NISM Series VIII - Equity Derivatives Paper - 08
| Q1.A trader believes that the future price of QPR company will rise and being a smart trader he will ____. |
| sell QPR futures now and buy them later when the price rises |
| buy QPR futures now and sell them later when it rises |
| wait till the price of QPR futures and cash market price become the same |
| wait till the prices drop to the lowest level |
| Q2.The rate of change in option premium for a unit change in the price of the underlying asset is known as Delta - State True or False? |
| False |
| True |
| Q3.What is done if a client defaults in making payments in respect to his daily settlement? |
| The contract is transferred to a special 'Default Account' |
| The contract is closed out |
| The contract is transferred to another clients account that has sufficient funds |
| Weeks notice is given to that client |
| Q4.Does a high initial margin level improve the solvency & financial capability of the clearing corporation - True or False? |
| True |
| False |
| Q5.What is a covered call? |
| It's a strategy to sell calls at various strike prices to profit from the premium received |
| It is used to generate extra income from existing holdings in the cash market. |
| Its a strategy of buying a call and sell its future for hedging |
| It's done by buying a call and put in the same strike price. |
| Q6.In a futures contract, the clearinghouse/clearing corporation practically becomes the counterparty for all transactions - State True or False? |
| True |
| False |
| Q7.Daily ‘Trading Price Limits’ define the maximum percentage by which the price of a futures contract can rise above or fall below the previous day's settlement price - State whether True or False? |
| True |
| False |
| Q8.A person who is bullish and a payer of premium is a ___. |
| buyer of a call option |
| seller of a call option |
| buyer of put option |
| seller of put option |
| Q9.A trader buys a June XYZ stock futures contract at Rs 242. After a few days, the price of XYZ futures was Rs 269. What will be your profit/loss if you square up your position? ( The market lot of XYZ share is 1000 ) |
| -20000 |
| -27000 |
| 20000 |
| 27000 |
| Q10._____ risk is the component of price risk that is unique to particular events of the company and/or industry and this risk could be reduced to a certain extent by diversifying the portfolio. |
| Unsystematic Risk |
| Systematic Risk |
| Arbitrage Risk |
| Interest Rate Risk |