SAMPLE PAPER - NCFM

Derivatives Dealers 19

noreply@blogger.com (Anonymous) — Mon, 04 Mar 2013 13:27:00 +0000

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

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

3-Stock price is same as
a) Strike price
b) Exercise price
c) 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) True
b) False

5-Daily Mark-to-market margin for index futures contract
a) 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 by
a) The SEBI
b) The Stock Exchange
c) The RBI
d) None of the above

7-Margins in Futures trading are to be paid by
a) only the buyer
b) only the seller
c) 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
exchange
a) True
b) 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 Rs 40?
a) Rs.19,000
b) Rs.17,000
c) 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

noreply@blogger.com (Anonymous) — 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) True
b) False

3-In an In-the-money call option the exercise price would be lower that the market price.
a) True
b) False
c) True only in Mumbai
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 USA
d) True only in Japan

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

7-Buyer of OTM put option is
a) bullish - payer of premium
b) bullish - receiver of premium
c) 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 asset
b) decrease in the price of underlying asset
c) no change in the price of underlying asset
d) Cannot Say

9-In an European option, the exercise date and expiration date
a) 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

noreply@blogger.com (Anonymous) — 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 broker
B. can start his normal trading as a stock broker after 2 months
C. only A
D. Both A & B

2.When a stock broker fails to pay the fees as provided in regulation, the board may suspend the ____________.
A. Driving license
B. Ration card
C. Registration certificate
D. 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 default
B.He has at least passed 12th standard
C. He is a fit & proper person
D. All of the above

4.Which is the following can apply to SEBI for registration?
A. Stock-broker
B. Sub-broker
C. Both a & b
D. 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 net worth of Rs _____lacs & shall deposit at least a sum of Rs _________ lacs of higher amount with the clearing house of the derivative exchange or derivative segment in the form specified from time to time
A. 200, 150
B. 100, 50
C. 150, 300
D. 400, 500

6.________ handles the complaints received by the investors against the trading members.
A. Investor Grievance cell
B. Investor Appeal court
C. Investor Dispute Court
D. Consumer Law Court

7.Which type of arbitrator is appointed if the claim amount is up to Rs. 25 lakhs?
A. A panel of Arbitrator
B. A sole Arbitrator
C. Depends on the client
D. 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. 100
B. 121.67
C. 112
D. 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. 5429.02
B. Rs. 6000

C. Rs. 6900

D. 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. 12200

B. Rs. 12500

C. Rs. 12000

D. Rs. 12640

Capital Market 2

noreply@blogger.com (Anonymous) — 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 the security 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. NSDL
B. Clearing members
C. SEBI
D. NSCCL

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

4-.Who provides for electronic transfer of securities in the stock market?
A. RBI
B. Depositories
C. Clearing Agencies
D. SEBI

5-Name the depository from the list given below.
A. NSE
B. NSCCL
C. NSDL
D. RBI

6-Who moves the securities available in the account of the members to the NSCCL?
A. Clearing banks
B. Custodians
C. Clearing members
D. Depositories

7-Which agency links Clearing Members & NSCCL for funds settlement?
A. Clearing Banks
B. Depositories
C.Clearing members
D.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 exchange
B. 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-broker
D. 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 such intimation, to the board for reconsideration of its decision.
A. 30 days
B. one month
C. 15 days
D. 6 months

10-Name the special category of members admitted by NSCCL as clearing members.
A. Supporting clearing member
B. Custodians
C. Registered clearing member
D. Professional clearing member

Capital Market 1

noreply@blogger.com (Anonymous) — 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. 100

B. 150

C. 500

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 of best prices.

