Derivative questions.docx

8/10/2019 Derivative questions.docx

1/42

Current Feed Content Derivatives Dealers 19

Posted: Mon, 04 Mar 2013 13:27:00 +0000

1-The buyer of an option can lose no more than the option premium paida) True b) False

2-Only shareholders of company can write an option.a) Trueb) False

3-Stock price is same asa) Strike priceb) Exercise pricec) Price of the underlying d) None of the above

4-Higher the volatility of the stock, lower the premium the call option would fetch.a) Trueb) False

5-Daily Mark-to-market margin for index futures contracta) is calculated on the daily closing price of index futures

b) is calculated on the basis of weighted average of the index.c) is calculated on the basis of average of last 30 minutes values of the index.d) None of the above

6-The margin requirements for the derivatives segment would be prescribed bya) The SEBIb) The Stock Exchange c) The RBId) None of the above

7-Margins in Futures trading are to be paid by a) only the buyerb) only the sellerc) both the buyer and seller d) the clearing corporation

8-The derivatives market would be under the same governing council as the cash segment in one

exchangea) Trueb) False

9-You have bought Satyam Call strike price Rs. 240 at a premium of Rs.25. Lot size is 1,200. What is your profit (+) or loss(-) if you sell the Call at Rs40?a) Rs.19,000b) Rs.17,000c) Rs.18,000 d) None of these

10-. . . . .S&P CNX Nifty is based on the price of 50 securities only.a)True b)False

Derivatives Dealers 18 Posted: Sun, 03 Mar 2013 13:26:00 +0000

1-. . . . .Stock index futures are financial futures.a) True b) False

2-Volatility of prices of the underlying assets and dividend yield do not affect the option values.a) Trueb) False

3-In an In-the-money call option the exercise price would be lower that the market price.a) True b) Falsec) True only in Mumbai
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/jn-M1fN1iDI/derivatives-dealers-19.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/jn-M1fN1iDI/derivatives-dealers-19.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/puc2ya1HRdE/derivatives-dealers-18.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/puc2ya1HRdE/derivatives-dealers-18.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/puc2ya1HRdE/derivatives-dealers-18.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/jn-M1fN1iDI/derivatives-dealers-19.html


2/42

d) None of the above

4-Intrinsic value of an option cannot be negative.a) True b) False

5-Premium of Infosys call option can be more than market price of Infosys.a) True

b) False c) True only in USAd) True only in Japan

6-With decrease in strike price, the premium on call decreases.a) Trueb) False c) True only in USAd) True only

7-Buyer of OTM put option isa) bullish - payer of premiumb) bullish - receiver of premiumc) bearish - payer of premium d) bearish - receiver of premium

8-An investor entering into a bear spread is expecting

a) increase in the price of underlying assetb) decrease in the price of underlying asset c) no change in the price of underlying assetd) Cannot Say

9-In an European option, the exercise date and expiration datea) always differ.b) may be the same.c) are necessarily the same. d) None of the above.

10-Time value and intrinsic value together comprise option premium.a) True b) False

Capital Market 3 Posted: Thu, 14 Feb 2013 10:53:00 +0000

1.A stock broker, whose application for grant of a certificate has been refuses by the board-A. shall not, on& from the date of the receipt of the communication buy ,sell, or deal in securities as a stock brokerB. can start his normal trading as a stock broker after 2 monthsC. only AD. Both A & B

2.When a stock broker fails to pay the fees as provided in regulation, the board may suspend the ____________.A. Driving licenseB. Ration cardC. Registration certificateD. Pan card

3.The eligible criteria for registration as a sub broker (an individual) shall be as follows:A. The applicant is not less than 21 years of age & has not been convicted of any offence involving fraud or defaultB.He has at least passed 12th standardC. He is a fit & proper personD. All of the above

4.Which is the following can apply to SEBI for registration?A. Stock-brokerB. Sub-brokerC. Both a & bD. None of the above

5.An applicant who desires to act as a clearing member, in addition to complying with the requirements of the regulation, shall have a minimum networth of Rs _____lacs & shall deposit at least a sum of Rs _________ lacs of higher amount with the clearing house of the derivative exchange orderivative segment in the form specified from time to time
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/kwpk-um54mU/capital-market-3.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/kwpk-um54mU/capital-market-3.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/kwpk-um54mU/capital-market-3.html


3/42

A. 200, 150B. 100, 50C. 150, 300D. 400, 500

6.________ handles the complaints received by the investors against the trading members.A. Investor Grievance cellB. Investor Appeal court

C. Investor Dispute CourtD. Consumer Law Court

7.Which type of arbitrator is appointed if the claim amount is up to Rs. 25 lakhs?A. A panel of ArbitratorB. A sole ArbitratorC. Depends on the clientD. None of the above

8-How much would we pay for Rs. 121.67, to be received five years in future, if our opportunity cost were 4% ?A. 100B. 121.67C. 112D. 105

9.What is the present value of Rs. 6000 receivable after two years at a discount rate of 5% under continuous discounting?

A. Rs. 5429.02B. Rs. 6000C. Rs. 6900D. Rs. 5900

10.The Future value of Rs. 10000 investment done today, which gives an annual rate of return of 20% per annum, after one year should be________.A. Rs. 12200B. Rs. 12500C. Rs. 12000D. Rs. 12640

Capital Market 2 Posted: Wed, 13 Feb 2013 10:39:00 +0000

1-The status of a security is indicated in the screen market by price. P

indicates that the security is in the _____________ & S

indicates that thesecurity is_____________.A. Pre-open phase, suspended. B. Purchased, sold.C. Profit, special.D. Purchased, special term order

2-Who settles the trades executed at NSE?A. NSDLB. Clearing membersC. SEBID. NSCCL

3-In the current scenario, which system is followed for settlement of cash market tr ansaction?A. T+1B. T+5C. T+2D. T day

4-.Who provides for electronic transfer of securities in the stock market?A. RBIB. DepositoriesC. Clearing AgenciesD. SEBI

5-Name the depository from the list given below.A. NSEB. NSCCL
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/jVZXDrBjh98/capital-market-2.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/jVZXDrBjh98/capital-market-2.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/jVZXDrBjh98/capital-market-2.html


4/42

C. NSDLD. RBI

6-Who moves the securities available in the account of the members to the NSCCL?A. Clearing banksB. CustodiansC. Clearing membersD. Depositories

7-Which agency links Clearing Members & NSCCL for funds settlement?A. Clearing BanksB. Depositories C.Clearing membersD.NSE

8-The Board shall take into account for considering the grant of a certificate for all matters relating /dealing in securities & in particular the following ,namely, whether the stock broker:A. Is eligible to be admitted as a member of a stock exchangeB. Has the necessary infrastructure like adequate office space, manpower etc.C. Is subjected to disciplinary proceedings under the rules, regulations & bye-laws of a stock exchange with respect to his business as a stock-brokerD. All of the above

9-An applicant, whose registration certificate has been refused by the Board, may reapply within a period of _________ from the date of receipt of suchintimation, to the board for reconsideration of its decision.A. 30 days

B. one monthC. 15 daysD. 6 months

10-Name the special category of members admitted by NSCCL as clearing members.A. Supporting clearing memberB. CustodiansC. Registered clearing memberD. Professional clearing member

Capital Market 1 Posted: Tue, 12 Feb 2013 10:35:00 +0000

1-The first ticker window, by default, displays all the _____________ traded in the future & option segment.A. Derivatives contract. B. Nifty securities.C. Mid cap Securities.D. Nifty junior stocks.

2-The ticker selection facility is confined to the securities of ______________ segment only.A. Derivative market.B. Capital market.C. Commodity market.D. Auction market.

3-The message window enables the user to view messages broadcast by the__________ such as corporate actions, any market news etc.A. Exchange. B. RBI.C. GOVT.

