NISM Series VIII – Equity Derivatives Paper – 02

Q1.The main proof of whether a futures transaction is for speculation or hedging is based on whether there already exists a related commercial position that is exposed to the risk of loss due to price movement – State True or False?
  True
  False

 

Q 2.A derivative market would primarily have __.
 Speculators
 Hedgers
 Long term investors
 Both 1 and 2

 

Q3.Clearing member Ram has 6 trading members who are all in Mumbai and Clearing member Shyam has 6 trading members who are all outside Mumbai. Both of them have deposited the same amount of liquid assets with the clearing corporation. Which amongst the following statement is True?
 Clearing Member Ram will have a higher exposure limit than Clearing Member Shyam
 Clearing Member Shyam will have a higher exposure limit than Clearing Member Ram
 Both Ram and Shyam will have the equal exposure limits
 None of the above

 

Q4.Hedging would ensure that your profits are always on the higher side compared to an unhedged position – State True or False?
  True
  False

 

Q5.The minimum Networth requirement for a clearing member of Capital Market Segment and F&O segment is –
 Rs 50 lakhs
 Rs 100 lakhs
 Rs 250 lakhs
 Rs 300 lakhs

 

Q6.Any person who wishes to open a Trading Account must be given the following documents by his trading member –
The complete version of all the laws of SEBI
 Risk disclosure document
 All the rules & regulations of the exchange
 SEBI guidelines on the subject

 

Q7.Derivatives brokers/ dealers are expected to know their clients and to exercise care to ensure that the derivative product being sold by them to a particular client is suitable to his understanding and financial capabilities – State True or False?
  True
  False

 

Q8.A farmer agrees to sell 100 tonnes of sugarcane to a factory after 2 months at a specific price. What is this type of contract known as?
Swaption
 Future Contract
 Forward Contract
 None of the above

 

Q9. The liquid assets which are to be deposited by the clearing member can be in the form of ____.
 Only cash
 Only cash and approved securities
 Cash, Bank Guarantees, Equity Securities and other Cash Equivalents
 None of the above

 

Q10.Mr. Singh purchases a call option on a stock at Rs. 10 per call with a strike price of Rs. 140. If on the exercise date, the stock price is Rs. 168, ignoring transaction cost, Mr. Singh will choose ____
 To exercise the option
 Not to exercise the option
May or may not depend on the balance he has in his bank account
May or may not depend on the recommendation of experts

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