AAFM Secret Sauce Question Bank

The main motive behind derivatives market includes

Permission to stock exchanges to start derivative segment is given by

Which of the following measures the impact on premium based on time left for expiry

What is the lot value of a 2000 stike price call option (load multiplier 50)

M to M margin requirement takes place on

Brokers take initial margin on the basis of

A farmer promises a buyer to give 5 trucks of grain in future total 50 lacs. After 3 months, he fulfills his promise. This is an example of

Which of the following is not an advantage of screen base trading in relation to OTC contract

Future contracts are

The process when futures price meets spot prices at the time of expiry

Beta Is the measure of co relating index and

The position limits of Trading members / FPIs (Category I) / Mutual Funds in equity index option contracts is higher of ______or ________of the total open interest in the market in equity index option contracts.

For option seller premium is paid at the time of contract

Index maintainance involves

The process when broker does excessive trading for brokrage

Basis is the differnece between

Putt call parity refers to the relationship between

Arbitrageur and hedger relationship

The________ offers the option holder the right to exercise the Option at the pre-agreed price at any time before the date of expiration.

A ___________ is a derivative contract between two parties where they agree to exchange cash flows or liabilities over a specified period.

An__________ is an options trading strategy in which a trader will buy and sell multiple options of the same type – either call or put – with the same underlying asset.

What is the value of Call option buy with strike price of 3300 and market price of Rs. 3100. (Lot multiplier 50)

Which of the folowing are not true about Future contracts

Tax paid on transactions in the Indian stock exchange market

STT paid by

You sold a Put option on a share. The strike price of the put was Rs245 and you received a premium of Rs 49 from the option buyer. Theoretically, what can be the maximum loss on this position?

Current Price of XYZ Stock is Rs 286. Rs. 260 strike call is quoted at Rs 45. What is the intrinsic Value?

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?

A trader has bought 100 Shares of XYZ at Rs 780 per share. He expects the price to go up but wants to protect himself if the price falls. He
does not want to lose more than Rs1000 on this long position in XYZ. What should the trader do?

A calendar spread contract in index futures attracts

Trader A wants to sel 20 contracts of August series at Rs 4500 and Trader B wants to sell 17 contracts of September series at Rs 4550. Lot size is 50 for both these contracts. The Initial Margin is fixed at 6%. How much Initial Margin is required to be collected from both these investors (sùm of initial margins of A and B) by the broker?

In order to keep the index comparable all time, total return index takes into account the

___________ clears the transactions on behalf of him, his clients and trading members

Power to approve byelaws of stock exchange in India lies with

How does the clearing corporation charges margins

Brokers need to settle the runing account of clients on (1) weekly or monthly basis (2) quarterly or monthly basis (3) Weekly or quarterly basis (4) Daily or weekly basis

Shorten the time to maturity of put option higher the time value.

Custodian clears on behalf of

Which of the folowing orders have time condition attached

Which futures contract has the maximum option premium

A _______ order instructs your broker to sell a security only at or above a specific price you set, ensuring you get at least that price or a better one.

Which of the following about price time priority is true

Which of the following does not represent a liquid asset for a trading member

The___________ is the difference between the highest price a buyer is willing to pay (the bid price) and the lowest price a seller is willing to accept (the ask price) for a security, representing the cost of trading in the market.

_______measures the rate of time decay in an option’s value, indicating how much an option’s price is expected to decrease as time passes, all else being equal.

Which of the following contracts are not settled and cleared bilaterally ?

Brokers charge ______ to cover any loss through out the day

Most suitable and cost effective way used by insitutions and mutual funds for hedging purposes

Whenever a new client enters the market _________ is provided by brokers outlining the risks associated with trading or investing in capital market instruments

The buyer of an option cannot lose more than the option premium paid

Calender spread is an options trading strategy representing a ___ line

_____ is a document used in identification of clients

In the Indian stock market, tick size, is determined by the __________

SCORES is

An IN THE MONEY option is

You sold a Put option on a share. The strike price of the put was Rs. 375 and you received a premium of Rs 67 from the option buyer. Theoretically, what can be the maximum loss on this position?

