NISM Series VIII - Equity Derivatives Exam Series - 12

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Q 1. The trader sold the call option on a share strike price of Rs. 200 and received a premium of Rs. 12 from the option buyer. What could be his maximum loss in this position?

Rs 200

Rs 188

Rs 12

Unlimited

Q 2. The process by which a futures contract is terminated by a transaction that is equal and opposite to the original transaction is called __________.

netting

offsetting

hedging

mark to market

Q 3. The settlement in the futures contract happens only in __________.

Cash

Physical Delivery

Cash or Delivery

None of the above

Q 4. A buyer of the Out-Of-the-Money (OTM) Call option is _______.

Bullish and pays the premium

Bullish and receives the premium

Bearish and pays the premium

Bearish and receives the premium

Q 5. When the volatility of the underlying stock decreases, the premium of its Call option will _______.

A) Speculators to Hedgers

B) Arbitrageurs for Hedgers

C) Speculators for Arbitrageurs

D) Hedgers to Speculators

Q 6. What advantages does screen-based trading have over floor trading?

There are no set-up costs in screen-based trading

There is transparency in trade execution and execution prices

Technology needs are lower

There is no need to route the order through an exchange

Q 7. When a person enters into a forward contract, the loss that can occur on the position is _____.

known

unknown

Q 8. In the case of Bonus shares, the new option strike price has arrived at by ______ the old strike price by the adjustment factor.

adding

dividing

subtracting

multiplying

Q 9. When would a trader make a profit on a short position of September futures?

when he buys an October future at a lower price

when he sells another September future at a lower price

he squares off on this short position by buying the September future at a lower prices

when he sells October futures at a lower price.

Q 10. When a stock that is part of the index has a stock split, it does not have an impact on the index.

TRUE

FALSE

Q 11. _______ gives the right to sell an asset for a certain price on or before a specified date.

European Call option

European Put option

American Call option

American Put option

Q 12. Delta is the change in option price given a one percentage point change in risk-free interest rates - State True or False?

FALSE

TRUE

Q 13. When does the monthly series mature for Nifty index futures of NSE?

First Wednesday of the month

First Thursday of the month

Last Wednesday of the month

Last Thursday of the month

Q 14. 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?

TRUE

FALSE

Q 15. An Index Option is ______.

a derivative product

settled in cash

rarely traded on the Indian stock exchanges

Both 1 and 2

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