NISM Series VIII - Equity Derivatives Exam Series -5

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Q 1. If you buy a PUT option at a premium of Rs 37 at the Strike Price of Rs 260, then the maximum possible loss on this position is ______

Unlimited

Rs 37

Rs 297

Rs 223

Q 2. Mr. X does not hold any shares of ABC company so he cannot write a CALL option on it - State True or False?

TRUE

FALSE

Q 3. Which function of the Exchange is focused on maintaining stability in the derivatives market?

Risk Management

Investor grievance handling

Arbitration

Listing

Q 4. What is 'ASK PRICE'?

It is the price at which the market maker is prepared to lend

It is the price at which the market maker is prepared to buy

It is the price at which the market maker is prepared to sell

It is the price at which the market maker is prepared to buy or sell as per market conditions

Q 5. If there is a Stock Split of a company that is a part of an Index, then what will its impact be on the index value?

The index value can increase or decrease but this cannot be forecasted with accuracy

The index value will remain unchanged

The index value will decrease

The index value will increase

Q 6. SCORES' is the name given to ________.

SEBI’s web-based complaint redressal system

Securities Collateral Records System

Exchange’s risk management and margin system

Suspicious transaction reporting system

Q 7. Mr. Ganesh thinks that the market will go down, so he will sell 10 lots of index futures in 3500. His predictions come as the index falls and Mr. Ganesh buys back the futures contract at 3410. What is the profit Mr. Ganesh has made if one lot of index is 50?

35000

45000

55000

65000

Q 8. As per the news, the Government can lose a vote of confidence and this can affect the stock markets pretty badly. If you are an active trader, what is the ideal step you will take?

Buy index futures

Sell index futures

Double your portfolio holdings

Buy Blue Chip shares

Q 9. Identify the CORRECT statement.

Penny stocks good investment options for senior citizens

Brokers of the stock exchange are not expected to disclose the investment risks to their clients

Low-income families can use derivative instruments to get rich quickly

Sales agents of the brokers should not use high-pressure luring tactics

Q 10. Calendar spreads carry basic risk and no market risk - hence _____ margins are charged.

Higher

Lower

NIL

Very high

Q 11. A person sells one ABC Ltd. stock futures contract at Rs.268 and the lot size is 1,500. What is the profit (+) or loss (-), if he/she purchases the contract back at Rs.274?

9000

18000

-9000

-18000

Q 12. What are the Value-at-risk measures?

value of a volatile portfolio

Risk level of a financial portfolio

Value of illiquid shares portfolio

Index PE value

Q 13. The securities which are placed by clearing members with the clearing corporation as a part of liquid assets are __________.

marked to market on a periodical basis

are not marked to market as they are blue chip shares

may or may not be marked to market depending on the decision of the Stock Exchange

None of the above

Q 14. In an 'In the money' PUT option____

strike price would be lower than the market price

exercise price would be equal to the market price

strike price would be higher than the market price

strike price would be zero

Q 15. If futures prices are lower than the spot price of an asset, market participants may expect the spot price to come down in the future. This situation is called –

Contango

Reverse System

Backwardation

Impact costs

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