In India’s derivatives market, contract lot sizes are set by the _________

What are the STT charges for the equity delivery for both buy and sell side

For the clearing members who have exceeded their position limits can

An options trading is

Future contracts are standardised by the

Let us suppose C1 customer is a CA and C2 customer is management professional. Which one of the above two attarcts lesser margins

If transaction costs in the derivatives market _______, it generally leads to ______ customers and __________market activity

Which of the following is an important code of conduct for financial market intermediaries

Option margins are paid by

Let us suppose a person buys ABC futures contract, at Rs. 4600. If the price falls down to 4500. What is the next step followed with reference to mark to margin requirement

Which of the following statements about short selling is true

When the naked call options are sold, the seller benefits as the underlying security _______in price

Let us suppose a person buys ABC futures contract, at Rs. 3000. If the price increases to 3500, what is the mark to margin requirement (in amount )?

Delta is a ratio that compares the change in the price of a derivative (like an option) to the change in the price of its

Exercise date and expiration date may differ incase of _________ option

A portfolio with a beta ___________ will typically perform close to market performance

A call option has a value of Rs. 10, and the underlying asset has a price of Rs. 20. The underlying asset increases in price to Rs. 23, and the option value corresponds by increasing to Rs. 11. The delta is equal to

Derivative market involves

Which of the following combination is the correct user heirarchy in a typical derivatives trading platform or exchange (a) Corporate manager (b) bank manager © dealer (d)jobber €broker

To adjust for a stock split of 1:1 Strike price of 1500 should come to

Client position cannot netted off against each other during calculation of initial margin on derevative segements.

Imagine an investor owns 100 shares of stock XYZ currently priced at Rs. 50.In order to supplement the long stock position with the collar strategy, the investor makes the following trades, which match his/her outlook for the stock and the prevailing market conditions: 1. The investor buys 1 front month put option with a strike price of Rs. 45 for a premium of Rs. 2 per share (Rs. 200 for 100 shares). 2. The investor sells 1 front month call option with a strike price of Rs. 55 for a premium of Rs. 2 per share (Rs. 200 for 100 shares). Calculate his maximum profit and maximum loss.

Which of the following is true about butterfly strategy

Post the 1: 1 bonus issue; If the pre bonus price was Rs. 390, the post bonus price will be

Treasury bills future contract is quoted on the basis of

Interoperability of clearing corporation framework is allowed for all the products available in the Indian securities markets, EXCEPT:

Daily Settlement price of GOI futures contracts is

Which of the following face value canbe bought or sold for GOI futures contarct

If GOI futures contract increases by one tick size, change is value of future contract will be

In derivatives market, SPAN margin requirements are updated

RBI has instructed __________ to update the settlement basis and other market conventions on regular basis

If the long-term rate is 10% and short-term rate is 8%, the shape of term structure of rates is,

A “shift in the term structure of interest rates” refers to

If the base rate of Overnight MIBOR futures is Rs 8, then its operating range will be

A Power of Attorney (PoA) executed by a client in favor of a stock broker is commonly used to facilitate the

Which of the following is a common option strategy that can be used to generate extra income on bond holding.

Daily Mark to market settlement of Exchange traded interest rate future contract is

Trading member can execute trades for

True return can be calculated more easier and straight forwartd in which of the following instruments

What is the settlement method for 91-day bill futures?

The gross open positions of the Trading member across all contracts should not exceed______ of the total open interest

A trading member is a member of

If you expect the interest rate will go up in future, today you should

In which of the following instruments, return is often generated before its maturity date

Details of daily trade need to be sent to exchange by _______

In Bullish vertical spread using put strategy, trader

Which of the following is a predominant risk for banks

Participants buy a put option with strike price of 98.50 at a premium of Rs. 0.20. On Expiry the bond price is Rs. 98.50. What is his net pay-off?

