NISM Series VIII – Equity Derivatives Paper – 26

Q1.What is an Index Option?
It’s a derivative product
It essentially settled in cash
 Index options are not allowed in Indian markets
 Both 1 and 2


Q2.Can a broker take any amount of exposure once he has satisfied the minimum net worth and minimum deposit with the exchange in the form of liquid assets?


Q 3.A person who provides two-way quotes for various stocks is known as __.
 Market Maker


Q4.___ is not a derivatives market product.
 Preference Share


Q5.A mutual fund manager is bearish on the market and wishes to reduce its exposure to equities from 50% to 40%, without selling any of his equity holdings. Can he sell index futures for it?
 Yes, he can sell index futures
 No, Mutual funds are not allowed to sell index futures


Q6.In the derivative segment, once the initial margin requirement is fixed, it cannot be changed by the exchange, during the lifetime of the futures contract – State True or False?


Q7.When a PUT option on an index is exercised, the option holder receives from the option writer ____.
 A cash amount that is equal to the excess of spot price over exercise price
 A cash amount that is equal to the excess of exercise price over spot price
 A cash amount that is equal to spot price
 No amount


Q8.Netting’ is the process by which a futures contract is terminated by a transaction that is equal and opposite to the original transaction – State True or False?


Q 9. You are bullish on a stock but unsure of the overall market. The action you should take is :
 Buy Stock futures and sell Index futures
 Sell Index futures
 Buy Stock Futures
 None of the above


Q10.A trader sells a lower strike price CALL option and buys a higher strike price CALL option, both of the same scrip and same expiry date. This strategy is called ____.
 Bearish Spread
 Bullish Spread
 Long term Investment


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