D. CRISIL

4-The one line market information displayed in the market watch screen is for current best price orders available in the _______________ .A. Odd lot book.B. RETDEBT book.C. Regular lot book.D. Auction order book

5-One of the best features of NEAT software is that the user has the facility to set up___ securities in the market watch.A. 100B. 150C. 500
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/yuIiKubGG28/capital-market-1.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/yuIiKubGG28/capital-market-1.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/yuIiKubGG28/capital-market-1.html


5/42

D. 400

6-The purpose of market by price is to enable the user to view ________________ in the market aggregated at each price & is displayed in order ofbest prices.A. Outstanding orders.B. Outstanding auctions.C. Outstanding buyers.

D. Outstanding sellers

7-Bank Guarantee can be submitted as .....to NSCCL by trading memberA.warrentyB.suretyC.Additional base capitalD.None of these

8-A depository is an entity where securities of the investors are held inA.Physical formB.Electronic and physicalC.Electronic formD.None of the above

9-Member wise margin payment status report is aA.weeklyB.daily

C.monthlyD.None of the above

10.If .....attempts are made by user to log on with an incorrect password then the user is automatically disabledA.5B.4C.3 D.2

Derivatives Dealers 17 Posted: Fri, 08 Feb 2013 13:24:00 +0000

1-A forward contract is an agreement to buy a certain asset at a certain future date for a price to bedetermined in the future.a) Trueb) False c) True only in Europed) True only in Africa

2-In the olden days, the area within the exchange where trading was conducted through open outcry,was known as the Pit.a) True b) Falsec) none of the above

3-If the price of the underlying asset rises sharply after the initiation of a futures contracta) the long position becomes profitable b) the long position becomes unprofitablec) the short position becomes profitabled) none of the above

4-You can buy index futures in India regardless of whether you own the index shares or not.a) True b) Falsec) True only in Mumbaid) True only in Delhi

5-A scarce supply of the actual commodity generally causes futures price to fall.a) Trueb) False c) True only in Mumbaid) True only in Delhi

6-How are prices fixed in case of a forward contract?a) They are decided at the time of entering into the contract. b) They are decided at the end of the contract period
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/pMBgnBWBdew/derivatives-dealers-17.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/pMBgnBWBdew/derivatives-dealers-17.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/pMBgnBWBdew/derivatives-dealers-17.html


6/42

c) They are decided and revised from time to time based on market conditiond) None of the above

7-Future contracts are usually much more liquid than the Forward contractsa) True b) Falsec) None of the above

8-The settlements of a forward contracts takes place on the date of maturitya) True b) Falsec) None of the above

9-You bought January Satyam Futures @ Rs 268 and the lot size is 1,200. What is your profit (+)or loss(-) if you sell at Rs 225 ?a) -50,600b) -51,600 c) -52,600d) None of these

10- . . . . . .The stock index future were first introduced at CBOT in USAa) Trueb) False (Ans-Kansas city board of trade)

Derivatives Dealers 16 Posted: Fri, 25 Jan 2013 20:29:00 +0000

Q1. If an option is out of the money and the strike price of the option is lower than the spotprice of the underlying, then we are referring to ____.

A Put Option A Call option An European Option An American option

Q2. Nifty is at 5200. A put option at 5000 strike price is trading at Rs . 150. What is theintrinsic value of the option?

150 200 0 350

Q3. Which of the following is an exchange traded contract?

Futures on Nifty

Forward contract on oil A 10 year loan An interest rate swap

Q4. All December 2009 stock Futures contracts traded on NSE will expire on :

3rd Thursday of December 2009
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/IYPD6ghYf54/derivatives-dealers-16.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/IYPD6ghYf54/derivatives-dealers-16.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/IYPD6ghYf54/derivatives-dealers-16.html


7/42

Exchanges decides on expiry day and will update the investors on 1st December 2009 Last Thursday of December 2009 Last Friday of December 2009

Q5. Nifty is at 3900. What should be the fair price of Nifty futures expiring 180 days from

today. Risk free rate is 8% p.a.

4027 4083 4059 4031

Q6. Derivatives help in ____.

Improving Market Efficiency Risk Management Price Discovery of the underlying All of the above

Q7. An investor is long 2 contracts of Nifty futures purchased at Rs. 5035 each. The next morning a scam is disclosed of a la rge company because ofwhich markets sell off and Niftyfutures goes down to Rs. 4855. What is the mark to market for the investor? (1 Nifty contract is 50 shares).

Rs. 18000 Rs. -9000 Rs. 9000 Rs. -18000

Q8. The parties for the Futures contract have the fl exibility of closing out the contract priorto the maturity by squaring off the t ransactions in the market. State true or f alse.

FALSE TRUE

Q9. An investor has Unitech shares in her portfolio. RBI is increasing interest rates which isnegative for the stock. She wants to protect the downside in the stock as she feels RBI willdecide on increasing interest rates in the next 3 months. What should she do?

Buy 2 month put option of Unitech

Buy 1 month put option of Unitech Buy 3 month put option of Unitech Buy 3 month call option of Unitech

Q10. An investor sells 3 lots of Nifty futures at Rs. 5231 each. On that day Nifty closes at Rs.5310 in the futures market. What is t he mark to market for the investor if any? One lot of Niftyis 50 shares


8/42

Profit of Rs. 13000 Profit of Rs. 11000 Loss of Rs. 11850 Loss of Rs. 10000

Derivatives Dealers 15 Posted: Thu, 24 Jan 2013 11:30:00 +0000

Q1. Nifty futures is trading at Rs. 3975 and an investor buys a 4000 call for current monthfor Rs. 100. What should be the closing price of Nifty only above which the investor starts tomake Profits if he holds his long option position? 1 lot of Nifty = 50 shares.

4000 4100 4075 3975

Q2. An investor buys 2 contracts of TCS futures for Rs. 570 each. He sells of one contract atRs. 585. TCS futures closes the day at Rs. 550. W hat is the net payment the investor has topay/ receive from his broker? 1 TCS contract = 1000 shares

Receive Rs. 15000 from the broker Pay Rs. 5000 to the broker Receive Rs. 5000 from the broker Pay Rs. 20000 to the broker

Q3. Nifty futures is trading at Rs. 4955. An investor feels the market will not go beyond5100. He can ____.

Sell 5000 Nifty put Sell 5100 Nifty put Sell 5100 Nifty Call Sell 5000 Nifty call

Q4. The maximum expiry for individual stock options contract is :

6 months 3 months

1 months 2 months

Q5. SBI is trading at Rs. 1800 in the cash market. What would be the price of SBI futuresexpiring three months from today. Risk free rate = 8% p.a.

1844 1836
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/jt8JukxJGjY/derivatives-dealers-15.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/jt8JukxJGjY/derivatives-dealers-15.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/jt8JukxJGjY/derivatives-dealers-15.html


9/42

1895 1814

Q6. Security descriptor for stock Futures contract is :

OPTSTK FUTSTK OPTIDX FUTIDX

Q7. Nifty futures is trading at Rs. 3325 and an investor buys a 3400 call for current monthfor Rs. 100. What should be the closing price of Nifty only above which the investor starts tomake Profits if he holds his long option position? 1 lot of Nifty = 50 shares.

3400 3325

3500 3425

Q8. Like Futures contracts there is daily settlement of options contracts.

depends on the expiry TRUE FALSE depends if the option is call or put

Q9. An investor bought a put option on a stock with a strike price Rs. 2000 for Rs. 200. Theoption will be in the money when _______.

The stock price is greater than Rs. 2200 The stock price is less than Rs. 2000 The stock price is less than Rs. 1800 The stock price is greater than Rs. 2000

Q10. The value of a put option is positively related to all of t he following EXCEPT:

exercise price

risk-free rate time to maturity

Derivatives Dealers 14 Posted: Wed, 23 Jan 2013 20:24:00 +0000
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/qA9vcxlYG90/derivatives-dealers-14.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/qA9vcxlYG90/derivatives-dealers-14.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/qA9vcxlYG90/derivatives-dealers-14.html


10/42

Q1. An investor buys a 1 lot of Nifty futures at Rs. 4927 and sells it at Rs. 4567 If onecontract is 50 shares what is the Profit/ Loss in the transaction?

