Interest Rate Derivatives Quiz2

Question 1 of 151

1. Question

1 point(s)

A trader does the following currency futures trade – sells EURINR and Buy JPYINR for an equivalent amount. What view has he executed ?

INR weakening against EUR
EUR weakening against JPY
EUR strengthening against JPY
INR strengthening against EUR

Question 2 of 151

2. Question

1 point(s)

A trader takes a long position in USDINR futures contract at a price of 65 by buying 40 lots. On expiry of contract the settlement price was 65.40. What is his profit or loss ?

Loss of Rs 16000
Profit of Rs 16000
Loss of Rs 1600
Profit of Rs 1600

Question 3 of 151

3. Question

1 point(s)

Mr. Amit sells a USD put option at strike of 66 and receives a premium of INR 0.4. What would be the break even point for the two transactions ?

65.6
66.4
66
65.4

Question 4 of 151

4. Question

1 point(s)

The current EURIN spot is 80. The current future price of EUR is at a premium to INR. A trader believes that on expiry of one month EURINR futures, the spot may remain at 80. What currency futures trade strategy would be profitable to the trader if his views comes correct?

Sell EURINR for one month and buy for 2 month
Buy EURINR for one month and sell for 2 month
Buy EURINR
Sell EURINR

Question 5 of 151

5. Question

1 point(s)

What is the process of actual pay in / pay out of mark to market margin or profit / loss on cancellation or on maturity of futures contract called ?

MTM
Clearing
Pay in / Pay out
Settlement

Question 6 of 151

6. Question

1 point(s)

___has issued guidance notes on accounting of index futures contracts from the view point of parties who enter into such futures contracts as buyers or sellers.

SEBI
RBI
CRISIL
ICAI

Question 7 of 151

7. Question

1 point(s)

An Indian investor has invested Rs 390000 in US securities. At the time of investment, the exchange rate was 65. Two years later he noticed that his investments have gained 25% in USD terms and liquidated his investments. He repatriated the money to India at the then existing rate of Rs 62. What would be his real returns( returns in INR terms) ?

0.1856
0.1923
0.2087
0.213

Question 8 of 151

8. Question

1 point(s)

___best describes the total open interest which is used for the purpose of monitoring open position during the day.

Total open interest at 12.00
Total open interest at the time of monitoring
Total open interest at the end of previous day
Maximum open interest in the previous day

Question 9 of 151

9. Question

1 point(s)

An vegetable oil factory owner gets into a contract with McDonalds to sell certain quantity of vegetable of contract has the factory owner entered into with the McDonalds ?
oil at a fixed price for a year. Which type of Contract has the factory owner entered into with the McDonalds?

Swap
Arbitrage
Forward
Forward

Question 10 of 151

10. Question

1 point(s)

Mr. Amit is working with a of a currency broking house is an expert in currency movements. As per his view, INR should appreciate against EUR in next 6 months and accordingly he advised some of his clients to take a short position by selling EUR against INR and also he guaranteed against any losses. The manager of the employee takes an action against Mr. Amit for violating some trading guidelines. What should Mr. Amit have done to avoid the punishment ?

Amit should have advised the clients correctly to take short position for 1 months and not 6 months as 6 month is a long period
Amit should have also clearly mentioned the risk to his view
Amit should not have guaranteed against losses
Amit should have advised the clients correctly to take short position for 12 months and not 6 months as 6 month is a short period

Question 11 of 151

11. Question

1 point(s)

Mr. Vaibhav believes that USDINR will appreciate and accordingly he enters into a derivative contract to execute his view of appreciating USDINR.
His view proved correct but he observed that his profits are not increasing along with the USDINR appreciation. What type of derivative contract would he have entered in ?

Long Call option
Long Put Option
Short Call option
Short Put option

Question 12 of 151

12. Question

1 point(s)

What is true with respect to Governing Council of currency futures segment of an exchange ?

Governing council of currency futures and equity derivative /cash segment can have maximum 25% common members
Governing council of currency futures and equity derivative /cash segment can have maximum 40% common members
Governing council of currency futures and equity derivative /cash segment can have maximum 50% common members
Governing council of currency futures and equity derivative /cash segment can have maximum 10% common members

Question 13 of 151

13. Question

1 point(s)

A ‘DERIVATIVE PRODUCT can be best described as a___

complex product which is traded only amongst banks and large institutions
product whose value is derived from value of one or more underlying variables
product which can be from Equity / Currency or Commodity markets and are traded on a recognised stock exchange.

