax (STT) in case of Sale of an option in securities is _______

0.017 percent
0.13 percent
0.0125 percent

38. Question

1 points

A Local Jeweler agrees to buy 3 kilograms of gold from whole sale gold trader after 2 months. What type of contract we are reffering here to?

Futures Contract
Forward Contract
Swaptions
None of the above

39. Question

1 points

Bullish Vertical Spreads can be implemented by the use of _________

only futures
Only Calls
Only Puts
Both calls and puts

40. Question

1 points

A put option gives the buyer a right to sell how much of the underlying to the writer of the option?

Any quantity
The specified quantity or less than the specified quantity
The specified quantity or more than the specified quantity
Only the specified quantity (lot size of the option contract)

41. Question

1 points

Nifty consists of securities having _____ market capitalization stocks.

large
small
medium
large and small

42. Question

1 points

Ms. Shetty has sold 800 calls on DR. REDDY’S LAB at a strike price of Rs.882 for a pre mium of Rs.25 per call on April 1. The closing price of equity shares of DR. REDDY’S LAB is Rs. 884 on that day. If the call option is assigned against her on that day, what is her net obligation on April 01?

Pay-out of Rs.18,300
Pay-in of Rs.18,300
Pay-in of Rs.13,800
Pay-out of Rs.18,400

43. Question

1 points

The F&O segment of NSE provides trading facilities for the following derivative instruments, except

Individual warrant options
Index based futures
Index based options
Individual stock options

44. Question

1 points

__________ take advantage of a discrepancy between prices in two different markets

Speculators
Hedgers
Arbitrageurs

45. Question

1 points

An index put option at a strike of Rs 2176 is selling at a premium of Rs 18 At what index level will it break even for the buyer of the option

Rs 2162
Rs 2158
Rs 2196
Rs 2194

46. Question

1 points

Forward contracts are ________ contracts.

Multilateral
Tri-lateral
Future
Bilateral

47. Question

1 points

Usually, open interest is maximum in the _______ contract.

far month
far month
near month
more liquid contracts

48. Question

1 points

The may futures contract on XYZ ltd. closed at Rs.3940 yesterday. It closes today at Rs.3898.6. The spot closes at Rs.3800. Raju has a short position of 3000 in the may futures contract. he sells 2000 units of may expiriing put options on XYZ with a strike price of Rs.3900 for a premium of Rs.110 per unit. What is his net obligation to/from the clearing corporation today?

The may futures contract on XYZ ltd. closed at Rs.3940 yesterday. It closes today at Rs.3898.6. The spot closes at Rs.3800. Raju has a short position of 3000 in the may futures contract. he sells 2000 units of may expiriing put options on XYZ with a strike price of Rs.3900 for a premium of Rs.110 per unit. What is his net obligation to/from the clearing corporation today?
payout of Rs.640000
payout of Rs.344200
payin of Rs.95800

49. Question

1 points

Selling one market lot of calls at a strike of 3800 and Buying a market lot of calls at a strike of 4200 is an example for

bull spread
bear spread
bear spread

50. Question

1 points

Cash and Carry model for futures pricing is also known as non-arbitrage model

TRUE
FALSE

51. Question

1 points

The first stock index futures contract was traded at _____________

Chicago Mercantile Exchange
LIFFE
NSE
Kansa City board of Trade
BSE

52. Question

1 points

The normal trading is resumed in a scrip banned in derivatives segment if the open interest __________

falls below 90 percent of the market wide position limit
falls below 80 percent of the market wide position limit
falls below or equals 80 percent of the market wide position limit
falls below or equals 90 percent of the market wide position limit

53. Question

1 points

Hedge contract month is the maturity month of the contract through which a trader hedges his position

TRUE
FALSE

54. Question

1 points

___________ is the last day on which the futures contract will be traded, at the end of which it will cease to exist

judgement day
last friday of the month
expiry date
last tuesday of the month

55. Question

1 points

Clearing corporation on a derivatives exchange becomes a legal counterparty to all trades and be responsible for guaranteeing settlement for all open positions.

FALSE
TRUE

56. Question

1 points

An arbitrage is a deal that produces risk free profits by exploiting a mispricing in the market

TRUE
FALSE

57. Question

1 points

The beta of TELCO is 0.8. A person has a long TELCO position of Rs. 800,000 coupled with a short Nifty position of Rs. 600,000. Which of the following is TRUE?

He is bearish on Nifty as well as on TELCO
He is bearish on Nifty as well as on TELCO
He has a partial hedge against fluctuations of Nifty
He has a partial hedge against fluctuations of Nifty

58. Question

1 points

STT for sale of option in Securities

0.17%
0.04%
0.017 %
None

59. Question

1 points

To be eligible for trading in derivatives segment, the market wide position limit of the stock should be ________

>= 300 crores
>= 300 crores
<= 100 crores
>= 500 crores

60. Question

1 points

Cost of Carry represents the relationship between ___________ and ______________ Prices

SPOT,Futures
SPOT.Cash
SPOT.Cash
None

61. Question

1 points

Theta is also referred to as the _________ of the portfolio

time decay
time decay
time decay
risk delay

62. Question

1 points

A corporate manager can

perform order and trade related activities
receive reports for all branches of the trading member firm
receive reports for all dealers of the firm.
can define exposure limits for the branches of the firm
all the above

63. Question

1 points

___________ is created when the underlying view on the market is positive but the trader would also like to reduce his cost on position

A bear spread
A bull spread
A rangebound spread
A rangebound spread

64. Question

1 points

if we compute the index based on weights of each security based on non promoter holding, it is called ______

free float market capitalization index
price weighted
equal weighted
market capitalisation index

65. Question

1 points

A January month Nifty Futures contract will expire on the last _____ of January

Monday
Thursday
Tuesday
Wednesday

66. Question

1 points

The order size (in value terms) required to cause a change in the stock price equal to one-quarter of a standard deviation is called as _______

Beta Order size
Alpha order size
Bulk order size
Median quarter sigma order size

67. Question

1 points

OTC derivative market is highly regulated market because these transactions occur in private among qualified counterparties

TRUE
FALSE

68. Question

1 points

Institutional investors world wide are major users of ______.