Profit Rs. 18000 Loss Rs. 22000 Loss Rs. 18000

Profit Rs. 22000

Q2. When the strike price is lower than the spot price of the underlying, a call option will be ____.

At the money Out of the money In the money American Type

Q3. As more and more ____ trades take place, the difference between spot and futures priceswould narrow.

arbitrage delta speculative hedge

Q4. In a business daily to get information about the top gainers in the futures market, one hasto look in the heading :

Open Interest Positive trend Negative trend Contract details

Q5. Which of the following is NOT a hedge for a long position in an underlying stock?

Sell put option Sell call option Sell futures Buy Put option

Q6. TCS is trading at Rs. 420 in the spot market and Rs. 435 in the futures market. Is therean arbitrage opportunity? The Futures contract is settling today.

Yes Depends on Market Sentiment No


11/42

Q7. All Stock Options are American in nature.

FALSE TRUE

Q8. On 1st January, SBI is trading at Rs. 2310. An investor is bullish on the company becauseof the earnings of last quarter and buys a SBI futures at Rs. 2310. He sells SBI futures at Rs.2335. What is the Profit / Loss fo r the investor if 1 lot of SBI is 250 shares?

Rs. -6250 Rs. 6250 Rs. 0 Rs. -10000

Q9. In India, all Options traded on Nifty are :

European options Asian Options American options Continental Options

Q10. Reliance is trading at Rs. 1520 in the cash market. What should be the fair price ofReliance futures expiring 90 days from today. Risk free rate is 8% p.a.

1563 1529

1551 1537

Derivatives Dealers 13 Posted: Thu, 17 Jan 2013 19:30:00 +0000

Q1.Which of the following cannot be an underlying asset for financial derivative contract?

1. Equity index

2. interest rate

3. commodities

4. foreign exchange

Q2. in an option contracts, the option lies with the . . . .

5. buyer

6. seller

7. both

8. exchange
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/QdW7srnOYzk/derivatives-dealers-13.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/QdW7srnOYzk/derivatives-dealers-13.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/QdW7srnOYzk/derivatives-dealers-13.html


12/42

Q3. the potential returns on a future positions are

9. limited

10. unlimited

11. a function of the volatility of the index

12. none of the above

Q4. The maximum brokerage chargeable by trading member in relation to trades effected in the contracts on the f&o segment of the nse is fixed at . .. of the contract value, exclusive of satutory levies.

13. 1.5%

14. 2.0%

15. 1%

16. 2.5%

Q5. The best buy order for a given future contracts is the order to buy the index at the . . . . . .

17. highest price

18. lowest price

19. average of the highest and lowest price


Q6. SPAN is a . . . . .based margining system

21. portfolio

22. options

23. futures

24. derivatives

Q7. The regulatory framework for the derivative market in india has been developed by the . . . .

25. L.C.Gupta committee

26. A.C.Gupta committee

27. J.R.Verma committee

28. None of the above

Q8. The clearing member has to maintain a minimum liquid networth of . . . .

29. 35 Lakh

30. 80 Lakh

31. 50 Lakh

32. 20 Lakh

Q9. The daily settlement price for index futures shall be decided by

33. SEBI

34. the Reserve Bank of India

35. the Clearing Corporation / house



13/42

Q10. You bought January Satyam Futures @ Rs 268 and the lot size is 1,200. What is your profit (+)or loss(-) if you sell at Rs 225 ?

37. -50,600

38. -51,600

39. -52,600

40. None of these

Derivatives Dealers 12 Posted: Wed, 16 Jan 2013 19:30:00 +0000

Q1. Liquidity risk can be caused by

0. sale of large number of shares which depress price significantly.

1. high market capitalisation

2. failure of VSAT.

3. low market capitalisation

Q2.The securities which are not delivered in the clearing house during pay-in, are purchased by the clearing house from the market. This process isknown as

4. close-out

5. penalty

6. auction

7. upla badla

Q3. Forward contract is a good means of avoiding price risk, but it also entails element of risk because

8. The contract is not standardised

9. The party to the contract may not honour its part of obligation and default .

10. The contract value is fixed11. None of the above

Q4. The shares of XYZ Ltd are currently quoted at Rs 100. Futures on this share are quoted at Rs 110. In what situation would you buy these futures?

12. You expect the price of the share to move up by 5%




Q5.A trader bought 10 Jan Sensex contracts at the BSE. How will the trader close out this position in the market?

16. Sell 10 Jan sensex contracts

17. Sell 15 Feb. nifty contracts

18. Buy 15 March sensex contracts

19. Buy 15 March nifty contracts

Q6. An Over The Counter option
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/6aRhniixcT8/derivatives-dealers-12.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/6aRhniixcT8/derivatives-dealers-12.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/6aRhniixcT8/derivatives-dealers-12.html


14/42

20. is a standardised contract traded on an Exchange

21. is a contract tailored to suit individual requirements

22. is an option on stocks of pharmaceutical companies

23. can be bought from any option writer

Q7. An investor is bullish on a particular stock, but does not possess liquid cash to buy the scrip.What should he do?

24. buy an index-future

25. wait till he saves enough money

26. do nothing

27. buy an option on the particular stock

Q8. Three Call series of Sesa goa - March, April and May are quoted. Which will have the lowest Option Premium?

28. April

29. May

30. March

31. All will be equal

Q9. the amount that must be deposited in the margin account at the time a future contracts is first entered into is known as . . . . .

32. Initial Margin

33. Mark-to-Market

34. Maintenance Margin


Q10. Index Options, have index as the underlying.

36. True

37. False

38. True not in India

39. False not in india

Derivatives Dealers 11 Posted: Tue, 15 Jan 2013 13:56:00 +0000

Q1. Each forward contract0. can be structured as required by the buyer and seller

1. will have the same specifications

2. specifications are decided by the RBI

3. None of the above .

Q2. A forward contract is an agreement to enter into a contract at a pre-specified future date.4. True

5. False

6. True only in Europe

7. True only in Africa
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/R1OJo0zhdOQ/derivatives-dealers-11.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/R1OJo0zhdOQ/derivatives-dealers-11.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/R1OJo0zhdOQ/derivatives-dealers-11.html


15/42

Q3. A Call Option gives the Holder the right8. to buy the underlying asset

9. to sell the underlying asset

10. to either sell or buy the underlying asset, as he wishes


Q4. Which of the following is true?12. European options can be exercised anytime before the expiration date

13. European options can be exercised on or before the expiration date

14. European options must be exercised on the expiration date

15. European options can be exercised only on the expiration date

Q5. An European Option16. can be exercised anytime during the life of the Option

17. can be exercised only at maturity

18. is traded only on the European Exchange

19. is a floating rate option

Q6. The holder of a long position in call option benefits if the price of underlying asset20. increases

21. decreases

22. does not change

23. can not say

Q7.In an options contract on futures, the underlying asset is a24. Present contract

25. Past contract

26. Futures contract

27. None of the above.

Q8. The bid is the price at which market maker is prepared28. to buy.

29. to sell.

30. to remain idle


Q9. An investor has open position of 10 contract long, 10 contract long and 10 contract short insensex future March, April and May series respectively. What are her spreads acrossMarch-April?

32. 0

33. 10

34. 20

35. None of these

Q10. If you have short sold a Sensex fu ture at 3000 and bought it at 3100, what is your gain / loss?36. A loss of Rs. 5000

37. A gain of Rs. 500

38. A gain of Rs. 5000

39. A loss of Rs. 500


16/42

Derivatives Dealers 10 Posted: Mon, 14 Jan 2013 07:35:00 +0000

Q1. At the end of each t rading day, the Clearing House process of settling your account on a cash basis(funds added to your balance if your positionhas made a profit, deducted if you sustained a loss) is called:a) Marking to the market. b) Performance bond call.c) Maintenance performance bond call.d) Initial performance bond call.

