NISM Series VIII – Equity Derivatives Paper – 16

Q1.You sold a Put option on a share. The strike price of the put was Rs.245 and you received a premium of Rs.49 from the option buyer. Theoretically, what can be the maximum loss on this position?
 206
 196
 49
 NIL

 

Q2.A person has bought an option so cannot lose more than the option premium paid.
 False for all types of options
 True only for American options
 True only for European options
 True for all types of options

 

Q3.Three Call series of the same strike price of State Bank of India stock-June, July, and August are quoted. Which will have the lowest option premium?
The same premium for all
 June
 July
 August

 

Q 4. The Clearing Corporation can transfer a defaulting member’s client’s position to _____.
 Liability a/c.
 Another solvent member
 Investor Protection Fund a/c.
 The Stock Exchange

 

Q 5.Mr. Nayar has purchased 8 contracts of the March series and sold 6 contracts of the April series of the NSE Nifty futures. How many lots will get categorized as Regular (non-spread) open positions?
 14
 8
 2
 6

 

Q6.___ measures the sensitivity of the option value to a given small change in the price of the underlying asset.
 Delta
 Theta
 Rho
 Vega

 

Q 7.Of the below-mentioned options, which would attract margins?
 Buyer of PUT Option
 Seller of CALL Option
 Seller of PUT Option
 Both 2 and 3

 

Q8.Mr. Singh purchases a call option on a stock at Rs. 10 per call with a strike price of Rs. 140. If on the exercise date, the stock price is Rs. 168, ignoring transaction cost, Mr. Singh will choose ____
 To exercise the option
 Not to exercise the option
May or may not be depending on the balance he has in his bank account
May or may not depend on the recommendation of experts

 

Q 9. You have bought a CALL of ITC Ltd. of Strike price of Rs 200 of January. To close the position, you will SELL a PUT of the same strike price as January. True or False?
  False
  True

 

Q10.What does a beta of more than 1 mean?
It means that the expected percentage change in stock price will be twice the percentage change in the index
It means that the expected percentage change in stock price will be less percentage change in the index
It means that the expected percentage change in stock price will be more than the percentage change in the index
It means that the expected percentage change in stock price equals the percentage change in the index

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