NISM Series VIII - Equity Derivatives Exam Series - 14
NISM Series VIII - Equity Derivatives Exam Series - 14
Q 1. Why are the margins for calendar spreads in index futures low?
Because calendar spreads are not traded on an Exchange
Because calendar spreads are OTT transactions
Since the market risk is low in calendar spreads
Because calendar spreads are special transactions guaranteed by RBI
Q 2. Functions of a Derivative Market include _____.
Improve price discovery based on actual valuations and expectations
A shift of speculative trades from an unorganized market to organized markets
Both 1 and 2
None of the above
Q 3. In a forward contract, the party that agrees to sell the underlying asset on a certain specified date for a specific price is said to have assumed_______
Long position
square-off position
a short position
a trade-off position
Q 4. A common individual investor cannot write an option.
TRUE
FALSE
Q 5. Option premium is the price which is paid by the _______.
Option seller to option buyer
Option buyer to option seller
Option buyer and option seller for the exchange
Option buyer and option seller to a third party
Q 6. Identify the TRUE statement concerning Futures Contracts.
Futures and Forward contracts are the same
Futures contracts can be traded either on the OTC market or on an exchange
Futures contracts can only be traded on the OTC market
Futures contracts can only be traded on an exchange
Q 7. Is there higher flexibility in fixing forward contract specifications as compared to futures contract specifications - State True or False?
TRUE
FALSE
Q 8. In an American Put Option, the buyer gets the right, but not the obligation to _______ the writer an underlying asset at a specified price ________.
Buy from: on or before the expiry date
Buy from: on the expiry date
Select to: on or before the expiry date
Select to: on the expiry date
Q 9. What type of index is NSE NIFTY?
It's a price-weighted index
It's a free-float market capitalization index
It's an equally weighted index
It is a market capitalization-weighted index
Q 10. The trader took a short position on one contract in Sept ABC futures (contract multiplier 50) at a price of Rs.1800. When he closed this position a few days later, he realized that he had made a profit of Rs.5000. Which of the following closing actions would have enabled him to generate the profit? (Please ignore brokerage costs) .
Buy 1 Sept ABC futures contract at 1900
Buy 1 Sept ABC futures contract at 1700
Selling 1 Sept ABC futures contract at 1900
Selling 1 Sept ABC futures contract at 1700
Q 11. When ordinary cash dividends are declared, put option values will decrease - State True or False?
TRUE
FALSE
Q 12. An option that would give zero cash flow to its holder if it were exercised immediately is known as _______.
On the money option
Out-of-the-money option
In the money option
None of the above
Q 13. If the share price of ABC shares increases by Rs 5 and the delta of its option is 0.5, then by how much will the option price rise?
Rs. 5
Rs. 10
Rs. 2.50
Rs. 1
Q 14. Mr. Menon has bought a futures contract and the price rises. In this case, Mr. Menon will _________.
Make a profit
Make a loss
Make a profit or make a loss depending on the situation
Insufficient information to arrive at a conclusion
Q 15. Which of the below statement(s) holds for a Futures Contract?
Futures Contracts are settled through the clearing corporation of the exchange
Futures Contracts are standardized contracts
Futures Contracts are traded on an exchange
All of the above
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