Q2. Daily mark-to-market margin payments arise on adverse positions resulting from price movements in futures.a) True b) Falsec) True only in 2001d) True only in 2012

Q3. Mark-to-market margins will be collected on aa) Weekly basisb) every 2 daysc) every 3 daysd) daily basis

Q4. Who will be eligible for clearing trades in stock futures?a) All Indian citizensb) All members of the BSEc) Only members who are registered with the Derivatives Segment as Clearing Members d) All of the above

Q5. The daily settlement price for index futures shall be decided bya) SEBIb) the Reserve Bank of Indiac) the Clearing Corporation / house d) None of the above

Q6. An investor has open position of 10 contract long and 20 contract short in sensex future March and April series respectively. What are heropen positions in March series after considering the spread position.a) 0 b) 10c) 20d) None of these

Q7. If you have short sold a Sensex future at 3000 and bought it at 3100, what is your gain / loss?a) A loss of Rs. 5000 b) A gain of Rs. 500c) A gain of Rs. 5000d) A loss of Rs. 500

Q8.S&P CNX Nifty is a market- capitalization weighted indexa) Trueb) Falsec)none of the above

Q9. Computational methodology followed for construction of stock market indices area) Free Float Market Capitalization weighted Indexb) Market Capitalization weighted indexc) Price Weighted Index.d) True all of them

Q10. . . . . . are private agreements between two parties to exchange cash flow in future according to prearranged formula , They can be regarded asportfolio of forward contracts .a) Swapsb) warrantsc) basketsd) leaps
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/yRGWudAwe1E/derivatives-dealers-10.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/yRGWudAwe1E/derivatives-dealers-10.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/yRGWudAwe1E/derivatives-dealers-10.html


17/42

Derivatives Dealers(9) Posted: Wed, 09 Jan 2013 09:00:00 +0000

Q1.Which of the following is NOT an example of a forward contract?a) An agreement to buy a car in the future at a specified price.b) An agreement to buy an airplane ticket at a future date for a certain pricec) An agreement to buy a refrigerator today at the posted price. d) An agreement to subscribe to a newspaper at a specified price at a future date.

Q2. Futures on individual stocks are alloweda) on all stocks listed on the stock exchangeb) on few selected stocks only c) on all stocks listed on all stock exchanges in Indiad) on all stocks where price is more than Rs 100 per share

Q3.A rice exporter will be purchasing rice soon. He is afraid that higher prices could wipe out his potential profits. What can the rice exporter do in thefutures market to minimize his price uncertainty?a) He can sell Rice Futures.b) He should buy Rice Futures c) He cannot get any help from Futures and Options.d) He should not get into Rice business.

Q4. An exchange traded futures contract is similar to an OTC (over the counter) derivative. Some common features are :a) Both are tailored (e.g. non-standardised) instrumentsb) Both require margin collection by a clearing housec) Both are exposed to credit-risk i.e. risk of non-performance by counter partyd) None of the above

Q5. Derivatives are highly leveraged, which implies thata) You can take a higher position with smaller investments using derivatives b) You can take a lower position with higher investments using derivativesc) You can take a higher position if you buy the underlying assets instead of buying derivativesd) You should buy the underlying assets as you might make more profit on them rather thanderivatives

Q6.All options contracts expire on the .....a) last friday of the monthb) last Thursday of the month c) last tuesday of the monthd) none of the above

Q7. On the NSE's NEAT-F&O system, matching of trades takes place at the .. ...a) active order priceb) passive order price c) market priced) none of the above

Q8. All futures and options contracts expires on the ......a) last friday of the monthb) last thursday of the monthc) last tuesday of the monthd) none of the above

Q9.The NEAT -F&o trading system supports an ......a) order driven marketb) demand driven marketc) price driven marketd) none of the above

Q10. At any time , the F&O segment of nse provides trading facilities for..... NIFTY futures contracts.a) twob) three c) nined) none of the above
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/9T4emTYQrJk/derivatives-dealers9.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/9T4emTYQrJk/derivatives-dealers9.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/9T4emTYQrJk/derivatives-dealers9.html


18/42

Derivatives Dealers(8) Posted: Tue, 08 Jan 2013 08:00:00 +0000

Q1.You bought January Satyam Futures @ Rs 268 and the lot size is 1,200. What is your profit (+)or loss(-) if you sell at Rs 225 ?a) -50,600b) -51,600 c) -52,600d) None of these

Q2.An investor has buy position in a scrip, he can make his position nil in the settlement bya) selling any security of equal quantity.b) selling the same scrip and same quantity .c) selling any index scrip of equal quantityd) selling any A-group scrip for equal quantity.

Q3.The futures market has its own terminology. If a t rader was long in the market, what would thatmean?a) The trader sold a future contractb) The trader bought a futures contract c) The traders open positions exceeded his net worth d) None of the above

Q4.Forward contracts can be cancelled with any counterparty in the market and not necessarily with the same counterparty with whom it was enteredintoa) Trueb) False c) True only in Japand) True only in Africa

Q5.Hedgers and speculators strike a balance due to their needs asa) Hedger has to take risk while speculator has to give up riskb) Both hedgers and speculators have to take riskc) Both hedgers and speculators have to give up riskd) Hedger avoids risk while the speculator takes risk

Q6. If you have bought a Sensex future at 3200 and sold at 3600 what is your profit/loss?a) loss Rs.18,000b) gain Rs.20,000 c) gain Rs.18,000d) loss Rs.20,000

Q7.An investor has open position of 10 contract long, 10 contract long and 10 contract short in sensex future March, April and May series respectively.What are her spreads across March-April?a) 0 b) 10c) 20d) None of these

Q8.Otc derivatives are consider risky becausea)There is no formal house margin system .b)they dont follow any formal rules .c)they are not settled on a clearingd)all of the above

Q9.An investor has an open position of 10contracts short and 23 contracts long in Marchand April Series respectively. How many contractsare covered under calendar spread?a) 23b) 13c) 10 d) None of these

Q10. The existence of a derivatives market lends to complete market.a) True b)False
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/3rHg8FEyzVo/derivatives-dealers8.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/3rHg8FEyzVo/derivatives-dealers8.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/3rHg8FEyzVo/derivatives-dealers8.html


19/42

Derivatives Dealers(7)

Posted: Mon, 07 Jan 2013 11:24:00 +0000

Q1.cash market is a market with immediate or near immediate delivery

True False True in USA True Only on Euorope

Q2.Future contracts may or may not be traded on an exchange

True False True only on 2012 True only 2002

Q3. a future contracts is very st andardized contracts that leaves very little (except the price) open to negotiation.

True False True only in Mumbai True only Delhi

Q4 OTC Derivatives stand for ________.

Over the Counter Derivatives

Outstanding Transaction Credit Derivatives Options Trade Credit Derivatives Commodity price risks

Q5 Under normal circumstances the Futures price trades at a ____ price than the Spot price :

Higher Lower Same price as spot Depends on the type of contract

Q6.For stop-loss buy order, the trigger price is ______ the limit price.

Less than Greater than Equal to None of the above
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/eu6O76BUzpA/derivatives-dealers7.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/eu6O76BUzpA/derivatives-dealers7.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/eu6O76BUzpA/derivatives-dealers7.html


20/42

Q7.A Trading Member can trade __________

on their own account on behalf of their clients

on behalf of participants all of the above

Q8 . Index calculation frequency for NSE NIFTY 50 is _____

Real Time offline Not mention by NSE

Q9. Currently the tick size in the scrip listed on the exchange is ______

5 paisa 10 paisa .o5 paisa none of the above

Q10. Which is not a part of security market

Commodity Real state Equity

Derivaties

Derivatives Dealers(6) Posted: Wed, 02 Jan 2013 14:38:00 +0000

Q1-In future contracts , the contract maturity period is defined by-

The exchange by the RBI by the parties to the contracts

by the government

Q2-A long or short position in a future contract can be closed easily by initiating a reverse trade.