Question 14 of 151

14. Question

1 point(s)

If a person has bearish view on USDINR, which would be the appropriate strategy for the objective of maximizing the profit ?

Buy USD Call option
Sell USD Call option
Buy USD Put option
Sell USD Put option

Question 15 of 151

15. Question

1 point(s)

Identify the appropriate strategy for a BULLISH view on USDINR and trade objective of zero cash outgo.

Sell USDINR Call option
Sell USDINR Put option
Buy USDINR Call option
Buy USDINR Put option

Question 16 of 151

16. Question

1 point(s)

As a trader you believe USDJPY will move from 90 to 95 in the next one month. You are a trader based in India where there is no trading in USDJPY. Therefore which of the following would you do to execute this view using currency future contracts of JPYINR and USDINR.

Short JPYINR and Long USDINR
Short USDINR and Long JPYINR
Short JPYINR
Long JPYINR

Question 17 of 151

17. Question

1 point(s)

If more than one contract in a series are outstanding at the time of expiry/ squaring off, the contract price of the contract so squared off should be determined using____method for calculating profit/loss on squaring-up.

LIFO
FIFO
High price first
Low price first

Question 18 of 151

18. Question

1 point(s)

Which of the below option is TRUE with respect to Exchange Traded derivatives ?

Only the contracting parties are safe guarded by the risk management policies and not all the market participants.
Exchange traded derivatives are not regulated
The margining system is different for different set of counter parties
All market participants are safe guarded by the risk management policies

Question 19 of 151

19. Question

1 point(s)

When you buy an Option, does it means you have a right to sell the underlying asset ?

Yes
No
Depends on whether its a Call or Put option

Question 20 of 151

20. Question

1 point(s)

The minimum networth required for a company for applying to become a authorised exchange of currency futures is Rs _Crores

50
75
100
200

Question 21 of 151

21. Question

1 point(s)

A sub-broker has to execute a bipartite agreement between him and his client clearly specifying rights and obligations of each party – State True or False ?

True
False

Question 22 of 151

22. Question

1 point(s)

For the same maturity, the premium on “In The Money’ option will be lower than the premium for ‘Out of The Money’ option – State True or False ?

True
False

Question 23 of 151

23. Question

1 point(s)

A wheat flour manufacturer gets into a contract with a five star hotel chain to sell certain quantity of wheat flour at a fixed price for a year.
However after a few months, the price of wheat rises much above the contracted price and the manufacturer refuses to sell to the five star hotel chain. What is the type of risk highlighted in this contract?

Operational Risk
Liquidity Risk
Basis Risk
Counter Party Risk

Question 24 of 151

24. Question

1 point(s)

An Indian exporter wishes to completely hedge the 10,000 GBP he is expecting to receive on 70th day from today. On the exchange the contracts available are for 30,60 and 90 maturity days. He does not want to take any risk. What kind of action is he likely to take ?

Short GBPINR on an Exchange
Long GBPINR on an Exchange
Long GBPINR on OTC market
Short GBPINR on OTC market

Question 25 of 151

25. Question

1 point(s)

As per SEBI rules, the Exchange has to offer how many minimum number of ‘OUT OF THE MONEY durrency option contracts for each maturity ?

1
3
5
12

Question 26 of 151

26. Question

1 point(s)

Mr X buys GBPINR futures at various price points over two days. He buys 20 lots at 80.00 at 11.30 am and 15 lots at 80.25 at 1.30 pm on Day 1. On Day 2 he buys 25 lots at 80.50 at 11 am and 10 lots at 80.40 at 2 pm. On day 3 he sell 50 lots at 80.60. Calculate his Profit / loss on the squared off position using FIFO method.

17860
18750
21390
23745

Question 27 of 151

27. Question

1 point(s)

A trader feels that INR should depreciate against the USD in the next few months. What currency future transaction will be profitable to him if his view comes true ? (Assume everything else remaining the same )

Buy USDINR
Sell USDINR
Take no action

Question 28 of 151

28. Question

1 point(s)

A trader wants to sell GBPINR one month futures contract. The current price is 81.50 and he enters a limit order to sell at 81.70. Assume that the price moves between 81 and 82 after the limit order was entered, at what price is this order likely to be executed ?

