NISM-SERIES-I SET 1 QUIZ

In case of a member’s default, the Clearing Corporation cannot transfer clients positions to another member or close out all open positions of defaulting member, without prior approval from SEBI – State True or False?

There are many products in the market which give high returns in risk-free manner – State whether True or False?

A long or short position in a futures contract can be closed by initiating a reverse trade – State True or False?

Its common to have derivatives contract without any expiration date-State whether True or False ?

Fixed deposits and Bank guarantees are NOT permitted to be offered by Clearing Members to the Clearing corpn as part of liquid assets – State whether True or False?

The term mark-to-market means

_____ means the maximum exposures in terms of number of options and futures contracts that an investor can hold on one side of the market.

The mark-to-market margin debits for stock futures are done on a daily basis but the mark-to-market margin credits are done on a weekly basis – State whether True or False ?

The initial margin is always equal to the mark-to-market margin – State True or False?

Mr. Arvind is very bullish on the market. How ever he feels some specific companies which he has in his portfolio will not perform well in future. What strategy should he adopt?

Even if you do not own the underlying stock, you can sell the stock option for that stock – State whether True or False?

Longer the time to maturity of the PUT option, higher will be the time value – State whether True or False?

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

Before you take a position in a futures contract, the Exchange calls for___to conver any loss that your position may incur.

What happens to the unmatched portion of the order in an Immediate or cancel (IOC) order ?

The option premium is affected by the difference in the exercise price and the spot price – State True or False ?

In stock markets, Beta is a statistical measure of the sensitivity of the movement of a share price to the movement of prevailing interest rates – State True or False?

When we trade in Commodities in a future exchange, it involves buying and selling______.

When you sell a PUT option, you expect _____.

Each investor who wishes to trade in the derivatives segment is required to satisfy minimum net worth conditions – State True or False ?

What does an Call Option gives the buyer ?

As the strike price goes higher, the premium on Call Options will decrease. – State True or False?

If the Trading Member reaches his position limit, he will______.

What is the role of speculators in the market ?

Which of the following options will result in the creation of a BEAR SPREAD?

Is it true that a buyer of a CALL OPTION cannot lose more than the option premium paid ?

What is the difference between Spot Price and Future Price known as ?

What is the intrinsic value of a call option if the spot price is Rs 300 and the strike price is Rs 250 ?

Which exchange first started trading in financial futures ?

You have created a Short Position on futures contract. This can be squared up by________.

Writing a covered callis_________.

What happens when the price of the underlying rises after a future contract is initiated?

The Clearing Corporation can transfer client positions from one broker member to another broker member in the event of a default by the first broker member. No SEBI approval is required for this action – State True or False ?

A writer / seller of a deep out of the money CALL option is ________.

The Risk Return profile for a Future contract is symmetric while that of an Option contract is asymmetric – State True or False ?

A portfolio with 200 stocks is only half as risky as another portfolio with 100 stocks – State True or False ?

Mr. A is a risk averse Investor. He would prefer secure investments like fixed deposits and other debt instruments and not market oriented investments – State True or False?

One can use Index Futures for hedging to eliminate or reduce the___________.

________________is not an application of indices.

The strategy in which an trader buys a call option of lower strike price and sells another call option with a higher strike price of the same share and same expiry date is called__________

In equity scheme, the Mutual Fund can hedge its equity exposure by selling index futures – True or False?

Who monitors the collection of Initial margin and allows exposure to members based on that ?

Losses due to Operational risks include losses due to._________

Value-at-risk is calculated____________.

Trade Guarantee Fund (TGF) is maintained for –

As per the recommendations of the L.C.Gupta Committee, CROSS MARGINING ( which takes into account the combined position in the cash and derivative market) is not permitted.

An option buyer pays the option premium to the option seller. State True or False?

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. True or False ?

The spot price of Grasim Industries Ltd share is Rs 900, the call option of Strike Price Rs 850 is_________.

In the Option segment, if you sell a CALL at a premium of Rs 45 at the Strike Price of Rs 400, lot is of 200 shared, the maximum possible Profit is_______.