A. Outstanding orders.

B. Outstanding auctions.

C. Outstanding buyers.

D. Outstanding sellers

7-Bank Guarantee can be submitted as .....to NSCCL by trading member

A.warrenty

B.surety

C.Additional base capital

D.None of these

8-A depository is an entity where securities of the investors are held in

A.Physical form

B.Electronic and physical

C.Electronic form

D.None of the above

9-Member wise margin payment status report is a

A.weekly

B.daily

C.monthly

D.None of the above

10.If .....attempts are made by user to log on with an incorrect password then the user is automatically disabled

A.5

B.4

C.3

D.2

Derivatives Dealers 17

noreply@blogger.com (Anonymous) — 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 be
determined in the future.
a) True
b) False
c) True only in Europe
d) 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) False
c) none of the above

3-If the price of the underlying asset rises sharply after the initiation of a futures contract
a) the long position becomes profitable
b) the long position becomes unprofitable
c) the short position becomes profitable
d) 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) False
c) True only in Mumbai
d) True only in Delhi

5-A scarce supply of the actual commodity generally causes futures price to fall.
a) True
b) False
c) True only in Mumbai
d) 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
c) They are decided and revised from time to time based on market condition
d) None of the above

7-Future contracts are usually much more liquid than the Forward contracts
a) True
b) False
c) None of the above

8-The settlements of a forward contracts takes place on the date of maturity
a) True
b) False
c) 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) -50,600
b) -51,600
c) -52,600
d) None of these

10- . . . . . .The stock index future were first introduced at CBOT in USA
a) True
b) False (Ans-Kansas city board of trade)

Derivatives Dealers 16

noreply@blogger.com (Anonymous) — 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 spot
price 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 the
intrinsic value of the option?

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
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 large company because of which markets sell off and Nifty
futures 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 flexibility of closing out the contract prior
to the maturity by squaring off the transactions in the market. State true or false.

FALSE
TRUE

Q9. An investor has Unitech shares in her portfolio. RBI is increasing interest rates which is
negative for the stock. She wants to protect the downside in the stock as she feels RBI will
decide 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 the mark to market for the investor if any? One lot of Nifty
is 50 shares

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

Derivatives Dealers 15

noreply@blogger.com (Anonymous) — 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 month
for Rs. 100. What should be the closing price of Nifty only above which the investor starts to
make 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 at
Rs. 585. TCS futures closes the day at Rs. 550. What is the net payment the investor has to
pay/ 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 beyond
5100. 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 futures
expiring three months from today. Risk free rate = 8% p.a.

1844
1836
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 month
for Rs. 100. What should be the closing price of Nifty only above which the investor starts to
make 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. The
option 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 the following EXCEPT:

exercise price
risk-free rate
time to maturity

Derivatives Dealers 14

noreply@blogger.com (Anonymous) — Wed, 23 Jan 2013 20:24:00 +0000

Q1. An investor buys a 1 lot of Nifty futures at Rs. 4927 and sells it at Rs. 4567 If one
contract 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 prices
would narrow.

arbitrage
delta
speculative
hedge

Q4. In a business daily to get information about the top gainers in the futures market, one has
to 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 there
an arbitrage opportunity? The Futures contract is settling today.

Yes
Depends on Market Sentiment
No

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 because
of 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 for 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 of
Reliance futures expiring 90 days from today. Risk free rate is 8% p.a.

1563
1529
1551
1537

Derivatives Dealers 13

noreply@blogger.com (Anonymous) — Thu, 17 Jan 2013 19:30:00 +0000

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

Equity index
interest rate
commodities
foreign exchange

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

buyer
seller
both
exchange

Q3. the potential returns on a future positions are

limited
unlimited
a function of the volatility of the index
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.

1.5%
2.0%
1%
2.5%

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

highest price
lowest price
average of the highest and lowest price
none of the above

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

portfolio
options
futures
derivatives

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

L.C.Gupta committee
A.C.Gupta committee
J.R.Verma committee
None of the above

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

35 Lakh
80 Lakh
50 Lakh
20 Lakh

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

SEBI
the Reserve Bank of India
the Clearing Corporation / house
None of the above

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 ?

