NISM Series VIII – Equity Derivatives Paper – 22

Q1.The system in which trading is done through various computers which are attached to a central computer is called Online trading.


Q2.An option with zero intrinsic value is called ____.
 OTM – Out of The Money option
 ATM – At The Money option
 ITM – In The Money option
 Both – At The Money and Out of The Money options


Q3.An exchange-traded option after maturity ____.
Can be traded after 2 days ie. after pay-in / payout.
 Can be traded in the spot market
 Cannot be traded
 None of the above


Q4.Tick size depends on –
 The Delta of the security
It’s fixed by the exchange
 Volume in that security
 The Interest rates


Q5.If you are a seller of a put option, you expect _____.
 No change in the price
 Increase in the price
 Decrease in the price
 Both 1 and 2


Q 6. To whom is a high impact cost beneficial?
 Only buyers
 Only sellers
 Neither buyers nor sellers
 Only arbitrageurs


Q 7.The Option which gives its holder a positive cash flow is called a ____.
 At the money option
 Out of the money option
 In the money option


Q8.The major reason for collecting a high initial margin is to improve the solvency of the clearing corporations.


Q 9. A call option gives its holder the right to buy ‘any quantity of the underlying asset from the writer of the call option at a pre-specified price – State True or False?


Q10.A short position in a PUT option can be closed out by taking a long position in the same PUT option – State True or False?

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