True False True only in Mumbai True only in delhi


21/42

Q3-A warrant could be understood as

A derivative instrument Akind of equity share A kind of debenture

A kind of financial bond

Q4-Use of index future for hedging helps us eliminating the following risk

Stock specific risk All possible risk No risk Market risk

Q5- Systematic risk is an investment risk peculiar to a company which can be reduced by diversifying one's portfolio

False True True only in africa True only in japan

Q6- One of the method to control financial risk is to have

Exposure limits Un-interrupted power supply unit Speculate heavily None of the above

Q7-Credit risk on a derivative transaction includes

Power outage Riots in the country Credit exposure in the event of default and the probability of a counter party's default. Bank strikes

Q8-In case on NSE Index futures, The mpnthly series matures on

First Thursday of the month Last Thursday of the month First Wednesday of the month Last Wednesday of the month

Q9-Which of the following can be the underlying in a financial future ?

Sugar T Notes


22/42

Coffee Pork bellies

Q-10-You sold January satyam futures @ Rs 248 and the lot size is 1200. What is your profit or loss If you purchase at Rs 274?

-30,200

-31200 -32200 none of the above

Solution- Purchase Price : 274Sales Price: 248Loss per unit: 26Lot size : 1200Loss = (274-248)*1200 = 31200

Derivatives Dealers(5) Posted: Sun, 23 Dec 2012 18:20:00 +0000

Q1-A fund manager bullish on the market what should be his course of action ?0. Buy index future

1. Sell the index future

2. Sell his entire portfolio


Q2-Tick size is4. The minimum daily movement permitted in the price of the contract

5. The minimum permitted price movement during the entire life of the contract

6. The minimum permitted price movement in a futures contract


Q3-In the case of future the initial margin is paid only by seller and not by the buyers8. True

9. False

Q4-If you have sold june sensex future @4800 , you will make profit only if10. Future price goes up

11. Future price go down


Q5-Generally higher the price volatility , higher would be intial margin requirement13. True

14. True in africa

15. True in Japan16. False

Q6-A derivative exchange faces17. Legal risk

18. Operational risk

19. Liquidity risk

20. All of the above


23/42

Q7-The risk which is measured by a BETA value is called

21. Unsystematic risk

22. Systematic risk

23. Default risk


Q8-a investor has done the following two spread trades in sensexfuture contracts what is her profit (+) or loss(-)? bought 10 contract jan-feb@2, sold10 jan-feb @ 17

25. 1500

26. 7500

27. 375000


Solution -purchase price Rs- 2sale price Rs- 17Number of contracts- 10Lot Size - 50profit = (17-2) * 10 *50= 7500

Q9-At sensex future price level of 3000, what will be the value of one sensex future contract29. 3000

30. 300000

31. 150000


Solution -Sensex Price - 3000Lot Size- 50Value - 3000*50=150000

Q10-Taking position in futures opposite to that in cash market for protecting cash market holding is

33. Hedging

34. Speculating

35. Arbitrage


Derivatives Dealers(4) Posted: Wed, 19 Dec 2012 08:52:00 +0000

Q1-Which of the following is true ?

0. An american option can be exercised on an american option exchange

1. An american option can be exercised on the expiration date.

2. An american option can be exercised on before the expiration date

3. An american option can be exercised on or before the expiration date.

Q2-Expiration date is the date on or before which the option must be exercised


24/42

4. True

5. False

6. true only on USA

7. True only on japan

Q3-The black-scholes model is used for the pricing of

8. Index futures

9. option

10. Equity share

11. Corporate debt

Q4-A stock option is example of a

12. Commodity

13. Derivative instrument

14. Money market instrument

15.

Foreign exchange contract

Q5-Who can write the option ?

16. Only market makers

17. Only FIIS

18. Any person whether he owns underlying stock or not

19. Any person owing underlying stock

Q6-Selling long on the stock means ....

20. Seller does not own the stock he is suppose to deliver

21. seller has to deliver the stock after a long time

22. seller owns the stock he is suppose to deliver

23. seller has to deliver the stock along with interest

Q7-Purchase of a call option has expectation that stock price will

24. Increase

25. Decrease

26. Remain constant


Q8-Exercise price of option are specified by-

28. Government

29. Company

30. Market makers

31. Exchange

Q9-If you have bought a future contract and price drops , you will be making a profit.

32. True


25/42

33. False

34. Sometimes true

35. Some times false

Q10-The greater the number of participants in any market , generally lower the liquidity .

36. True37. False

38. True only for the year 2002

39. True only for the year 2001

Derivatives Dealers(3) Posted: Wed, 19 Dec 2012 08:09:00 +0000

Q1-The derivatives contracts initially developed in...

0. Commodities

1. Futures

2. Options

3. Cash

Q2-The derivatives drive their name from their respective underlying asset

4. True

5. False

Q3-The first contract to be launched on NSE was the nifty 50 index futures contracts

6. True

7. False

Q4-When SEBI allows exchange to trade in index future

8. May 25, 2000

9. June 20, 2000

10. May 25, 2001

11. July 29, 2010

Q5-Maximum expiration time for derivatives contract in NSE is

12. 3 months

13. 4 months

14. 6 months

15. 1 year

Q6-The S&P CNX NIFTY index covers 21 sectors of the Indian economy

16. True
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/y8mRWSHjdKM/derivatives.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/y8mRWSHjdKM/derivatives.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/y8mRWSHjdKM/derivatives.html


26/42

17. False

Q7-Participants on a derivative market

18. Hedger

19. Speculator

20. Arbitrageurs21. All of them

Q8-Who provide depth in the market22. Hedger

23. Speculator

24. Arbitrager

Q9-In forward contracts , delivery date, price and quantity are negotiated

25. True

26. False

Q10-In which contract price are not available in public domain.

27. Forward

28. Future

29. Options

30. Cash

Derivatives Dealers (2) Posted: Sun, 16 Dec 2012 17:22:00 +0000

Q1-If some one is 'bearish' in the market ?

0. He expects market to rise

1. He expects market to fall

2. He expects market to close

3. Hes expects to market to close.

Q2-The value of a derivatives instrument

4. Is fixed

5. Depends on the value of an underlying asset

6. Is reset at fixed level


Q3-In which market contract of each party faces of risk of default?

8. Forward

9. Cash

10. Futures

11. Options
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/lySBgQvZfDY/derivatives-dealers_16.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/lySBgQvZfDY/derivatives-dealers_16.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/lySBgQvZfDY/derivatives-dealers_16.html


27/42

Q4-The future contract are thus refined Forward contract in terms of standardization, performance, guarantee and liquidity .

12. True

13. False

Q5-A farward contract has zero value for both the parties involved .

14. True

15. False

Q6-A long or a short position in a Futures contract can be closed easily by initiating a reserve trade

16. True

17. False

Q7-The market impact cost on a trade of rs 3 million of the full NIFTY works out to be about 0.5%.This means that if NIFTY is at2000, a buy order will go through at roughly ....

18. 2010

19. 2050

20. 2500


Q8-If liquidity is poor , impact cost would be ....

22. High

23. Low

24. Moderate


Q9-At the point of entering into the future contract

26. Both the buyers and seller pay initial margin to the exchange

27. The buyer alone pays initial margin to the exchange

28. The seller alone pays the initial margin

29. No margin are payable to the exchange by the buyer or the seller

Q10-If you have bought a future contract and the the price drops, you will be making a profit

30. True

31. False

32. Sometimes true

33. Some times false

Derivatives Dealers (1) Posted: Sat, 15 Dec 2012 20:42:00 +0000Introduction to derivatives

Q1-future trading commenced first on ----- 0. Chicago board of trade
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/nyOaxt2mniw/derivatives-dealers.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/nyOaxt2mniw/derivatives-dealers.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/nyOaxt2mniw/derivatives-dealers.html


28/42

1. Chicago board options exchange

2. Chicago mercantile exchange

Q2-The underlying asset for a derivatives contract can be -----

3. equity

4. interest rate

5. commodities

6. all of them

Q3-Derivatives first emerged as .... products

7. speculating

8. hedging

9. volatility

10. risky

Q4-who are the participant in the derivative market ?