-50,600
-51,600
-52,600
None of these

Derivatives Dealers 12

noreply@blogger.com (Anonymous) — Wed, 16 Jan 2013 19:30:00 +0000

Q1. Liquidity risk can be caused by

sale of large number of shares which depress price significantly.
high market capitalisation
failure of VSAT.
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 is known as

close-out
penalty
auction
upla badla

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

The contract is not standardised
The party to the contract may not honour its part of obligation and default.
The contract value is fixed
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?

You expect the price of the share to move up by 5%
You expect the price of the share to move up by 7%
You expect the price of the share to move up by 25%
You expect the price of the share to move up by 8%

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

Sell 10 Jan sensex contracts
Sell 15 Feb. nifty contracts
Buy 15 March sensex contracts
Buy 15 March nifty contracts

Q6. An Over The Counter option

is a standardised contract traded on an Exchange
is a contract tailored to suit individual requirements
is an option on stocks of pharmaceutical companies
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?

buy an index-future
wait till he saves enough money
do nothing
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?

April
May
March
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 . . . . .

Initial Margin
Mark-to-Market
Maintenance Margin
None of the above

Q10. Index Options, have index as the underlying.

True
False
True not in India
False not in india

Derivatives Dealers 11

noreply@blogger.com (Anonymous) — Tue, 15 Jan 2013 13:56:00 +0000

Q1. Each forward contract

can be structured as required by the buyer and seller
will have the same specifications
specifications are decided by the RBI
None of the above .

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

True
False
True only in Europe
True only in Africa

Q3. A Call Option gives the Holder the right

to buy the underlying asset
to sell the underlying asset
to either sell or buy the underlying asset, as he wishes
None of the above

Q4. Which of the following is true?

European options can be exercised anytime before the expiration date
European options can be exercised on or before the expiration date
European options must be exercised on the expiration date
European options can be exercised only on the expiration date

Q5. An European Option

can be exercised anytime during the life of the Option
can be exercised only at maturity
is traded only on the European Exchange
is a floating rate option

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

increases
decreases
does not change
can not say

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

Present contract
Past contract
Futures contract
None of the above.

Q8. The bid is the price at which market maker is prepared

to buy.
to sell.
to remain idle
None of the above

Q9. 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?

0
10
20
None of these

Q10. If you have short sold a Sensex future at 3000 and bought it at 3100, what is your gain / loss?

A loss of Rs. 5000
A gain of Rs. 500
A gain of Rs. 5000
A loss of Rs. 500

Derivatives Dealers 10

noreply@blogger.com (Anonymous) — Mon, 14 Jan 2013 07:35:00 +0000

Q1. At the end of each trading day, the Clearing House process of settling your account on a cash basis(funds added to your balance if your position has 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) False
c) True only in 2001
d) True only in 2012

Q3. Mark-to-market margins will be collected on a
a) Weekly basis
b) every 2 days
c) every 3 days
d) daily basis

Q4. Who will be eligible for clearing trades in stock futures?
a) All Indian citizens
b) All members of the BSE
c) 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 by
a) SEBI
b) the Reserve Bank of India
c) 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 her open positions in March series after considering the spread position.
a) 0
b) 10
c) 20
d) 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. 500
c) A gain of Rs. 5000
d) A loss of Rs. 500

Q8.S&P CNX Nifty is a market- capitalization weighted index
a) True
b) False
c)none of the above

Q9. Computational methodology followed for construction of stock market indices are
a) Free Float Market Capitalization weighted Index
b) Market Capitalization weighted index
c) 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 as portfolio of forward contracts .
a) Swaps
b) warrants
c) baskets
d) leaps

Derivatives Dealers(9)

noreply@blogger.com (Anonymous) — 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 price
c) 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 allowed
a) on all stocks listed on the stock exchange
b) on few selected stocks only
c) on all stocks listed on all stock exchanges in India
d) 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 the futures 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) instruments
b) Both require margin collection by a clearing house
c) Both are exposed to credit-risk i.e. risk of non-performance by counter party
d) None of the above

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

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

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

Q8. All futures and options contracts expires on the ......
a) last friday of the month
b) last thursday of the month
c) last tuesday of the month
d) none of the above