At 81.70
Any price between 81.70 and 82
At or below 81.50
Any price between 81 and 81.50

Question 29 of 151

29. Question

1 point(s)

In Currency Market, if’T is the date of transaction, the T + 1 is called as (With respect to Settlements)

Tom
Spot
Cash Date
None of the above

Question 30 of 151

30. Question

1 point(s)

When you short a PUT option, once the breakeven point is crossed, the losses keep increasing with decreasing price of underlying asset.

Always true
Sometimes true
Never true
None of the above

Question 31 of 151

31. Question

1 point(s)

Only American style currency options are traded on exchanges – State True or False ?

True
False

Question 32 of 151

32. Question

1 point(s)

The mark-to-market gains and losses are settled in cash before the start of trading on _day

T+1
T+2
T
On Real Time basis

Question 33 of 151

33. Question

1 point(s)

The tick size for USDINR futures contract in India is___

0.25 rupees
0.025 rupees
0.0025 rupees
1.25 rupees

Question 34 of 151

34. Question

1 point(s)

A client buys a EUR Put option at strike of 60 and pays a premium of INR 0.45. What would be the breakeven point for the transaction?

60.45
59.55
60.9
60

Question 35 of 151

35. Question

1 point(s)

A trader in currency markets buys a long position in EURINR futures contract at a price of 65.40 and he buys 40 lots of the same. On expiry the settlement price is announced at 65.60. How much profit (+) or loss (-) does he make ?

Profit of 8
Profit of 800
Profit of 8000
Loss of 800

Question 36 of 151

36. Question

1 point(s)

As per the Foreign Exchange Management Act an ‘AD Category 1’ bank can have a maximum net NPA of___ % to become a Trading and Clearing Member of currency futures segment at a recognised stock exchange.

0.04
0.048
0.03
0.025

Question 37 of 151

37. Question

1 point(s)

A trader is long in EURINR Call option of strike price of 75. The current spot price of EURINR is 79. What is the moneyness of this option ?

In the Money
Out of the Money
At the Money
None of the Above

Question 38 of 151

38. Question

1 point(s)

Assume that on 1st December 2010, USD-INR spot was at 45, premium for January 2011 maturity put option at strike of 45.5 is INR 0.54/0.55 and premium for January 2011 maturity call option at strike of 45 is INR 0.71/0.72. A client Mr. Shah executes a trade wherein he buys put at a strike of 45.5 and sells a call at a strike of 45. On expiry the RBI reference rate is 44.75. How much net profit/loss did Mr. Shah make per USD?

Profit of INR 0.91
Loss of INR 0.2
Loss of INR 0.96
Profit of INR 0.15

Question 39 of 151

39. Question

1 point(s)

As per SEBI rules, the currency exchanges have to offer_ series monthly contracts and contract.

4, 4
3, 3
3, 4
4, 3

Question 40 of 151

40. Question

1 point(s)

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?

60.1
60.5
60.9
60.3

Question 41 of 151

41. Question

1 point(s)

What is the ISO Currency Symbol of SWISS FRANC?

SWF
SSF
SFC
CHF

Question 42 of 151

42. Question

1 point(s)

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

Rs 50 crore
Rs 100 crore
Rs 250 crore
Rs 500 crore

Question 43 of 151

43. Question

1 point(s)

The intrinsic value of ‘In the money’ option and ‘At the money’ option is always greater then or equal to One – State whether True or False?

True
False

Question 44 of 151

44. Question

1 point(s)

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?

400 and 450
350 and 375
525 and 470
390 and 410

Question 45 of 151

45. Question

1 point(s)

Which of the following is true with respect to settlement date for exchange traded currency futures ?

Two calendar days before the contract expiry
Two business days before the contract expiry
Last working day of the month
Two calendar days after the contract expiry

Question 46 of 151

46. Question

1 point(s)

The initial deposit which is required for initiating a currency future position is known as

Mark to Market Margin
Special Margin
Initial Margin
VaR Margin

Question 47 of 151

47. Question

1 point(s)

Which of the following best describes the guidelines for brokers with respect to issuing of contract notes for execution of orders?