11. hedger

12. speculators

13. arbitrageurs

14. all of them

Q5-The first exchange traded in financial derivative in india commenced with the trading of .....

15. index futures

16. stock options

17. index options

18. interest rate futures

Q6-NIFTY includes the ..... most liquid stocks that trade on NSE

19. 30

20. 50

21. 100

22. 500

Q7-The indian company which provides professional index management services is ....

23. IISL( India Index Services Limited)

24. S&P( standard and poors)

25. NCCL

26. CRISIL

Q8-Impact cost measure the .....

27. liquidity of the stock


29/42

28. return on the stock

29. volatility of the stock

Q9-Index funds are .... managed

30. passively

31. actively

32. family


Q10-The market price of a product or a commodity is

34. Determined by demand only

35. Determined by supply only

36. Determined by demand and supply

37. influenced by government manipulation

Derivatives Dealers Module (set 2) Posted: Fri, 14 Dec 2012 20:06:00 +0000

Mock Test Paper

Q.1 Theta is also referred to as the _________ of the portfolio

(a) time decay (b) risk delay (c) risk decay (d) time delay

Q.2 All of the following are true regarding futures contracts except

(a) they are regulated by RBI (b) they require payment of a performance bond (c) they are a legally enforceable promise (d) they are market to market

Q.3 Clearing Members (CMs) and Trading Members (TMs) are required to collect upfront initial margins from all their TradingMembers/Constituents. (a) FALSE (b) TRUE

Q.4 All open positions in the index futures contracts are daily settled at the(a) mark-to-market settlement price (b) net settlement price (c) opening price (d) closing price

Q.5. An American style call option contract on the Nifty index with a strike price of 3040 expiring on the 30th June 2008 is specified

as 30 JUN 2008 3040 CA. (a) FALSE (b) TRUE

Q.6 Usually, open interest is maximum in the _______ contract.(a) more liquid contracts (b) far month (c) middle month (d) near month

Q.7 An equity index comprises of ______.
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/fiBsFJzPD2Y/derivatives-dealers-module-set-2_14.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/fiBsFJzPD2Y/derivatives-dealers-module-set-2_14.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/fiBsFJzPD2Y/derivatives-dealers-module-set-2_14.html


30/42

(a) basket of stocks (b) basket of bonds and stocks (c) basket of tradeable debentures (d) None of the above

Q.8 Position limits have been specified by _______ at trading member, client, market and FII levels respectively.(a) Sub brokers

(b) Brokers (c) SEBI (d) RBI

Q.9 An order which is activated when a price crosses a limit is _________ in F&O segment of NSEIL.(a) stop loss order (b) market order (c) fill or kill order (d) None of the above

Q.10 Which of the following is not a derivative transaction?(a) An investor buying index futures in the hope that the index will go up. (b) A copper fabricator entering into futures contracts to buy his annual requirements of copper. (c) A farmer selling his crop at a future date (d) An exporter selling dollars in the spot market

Q.11 An investor is bearish about ABC Ltd. and sells ten one-month ABC Ltd. futures contracts at Rs.5,00,000. On the last Thursdayof the month, ABC Ltd. closes at Rs.510. He makes a _________. (assume one lot = 100)(a) Profit of Rs. 10,000 ( b) loss of Rs. 10,000 (c) loss of Rs. 5,100 (d) profit of Rs. 5,100109

Q.12 The interest rates are usually quoted on :(a) Per annum basis (b) Per day basis (c) Per week basis (d) Per month basis

Q.13 After SPAN has scanned the 16 different scenarios of underlying market price and volatility changes, it selects the ________loss from among these 16 observations (a) largest

(b) 8th smallest (c) smallest (d) average

Q.14 Mr. Ram buys 100 calls on a stock with a strike of Rs.1,200. He pays a premium of Rs.50/call. A month later the stock tradesin the market at Rs.1,300. Upon exercise he will receive __________.(a) Rs.10,000 (b) Rs.1,200 (c) Rs.6,000 (d) Rs.1,150

Q.15 There are no Position Limits prescribed for Foreign Institutional Investors (FIIs) in the F&O Segment.(a) TRUE (b) FALSE

Q.16 In the Black-Scholes Option Pricing Model, when S becomes very large a call option is almost certain to be exercised(a) FALSE

(b) TRUE

Q.17 Suppose Nifty opt ions trade for 1, 2 and 3 months expiry with strike prices of 1850,1860, 1870, 1880, 1890, 1900, 1910. Howmany different options contracts will be tradable?(a) 27 (b) 42 (c) 18 (d) 24

Q.18 Prior to Financial Year 2005 - 06, transaction in derivatives were considered as speculative transactions for the purpose ofdetermination of tax liability under the Income-tax Act(a) TRUE


31/42

(b) FALSE

Q.19 ______ is allotted to the Custodial Participant (CP) by NSCCL.(a) A unique CP code (b) An order identifier (c) A PIN number (d) A trade identifier

Q.20 An interest rate is 15% per annum when expressed with annual compounding. What is the equivalent rate with continuouscompounding?(a) 14% (b) 14.50% (c) 13.98% (d) 14.75%

Q.21 The favorable difference received by buyer/holder on the exercise/expiry date, between the final settlement price as and thestrike price, will be recognized as ___________ (a) Income (b) Expense (c) Cannot say (d) None

Q.22 The F&O segment of NSE provides trading facilities for the following derivative instruments, except(a) Individual warrant options (b) Index based futures

(c) Index based options (d) Individual stock options

Q.23 Derivative is defined under SC(R)A to include : A contract which derives its value from the prices, or index of prices, ofunderlying securities. (a) TRUE (b) FALSE

Q.24 The risk management activities and confirmation of trades through the trading system of NSE is carried out by _______.(a) users (b) trading members (c) clearing members (d) participants

Q.25 A dealer sold one January Nifty futures contract for Rs.250,000 on 15th January. Each Nifty futures contract is for delivery of50 Nifties. On 25th January, the index closed at 5100. How much profit/loss did he make ?

(a) Profit of Rs. 9000 (b) Loss of Rs. 8000 (c) Loss of Rs. 9500 (d) Loss of Rs. 5000

Q.26 Manoj owns five hundred shares of ABC Ltd. Around budget time, he gets uncomfortable with the price movements. Which ofthe following will give him the hedge he desires (assuming that one futures contract = 100 shares) ?(a) Buy 5 ABC Ltd.futures contracts (b) Sell 5 ABC Ltd.futures contracts (c) Sell 10 ABC Ltd.futures contracts (d) Buy 10 ABC Ltd.futures contracts

Q.27 An investor is bearish about Tata Motors and sells ten one-month ABC Ltd. futures contracts at Rs.6,06,000. On the lastThursday of the month, Tata Motors closes at Rs.600. He makes a _________. (assume one lot = 100)(a) Profit of Rs. 6,000 (b) Loss of Rs. 6,000

(c) Profit of Rs. 8,000 (d) Loss of Rs. 8,000

Q.28 The beta of Jet Airways is 1.3. A person has a long Jet Airways position of Rs. 200,000 coupled with a short Nifty position ofRs.100,000. Which of the following is TRUE? (a) He is bullish on Nifty and bearish on Jet Airways (b) He has a partial hedge against fluctuations of Nifty (c) He is bearish on Nifty as well as on Jet Airways (d) He has a complete hedge against fluctuations of Nifty

Q.29 Suppose a stock option contract trades for 1, 2 and 3 months expiry with strike prices of 85, 90, 95, 100, 105, 110, 115. How


32/42

many different options contracts will be tradable?(a) 18 (b) 32 (c) 21 (d) 42

Q.30 The bull spread can be created by only buying and selling

(a) basket option (b) futures (c) warrant (d) options

Q.31 A stock broker means a member of_______.(a) SEBI (b) any exchange (c) a recognized stock exchange (d) any stock exchange

