NISM Series VIII – Equity Derivatives Paper – 28

Q 1. In the futures market, the basis is referred to as _____.
The beta of the future stock
The volatility of the market
The price difference between Spot and Future price
 The Bid-Ask price

 

Q 2.You have sold one lot of JSW Steel futures for Rs 300 (lot size 2000) expecting that this share price will go down. But you also want to protect yourself against any loss of more than Rs 10,000. What should you do?
 Place a limit order to buy at Rs 305
Place a stop-loss buy order at Rs 295
Place a stop-loss buy order at Rs 305
 Place a limit sell order at Rs 305

 

Q3.You sold a call option on a share. The strike price of the Call was Rs 250 and you received a premium of Rs 16 from the option buyer. What can be the maximum loss on this position?
 Unlimited
 Zero
 Rs. 250
 Rs. 234

 

Q4.Option contracts can be settled ____ .
 in cash or settled by delivery depending on the terms of the contract
 in cash or settled by delivery depending on the choice of the buyer
 in cash or settled by delivery depending on the choice of the seller
 None of the above

 

Q5.The risk-return profile of an option contract is ___.
 symmetric
 asymmetric
 like treasury bond
 like mutual funds

 

Q6.In general, terms, if the number of participants in a market is more, the liquidity will be low – State True or False?
  True
  False

 

Q7.When compared to the cash market, there are more chances that an investor does not properly understand the risks involved in the derivatives market. True or False?
  True
  False

 

Q8.Clearing Corporation of an Exchange guarantees performance of exchange-traded contracts – State whether True or False?
  True
  False

 

Q9.Mr. Sunil places a stop loss sell order on ABC stock with a trigger price of Rs. 450. The current market price of ABC stock is Rs 470. The order will be released for execution ___
 As soon as the market price of ABC touches Rs. 470
 As soon as the market price of ABC touches Rs. 450
 As soon as the order is placed in the system
 If similar orders are available in the order book at Rs. 450

 

Q10.In a Derivatives Market, the person who takes the risk is ____
 Arbitrageurs
 Speculators
 Hedgers
 None of the Above

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