Broker should have a separate audit team which inspects the process of issuing contract notes at all his sub-brokers
Brokers should promptly issue contract notes to his clients every week on Friday
Brokers should promptly issue contract notes to his clients and clients of his sub brokers.
Broker should ensure that his sub-brokers issue contract notes every week to their clients

Question 48 of 151

48. Question

1 point(s)

In OTC currency derivative market in India, is it possible for a corporate to write an option and receive a net premium?

Possible
Not possible
Possible, if he can give to the bank a copy of underlying trade transaction against which option has been written

Question 49 of 151

49. Question

1 point(s)

Which of the following correctly describes the closing price of USDINR futures contract ?

The average price for last half hour trading.
The weighted average price for last half an hour trading.
The last traded price.
The average price of bid and ask price for last half an hour of trading.

Question 50 of 151

50. Question

1 point(s)

The system of accounting which is used to calculate prices of currency futures contract when multiple contracts of a series are combined / squared up is___

LIFO
FIFO
Lowest price contract are squared off first
Profit making contracts are squared off first.

Question 51 of 151

51. Question

1 point(s)

The system of accounting which is used to calculate prices of currency futures contract when multiple contracts of a series are combined / squared up is___

LIFO
FIFO
Lowest price contract are squared off first
Profit making contracts are squared off first.

Question 52 of 151

52. Question

1 point(s)

Which of the following is a true measure of the realized return for a coupon bond?

Yield-to-maturity
Current yield
Coupon
None of the above

Question 53 of 151

53. Question

1 point(s)

The underlying for 10-year bond futures under the current regulations can be theoretically

Actual bond
Notional bond
Both 1 and 2
None of the above

Question 54 of 151

54. Question

1 point(s)

If the spread between long-term rate and short-term rate has changed from +0.75% to +1.25%, the shift in term structure is

Flattening
Steepening
Parallel
None of the above

Question 55 of 151

55. Question

1 point(s)

Which of the following risks can be hedged with T Bill and T Bond futures?

Reinvestment risk
Credit risk
Both 1 and 2
None of the above

Question 56 of 151

56. Question

1 point(s)

The futures hedge is exposed to___

basis risk
yield curve spread risk
both 1 and 2
None of the above

Question 57 of 151

57. Question

1 point(s)

Exchange can further “tighten” but cannot dilute the scope of SEBI Regulations – State True or False ?

True
False

Question 58 of 151

58. Question

1 point(s)

Basis risk arises from

Differential price changes in the exposure and futures contract
Mismatch between the amount of exposure and futures notional
Mismatch between the maturity/expiry of exposure and futures contract
All of the above

Question 59 of 151

59. Question

1 point(s)

Which of the following correctly describes “hedging”?

Risk minimization
Risk insurance
Risk reduction
Risk elimination

Question 60 of 151

60. Question

1 point(s)

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

cannot be higher than 101
cannot be lower than 99
Both 1 and 2 together
None of the above

Question 61 of 151

61. Question

1 point(s)

Yield curve spread risk arises when the term structure shifts are not parallel but either steepening or flattening – State True or False ?

True
False

Question 62 of 151

62. Question

1 point(s)

India the last trading day and expiry day are one and the same for interest rate futures contract – State True or False ?

True
False

Question 63 of 151

63. Question

1 point(s)

The price of a bond is Rs 300. The Yield to Maturity (YTM) is 6.8% and the Modified duration is 3. If the Y TM changes by 1%, the bond price will change by _

Rs 9
Rs 3
0.058
0.078

Question 64 of 151

64. Question

1 point(s)

Who sets the Extreme Loss Margin at Clearing Member level ?

The Stock Exchange
The Stock Exchange
Clearing Corporation
Mark to Market Margining system

Question 65 of 151

65. Question

1 point(s)

Position Limit is the limit on an investor’s maximum daily volume – State True or False ?

True
False

Question 66 of 151

66. Question

1 point(s)

trade will not lead to any profit or loss in future.

Speculative
arbitrage
call option
hedge

Question 67 of 151

67. Question

1 point(s)

What is the option on Interest Rate called ?

FRA
FX option
Equity option
Interest rate option

Question 68 of 151

68. Question

1 point(s)

The Stop Loss order requires a _price to be specified.

market
arbitrage
trigger
order cancel

Question 69 of 151

69. Question

1 point(s)

Mr. Kiran is a Non Resident and he sees a drop in interest rates in India. To make a speculative profit, he wishes to short sell interest rate derivatives. Can he do it ?

