NISM Series VIII - Equity Derivatives Exam Series - 22

NISM Series VIII - Equity Derivatives Exam Series - 22

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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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