Q9.The NEAT -F&o trading system supports an ......
a) order driven market
b) demand driven market
c) price driven market
d) none of the above

Q10. At any time , the F&O segment of nse provides trading facilities for..... NIFTY futures contracts.
a) two
b) three
c) nine
d) none of the above

Derivatives Dealers(8)

noreply@blogger.com (Anonymous) — 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) -50,600
b) -51,600
c) -52,600
d) None of these

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

Q3.The futures market has its own terminology. If a trader was long in the market, what would that
mean?
a) The trader sold a future contract
b) 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 entered into
a) True
b) False
c) True only in Japan
d) True only in Africa

Q5.Hedgers and speculators strike a balance due to their needs as
a) Hedger has to take risk while speculator has to give up risk
b) Both hedgers and speculators have to take risk
c) Both hedgers and speculators have to give up risk
d) 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.18,000
b) gain Rs.20,000
c) gain Rs.18,000
d) 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) 10
c) 20
d) None of these

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

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

Q10. The existence of a derivatives market lends to complete market.
a)True
b)False

Derivatives Dealers(7)

noreply@blogger.com (Anonymous) — 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 standardized 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

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)

noreply@blogger.com (Anonymous) — 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

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

Derivatives Dealers(5)

noreply@blogger.com (Anonymous) — Sun, 23 Dec 2012 18:20:00 +0000

Q1-A fund manager bullish on the market what should be his course of action ?

Buy index future
Sell the index future
Sell his entire portfolio
None of the above

Q2-Tick size is

The minimum daily movement permitted in the price of the contract
The minimum permitted price movement during the entire life of the contract
The minimum permitted price movement in a futures contract
None of the above

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

True
False

Q4-If you have sold june sensex future @4800 , you will make profit only if

Future price goes up
Future price go down
None of the above

Q5-Generally higher the price volatility , higher would be intial margin requirement

True
True in africa
True in Japan
False

Q6-A derivative exchange faces

Legal risk
Operational risk
Liquidity risk
All of the above

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

Unsystematic risk
Systematic risk
Default risk
None of the above

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, sold 10 jan-feb @ 17

1500
7500
375000
None of the above

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

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

3000
300000
150000
None of the above

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

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

Hedging
Speculating
Arbitrage
None of the above

Derivatives Dealers(4)

noreply@blogger.com (Anonymous) — Wed, 19 Dec 2012 08:52:00 +0000

Q1-Which of the following is true ?

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

True
False
true only on USA
True only on japan

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

Index futures
option
Equity share
Corporate debt

Q4-A stock option is example of a

Commodity
Derivative instrument
Money market instrument
Foreign exchange contract

Q5-Who can write the option ?

Only market makers
Only FIIS
Any person whether he owns underlying stock or not
Any person owing underlying stock

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

Seller does not own the stock he is suppose to deliver
seller has to deliver the stock after a long time
seller owns the stock he is suppose to deliver
seller has to deliver the stock along with interest

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

Increase
Decrease
Remain constant
None of the above

Q8-Exercise price of option are specified by-

Government
Company
Market makers
Exchange

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

True
False
Sometimes true
Some times false

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

True
False
True only for the year 2002
True only for the year 2001

Derivatives Dealers(3)

noreply@blogger.com (Anonymous) — Wed, 19 Dec 2012 08:09:00 +0000

Q1-The derivatives contracts initially developed in...

Commodities
Futures
Options
Cash

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

True
False

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

True
False

Q4-When SEBI allows exchange to trade in index future

May 25, 2000
June 20, 2000
May 25, 2001
July 29, 2010

Q5-Maximum expiration time for derivatives contract in NSE is

3 months
4 months
6 months
1 year

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

True
False

Q7-Participants on a derivative market

Hedger
Speculator
Arbitrageurs
All of them

Q8-Who provide depth in the market

Hedger
Speculator
Arbitrager

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

True
False

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

Forward
Future
Options
Cash

Derivatives Dealers (2)

noreply@blogger.com (Anonymous) — Sun, 16 Dec 2012 17:22:00 +0000

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

He expects market to rise
He expects market to fall
He expects market to close
Hes expects to market to close.