Stock Futures
Stock Options
Index Linked derivatives
Equity linked derivatives

69. Question

1 points

The intrinsic value of a call option is

the amount the option is ITM
the amount the option is OTM
the amount the option is ATM
the amount the option is ATM

70. Question

1 points

Which is true about IOC – Immediate or Cancel order in future and option segment?

IOC is not applicable for Futures and Options segment.
IOC is applicable only for Buy Orders.
Order released in to the system will search for matching portion. Unmatched portion is cancelled Immediately.

71. Question

1 points

Arbitragers generally lock in their profits unlike traders who trade naked contracts

TRUE
FALSE

72. Question

1 points

What is the outstanding position on which initial margin will be levied, if no proprietary trading is done and the details of client trading are one client buys 1000 units at the rate 1260 and the second client buys 1000 units at the rate Rs 1255 and sells 1000 units at the rate Rs 1260

4000 units
3000 units
2000 units
1000 units

73. Question

1 points

A defaulting members clients positions could be transferred to ____________ by the Clearing Corporation.

Error account
Error account
Error account
Another solvent member

74. Question

1 points

Vertical spread is also known as Calendar spread

TRUE
FALSE

75. Question

1 points

Corporate actions are broadly classified under _____________ and _____________

stock benefits and cash benefits
stock options and bonus
stock options and bonus
none of the above

76. Question

1 points

Put option seller will have the obligation to sell if the put option buyer exercises his right.

TRUE
FALSE

77. Question

1 points

SBI is trading at Rs. 1800 in the cash market. What would be the price of SBI futures expiring three months from today. Risk free rate = 8% p.a.

1844
1895
1814
1895

78. Question

1 points

Santhosh is bullish about company XYZ and buys ten one-month XYZ futures contracts at Rs.296,000. On the last thrusday of the month, XYZ closes at Rs.271. he makes a ________________

profit of Rs.15000
profit of Rs.25000
loss of Rs.15000
loss of Rs.25000

79. Question

1 points

In the NEAT F&O system, the hierarchy amongst users comprises of _______.

branch manager, dealer, corporate manager
corporate manager, branch manager, dealer
dealer, corporate manager, branch manager
corporate manager, dealer, branch manager

80. Question

1 points

Clients positions can not be netted off against each other while calculating initial margin on the derivatives segment.

TRUE
FALSE

81. Question

1 points

The expiration date is the date on which

the option holder must exercise.
the option writer's rights expire.
the option holder's rights expire.
Both A and C

82. Question

1 points

On expiry, the settlement price of a stock futures contract is _______.

opening price of futures contract
closing stock price
closing stock price
opening stock value

83. Question

1 points

When the strike price is lower than the spot price of the underlying, a call option will be ____.

At the money
At the money
Out of the money
American Type

84. Question

1 points

________ wish to bet on future movements in the price of an asset

Hedgers
Arbitrageurs
Speculators

85. Question

1 points

Hedgers provide the liquidity and the dept to the derivatives market.

TRUE
FALSE

86. Question

1 points

Horizontal spread is also known as Time Spread

FALSE
TRUE

87. Question

1 points

If you have sold a XYZ futures contract (contract multiplier 50) at 3100 and bought it back at 3300, what is your gain/loss?

A gain of Rs. 5000
A loss of Rs. 10000
A loss of Rs. 5000
A gain of Rs. 10000

88. Question

1 points

Which of the following is required for personnel working in the industry in order to dispense quality intermediation?

To follow certain code of conduct.
To give frequent buy and sell recommendations to clients.
To have good contacts with institutional clients.
All of the above

89. Question

1 points

In a Stop Loss Buy Order, Limit Price is

Less than Trigger Price
Less than or Equal to Trigger Price
Greater than Trigger Price
Greater than or Equal to Trigger Price

90. Question

1 points

________ involves combining options on the same underlying and of same type (call/ put) but with different strikes and maturities

warrants
swaps
Spreads
SPN

91. Question

1 points

Option seller will be legally bound to honour the contract by settling in cash if the option buyer does not exercise.

TRUE
FALSE

92. Question

1 points

Which of the following cant be a underlying asset for a FINANCIAL derivative contract?

Equity index
commodities
interest rate
foreign exchange

93. Question

1 points

________ uses futures or options market to reduce or eliminate risk

Arbitrageurs
Hedgers
Speculators

94. Question

1 points

American options can be exercised any time during the contract cycle.

FALSE
TRUE

95. Question

1 points

All futures contracts for each member are ________________ to the daily settlement price of the contract.

marked
marked to market
settled
None of the above

Average score
Your score

NISM Currency Derivatives – 1