Which of the following is a 3 quarterly contracts of GOI futures contract

Which of the following future contracts are cash settled

Option payoffs are

Which of the following is the last trading day for a GSEc futures contract

Which of the following is an example of derivatives

Total number of derivatives contracts outstanding is called

______is a risk management strategy that aims to reduce potential losses in an investment by taking a counterbalancing position in a related asset.

In case of Gsec options, minimum quantity freeze is allowable for the orders having quantity upto

Which of the following is the last working day of the MIBOR’s future contract

If Volatility of underlying asset incereases _________ of the option will be in a profitable position

Other things remaining constant, If the spot price of an option decreases, put option premium

The difference between option premium and intrinsic value is

Person goes short in a futures contract at Rs.100 and on expiry underlying price is Rs. 101, he will

Other things remaining constant, If the strike price of an option increases, call option premium

Option buyer faces _______risk and option seller faces _________risk.

Which of the followng is not a factor leading to huge growth in derivatives market

What Is the minimum networth requirement for a stock exchange to start currency futures trading for a self clearing member

What is the maximum NPA for category 1 bank to start currency futures trading

Currency option value is determined on the basis of

Speculative loss can be set off against

Which style of options are only traded on Indian exchanges?

Which model uses forward rate instead of spot prices to calculate theoretical price of the underlying asset

World over the financial regulators and Government are encouraging what kind of change in dealing with financial derivatives?

Lot size of USD INR currency futures is

An Immediate Or Cancel (IOC) order__________.

Indentify the Act which is mainly responsible for governing the trading of securities in India.

As There is a news of rise in consumer price index in USA suddenly, it will lead to

Settlement date of exchange traded futures

Who becomes counter party in exchange traded futures

A broker should issue without delay to his client a contract note for all transactions in the form specified by the____.

An order in futures with automated execution logic

Which of the following is correct regarding SEBI turnover fee

Guidelines of ETF are given by

Price freeze arises

Broker advertisement Is legal for

Which of the following is true about position limits

___not be permitted to participate in currency futures market.

Mr A promises to buy sugar at a specified price after 2 months but afre 2 months Mr B refuses to sell as sugar prices touch sky. This is an example of

Guidelinesof PRO ACCOUNT given by

Marked to market margin settlemet is done on

Base and quote currency in USD INR

Are buy call and sell put option same

Option premium is paid by

Option premium _______ with _________ in volatility In underlying stocks

If the interest rates _____ option premium___

Mr Raunak believes that there is a very strong bullish trend in USDINR. He also believes that there will be a decrease in volatility. So which option strategy is he most likely to use ?

Interoperability of clearing corporation framework is allowed all the products in the indian securities market except

Other things keeping constant, if spot prices increases, option value in call option ….______

Powers of SEBI does not include

Which of the following cyurency pair is not permitted in indian stock exchanges

A person sells a USD Put option at strike of 60.50 and receives a premium of INR 0.40. What would be the breakeven point for the transaction?

Stock exchange provide as a

FEMA deals with

Loss on derivative transactions which are carried out in a recognised stock exchange can be carried for ________ period assessment years

Assume USD/JPY futures 115.08/115.09 and USD/INR futures is 75.64/75.65 . Then cross JPY /INR (100JPY) bid rate will be

A trader sells 10 lots of USD /INR at 093.60/93.85 and after a week squares off 5 lots of USD/INR at 95.80/95.95 . Find out his profit and loss

A trading member buys 10 lots of USD / INR and sells 2 lots in his proprietary book. His client also buys 10 lots of USD/INR and sells 2 lots similarly. Find out the open position for both trading member and his client.

A trading member bearish on USD/INR sells a call option at Rs. 85.60. Premium received is Rs. 0.40. At the maturity, settlement price turns out to be 89. Find the loss incurred.

