NISM Series VIII – Equity Derivatives – Mock Test – Quiz 2

Over-the-counter option are always standardized – State whether True or False ?

A seller of call option can lose unlimited amount of money – State True or False?

The broker is compulsorily required to get a Risk Disclosure Document signed by the client, at the time of client registration – State True or False?

A long position in futures market can be reversed only with the same counterparty from whom the contract was initially purchased –State whether True or False?

Intrinsic value of an option is sum of Option premium and Time value – State whether True or False?

It’s the duty of the Clearing Corporation to continuously analyze and modify the initial margin requirements as the stock markets tend to be very volatile- State whether True or False?

In exercising call option on an index, the option holder receives from the option writer cash amount equal to excess of spot price (at the time of exercise) over the strike price of the call option – State whether True or False?

In a derivatives exchange, the net worth requirement for a clearing member is higher than that of a non-clearing member – State whether True or False?

At the time of final settlement, the seller / writer of the option will recognize the adverse difference he paid to the buyer as ____ in his profit and loss account.

At price level of Rs. 6900, what will be the value of one lot of ABC futures contract (contract multiplier 50)?

What does hedging do?

Which of these statements is True?

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

Meghna wants to sell 34 contracts of ABC futures at Rs. 2450 (contract multiplier is 50). Initial margin is 7%. How much will be the initial margin to be paid ?

In the derivatives market, as the strike price goes down, the premium of PUT option_______

Can the exercise price be more than or equal to or less than the cash spot price?

In a derivative segment, the initial margin is collected from the clearing member on a net basis i.e.. After netting all buy and sell positions of all clients together – State True or False?

Derivatives brokers/ dealers are expected to know their clients and to exercise care to ensure that the derivative product being sold by them to a particular client is suitable to his understanding and financial capabilities – State True or False?

Trading is allowed in Indian Equity markets in which of the following-

Suppose you are a trading member and have bought 14 contracts of April series index futures and sold 7 contracts of April series index futures on your own account. What will be your exposure on these transactions?

A person has buy position in a stock, how can he cover his long position in the stock?

Mr. X does not hold any shares of ABC company so he cannot write a CALL option on it – State True or False?

Two stocks A and B stocks are quoted at Rs 500 per share. Keeping everything else constant, if A is more volatile than B, which ‘Put’ will be priced higher?

On the derivatives futures market, if there are three series of one, two and three months open at a point of time, how many calendar spread can one have?

_____can write an option in the Indian stock market.

For a derivative exchange, the net worth requirement for a clearing member is always less than that for a non-clearing member – State True or False?

When an option moves more in the money, the absolute value of Delta will ______ .

A Professional Clearing Member can act only for Institutional clients – State True or False ?

The price at which the market maker is ready to buy is known as BID price – State True or False?

If a Day Order is not executed during the day, it will _______ .

The Intrinsic value of an In the Money option is the difference between the Market Price and the Exercise price – State true or False?

If the price of the underlying stock of a PUT option is very volatile._____ .

There is only CASH settlement for Nifty futures contract – State True or False ?

A Mutual Fund floats a new fund offer of a 100% equity scheme. Till the time it invests this cash in equities, the fund can take equity exposure by buying stock index futures – State True or False?

A writer of a naked PUT option is _____.

The potential exposure is calculated by the clearing corporation_____.

If a Trading member defaults in the derivative segment, he can still continue the trading business in the cash segment. – True or False?

The Spot price i.e.. The market price of a share is Rs 200 and the interest rate is 12% pa. Which of the below price is closest to 3 months future maturity?

Mr. Manoj buys a put option on PQR stock for Rs 20 of strike price Rs 130. If on the exercise day, the spot price of PQR is Rs 175, Mr. Manoj will choose______.

If you have sold a ITC Ltd. futures contract (contract multiplier 500) at 200 and bought it back at 228, what is your gain/loss?

If the price of a stock is volatile, then the option premium would be relatively______.

If the liquid assets maintained by clearing member Mr. Ram are higher than that clearing member Mr. shyam, which of the below options is/are true?

As per SEBI rules, a stock broker can be suspended from the derivatives segment if _____.

Cost of carry model means price of futures is equal to _____.

**Mr. Gautam has sold a put option with strike of Rs. 650 at a premium of Rs.60. What is the maximum gain per share that he may have on expiry of this position?

The Strangle strategy is similar to straddle strategy in outlook but different in ________.

Theta is _______.

The net worth of clearing members does not include-

Option Premium consists of two components-

The liquid asset which are to be maintained by clearing members with clearing corporation can include gold and silver jewellery after applying standard 20% haircut.