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Debt instrument
Derivative product
2. The purchase of a share in one market and the simultaneous sale in a different market to benefit from price differentials is
known as ____________.
Mortgage
Arbitrage
Hedging
Speculation
3. Financial derivativesGO
provide the facility for __________.
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Speculation NISM Series VIII: Equity Derivatives Certification Examination
Hedging
Arbitraging
Government policies
True
False
6. You sold one XYZ Stock Futures contract at Rs. 278 and the lot size is 1,200. What is your profit (+) or loss (-), if you
purchase the contract back at Rs. 265?
16,600
15,600
-15,600
-16,600
7. You have taken a short position of one contract in June XYZ futures (contract multiplier 50) at a price of Rs. 3,400. When
you closed this position after a few days, you realized that you made a profit of Rs. 10,000. Which of the following closing
actions would have enabled you to generate this profit? (You may ignore brokerage costs.)
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8. Which NISMprice
of the following is closest to the forward Seriesof
VIII: Equity Derivatives
a share, Certification
if Cash Price Examination
= Rs.750, Forward Contract Maturity = 6
months from date, Market Interest rate = 12%?
772.5
795
840
940.8
9. If you have sold a XYZ futures contract (contract multiplier 50) at 3100 and bought it back at 3300, what is your gain/loss?
11. Client A has purchased 10 contracts of December series and sold 7 contracts of January series of the NSE Nifty futures.
How many lots will get categorized as regular (non-spread) open positions?
10
17
12. In an equity scheme, fund can hedge its equity exposure by selling stock index futures.
True
False
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13. Margins in 'Futures' trading are to be paid by _______.
14. When the near leg of the calendar spread transaction on index futures expires, the farther leg becomes a regular open
position.
True
False
Seller has more than a year's time to deliver the stock which he sold
16. The buyer of an option cannot lose more than the option premium paid.
19. You sold a Put option on a share. The strike price of the put was Rs.245 and you received a premium of Rs.49 from the
option buyer. Theoretically, what can be the maximum loss on this position?
196
206
49
20. Current Price of XYZ Stock is Rs. 286. Rs. 260 strike call is quoted at Rs. 45. What is the Intrinsic Value?
19
26
45
21. A european call option gives the buyer the right but not the obligation to buy from the seller an underlying at the prevailing
market price "on or before" the expiry date.
True
False
22. A put option gives the buyer a right to sell how much of the underlying to the writer of the option?
Any quantity
24. An option with a delta of 0.5 will increase in value approximately by how much, if the underlying share price increases by
Rs 2?
Rs 1
Rs 2
Rs 4
Standardised options
Customised options
26. Higher the price volatility of the underlying stock of the put option, ______________.
27. In which option is the strike price better than the market price (i.e., price difference is advantageous to the option holder)
and therefore it is profitable to exercise the option?
Higher-the-money option
28. Mr. X purchases 100 put option on stock S at Rs. 30 per call with strike price of Rs. 280. If on exercise date, stock price is
Rs. 350, ignoring transaction cost, Mr. X will choose _____________.
May or may not exercise the option depending on whether he is in his hometown or not at that time
May or may not exercise the option depending on whether he like the company S or not
29. Three Call series of XYZ stock - January, February and March are quoted. Which will have the lowest Option Premium
(same strikes)?
January
February
March
30. Which is the ratio of change in option premium for the unit change in interest rates?
Vega
Rho
Theta
Gamma
31. If you sell a put option with strike of Rs. 245 at a premium of Rs.40, how much is the maximum gain that you may have on
expiry of this position?
285
40
205
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32. If an investor buys a call option with lower strike price and sells another call option with higher strike price, both on the
same underlying share and same expiration date, the strategy is called ___________.
Bullish spread
Bearish spread
Butterfly spread
Calendar spread
33. On the derivative exchanges, all the orders entered on the Trading System are at prices exclusive of brokerage.
True
False
34. A trader has bought 100 shares of XYZ at Rs.780 per share. He expects the price to go up up but wants to protect himself
if the price falls. He does not want to lose more than Rs.1000 on this long position in XYZ. What should the trader do?
Place a limit sell order for 100 shares of XYZ at Rs.770 per share
Place a stop loss sell order for 100 shares of XYZ at Rs.770 per share
Place a limit buy order for 100 shares of XYZ at Rs.790 per share
Place a limit buy order for 100 shares of XYZ at Rs.770 per share
35. Investor A wants to sell 20 contracts of August series at Rs.4500 and Investor B wants to sell 17 contracts of September
series at Rs.4550. Lot size is 50 for both these constracts. The Initial Margin is fixed at 6%. How much Initial Margin is required
to be collected from both these investors (sum of initial margins of A and B) by the broker?
2,70,000
5,02,050
2,32,050
4,10,000
36. A member has two clients C1 and C2. C1 has purchased 800 contracts and C2 has sold 900 contracts in August XYZ
futures series. What is the outstanding liability (open position) of the member towards Clearing Corporation in number of
contracts?
800
1700
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900 NISM Series VIII: Equity Derivatives Certification Examination
100
37. A defaulting member's clients positions could be transferred to ____________ by the Clearing Corporation.
The Exchange
A suspense account
Error account
38. Clients' positions cannot be netted off against each other while calculating initial margin on the derivatives segment.
True
False
On a weekly basis
Every 2 days
Every 3 days
On a daily basis
Networth of an investor
41. A penalty or suspension of registration of a stock broker from derivatives exchange/segment under the SEBI (Stock
Broker and Sub-broker) Regulations, 1992 can take place if _______________.
42. Clearing corporation on a derivatives exchange becomes a legal counterparty to all trades and be responsible for
guaranteeing settlement for all open positions.
True
False
RBI
Clearing Corporation
SEBI
Margin Office
44. Liquid Assets maintained by Mr A (Clearing Member) are higher than that maintained by Mr B (Clearing Member). Which
of the following statements is true?
45. On the Clearing Council of the Clearing Corporation of the derivatives segment, broker-members are allowed.
True
False
46. The main objective of Trade Guarantee Fund (TGF) at the exchanges is _________________.
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All of the above
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Expected maximum loss, which may be incurred by a portfolio over a given period of time and specified confidence level
Only members, who are registered with the Derivatives Segment as Clearing Members
49. If price of a futures contract decreases, the margin account of the buyer of this futures contract is debited for the loss.
True
False
50. When establishing a relationship with a new client, the trading member takes reasonable steps to assess the background,
genuineness, beneficial identify, financial soundness of such person and his investment objectives.
True
False
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develops examinations for respective modules. NISM does not provide any training, for preparation of examinations, directly or indirectly to participants who desire to appear for NISM
examinations. However, there are organisations / entities that are providing training programs / model test papers, in class room, online or any other format or medium, to participants who desire
to appear for NISM examinations. It is specifically being brought to the notice of all concerned that NISM is not directly or indirectly associated with such training programs or model test papers or
any kind of training in any form for helping pass NISM certification examinations. Further, NISM has not authorised any organisation / person as authorised training partner / trainer for providing
training for passing NISM certification examinations."
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