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 Mr. Ganesh buys back the futures contract at 3410. What is the profit Mr. Ganesh has made if one lot of index is of 50.

_________is not a derivatives market product.

For which type of options is it profitable to exercise the options ?

Counterparty risk can also be called as__________.

To whom is a high impact cost beneficial ?

A call option gives the buyer the right to buy the underlying at market price – State True or False ?

When it is said that there is cash settlement of an index futures contract, it means that the contract is settled in cash with no delivery of the underlying – State whether True or False?

When the margins are kept on the lower side, it will attract more players to join the derivatives market – State True or False?

___________is a deal that produces profit by exploiting a price difference in a product in two different markets.

How can you close a short position in a futures market?

Arbitrage is basically earning a risk-free profit by simultaneous buying and selling replicating assets in two or more different markets – State True or False?

An Index Option is ________.

Clearing Member Mr. Prabhu focuses mainly on proprietary trading, while Clearing Member Mr. Mehta does not do any proprietary trades and does trades only for clients. If both have deposited the same amount of assets with Clearing Corporation, which of the foll statement is true?

After the initiation of the futures contract, the price of the underlying asset has risen. In this situation,_______.

If the price volatility of the underlying stock is high then the Put option will______.

Why are margins collected in the derivative segment ?

What is an Index Option ?

Can a broker take any amount of exposure once he has satisfied the minimum net worth and minimum deposit with the exchange in the form of liquid assets?

A person who provides two way quotes for various stocks is known as ____.

A mutual fund manager is bearish on the market and wishes to reduce its exposure to equities from 50% to 40%, without selling any of his equity holdings. Can he sell index futures for it ?

the derivative segment, once initial margin requirement is fixed, it cannot be changed by the exchange, during the lifetime of the futures contract – State True or False ?

When a PUT option on an index is exercised, the option holder receives from the option writer ________.

‘Netting’ is the process by which a future contract is terminated by a transaction that is equal and opposite to the original transaction – State True or False?

What is an Index Future ?

What does Beta of 1 mean ?

Loss on derivative transactions can be set off against any other income during the year. In case the same cannot be set off, it can be carried forward to subsequent assessment year and set off against any other income of the subsequent year. Such losses can be carried forward for a period of_____assessment years.

Which tax is applicable for equity transactions done on a recognized stock exchange?

Among the following options, in which future contract, the contract cannot be used as a means to acquire the underlying asset?

The daily Mark to Market gain or loss is realised________.

The features of Futures are quiet similar to _______.

If the far month futures prices are less than near month futures prices, this is known as ________.

Cross margining between cash and derivative segments of an exchange helps reduce the overall margin level applicable to investors and traders – State True or False ?

The net worth requirements of Clearing Members and Trading Members is the same for the derivatives exchange – State True or False ?

When a call option on an index is exercised, the call option holder receives from the option writer an amount equal to excess of spot price over the strike price of that call option – State True or False ?

Margins in the derivative segment has to be collected from all clients, including Financial Institutions and Fils – State True or False?

When a new client opens a trading account with a trading member, which of the following documents have to be compulsorily given to him ?

If the share price of XYZ share increases by Rs 2 and the delta of its option is 0.5, then by how much will the option price rise ?

Liquid stocks in a market have low impact cost when compared to illiquid stocks – State True or False?

If one does a calendar spread contract in index futures, then it attracts. _______

_________ measure of the sensitivity of an option price to changes in market volatility.

A stock exchange has ON LINE SURVEILLANCE capability to monitor the _______.

The options which are traded on a exchange are standardised.

The basic test of whether a trade done in the future market is for hedging or speculation is centered on the premise that there already exist a related commercial position which is exposed to the risk due to price fluctuations.

You are long in ICICI Bank Ltd futures at price Rs 500. The prices rises to Rs 520 next day. The Mark to Market margin will be credited to your account. True or False ?

If you sell a put option with strike of Rs. 375 at a premium of Rs.50, how much is the maximum gain that you may have on expiry of this position ?

An option with zero intrinsic value is called_________.

An exchange traded option after maturity____________.

Tick size depends on —

If you are a seller of put option, you expect___________.

The Option which gives its holder a positive cash flow Is called a__