Yes
No

Question 70 of 151

70. Question

1 point(s)

As per the current accounting standards in India – The fair value will be taken to the Profit/Loss Account inculding transactions qualifying as Hedging Transactions – State True or False ?

True
False

Question 71 of 151

71. Question

1 point(s)

A Normal shape of term structure means that rate is the same for all terms – True or False ?

True
False

Question 72 of 151

72. Question

1 point(s)

Which of the following category of market participants can use interest rate derivatives?

Retail investors
Mutual funds
Foreign institutional investors
All of the above

Question 73 of 151

73. Question

1 point(s)

Which of the following makes debt an essential component of capital?

Tax-deductibility of interest expense
Lower cost
Both 1 and 2
None of the above

Question 74 of 151

74. Question

1 point(s)

The “fixed” in fixed income securities implies that _

Risk is fixed
Cash flows timing is fixed
Return is fixed
All of the above

Question 75 of 151

75. Question

1 point(s)

Custodian’s role is to settle___

Cash leg of the trade
Securities leg of the trade
Both 1 and 2
None of the above

Question 76 of 151

76. Question

1 point(s)

A Professional clearing Member can_

Execute tardes
Clear and Settle trade
Both 1 and 2
None of the above

Question 77 of 151

77. Question

1 point(s)

Which of the following is the last trading day for Govt. bond futures?

Two business days before the last business day of the Expiry Month
wo business days after the first business day of the Expiry Month
Seven business days before the last business day of the Expiry Month
Last Thursday of Contract / Expiry Month

Question 78 of 151

78. Question

1 point(s)

Which of the following is the settlement day for 10-year bond futures?

Last business day of the Expiry Month
Two business days after the last trading day
Both (a) and (b) above
None of the above

Question 79 of 151

79. Question

1 point(s)

Yield-to-maturity (YTM) assumes which of the following?

Term structure is flat
Shift in the term structure is parallel
Reinvestment rate is the same as YTM
All of the above

Question 80 of 151

80. Question

1 point(s)

The regulator for the primary market of government securities is___

RBI
SEBI
Stock Exchanges
None of the above

Question 81 of 151

81. Question

1 point(s)

Which of the following is correct about the Conversion Factor?

It adjusts the quantity of Deliverable Bond
It adjusts the price of Deliverable Bond
Both 1 and 2
None of the above

Question 82 of 151

82. Question

1 point(s)

Which of the following statements is true?

Clearing precedes settlement
Settlement precedes clearing
Settlement precedes trade
None of the above

Question 83 of 151

83. Question

1 point(s)

Credit spread is the price of

Price risk
Credit risk
Reinvestment risk
All of the above

Question 84 of 151

84. Question

1 point(s)

Which of the following bond pays interest in proportion to the prevailing market rate?

Floater Bonds
Zero-coupon bond
Fixed-rate bond
Inverse floater

Question 85 of 151

85. Question

1 point(s)

Which of the following entities is the registry for government securities ?

Public Debt Office (PDO), RBI
National Securities Depository Ltd (NSDL)
Central Depository Services (India) Ltd (CDSL)
Both 2 and 3

Question 86 of 151

86. Question

1 point(s)

Inter-commodity spread consists of buying futures on one underlying and selling futures on another for different expiry month and for the same quantity – State True or False ?

True
False

Question 87 of 151

87. Question

1 point(s)

The last trading day for Treasury Bill future contract is the Last Wednesday of Contract Month or the___day if it is a holiday.

previous
next
either 1 or 2 as per Exchange decision
Last trading cannot be changed

Question 88 of 151

88. Question

1 point(s)

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

0.01
0.03
0.04
No change in price

Question 89 of 151

89. Question

1 point(s)

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?

Bond A
Bond B
The one with the higher coupon
Bonds cannot be judged based on their prices

Question 90 of 151

90. Question

1 point(s)

Amongst the below given options, which is TRUE for Subsidiary General Ledger (SGL) Account ?