A person invested Rs. 140000 in US securities with the exchange rate of 65. After 2 years he got 25% return on his investment in USD terms. He repatriated all his earnings to India at Rs. 75. Find his holding period return

A person invested Rs. 250000 in US securities with the exchange rate of 45. After 5 years he got 15% return on his investment in USD terms. He repatriated all his earnings to india at Rs. 56. Find his holding period return

Suppose the 6-month interest rate in India is 3.5% (or 7% per annum) and in the USA it is 2.5% (5% per annum). The current USDINR spot rate is 83. What is the likely 6-month USDINR futures price?

Broker Mr. A charges a brokerage of Rs 20 per lot of USDINR futures on only one leg of the transaction if its squared off the same day. Broker Mr B charges Rs 15 per lot of USDINR futures on both the legs even if its squared up on the same day. A client buys 15 lots of USDINR futures and sells of 10 lots the same day and the balance 5 lots after 4 days. What will be the brokerage charged by broker Mr A and Mr B respectively?

Non-deposit taking applicable NBFCs with asset size of _________ or above, are allowed
to participate in the designated currency options exchanges recognized by SEBI, as clients,

What is the SEBI turnover fees for per crore turnover foe currency derivatives segment

What is the liquid networth required for a trading member to maintain at all points of time excluodng all margins

Minimum networth required for AD category 1 bank in order to become Trading member and clearing members is __________. They should also maintain a minimum capital adequacy ratio of _______

Basis risk arises because of

A person has invested INR 100,000 in an indian corporate bond for a year giving a return of 16% in one year. The person plans to use the proceeds from the maturity of corporate bond to fund his sons’ education in US. At the time of investing in the corporate bond, USDINR spot rate was 70and one year premium was 4%. The person decides to hedge currency risk using USDINR one year futures. At the end of one year, how many USD can this person remit to his son ?

When does spot price equals to strike price

In the OTC contracts, settlement is done______

Which of the following statements is correct with reference to relation between limit price and trigger price in buy stop loss order

Tick can be said as

Which of the following is correct regarding regulations for broker in the context of trade executed

Foreign exchange market in India is regulated by

Which of the following is true about selling a call option ?

An exporter hedges 20000 USD by buying September 2020 USDINR Put option at a strike price of Rs 73.00 when the price was Rs 0.47/0.49 . The exporter received USD in his account on 20th September. He decided to cancel the option on 20th September when the price for the same contract was Rs 0.22/0.24. How much loss did the exporter make on cancelling the Put option if the latest available RBI USDINR reference rate was Rs 72.50.

A trading member (TM) buys 9 lots of April USDINR futures and also sells 9 lots of May futures in his proprietary book. On the same day, a client of the TM buys 9 lots of April futures and sells 9 lots of May futures. What would be the open position (in USD) of TM and his client at the end of the day?

Assume you are an exporter, and you want to sell USD that you have received as export remittance. The bank quotes a price of 75.10 / 75.12 for USDINR. At what price can you sell one unit of USD?

A student going abroad for higher studies gets a loan of Rs 10,00,000 sanctioned from his bank He has to make the payment to the University after one month and he is concerned about foreign exchange (FX) rate fluctuation. To hedge the FX risk, he wants to buy an exchange-traded call option with a strike price of Rs.50.00 . How many lots of call options should he buy?

A trading member buys 80 lots of USDINR at 74.50 and sells 90 lots the same day at 74.60. The settlement price for the day was 74.30. What would be his mark to market margin (MTM) on the open positions ?

Assume that the risk-free interest rate for one year in JPY is 0.25% and in EUR is 1%. The current EURJPY spot rate is What is the FV of EURJPY

An exporter hedged 20,000 USD by buying USDINR put options at a strike of Rs 83 when the available price was Rs 0.35/0.37. Later he received USD earlier than the maturity of the contract, and decided to unwind the long put position. The available price at the time of unwinding was Rs 0.48/0.49 and the latest available FBIL USDINR reference rate was Rs 82.50. At the time of converting USD into INR, the exporter’s bank quoted him a price of Rs 82.45/75. What was the net price received per USD?