Q2-The value of a derivatives instrument

Is fixed
Depends on the value of an underlying asset
Is reset at fixed level
None of the above

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

Forward
Cash
Futures
Options

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

True
False

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

True
False

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

True
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 at 2000, a buy order will go through at roughly ....

2010
2050
2500
None of the above

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

High
Low
Moderate
None of the above

Q9-At the point of entering into the future contract

Both the buyers and seller pay initial margin to the exchange
The buyer alone pays initial margin to the exchange
The seller alone pays the initial margin
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

True
False
Sometimes true
Some times false

Derivatives Dealers (1)

noreply@blogger.com (Anonymous) — Sat, 15 Dec 2012 20:42:00 +0000

Introduction to derivatives

Q1-future trading commenced first on -----

Chicago board of trade
Chicago board options exchange
Chicago mercantile exchange

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

equity
interest rate
commodities
all of them

Q3-Derivatives first emerged as .... products

speculating
hedging
volatility
risky

Q4-who are the participant in the derivative market ?

hedger
speculators
arbitrageurs
all of them

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

index futures
stock options
index options
interest rate futures

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

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

IISL( India Index Services Limited)
S&P( standard and poors)
NCCL
CRISIL

Q8-Impact cost measure the .....

liquidity of the stock
return on the stock
volatility of the stock

Q9-Index funds are .... managed

passively
actively
family
none of the above

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

Determined by demand only
Determined by supply only
Determined by demand and supply
influenced by government manipulation

Derivatives Dealers Module (set 2)

noreply@blogger.com (Anonymous) — 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 Trading Members/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 ______.
(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 Thursday of 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 trades in 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 options trade for 1, 2 and 3 months expiry with strike prices of 1850,1860, 1870, 1880, 1890, 1900, 1910. How many 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 of determination of tax liability under the Income-tax Act
(a) TRUE
(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 continuous compounding?
(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 the strike 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, of underlying 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 of 50 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 of the 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 last Thursday 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 of Rs.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 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 HLL with 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 Premium Account’ 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 option 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 will be 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
(d) 1974

Q.40 The units of price quotation and minimum price change are not standardised item in
a Futures Contract.
(a) TRUE
(b) FALSE

Q.41 With the introduction of derivatives the underlying cash market witnesses _______
(a) lower volumes
(b) sometimes higher, sometimes lower
(c) higher volumes
(d) volumes same as before

Q.42 Clearing members need not collect initial margins from the trading members
(a) FALSE
(b) TRUE

Q.43 Which risk estimation methodology is used for measuring initial margins for futures/
options market?
(a) Value At Risk
(b) Law of probability
(c) Standard Deviation
(d) None of the above

Q.44 The value of a call option ___________ with a decrease in the spot price.
(a) increases
(b) does not change
(c) decreases
(d) increases or decrease

Q.45 Any person or persons acting in concert who together own ______% or more of the
open interest in index derivatives are required to disclose the same to the clearing
corporation.
(a) 35
(b) 15
(c) 5
(d) 1115

Q.46 NSE trades Nifty, CNX IT, BANK Nifty, Nifty Midcap 50 and Mini Nifty futures contracts
having all the expiry cycles, except.
(a) Two-month expiry cycles
(b) Four month expiry cycles
(c) Three-month expiry cycles
(d) One-month expiry cycles

Q.47 An investor owns one thousand shares of Reliance. Around budget time, he gets
uncomfortable with the price movements. One contract on Reliance is equivalent to
100 shares. Which of the following will give him the hedge he desires?
(a) Buy 5 Reliance futures contracts
(b) Sell 10 Reliance futures contracts
(c) Sell 5 Reliance futures contracts
(d) Buy 10 Reliance futures contracts