Its a demat account for debt securities which is maintained with depositories
Its a demat account for Govt. securities which is maintained with Public Debt Office (PDO), RBI.
Its a demat account for Govt. securities which is maintained with SEBI
None of the above

Question 91 of 151

91. Question

1 point(s)

Bond futures usually are settled as follows___

Cash settlement
Physical settlement
Both 1 and 2
None of the above

Question 92 of 151

92. Question

1 point(s)

Mark-to-market margin is paid by___

Buyer
Seller
Whichever party that have negative value on Open Position
None of the above

Question 93 of 151

93. Question

1 point(s)

Which was the first exchange traded derivative to be introduced in the Indian markets ?

Equity Index options
Single stock futures
Currency futures
Equity Index futures

Question 94 of 151

94. Question

1 point(s)

The stop-loss requires a trigger price to be specified, which should be lower than current market offer price for stop-loss buy order – State True or False ?

True
False

Question 95 of 151

95. Question

1 point(s)

Which of the following is the role of derivatives?

Cash or liquidity management
Financing
Risk management
All of the above

Question 96 of 151

96. Question

1 point(s)

What is FRA ?

Its the futures on Interest Rate
Its the forward on Interest Rate
Its the Option on Interest
Rate Its the Swap on Interest Rate

Question 97 of 151

97. Question

1 point(s)

Futures contracts can be used to modify the exposure portfolio’s Modified Duration in the following way/s:

To increase portfolio's Modified Duration
To decrease portfolio's Modified Duration
Either (a) or (b)
None of the above

Question 98 of 151

98. Question

1 point(s)

Which of the following markets are borrow-lend type of transactions?

Money market
Bond market
Both 1 and 2
None of the aove

Question 99 of 151

99. Question

1 point(s)

____require prior permission of RBI to short sell Treasury bill futures.

Retail participants
High Net worth persons
RBI supervised entities
All of the above

Question 100 of 151

100. Question

1 point(s)

Initial margin is paid by _

Only Buyer
Only Seller
Both Buyer and Seller
None of the above

Question 101 of 151

101. Question

1 point(s)

Which of the following derivatives have the largest market size in India?

Interest rate derivatives
Equity derivatives
Commodity derivatives
Currency derivatives

Question 102 of 151

102. Question

1 point(s)

Yield curve spread risk arises when the term structure shift is

steepening
flattening
both 1 and 2
None of the above

Question 103 of 151

103. Question

1 point(s)

The role of an Exchange is to _

To settle the trades between buyers and sellers
To facilitate the trades between buyers and sellers
Both 1 and 2
None of the above

Question 104 of 151

104. Question

1 point(s)

What is the meaning of Market Risk ?

Risk which arises if the market / exchange defaults
Risk due to uncertainty of future profit or loss due to price changes
Risk of loss
None of the above

Question 105 of 151

105. Question

1 point(s)

Which date is the ‘Expiry Date’ in Interest Rate futures contract ?

Settlement Date of the Interest Rate futures contract
Last Trading Date Interest Rate futures contract
Both frand 2 are the same
None of the above

Question 106 of 151

106. Question

1 point(s)

The Contract Amount (or the market lot ) for Treasury Bills and Government Bond futures is___and____Respectively.

10,000 and Rs 1,00,000 of facevalue
Rs 20,000 and Rs 2,00,000 of facevalue
Rs 25,000 and Rs 1,00,000 of facevalue
Rs 2,00,000 of facevalue for both.

Question 107 of 151

107. Question

1 point(s)

Forward on Interest Rate is called_____

Interest rate futures
Interest rate swap
Bond futures
None of the above

Question 108 of 151

108. Question

1 point(s)

Who issues the ‘Certificates of Deposit ?

Local Muncipality
Banks
RBI
Corporates

Question 109 of 151

109. Question

1 point(s)

Assume two bonds are issued by an issuer which have same maturity but different coupon. Which bond should an investor buy ?

Bond with a higher market price
Bond with a lower market price
Bonds cannot be judged based on their prices
None of the above

Question 110 of 151

110. Question

1 point(s)

The Public Debt Office of RBI maintains demat account of Govt. Securities for _

All investors of Govt. securities
All investors of Private, Public and Got. debt securities
All securities of State Govt
Banks, Primary Dealers and select Financial Institutions

Question 111 of 151

111. Question

1 point(s)

Why will every futures seller prefer to deliver “cheapest-to-deliver” bond ?