A person is required to pay the education fee for his son in USDafter 6 months. The current USDINR is trading at 82 and the premium for 6 months is 2%. The person invested Rs. 200,000 in Indian fixed income securities for 6 months @ rate of 6% p.a. The person hedges his currency risk using USDINR 6-month futures. How many dollars can this person remit to his son for education fee at the end of 6 months?

Person goes short in a GBPINR futures contract at Rs.99.75 and on expiry GBPINR reference rate is Rs. 100.75, he will ________?

A client buys a USD call option at strike of 75.5 and pays a premium of INR 0.3. What would be the breakeven point for the transaction?

Mr Kohli invested Rs 1,00,000 in US Stock Markets when the USDINR rate was 60. After one year his investment appreciated by 18% in USD terms. He sold of his investments and repatriated the money to India at the then existing rate of 62. What is his real returns in INR ?

A person has a requirement to buy one unit USD and also to sell one unit of USD in OTC spot market at the same time but in different banks. Both the banks quoted same price as 75.31/75.35. In this transaction, how much currency conversion profit/loss hs the person made as compared to a situation where he had export and import transaction in the same bank and import payment could be made from export receivables?

The minimum net worth requirement for a company to be eligible for applying to become an authorized exchange for currency futures is Rs _____

Mr. Mayur sells 10 lots of GBPINR 1 month futures when the price was 98.60/98.90 and squares off 5 lots after a week when price was 99.60/99.80.How much money did he make/lose on the part of the transaction that was squared off?

A trading member (TM) has two clients “X” and “Y” and he also does proprietary trading in currency futures. On day 1, TM buys 20 lots of USDINR one month futures and also sells 2 lots of the same contract on the same day in his proprietary book. On the same day, client “x” buys 12 lots of USDINR one month futures and also sells 2 lots of the same contract while client “Y” buys 12 lots and sells 2 lots of USDINR one month futures. What would be the open position (in USD) of the trading member, client “X” and client “Y” respectively at the end of day 1?

If 10 units of gold was valued at INR 45000 and the same was valued at USD 600. As per the gold standard methodology, what would be the value of one USD in terms of INR?

Mr. Balbir Singh has invested USD 8,000 in US equities and get an exchange price of 73 from its bank for converting INR into USD. In next two years his investments in US equities appreciated in value to USD 9,000. He sold off his portfolio and repatriated the capital and profits to India . His effective return after considering currency risk, on the investment turned out to be 12%. What exchange price Mr. Balbir would have received at the time of converting his profits from USD into INR?

If one year interest rate is 2% in UK and 7 % in India. If current GBPINR spot rate is 98, which of the following could be closest to the six month future rate of GBPINR?

Mr. Patil in India expects international gold prices to rise by 20% from USD 1700 per ounce to USD 1900 in next six months. To benefit from the view, he buys 300 grams of gold at Rupees 5000 per gram and also sold 10 lots of 6 month USDINR futures at 73. After six months, the trader sold gold at Rs 5200 per gram and unwinds currency futures at 74.5. Assuming 1 ounce is equal to 30 grams , which of the foll best describes the return for investor and the hedging strategy that Mr. Patil may have used?

Broker Mr. Mehta charges a brokerage of Rs 40 per lot of USDINR futures on only one leg of the transaction if its squared off the same day. Broker Mr Shah charges Rs 25 per lot of USDINR futures on both the legs even if its squared up on the same day. A client buys 20 lots of USDINR futures and sells of 10 lots the same day and the balance 10 lots after 10 days. What will be the brokerage charged by broker Mr Mehta and Mr Shah respectively ?

If the treasury bills future contract changes by 100 ticks, what will be the change in one unit of future contract

Let us suppose a person buys a bond at Rs. 101 clean price and 101.50 dirty price. After a period of 3 days, he sells its ay 101.70 clean price and 101.85 dirty price. What is the capital appreciation on the bond.

CCP clearing transactions takes place between