NISM Series VIII - Equity Derivatives Exam Series - 17
NISM Series VIII - Equity Derivatives Exam Series - 17
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Q 1. Complete the sentence: The shorter the time to expiry of a PUT Option, the lesser will be its _______.
Assignment Value
Time Value
Intrinsic Value
Settlement Value
Q 2. Institutional investors pay lower margins than individual investors for derivatives trading - State True or False?
TRUE
FALSE
Q 3. Contract month means_____
The month in which the transaction is done
The month of expiry of the futures contract
The month of the beginning of the futures contract
None of the above
Q 4. The value of clearing members does not include -
Bad Deliveries
Doubtful Debts
Unlisted Securities
All of the Above
Q 5. Identify the correct statement for the 'In-the-money' Call Option.
The strike price will be higher than the market price
The strike price will be zero
The exercise price would be equal to the market price
The strike price will be lower than the market price
Q 6. _________ is a cost to the market participants but is not mentioned in the contract note.
Impact Cost
SEBI turnover fees
Securities Transaction Tax
Exchange transaction charges
Q 7. The mutual fund manager is bearish on the market and wishes to reduce its exposure to equities from 50% to 40%, without selling any of its 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
Q 8. Brokers and dealers of derivative exchanges must also be registered with SEBI in addition to their registration with the stock exchange - State whether True or False.
TRUE
FALSE
Q 9. When will the Clearing Corporation change the initial margin requirements?
Clearing Corporation can continuously change the initial margin requirements according to changes in market volatility
Clearing Corporation can constantly change the initial margin requirements whenever there is an increase in trading volumes
Clearing Corporation changes the initial margin requirements periodically, based on specific instructions received from SEBI
Clearing Corporation changes the initial margin requirements periodically, after each expiry date
Q 10. Mr. Ravi purchased 10 call options in stock at Rs. 20 per call with a strike price of Rs 350. If on the exercise date, the stock price is Rs. 310, ignoring transaction cost, Mr. Ravi will choose___________
to exercise the option
not exercising the option
may or may not exercise the option depending on whether he likes the company or not
may or may not depend on whether he is in town or not
Q 11. The ‘ASK’ price is always_________.
greater than the bid price
equal to the bid price
lower than the bid price
none of the above
Q 12. Forwarded contracts are OTC contracts - True or False?
TRUE
FALSE
Q 13. Which of these documents does a trading member have to issue to all its clients?
Risk Control Document
Risk Identification Document
Risk Disclosure Document
Risk Monitoring Document
Q 14. The clearing member is free to close out transactions of a trading member if ________.
The trading member has not paid the initial margin money
The trading member has not paid daily settlement dues
In both the above cases
Q 15. The time value of an option is the portion of the option premium that is linked to the amount of time left till the expiry of the option contract and also because the underlying components that determine the value of the option may change during that time - State True or False?
TRUE