NISM Series VIII – Equity Derivatives Paper – 08

Q1.A trader believes that the future price of QPR company will rise and being a smart trader he will ____.
sell QPR futures now and buy them later when the price rises
buy QPR futures now and sell them later when it rises
wait till the price of QPR futures and cash market price become the same
 wait till the prices drop to the lowest level


Q2.The rate of change in option premium for a unit change in the price of the underlying asset is known as Delta – State True or False?


Q3.What is done if a client defaults in making payments in respect to his daily settlement?
 The contract is transferred to a special ‘Default Account’
 The contract is closed out
The contract is transferred to another clients account that has sufficient funds
Weeks notice is given to that client


Q4.Does a high initial margin level improve the solvency & financial capability of the clearing corporation – True or False?


Q5.What is a covered call?
It’s a strategy to sell calls at various strike prices to profit from the premium received
It is used to generate extra income from existing holdings in the cash market.
Its a strategy of buying a call and sell its future for hedging
It’s done by buying a call and put in the same strike price.


Q6.In a futures contract, the clearinghouse/clearing corporation practically becomes the counterparty for all transactions – State True or False?


Q7.Daily ‘Trading Price Limits’ define the maximum percentage by which the price of a futures contract can rise above or fall below the previous day’s settlement price – State whether True or False?


Q8.A person who is bullish and a payer of premium is a ___.
buyer of a call option
seller of a call option
 buyer of put option
 seller of put option


Q9.A trader buys a June XYZ stock futures contract at Rs 242. After a few days, the price of XYZ futures was Rs 269. What will be your profit/loss if you square up your position? ( The market lot of XYZ share is 1000 )


Q10._____ risk is the component of price risk that is unique to particular events of the company and/or industry and this risk could be reduced to a certain extent by diversifying the portfolio.
 Unsystematic Risk
 Systematic Risk
 Arbitrage Risk
 Interest Rate Risk

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