AAFM Secret Sauce Quiz

Most of the world Indices are designed on ________________________

For taking a position in Futures contract, initial margin is payable by

A trading member’s client C1 bought 10 lots of XYZ Stock March Series Futures at Rs.4400 and client C2 sold 15 lots of XYZ Stock March Series Futures at Rs.4450. Lot size is 50 for both these contracts. If the initial margin is 6%, what is the total margin to be collected by trading member from client C1 and client C2 combined?

What is the expiration day for Sensex Futures Monthly contracts?

Cost of Futures = Spot Price + Cost of carry. True or False?

Which of the following is not an assumption of Cost of Carry model?

Which of the following is not an assumption of Cost of Carry model?

You bought ABC Stock Futures at Rs.400 and the lot size is 1500. What is the Profit (+) or loss (-), if you sell the futures at 420?

As per ____________ option, the owner(buyer/holder) of the option can exercise his right at any time on or before expiry date/day of the contract

You have bought a Call of SBI of strike price of Rs 200 of January. To close the position, you will buy a PUT of same strike price of January.

You have bought 1 lot of XYZ Stock Futures April Expiry, lot size 1200. How do you square off this position?

As time to expiry reduces,

The seller of a call option faces ____________ , while seller of the futures faces _______________

You bought put option of strike price Rs.100 at Rs.4 when spot price was Rs.99. At expiry, the spot price is Rs.102. What is your profit/loss on expiry?

__________ is the measure of an option’s sensitivity to time decay

In India, options are priced using which method

You are an Indian exporting to USA. Export receivables are due next month and you are worried about USD price risk. What strategy will you use to reduce risk.

_________ Strategy is used to generate extra income from existing holdings in the cash market.

A PCR of less than one signals a _________ trend

A professional clearing member can clear the trades of his associates trading member and institutional clients, however a PCM is not a trading member of the exchange.

What is the net worth required for Clearing member?

Which of the following is reduced from networth while computing for networth of clearing member?

For FPIs, the gains and losses from derivatives on a recognized stock exchange are taxable as:

Derivatives traded on a recognized stock exchange are not considered as Speculative Gains and considered as Profit and gains from Business/Profession

Which Institutes comes out with guidelines for accounting for derivatives

If an order does not find a match in the trading system, it is ___________

The limit price is necessarily set higher than the market price irrespective of buy/sell trade

The contract size for GBPINR is

If USD-INR moved from 43.00 to 43.30, the USD has ______ and the INR has______

Arbitrage is a strategy of taking advantage of ____between two markets.

In currency future contract Daily mark to market settlement will be on a __________

The best buy order in the trading system is the order with the__________

If you buy a call option on EURINR, then you will have_______

Proprietary positions are calculated on net basis (Buy Sell)

What is SPAN

Businesses use derivatives primarily for __________

A speculator buys 10 USD-INR contracts @Rs.47.00 per contract and sell them @Rs.45.00 per contract. Assuming 1 contract = 1000 USD, the total profit/loss made by the speculator is Rs._____

________ clear and settle trades executed by TMs

The payin and payout of the mark to market settlement are affected on________________.

Under normal circumstances the Futures price trades at a price______than the the spot price

The Standardized USDINR shall have the following features:

Short hedge means underlying position of long in the foreign currency and hedging position of short in currency futures

Which of the following is not included as security by SCRA:

Which of the following category of market participants can short-sell bond futures?

What is an IOC order?

If the 6 months rates 6%, 1 year rate is 7% and 10 year is 8.5%, the shape of the term structure is______.

Which of the following is not an example of a derivative on security derivatives?

_____option can be exercised at any time up to expiration

For a 13-Year cash settled interest rate futures contracts, the underlying is________

What is the use of Quantity Freeze?

Who takes position in derivatetives markets to earn risk less profit?

When an order stays unexecuted in the trading system, it is called _________

The situation of BUY IN aries due to failure in settlement by ________

Which of the following has higher credit risk?

SEBI act 1992 was introduced for________

All option contracts expire on the _______

A dealer can view and perform order and trade

Who takes position in derivative market to earn risk less profit?

As per Macaulay Duration, for a 1% rise in interest rate, the price of 4 year zero-coupon bond will fall by roughly____

What is the settlement method for bond derivatives?

A professional clearing member can trade, clear and settle the trade of his own account and on behalf of his client.

Counterparty credit risk is substantially reduced by ________

Which of these risks is most severe for Banks and Financial institutions?

