Risk Management Theory

1 What is a clearing house? (3)

2. Explain in brief various functions performed by derivative market.(7)
3. What is convenience yield? (3)
4. Distinguish between forward and futures (7)
5. When will call and put option be exercised? (3)
6. What are the assumptions of Black Scholes model (7)
7. How is strangle strategy created? (3)
8. What are the types of futures contract ? Elucidate (7)
9. What is Cross hedging? (3)
10 What is Swap? What are the types of swaps? Elucidate. (7)
11. What is zero curve? (3)
12. What is meant by index arbitrage (3)
13. What is the significance of risk management in the context of an organization? Explain the
process of risk management? (10)
14. What is currency swaps ? (3)
15. What do you mean by VAR? (3)
16. Explain covered call and naked call? (3)
17. What is commodity future? (3)
18. Explain the types of credit derivatives (7)
19. What is recovery rate? (3)
20. Differentiate between commodity and financial futures . (3)
21. What do you mean by basis? Explain the three hypothesis about expected basis in case of
uncertainty (7)
22. Briefly explain the types of risk. Also discuss the risk management process (10)
23. What do you mean by Hedge ratio ? (3)
24. What do you mean by interest rate ? Explain in detail the types of interest rates? (7)
25. What do you mean by open interest ? What does it indicate? (3)
26. What do you mean by plain vanilla swaps? (3)
27. What is risk management? Explain in detail the methods of reducing the exposure to credit
risk (7)

28. Differentiate between stress testing and back testing (3)

29. Write a note on credit default swaps; collateralized debt obligation and total return swaps (10)
30. What is VAR? Explain the different methods of computing VAR (10)
31. Mention the principle of Put Call parity (3)
32. What is pricing of insurance? Enumerate the distinguishing features of health and group
insurance products (07)
33. Explain the various principles of insurance contract (10)
34. What is a hedge ratio? How is it determined? (3)
35. Critically examine the risk analysis and risk control process of financial assets (07)
36. Classify and explain the various types of risk (10)
37. A strangle is similar strategy to a straddle. Discuss the statement in light of option trading with
suitable examples (07)
38. How interest rate swaps are valued? Explain with an example (03)
39. How is the value of an option with time to expiration determined? What are the factors
affecting option prices? (10)
40. What do you understand by the term interest rates? Discuss the various types of interest rates
along with different yield curves. (3)
41. What is an aleatory contract (3)
42. Differentiate between pure and speculative risk (7)
43 Explain the fundamental legal principles that are reflected in insurance contracts (10)
44 What is a warranty in an insurance contract (3)
45 Differentiate between short hedge and long hedge (7)
46 What is plain vanilla swap? (3)
47 What is a spread? (3)
48 What do you mean by a strip and a strap? When are these strategies adopted?
49 What is a cross hedge? (3)
50 What is convenience yield? (3)
51. Explain the functions of the derivatives market (7)
52. Explain the concept of marking to market and also the different types of margins required to be
maintained by investors (07)
53 What is normal backwardation (03)

54. What is life insurance? How is it different from non-life insurance? Also explain different life
insurance products (10)
55. What are covered calls and naked calls?
56 What is open interest in option contracts (03)
57 Explain the following hedging strategies using option contracts :
a) Short stock + long call
b) Long stock + short call (07)
58 What is vega in terms of an option contract? (03)
59 Differentiate between exchange traded and over the counter derivatives (03)
60 Differentiate between American and European options. Discuss the factors affecting option
prices. (07)
61. What is a butterfly spread (03)
62. What is value at risk ? Discuss the various approaches to determine value at risk. (10)
63 What is credit risk? (03)
64 What are forward rate agreements (FRAs). Bring out the characteristics of FRAs (07)
65. Diferentiate between stress testing and back testing . (03)
66 Explain the terms position traders, day traders and scalpers (03)
67 Explain the steps involved in quantifying VaR using Monte Carlo simulation. (07)
68 Explain the terms treasury rates and repo rates, in brief (03)
69 What is a bull spread? How is it different from bear spread (03)
70 What are the factors affecting option pemium (07)
71 What is impact cost ? (03)
72 What is a swap ? Explain the major types of swaps (07)
73. What is a derivative? (03)
74 What are the characteristic features of an arbitrage transaction? (07)
75 Differentiate between interest rate caps and floors (03)
76 What are the categories of risk? Explain briefly. (07)
77 When is an option said to be in the money, at the money and out of the money (03)