Because the Conversion Factor does not change during the Delivery Month
Because the Conversion Factor varies during the Delivery Month
Because the price of the deliverable bond does not change during the Delivery Month
None of the above

Question 112 of 151

112. Question

1 point(s)

Among the following options, which is true about Position Limits ?

Position limit is the maximum daily volume at client level
Position limit is the maximum daily volume at trading member level
Position limit is the maximum daily volume at clearing member level
None of the above

Question 113 of 151

113. Question

1 point(s)

A trader expects the 3 month interest rate to fall in one month. What should he do today ?

Buy contract month expiring in 3 months on underlying sensitive to 1 month rate
Buy contract month expiring in 1 month on underlying sensitive to 3 month rate
Sell contract month expiring in 1 month on underlying sensitive to 3 month rate
None of the above

Question 114 of 151

114. Question

1 point(s)

The situation of BUY IN arises due to failure in settlement by ____

Buyer
Seller
Both 1 and 2
None of the above

Question 115 of 151

115. Question

1 point(s)

What is the use of ‘Quantity Freeze’ ?

it is a check to ensure that the order entry is not erroneous
it is a circuit filter for the day
Both 1 and 2
None of the above

Question 116 of 151

116. Question

1 point(s)

____are traded only in the OTC market.

Forwards
SWAPs
Both 1 and 2
None of the above

Question 117 of 151

117. Question

1 point(s)

The derivatives) traded in the exchange market is/are____

Options
Futures
Both 1 and 2
None of the above

Question 118 of 151

118. Question

1 point(s)

The contract months ie. expiry months for Treasury Bills futures in India are

Three nearest "serial" months
Three nearest "quarterly" months
Both "Serial" and "Quarterly" months
None of the above

Question 119 of 151

119. Question

1 point(s)

_____is traded both in OTC and Exchange markets.

Swap
Futures
Forwards
None of the above

Question 120 of 151

120. Question

1 point(s)

____is a debt security which has no cash flow until maturity.

Consol
Zero Coupon Bond
Annuity
All of the above

Question 121 of 151

121. Question

1 point(s)

When the difference between Long Term Rate and Short Term Rate falls or narrows from positive to less positive or from negative to more negative, the shift in term structure is called____

Steepening
Flattening
Parallel
Perpendicular

Question 122 of 151

122. Question

1 point(s)

In India the Interest Rate Derivatives are regulated by

RBI
SEBI
Finance Ministry
Jointly by RBI and SEBI

Question 123 of 151

123. Question

1 point(s)

The members of Exchange are called___

Trading Members
Clearing Members
Both 1 and 2
None of the above

Question 124 of 151

124. Question

1 point(s)

If the seller fails to serve the Notice of Intent to Deliver by the stipulated time either for full Open Position or part of it, the failed quantity will be ___

settled in cash
taken into Auction Settlement
either 1 or 2 as decided by the Buyer
either 1 or 2 as decided by the Seller

Question 125 of 151

125. Question

1 point(s)

For the Open Position on the Last Trading Day, the seller must notify the Clearing Corporation his intention to deliver by the close of____

Last Trading Day
Two business days prior to the last business day (expiry day) of Contract Month
Both 1 and 2 are same
None of the above

Question 126 of 151

126. Question

1 point(s)

A coupon paying bond is issued by a government ( sovereign ). Which risk(s) is/are associated with such bonds ?

Repayment Risk
Reinvestment Risk
Both 1 and 2
No risk are associated with government bonds

Question 127 of 151

127. Question

1 point(s)

The last trading day for a 10 year bond futures contract is____

Last Thursday of Contract / Expiry Month (or the previous trading day if it falls on a holiday)
Last Wednesday of Contract / Expiry Month (or the previous trading day if it falls on a holiday)
Last Thursday of Contract / Expiry Month (or the next trading day if it falls on a holiday)
Last Wednesday of Contract / Expiry Month (or the next trading day if it falls on a holiday)

Question 128 of 151

128. Question

1 point(s)

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

Hedging
Diversification
Risk Insurance
Speculation

Question 129 of 151

129. Question

1 point(s)

The settlement date for interest rate derivatives is___

the next business day after trade date
two days after trade date
three days after trade date
None of the above

Question 130 of 151

130. Question

1 point(s)

Day Order’ is also known as___

Stop-Loss Order
Good Till Day order
Immediate or Cancel order
Limit Order

Question 131 of 151

131. Question

1 point(s)

The accrued interest is paid by_____in the secondary market trades of coupon bonds.