The underlying for bond futures is ______

The regulator for the secondary market of government securities is _____

Nifty is at 4500 in May. Mr. Alex, executes a trade by buying a Rs.4300 Nifty Put for a premium of Rs. 23 and a Rs. 4700 Nifty Call for Rs 43. How much he has to pay for this transaction?

What is an IOC order?

The NEAT-F&O trading system supports an ______

Futures contracts are contracts________

______ are hybrid assets.

Credit spread is the price of______

What is FRA?

The derivative traded in the exchange market is/are_______

Hedging with stock futures means_______

The ____ order requires a trigger price to be specified.

Margin paid by the investor at the end of the day is called MTM margin

Which interest rate affect the price of Treasury Bills?

The permissible maturity for underlying of Treasury Bill futures in india are_______

For a 13-year cash settled interest rate futures contracts, the underlying is ______

________ measures the PRICE RISK in a bond.

Most consumer loans and housing loans are structured as_____

The contract amount for Govt. Bond futures is______.

What is the settlement method for bond derivatives?

Can a member deposit Non cash collateral in exchange

The regulator for the Exchange-traded interest rate derivatives is:

______ is an derivatives.

A stock is currently selling at Rs. 80. The put option to sell the stock at Rs. 85 costs Rs.12. What is the time value of the option?

An index option is a Money Market Instrument

The intrinsic value of a call option is the amount the option is_______

Value-at-risk measures___________

Which of these CALL options are OTM?

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

The value of a derivatives instrument _________

If the far month futures prices are less than near month futures prices, this is known as__________

If you Sell a Put option at premium of Rs 30 at the Strike Price of Rs 2000, lot is of 300 shares, then the maximum possible loss is _________

A fund manager is bullish on the market. What should be his course of action?

The potential returns on a long future positions are_______

A call option at a strike of Rs. 176 is selling at a premium of Rs.18. At what price will it break even for buyer of the option?

A buyer of Call Option?

An Over The Counter option –

Clients positions cannot be netted off against each other while calculating initial margin on the derivatives segment.

If you buy a PUT option at premium of Rs 20 at the Strike Price of Rs 250, lot is of 2000 shares, then the maximum possible loss is___________

The Money market securities have a period of more than one year – State True or False?

If the base price of a security for a trading day is Rs 100 and the price range is 1%, the opening price for trading day will be_________

In_____ bonds, the investor has the right to demand prepayment on specified dates before maturity

The effect of reinvestment risk on a bond is _________

If all the rates move in the same direction by same extent, the Term Structure of rates is called ______________

Bond X and Bond Y are issued by the same issuer and have the same maturity. Bond X is priced at 98 and Bond Y at 101.50 Which of the two bonds is a better investment?

Amongst the below given options, who requires a prior permission from SEBI to short sell Govt. Bond futures?

The Constituent Subsidiary General Ledger(CSGL) Account can be opened by_________

The role of the custodian is to settle________

Which of the following is correct about the Conversion Factor?

The relationship between the spot price and the future price is known as_________

Identify the cost which is an added cost to the stock market traders/investor, but is not paid by them explicitly and therefore it does not appear in their contract notes?

A ‘Closing buy transaction’ is a buy transaction which will have the effect of offsetting a ____________

A trader has sold a ABC futures contract at 2500 and bought it back at 2700, what is the gain/loss for the trader? Lot size is 50.

SCORES is _____________

As per the Income Tax Act, any loss on derivatives transaction can be set-off against which income in the same year?

Calculate the Intrinsic Value for the following Call option : Current price of the stock – Rs. 340. Call option of strike price Rs. 300 is quoted at Rs. 56

Rho is linked to the __________

If the share price of ABC share increases by Rs 5 and delta of its option is 0.5, then by how much will the option price rise?

At a price level of Rs. 6300, what will be the value of one lot of ABC futures contract. Lot size is 50.

Which are the two most important things to be considered while constructing an index?

A buyer of Out-of-the-Money(OTM) Call option is ______________

Speculator are those who wish to _________ risks whereas hedgers are those who wish to _________risks.

The terms of the contract are decided by mutual agreement between the price in a futures contract.

With regards to futures markets, BASIS is the __________

If you are a seller of put option, you expect ________ of the underlying asset.

The Unique Client Code, which is allotted by the broker, is linked to the ___________

Mr. Ganesh thinks that the markets will go down, so he sell 10 lots of index futures at 3500. His predictions come true and the index falls and he buys back the futures contract at 3410. What is the profit he has made if one lot of index is of 50.

A hedged portfolio will give higher returns than unhedged portfolio at all times.

