NISM Series VIII – Equity Derivatives Paper – 15

Q1.Which of these statements is True?
Money and securities deposited by clients can be attached for meeting the broker’s obligation on his proprietary account
 Money and securities deposited by clients cannot be attached for meeting the brokers obligation on his proprietary account
 Money and securities deposited by clients can be attached as per the decision of the clearing corporation
 Money and securities deposited by clients can be attached as per the decision of the Stock Exchange

 

Q 2.Initial margin to be paid in derivatives is set up taking into account the volatility of the underlying market. Generally ___
 Lower the volatility, higher the initial margin
 Higher the volatility, lower the initial margin
 Higher the volatility, higher the initial margin
 None of the above

 

Q3.Meghna wants to sell 34 contracts of ABC futures at Rs. 2450 (contract multiplier is 50). The initial margin is 7%. How much will be the initial margin to be paid ?
 Rs. 4165000
 Rs. 83300
 Rs. 5831
 Rs. 291550

 

Q4.In the derivatives market, as the strike price goes down, the premium of PUT option ___
 will increase
 will decrease
 there will be no change
 can increase or decrease

 

Q5.Can the exercise price be more than or equal to or less than the cash spot price?
 Yes
 No

 

Q 6. In a derivative segment, the initial margin is collected from the clearing member on a net basis ie. after netting all buy and sell positions of all clients together – State True or False?
  True
  False

 

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

 

Q 8. Trading is allowed in Indian Equity markets in which of the following –
 Index Options
 Individual stock options
 Individual stock futures options
 All of the above

 

Q 9. A seller of call option can lose unlimited amount of money – State True or False?
  True
  False

 

Q 10. Suppose you are a trading member and have bought 14 contracts of April series index futures and sold 7 contracts of April series index futures on your own account. What will be your exposure on these transactions ?
It will gross up to 21 contracts
 It will be netted to 7 contracts
 Higher of 14 and 7 ie. 14 contracts
The Stock Exchange can decide to either to gross-up or net out the exposure depending on the past record of the trading member

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