NISM Series VIII - Equity Derivatives Exam Series - 22
NISM Series VIII - Equity Derivatives Exam Series - 22
Q 1. The price of Stock P and the price of Stock Q are the same at Rs. 500. If everything else is constant and if Stock P is more volatile than Stock Q, the call option on ______ will be priced higher.
Stock P
Stock Q
Both calls will be equally priced
Inadequate information
Q 2. The strike price is that price at which the ________ can purchase (in case of a call) or sell (in case of put) the underlying asset by exercising the option.
Option Buyer
Option Writer
Clearing Corporation
Options Stock Exchange
Q 3. The margining system for indexed futures is based on _______.
Margin at risk
Price at risk
Volume at risk
Value at risk
Q 4. The BID PRICE is always __________.
Higher than ASK PRICE
Lower than ASK PRICE
Equal to ASK PRICE
Higher than the market price
Q 5. The initial margin in the derivatives market depends on the volatility of the underlying market. Usually _________.
The higher the volatility, the lower the initial margin
The higher the volatility, the Higher the initial margin
Lower the volatility, Higher the initial margin
None of the above
Q 6. The trader takes a short position on the call option but does not take any offsetting position on the underlying stock. What is this strategy known as?
Protective Put strategy
Writing a naked call
Writing a covered call
Butterfly strategy
Q 7. The clearing corporation may utilize the client account margins deposited with it to fulfill the dues that a clearing member may owe to the clearing corporation for the trades on the clearing member's account. State True or False?
TRUE
FALSE
Q 8. When a call option is ‘ In The Money ‘ – the _______________.
Strike Price is lower than Spot Price
Strike Price is higher than Spot Price
Strike Price is the same as Spot Price
None of the Above
Q 9. Delta has a change in option price given a one-day decrease in time for expiration - State True or False?
TRUE
FALSE
Q 10. State whether True or False - The Clearing Corporation of an Exchange has the power to disable a defaulted clearing member from trading further.
TRUE
FALSE
Q 11. If the price volatility of the underlying stock is high then the Put option will _____.
have zero premium
have a comparatively lower premium
have a comparatively higher premium
Volatility does not have any effect on the Put options
Q 12. Identify the True formula for the Cost of Carry model.
Price of Futures = Cost of carry
Prices of Futures = Spot price
Price of Futures = Spot + Cost of carry
Prices of Futures = Spot - Cost of carry
Q 13. A stock index like Nifty ______.
is a basket of stocks
can be easily manipulated
Both 1 and 2
None of the above
Q 14. Three Call series of the same strike price for State Bank of India stock-June, July, and August are quoted. Who will have the lowest option premium?
The same premium for all
June
July
August
Q 15. The gain or loss is realized daily due to mark to market mechanism in which of the following contracts?
Forward Contracts
Contracts in Swaps
Future market contracts
Equity Cash Market contracts
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