Initial margin to be paid in derivatives is set up taking into account the volatility of the underlying market. Generally _______

The risk that cannot be controlled by diversification of portfolio is _________.

________ is the ratio of change in option premium for a unit change in volatility.

A trader sells a futures contract and the price rises. The trader will ___________

A Forward Contract ______

The Intrinsic Value is zero for out-of-the money option but always positive for the in-the-money.

Shruti wants to buy a certain quantity of a share at a specified price or better. She will place a _________

A put option gives the buyer a right to sell how much of the underlying to the writer of the option?

What is Tick size?

Mr. Subu has buy position in a stock, he can cover his long position in the stock by selling______

A person has bought an option so cannot lose more than the option premium paid.

For USDINR Currency Futures, previous day settlement price is 56 and Today’s settlement price is 55.50. Bunty buys 20 contracts forward from previous day. What is the the MTM settlement?

Initial margin requirements are based on the _____ value at risk over a one-day time horizon

Daily settlement price for mark to market settlement of futures contracts shall be based on the last 30 minutes volume weighted average price of such contract across Exchange.

A member has two clients C1 and C2. C1 has purchased 800 contracts and C2 has 900 contracts in August XYZ futures series. What is the outstanding liability of the member towards clearing corporation in number of contracts?

A Call option is said to be In the money when ______ whereas a Put option is said to be In the money when_____________

An active trader in currency options market wants to execute his view on change in volatility over a period of time and wants to be insulated from changes in other factors impacting option pricing. What option strategy is he likely to use?

Formula for computation of Option premium is ________

Where all other factors affecting an option’s price remain same, the time value portion of an option’s premium will decrease with the passage of time. This is known as____________

The Breakeven point (BEP) for a short call position will also be equal to _____________

If you are a seller in the American option or short on American option you____________

The five key determinants of a currency option’s price other than the currency price and the strike price is/are ____________

What are the basic accounting heads to be maintained by any market participant for maintaining currency futures accounts?

The maximum net NPA% which an AD Category 1 bank can have for it to became a Trading and Clearing member of any recognized currency futures exchange is __________

What is the process of Actual Pay-in/Pay-out of Mark to Market margin or profit/loss on cancelled or on maturity of futures contract called?

Due to various risks involved in derivatives market, participants who wish to trade in derivatives products are advised by their broker to carefully read the document, given to them at the time of signing the agreement. The document is known as ___________

If the difference between long term rates and short term rates falls or narrows than the term structure of rates is called

The value of derivatives in the balance sheet is its ‘fair value’, which is its___________

Basis Risk’ refers to the differential price changes in___________

Mr A has purchased a par bond for a total sum of Rs 10 lakhs. Later the Yield to Maturity(YTM) falls by one basis point(0.01%). The modified duration is 5.80. Calculate the market value of Mr. A invesments after the change in YTM.

An action which may result in either profit or loss in future is known as ____________

The contract Amount for Treasury Bills and Government Bond futures is ________and __________respectively.

Initially, the exchange of good and service was made between parties through a mechanism known as the barter system.

In __________ process, Central banks issue paper currency and hold equivalent amount of Gold in their reserve. The value of each currency against another currency is derived from Gold exchange rate.

CAD and CHF stand for ____________

The US Dollar is by far the most widely traded currency worldwide and is also known as__________

Use of USD as a vehicle currency greatly _____ the number of exchange rates that must be dealt with in a multilateral system.

In a system of 100 currencies with no vehicle currencies, potentially there would be _______ currency pair or exchange rates.

Every trade in the FX market is a currency pair where one currency is bought with or sold for another currency. Therefore the two currencies are called___________

________is the market between Banks where dealers quote prices at the same time for both buying and selling the currency.

______ is a product whose value cannot be derived from its own value but is dependent on the value of some another product.

______are customized OTC contracts between two parties, where settlement takes place on a specific date in the future at today’s pre-agreed price.

In the case of a futures contract, the buyers and sellers do not enter into an agreement with one another rather both of them enter into an agreement with the exchange. This in turn eliminates the couterparty risk faced in forward.

Swaps are agreements between two parties to exchange cash flows in the futures according to a prearranged formula.

The value of a Derivatives contract are derived from its underlying asset but after a certain date they become completely worthless, hence it must be utilized within a given time period. This date is known as _________

Assume you buy a USDINR contract at Rs 74.50, one tick move on this contract will translate to __________depending on the direction of market movement.

In absence of interest rate parity, arbitrage opportunity_________