NISM Series VIII – Equity Derivatives Paper – 03

Q1.When would a trader make a profit on a short position of September futures?
when he buys an October future at a lower price
 when he sells another September future at a lower price
he squares of this short position by buying the September future at a lower price
 when he sells October futures at a lower price.


Q2.A clearing member is required to bring in additional incremental deposits of __ to the clearing corporation for each additional TM he undertakes to clear and settle deals.
 Rs.5 lakhs
 Rs.10 lakhs
 Rs.15 lakhs
 Rs.20 lakhs


Q3.Stock Brokers are allowed to fund the margin requirements of their clients. Is the state True or False?


Q 4.A call option is said to be ___ when the spot price is higher than the strike price.
 At the money
 Out of the money
 In the money


Q5.The mark-to-market margin debits for stock futures are done on a daily basis but the mark-to-market margin credits are done on a weekly basis – State whether True or False ?


Q6.Futures trading is considered riskier than equity trading due to ___.
 high leverage
 High pressure
 high volatility
 high liquidity


Q7.You have sold a CALL option on a stock at Rs. 16 per call with a strike price of Rs. 170. If on the exercise date, the stock price is Rs. 196, ignoring transaction cost, you will choose ____.
 to exercise the option
 not to exercise the option
 may or may not exercise the option depending on the company’s background
 none of the above


Q 8. Does a naked call option mean that the writer does not currently own the underlying – State True or False?


Q9.The Ask price is always greater than the Bid price.


Q 10. The initial margin is always equal to the mark-to-market margin – State True or False?

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