NISM Series VIII – Equity Derivatives Paper – 12

Q1.Mr. Banerjee sells a put option of a higher strike price and buys a put option of a lower strike price, both on the same share and same expiration. This strategy is called ___.
 Bearish Spread
 Bullish Spread
 Calendar Spread
 Straddle

 

Q2.When a person sells a call option, he has an –
 Bullish view
 Bearish view
 Long term view
 None of the above

 

Q3.In case of a member’s default, the Clearing Corporation cannot transfer clients’ positions to another member or close out all open positions of defaulting member, without prior approval from SEBI – State True or False?
  True
  False

 

Q 4.Mr. Arvind is very bullish on the market. However, he feels some specific companies which he has in his portfolio will not perform well in the future. What strategy should he adopt?
 Sell Index futures and Sell specific companies shares
 Buy Index futures and Sell specific companies shares
 Sell Index futures and Buy specific companies shares
 Do nothing as markets are uncertain

 

Q 5. In Option Spreads there is a combination of options constructed in such a way that there is limited profit or limited loss – State True or False?
  True
  False

 

Q6.The exercise price of an option is the same as its position limit – State whether True or False?
  True
  False

 

Q7.In exercising a Put option on a stock, the option holder acquires from the option writer __.
 a short position in the underlying stock
 a long position in the underlying stock
 a strangle position in the underlying stock
 a butterfly position in the underlying stock

 

Q8.As a Call option moves more Out-Of-The-Money, the absolute value of Delta will ___.
 Increase
 Decrease
 Not change
 None of the above

 

Q 9. Mr. P and Mr. Q are clearing members of a stock exchange. Both of them have maintained Rs 7 crores of liquid assets consisting of equity shares and other assets. Both have the same exposure limits on day one. Based on this, which of the following statements is true?
 The minimum exposure possible for the two brokers may change from time to time based on the changes in those asset valuations, even if they do not withdraw the assets deposited
The minimum exposure possible for the two brokers will remain the same forever, even if they withdraw the asset deposited subsequently
 The minimum exposure possible for the two brokers will remain the same forever as long as they do not withdraw the assets deposited
 None of the above

 

Q 10. A feature of a forward contract is ___.
 Its traded one-to-one between counterparties
 It has good liquidity
 It cannot be of a tenor of more than one year
 It does not carry any credit risk

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