Q.32 Ashish is bullish about HLL which trades in the spot market at Rs.210. He buys 10 three-month call option contracts on HLLwith a strike of 230 at a premium of Rs.1.05 per call. Three months later, HLL closes at Rs. 250. Assuming 1 contract = 100 shares, his profit on the position is ____.(a) Rs.18,950 (b) Rs.19,500 (c) Rs.10,000

(d) Rs.20,000

Q.33 A January month Nifty Futures contract will expire on the last _____ of January (a) Monday (b) Thursday (c) Tuesday (d) Wednesday

Q.34 Which of the following are the most liquid stocks?(a) All Infotech stocks (b) Stocks listed/permitted to trade at the NSE (c) Stocks in the Nifty Index (d) Stocks in the CNX Nifty Junior Index113

Q.35 In the books of the buyer/holder of the option, the premium paid would be ___________to Equity Index Option PremiumAccount or Equity Stock Option Premium Account,as the case may be (a) Debited

(b) Credited (c) Depends (d) None

Q.36 Greek letter measures a dimension to_______________ in an opt ion position (a) the risk (b) the premium (c) the relationship (d) None

Q.37 An option which gives the holder the right to sell a stock at a specified price at some time in the future is called a(a) Naked option (b) Call option (c) Out-of-the-money option (d) Put option

Q.38 Trading member Shantilal took proprietary purchase in a March 2000 contract. He bought 1500 units @Rs.1200 and sold 1400@ Rs. 1220. The end of day settlement price was Rs. 1221. What is the outstanding position on which initial margin willbe calculated?(a) 300 units (b) 200 units (c) 100 units (d) 500 units

Q.39 In which year, foreign currency futures based on new floating exchange rate system were introduced at the Chicago Mercantile Exchange(a) 1970 (b) 1975 (c) 1972


33/42


34/42

Q.51 The minimum networth for clearing members of the derivatives clearing corporation/ house shall be __________(a) Rs.300 Lakh (b) Rs.250 Lakh (c) Rs.500 Lakh (d) None of the above

Q.52 The Black-Scholes option pricing model was developed in _____.(a) 1923 (b) 1973 (c) 1887 (d) 1987

Q.53 In the case of index futures contracts, t he daily settlement price is the ______. (a) closing price of futures contract (b) opening price of futures contract (c) closing spot index value (d) opening spot index value

Q.54 Premium Margin is levied at ________ level. (a) client (b) clearing member (c) broker (d) trading member

Q.55 In the Black-Scholes Option Pricing Model, as S becomes very large, both N(d1) and N(d2) are both close to 1.0.(a) FALSE (b) TRUE

Q.56 To operate in the derivative segment of NSE, the dealer/broker and sales persons are required to pass _________ examination.(a) Certified Financial Analyst (b) MBA (Finance) (c) NCFM (d) Chartered Accountancy (e) Not Attempted

Q.57 The NEAT F&O trading system ____________.(a) allows one to enter spread trades (b) does not allow spread trades

(c) allows only a single order placement at a time (d) None of the above117

Q.58 Margins levied on a member in respect of options contracts are Initial Margin, Premium Margin and Assignment Margin(a) TRUE (b) FALSE

Q.59 American option are frequently deduced from those of its European counterpart (a) FALSE (b) TRUE

Q.60 Which of the following is closest to the forward price of a share price if Cash Price = Rs.750, Futures Contract Maturity = 1 year from date, Market Interest rate = 12% and dividend expected is 6%?(a) Rs. 795 (b) Rs. 705

(c) Rs. 845 (d) None of these

Derivatives Dealers module (set 1) Posted: Fri, 14 Dec 2012 18:30:00 +0000

1. Swaps can be regarded as portfolios of ________ (a) Future Contracts (b) Option Contracts (c) Call Options
http://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/8_rNvAqCLK0/derivatives-dealers-module.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/8_rNvAqCLK0/derivatives-dealers-module.htmlhttp://feedproxy.google.com/~r/SamplePaper-Ncfm/~3/8_rNvAqCLK0/derivatives-dealers-module.html


35/42


36/42

(b) False

12. CNX IT is a derivatives contract on NSE. True or False? (a) True (b) False

13. Forward contracts on expiration have to settled by __________.(a) cash

(b) difference in price (c) payment of margin (d) delivery of the asset

14. On expiry the settlement price of a stock option contract is the _________. (a) Closing futures price (b) Closing stock price (c) Closing options price (d) None of the above

15. In an index fund, trading in the stocks comprising the fund, is required in response to ______.(a) Favourable company specific news (b) Poor company specific news (c) Mergers (d) Government policies

16. The market impact cost on a trade of Rs. 3 million of the S&P CNX Nifty works out to be about 0.04%. This means that if S&P CNX Nifty is at 4100, a sell order of that value will go through at a price of Rs. _______.(a) 4098.35 (b) 4096 (c) 4093 (d) 4099.50

17. The following is an example of an order with time condition. (a) Day order (b) Stop Loss (c) Limit (d) All of the above

18. What is the outstanding position on which initial margin will be levied if no proprietary trading is d one and the details of client trading are: one client buys 1000 units @ 1260. The second client buys 1000 units @Rs.1255 and sells 1000 units @Rs.1260.?

(a) 2000 units (b) 3000 units (c) 1000 units (d) 4000 units

19. The beta of TELCO is 0.8. A person has a long TELCO posit ion of Rs. 800,000 coupled with a short Nifty position of Rs. 600,000. Which of the following is TRUE? (a) He is bearish on Nifty as well as on TELCO (b) He has a complete hedge against fluctuations of Nifty (c) He has a partial hedge against fluctuations of Nifty (d) He is bullish on Nifty as well as on TELCO

20. Reliance Industries Ltd. does not have a Beta value. True or False? (a) True (b) False

21. Nifty consists of securities having _____ market capitalization stocks.(a) large (b) small (c) medium (d) large and small

22. The beta of ICICI Bank is 1.5. A person has a long position of Rs. 400,000 of ICICI Bank. Which of the following gives a complete hedge?. (a) SELL Rs. 600,000 of Nifty futures (b) SELL Rs. 650,000 of Nifty futures (c) SELL Rs. 700,000 of Nifty futures (d) None of the above


37/42

23. On 15th January, Raju bought a January Nifty futures contract which cost him Rs.334,500. For this he had to pay an initial margin of Rs.31,520 to his broker. Each Nifty futures contract is for delivery of 100 Nifties. On 25th January, the index closed at 3360. How much profit/loss did he make? (a) (-) 1,200 (b) (-) 1,500 (c) (+) 1,200 (d) (+) 1,500


38/42

24. Futures have a _______ payo ff. (a) Non-linear (b) Linear (c) Vertical (d) Horizontal

25. Mr. A buys a futures contract of M/s. XYZ Ltd. (Lot Size: 1000) expiring on 29th Sep

for Rs. 300. The spot price o f the share is Rs. 290. Does he have to pay securities transaction tax? (a) Yes, only if he buys more than 1 contract (b) Yes (c) No, only if he sells of the contract immediately (d) No

26. Ms. Shetty has sold 5000 calls on ABC Ltd. at a strike price of Rs. 500 for a premium of Rs.25 per call on April 1. The closing price of equity shares of ABC Ltd. is Rs. 505 on that day. If the call option is assigned against her on that day, what is her net obligation on April 01?(a) Pay-out of Rs.1,22,300 (b) Pay-in of Rs.1,22,000 (c) Pay-in of Rs.1,25,000 (d) Pay-out of Rs.1,00,000

27. An index put option at a strike of Rs. 4200 is selling at a premium of Rs. 30. At what

index level will it break even for the buyer of the option?(a) Rs. 4175 (b) Rs. 4176 (c) Rs. 4170 (d) Rs. 4162