Buyer to Seller
Seller to Buyer
Issuer to Buyer
Issuer to Seller

Question 132 of 151

132. Question

1 point(s)

____is a measure of ‘Price Risk’ in a bond.

Macaulay Duration
Modified Duration
Both 1 and 2
None of the above

Question 133 of 151

133. Question

1 point(s)

The position limits are defined___

only at Trading Member level
only at Clearing Member level
only at Client level
None of the above

Question 134 of 151

134. Question

1 point(s)

Who frames the operational procedures for trading and settlement of interest rate derivatives ?

RBI
SEBI
Jointly by RBI and SEBI
Exchanges and Clearing Corporations

Question 135 of 151

135. Question

1 point(s)

Among the below given options, interest rates will be highest for _credit ratings.

AAA
AA
AA+
BB

Question 136 of 151

136. Question

1 point(s)

Which order has a better chance of execution – Stop Loss order or Stop Loss Limit order ?

Stop Loss Order
Stop Loss Limit Order
Both have equal chance of execution
None of the above

Question 137 of 151

137. Question

1 point(s)

Which of the following is true with respect to the regulations on buying and selling of T Bill and T Bond futures for Non-residents and Foreign Institutional Investors ?

They can short sell freely
They can short sell only with prior permission of SEBI
They cannot short sell
None of the above

Question 138 of 151

138. Question

1 point(s)

A trader expects the interest rate change to happen in the short term, so he should use____

Govt. bond futures with short expiry date
Govt. bond futures with long expiry date
Treasury Bill futures with short expiry date
Treasury Bill futures with long expiry date

Question 139 of 151

139. Question

1 point(s)

For the same deliverable bond, the conversion factor will be.____

same for different Delivery Months
different for different Delivery Months
same for serial months and different for quarterly months
different for serial months and same for quarterly months

Question 140 of 151

140. Question

1 point(s)

When a Stop Loss buy order is entered, the trigger price has to be _

higher than current market offer price
higher than current market bid price
lower than current market offer price
lower than current market bid price

Question 141 of 151

141. Question

1 point(s)

True return can be calculated in advance for___

Annuity
Zero coupon bond
Consols
Coupon Bond

Question 142 of 151

142. Question

1 point(s)

The____order requires a trigger price to be specified.

Immediate or Cancel
Stop Loss
Special Limit
Market

Question 143 of 151

143. Question

1 point(s)

_____measures the PRICE RISK in a bond.

Price value of basis point (PVBP)
Macaulay Duration
Both 1 and 2
None of the above

Question 144 of 151

144. Question

1 point(s)

If the SEBI regulations mention a farthest expiry date for futures contract of one year, than the Exchange can list the future trade contracts with the farthest expiry date of____

More than one year
Less than one year
More or less than one year
Less than one year or more than three years

Question 145 of 151

145. Question

1 point(s)

A “Gilt Account” is____

an account between Public Debt Office and Central governments
an account between Public Debt Office and investors in government securities
an account between Public Debt Office and Primary Dealers
None of the above

Question 146 of 151

146. Question

1 point(s)

Buy In”applies for”____

failure to notify the Intent to Deliver
short-delivery of securities on the settlement day
Both 1 and 2
None of the above

Question 147 of 151

147. Question

1 point(s)

From the given options, which is the most liquid tenor in Money Markets ?

10 month
6 month
2 month
1 month

Question 148 of 151

148. Question

1 point(s)

The maturity of the underlying bond on which the futures contract is currently listed is

1 Year
5 Year
10 Year
20 Year

Question 149 of 151

149. Question

1 point(s)

Among the following options, which quantity of face value can be bought or sold for Govt. bond futures ?

Rs 1 lakh
Rs 5 lakh
Rs 7 lakh
Rs 8 lakh

Question 150 of 151

150. Question

1 point(s)

In Exchange traded derivatives, the “trade guarantee” is given by _

SEBI
RBI
The concerned Exchange
Clearing Corporation

Question 151 of 151

151. Question

1 point(s)

When we trade, we___

minimise risk
assume risk
hedge the risk
eliminate the risk