Q.48 Spot Price = Rs. 100. Call Option Strike Price = Rs. 98. Premium = Rs. 4. An investor buys the Option contract. On Expiry of the Option the Spot price is Rs. 108. Net profit for the Buyer of the Option is ___.
(a) Rs. 6
(b) Rs. 5
(c) Rs. 2
(d) Rs. 4

Q.49 In the NEAT F&O system, the hierarchy amongst users comprises of
_______.
(a) branch manager, dealer, corporate manager
(b) corporate manager, branch manager, dealer
(c) dealer, corporate manager, branch manager
(d) corporate manager, dealer, branch manager

Q.50 The open position for the proprietary trades will be on a _______ [3 Marks]
(a) net basis
(b) gross basis

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, the 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)

noreply@blogger.com (Anonymous) — Fri, 14 Dec 2012 18:30:00 +0000

1. Swaps can be regarded as portfolios of ________

(a) Future Contracts

(b) Option Contracts

(d) Forward Contracts

2. A stock is currently selling at Rs. 165. The put option at Rs. 163 strike price costs Rs.

3. What is the time value of the option?

(a) Rs. 3

(b) Rs. 2

(d) Rs. 1.50

3. LEAPS have a maturity of upto _________

(a) one year

(b) three years

(d) three months

(e) I am not attempting the question

4. 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 500 units @ 1260.

The second client buys 900 units @Rs.1255 and sells 1000 units @Rs.1260?[2 Marks ]

(a) 1900 units

(b) 2400 units

(d) 600 units

5. A payer swaption is an option to pay ______ and receive ______.

(a) floating, fixed

(b) interest, interest

(c) fixed, floating

(d) options, futures

6. Forward contracts are ________ contracts.

(a) Multilateral

(b) Tri-lateral

(d) Bilateral

7. You are the owner of a 5 million portfolio with a beta 1.0. You would like to insure

your portfolio against a fall in the index of magnitude higher than 10%. Spot Nifty

stands at 4000. 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) 3,600

(d) None of the above

8. A receiver swaption is an option to receive ______ and pay ______.

(a) fixed, floating

(b) floating, fixed

(d) options, futures

9. The market impact cost on a trade of Rs. 4 million of the S&P CNX Nifty works out to

be about 0.06%. This means that if S&P CNX Nifty is at 4000, a sell order of that value

will go through at a price of Rs. _______.

(a) 3997.60

(b) 3996

(d) 3,995.50

10. Ms. Shetty has sold 1000 calls on ABC Ltd. at a strike price of Rs. 885 for a premium

of Rs.27 per call on April 1. The closing price of equity shares of ABC Ltd. is Rs. 890 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.22,300

(b) Pay-in of Rs.22,000

(d) Pay-out of Rs.22,000

11. BANK Nifty is a derivative contract on NSE ____________. True or False?

(a) True

(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

(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

(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

(d) 4099.50

17. The following is an example of an order with time condition.

(a) Day order

(b) Stop Loss

(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 position 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

(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

(d) None of the above

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

(d) (+) 1,500

24. Futures have a _______ payo ff.

(a) Non-linear

(b) Linear

(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 of 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

(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

(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

(d) All of the above

30. Nifty is a ________ index

(a) well diversified

(b) poorly diversified

(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

(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

(d) 2019

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

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

(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

(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

(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

(d) None of the above

39. The beta of ACC is 1.5. A person has a long TELCO position 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 should

be ______.

(a) 0.076

(b) 0.096

(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.

(d) Last traded price of Reliance Industries Ltd.

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

(d) None of the above

45. The NEAT F&O trading system _____________.

(a) allows spread trades

(b) allows combination trades

(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

(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

(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

(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

(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

(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 closing 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.

(a) Pay-out of Rs.12,300

(b) Pay-in of Rs.12,000

(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

(d) self clearing member

56. Index Funds use index futures to reduce _________

(a) tracking error

(b) expenses

(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

(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

ANSWERS: All right answers are bold.