NISM Series VIII - Equity Derivatives Exam Series - 21

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Q 1. At what price can a trader place a bid or offer for a script?

At a price that is within the daily circuit filter limits

At a price which the trader wishes

At the price negotiated between the exchange and the member

At a price which the trader deems fit

Q 2. Does the difference between the exercise price of the option and the spot price affect the option premium? State: Yes or No.

Yes

No

Q 3. The longer the expiry/maturity of the call option, the higher the time value.

FALSE

TRUE

Q 4. Mr. Subu has a buy position in a stock, he can square off his long position in the stock by selling ____.

Any index stock in equal quantity

Any security of equal quantity

The same stock and the same quantity

Any 'A' group stock in equal quantity

Q 5. Which type of order will you place to buy/sell a certain quantity of a share at a specified price or better?

All or no order

Limit order

Market order

Good for day order

Q 6. Future prices are usually more transparent than Forward prices - State True or False?

TRUE

FALSE

Q 7. A penalty or suspension of registration of a stockbroker from derivatives exchange/segment under SEBI (Stock Broker and Sub-broker) Regulations, 1992 can take place if ______.

Stock broker fails to resolve the complaints of the investors

The stock broker indulges in manipulating, price rigging, or cornering the market

The stock broker does not follow the code of conduct

All of the above

Q 8. Identify the strategy that will be most appropriate when volatility is expected to be very low.

Short Straddle

Short Butterfly

Long Butterfly

Long Straddle

Q 9. Securities Transaction Tax (STT) is levied on ________.

Purchase of Equity Shares

Sale of Derivatives

Purchase of Derivatives

Only 1 and 2

Q 10. A defaulting member's client's positions could be transferred to ____________ by the Clearing Corporation.

Suspension account

Another solvent member

The Exchange

Error account

Q 11. You have a short position in LP Stock futures at Rs 350 (one lot size is 500 shares) and you have made a profit of Rs 28000. To do this you will have to :

Sell one lot ar Rs 406

Sell one lot at Rs 294

Buy one lot at 406

Buy one lot at Rs 294

Q 12. Mr. Manoj is a nifty trader and feels that nifty has fallen sharply in the last few days to 17500 levels and should bounce back to 17700 levels over the next week. What option-based strategy should Mr. Manoj use to back his view?

He should have taken a long position in the 17500 call and a short position in the 17700 call

He should have taken a long position in the 17500 puts and a short position in the 17100 put

He should have taken a short position in the 17500 call and a short position in the 17100 call

He should have taken a short position in the 17500 call and a long position in the 17700 call

Q 13. A ‘European’ call option will give the buyer the right, but not the obligation, to buy from the seller an underlying at the strike price ________.

Only on the expiry date

On or before the expiry date

One day preceding the expiry date

One day after the expiry date

Q 14. When there is a ‘Closing buy transaction’, this will have the effect of being partly or fully offsetting ________.

Cross position

A short position

A high position

Long position

Q 15. You sold the 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 for this position?

Unlimited

Zero

Rs. 250

Rs. 234

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