NISM Series VIII – Equity Derivatives Paper – 07

Q1.When a Client default in making payment in respect of Daily Settlement, the action taken is ____.
 the client is given 2 days to clear the payments
 the contract is closed out
 the broker pays the money and the client refunds to him in 7 working days
the client can give a bank guarantee in 2 working days to avoid the contract being closed out.

 

Q2.The option premium is decided by ____.
 SEBI
 Stock Exchanges
 By buyers and sellers
 By Stock Brokers

 

Q3.Equities can also be traded through Professional Clearing Members.
  True
  False

 

Q4.ETFs are a basket of securities that trade like an individual stock on an exchange- True or False?
  True
  False

 

Q5.Mr. A wants to sell stock options but he does not own the underlying stock. Can he do it in India?
 Yes
 No

 

Q6.The intrinsic value of an option __.
Is the difference between the spot price and the strike price of an in-the-money option
 Is zero for at the money options
 Is called the time value of the option
 Both 1 and 2

 

Q7.Brokers are allowed to and expected to fund margin requirements of their clients – State True or False?
  True
  False

 

Q 8. When the price of a futures contract rises, the margin account ____.
 of the buyer is credited for the gain
 of the seller is debited for the loss
 Both 1 and 2
 None of the above

 

Q9.A short position in a futures contract can be reversed only with the same counterparty to whom the contract was originally sold – State True or False?
  True
  False

 

Q10.A trader sells a PUT option of strike Rs 100 on ABC stock for a premium of Rs 25. On expiry day, the ABC stock closed at Rs 50. What is the trader’s profit or loss in Rs. ? ( Lot size is 1000 )
 25000
 -25000
 50000
 -50000

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