28. Which of the following is the duty of the trading member? (a) Giving tips to clients to buy and sell (b) Funding losses of the clients (c) Collection of adequate margins from the client (d) All of the above

29. The only way an investor can manage risks in the underlying cash market is by? (a) Hedging in the futures market (b) Speculating in the futures market (c) Speculating in the options market (d) All of the above

30. Nifty is a ________ index(a) well diversified (b) poorly diversified (c) balanced (d) volatile

31. You have bought a stock on the exchange. To eliminate the risk arisin g out of the stock price, you should _____.(a) buy index futures (b) buy stock futures (c) sell the stock futures (d) none of the above

32. On 1st January, a three month call option on the Nifty with a strike of 4280 is available for trading. The `T that is used in the Black Scholes formula should be

_______.

(a) 3 (b) 0.25 (c) 90 (d) None of the above

33. The spot price of ABC Ltd. is Rs. 2000 and the cost of financing is 10%. What is the fair price of a one month futures contract on ABC Ltd.?(a) 2015 (b) 2016.75 (c) 2018.75 (d) 2019

34. Cyrus is short 800 WIPRO July Puts at strike Rs. 1520 for a premium of Rs. 43 each on


39/42

July 22. On July 25, (the expiration day of the contract), the spot price of WIPRO closes at Rs.1553, while the July futures on WIPRO close at 1655. Does Cyrus have an obligation to the Clearing Corporation on his positions, and how much, if any? (a) Yes. Rs.19,800 pay-out (b) No pay in or pay-out on expiration of contract (c) Yes. Rs.18,900 pay-out (d) Yes. Rs.19,800 pay-in

35. On 15th October, Arvind bought a December Nifty futures contract which cost him Rs. 325,600. For this he had to pay an initial margin of Rs. 30,100 to his broker. Each Nifty futures contract is for delivery of 100 Nifties. On 27th December, the index closed at 3280. How much profit/loss did he make? (a) (+) 1400 (b) (-) 2400 (c) (+) 2400 (d) (-) 1400

36. Assume that the base value of a market capitalization weighted index were 1000 and the base market capitalisation were Rs.70,000 crore. If the current market capitalisation is Rs.140,000 crore, the index is at Rs. ____.(a) 2,110 (b) 2,350 (c) 2,250 (d) 2,000

37. On 1st January, a one month call option on the Nifty with a strike of 4250 is available for trading. The `T that is used in the Black Scholes formula should be _______. (a) 2 (b) 0.08 (c) 20 (d) None of the above

38. If the annual risk free rate is 9%, then the r' used in the Black Scholes formula should be ______. (a) 0.086 (b) 0.099 (c) 1.1 (d) None of the above

39. The beta of ACC is 1.5. A person has a long TELCO posit ion of Rs. 900,000 coupled with a short nifty position of Rs. 800,000. Which of the following is TRUE?(a) He is bearish on Nifty as well as on ACC

(b) He has a complete hedge against fluctuations of Nifty (c) He has a partial hedge against fluctuations of Nifty (d) He is bullish on Nifty as well as on ACC

40. If the annual risk free rate is 8%, then the r' used in the Black Scholes formula shou ld be ______.(a) 0.076 (b) 0.096 (c) 1.1 (d) None of the above

41. Hedging with stock futures means ___________. (a) shorting stocks (b) shorting index futures (c) shorting stock futures (d) long index futures

42. Which of the following is the duty of the trading member?(a) Employing large numbers of research analysts (b) Executing his own orders prior to client orders (c) Bringing risk factors to the knowledge of client (d) None of the above

43. On expiry, the settlement price of a Reliance Industries Ltd. futures contract is _______. (a) opening price of Reliance Industries Ltd. (b) closing price of Reliance Industries Ltd. (c) closing price of Reliance Industries Ltd. futures contract (d) Last traded price of Reliance Industries Ltd.


40/42

44. On 1st January, a two month call option on the Nifty with a strike of 4250 is available for trading. The `T that is used in the Black Scholes formula should be _______. (a) 3 (b) 0.16 (c) 90 (d) None of the above

45. The NEAT F&O trading system _____________.

(a) allows spread trades (b) allows combination trades (c) allows only a single order placement at a time (d) (a) and (b) above

46. Santosh is bearish about ABC Ltd. and sells 10 one-month ABC Ltd. futures contracts at Rs.3,96,000. On the last Thursday of the month, ABC Ltd. closes at Rs.410. He makes a _________. (assume one lot = 100) (a) profit of Rs. 14,000 (b) loss of Rs. 14,000 (c) profit of Rs. 28,000 (d) loss of Rs. 28,000

47. To be eligible for trading a broker must be _________. (a) SEBI registered (b) highly capitalised (c) a member of the Association of Trading members

(d) None of the above

48. You are the owner of a 4 million portfolio with a beta 1.0. You would like to insure your portfolio against a fall in the index of magnitude higher than 12%. Spot Nifty stands at 4200. Put options on the Nifty are available at three strike prices. Which strike will give you the insurance you want?(a) 3,870 (b) 3,840 (c) 3,696 (d) None of the above

49. A stock is currently selling at Rs. 50. The call option to buy the stock at Rs.45 costs Rs.9. What is the time value of the option?(a) Rs. 9 (b) Rs. 7 (c) Rs. 4 (d) Rs. 2

50. An option contract which will not be exercised on the expiry date is ________. (a) an in-the-money option (b) a deep in-the-money (c) an out-of-the-money option (d) None of the above

51. The theoretical futures price is based on the ________.(a) strike price (b) underlying spot price (c) the price at which a futures contract trades in the market (d) the price set by the exchange

52. On 1st January, a two month call option on the Nifty with a strike of 4000 is available for trading. The `T that is used in the Black Scholes formula should be _______. (a) 2 (b) 0.16

(c) 20 (d) None of the above

53. Stock options on HDFC Bank Ltd. can be exercised ___________.(a) any time on or before maturity (b) upon maturity (c) any time upto maturity (d) on a date pre-specified by the trading member

54. Ms. Shetty has sold 1400 calls on HLL at a strike price of Rs.297 for a premium of Rs.11 per call on April 1. The c losing price of equity shares of HLL is Rs. 300 on that day. If the call option is assigned against her on that day, what is her net obligation on April 01.


41/42

(a) Pay-out of Rs.12,300 (b) Pay-in of Rs.12,000 (c) Pay-in of Rs.11,000 (d) Pay-out of Rs.11,200

55. _____________is allowed to clear trades of themselves but not of others.(a) Trading member - clearing member (b) Trading members are not allowed to clear their own trades

(c) professional clearing member (d) self clearing member

56. Index Funds use index futures to reduce _________ (a) tracking error (b) expenses (c) time to invest in the markets (d) All of the above

57. Weekly options trading commenced on NSE in _______.(a) 02-Jun-2005 (b) 04-Jul-2005 (c) NSE does not trade in Weekly options (d) 04-Jun-2005

58. The market impact cost on a trade of Rs. 5 million of the S&P CNX Nifty works out to be about 0.05%. This means that if S&P CNX Nifty is at 4200, a buy order of that

value will go through at a price of Rs. _______.(a) 4202.10 (b) 4200 (c) 4210 (d) 4211

59. What is the outstanding position on which initial margin will be levied if no proprietary trading is done and the details of client trading are: one client buys 2000 units @ 1260. The second client buys 2000 units @Rs.1255 and sells 1000 units @Rs.1260.? (a) 4000 units (b) 5000 units (c) 3000 units (d) None of the above

60. In the F&O segment of NSEIL, obligations of client's positions are calculated on a ________ basis.(a) cumulative

(b) gross (c) net (d) portfolio


42/42

The government is on the verge of its first shutdown in 17 years because some Republican members inthe House are insisting that President Obama either delay or repeal parts of Obamacare, his signaturelegislative achievement. Obama and his Democratic allies in Congress have vowed to quash any efforts

to gut the law, technically called the Affordable Care Act.

Documents

Derivative questions.docx