PRACTICE QUESTIONS-3 – 50 Ques

Identify which of these is not an application of indices:

Bulls’ are those investors who believe the market will rise – State True or False?

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

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

Clearing Corporation of an Exchange guarantees settlement of exchange traded contracts
– State whether True or False?

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

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?

Q3. 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?

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?

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

In an American Put Option, the buyer gets the right but not the obligation to___ the writer an asset at a specified price.

The strategy of ___ involves options with different strike prices but same expiry dates.

Is it true that at expiration, the value of an option is its intrinsic value?

What happens to a ‘Day Order’ if not executed during the day?

Mr. Harish bought 20 call options at Rs. 10 (strike Rs. 125). Stock closes at Rs. 100. He should:

Hedgers and speculators strike a balance because:

Identify the correct statement:

Mr. X sells one ABC stock future at Rs. 745. He buys it back at Rs. 754. Lot size: 1500. What is the result?

In a calendar spread transaction, the trader takes opposite position in two futures contracts with.

In the Options segment, if you buy a PUT, you expect the market / scrip to move ___________ .

The Time value of an option is the portion of option premium that is linked to the amount of time left till expiry of the option contract and also due to the fact that the underlying components that determine the value of option may change during that time – State True or False?

The trades done by dealers in their own account has to be totally segregated from the trades done in their clients account – 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?

As per news, the Government can lose a vote of confidence and this can affect the stock markets. What should an active trader ideally do?

Excess of premium in an option over the intrinsic value is known as the time value – State True or False?

If the volatility of the underlying stock is decreasing, the premium of call option would____________.

The simultaneous purchase and sale of two different tenors futures contracts in the same underlying is known as a .

When a seller SHORT SELLS a stock, it means .

Which complaint can be taken up by the exchange for redressal?

What is Tick size?

Which of the below statement(s) hold true for Futures Contract?

Investors who believe that the markets will fall are known as Bulls – State True or False?

Options contracts have two types of settlements:______premium settlement and Final settlement

Mr. Ganesh sells 10 lots of index futures at 3500 and buys back at 3410. If one lot is 50, what is his profit?

When the price of a future contract decreases, the margin account .

In the derivatives segment, who has to pay the margins as specified by the Clearing Corporation?

What does a seller of Put Option expect?

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

In a calendar spread transaction, the trader takes opposite position in two futures contracts with.

What is Tick size?

Which of the below statement(s) hold true for Futures Contract?

Investors who believe that the markets will fall are known as Bulls – State True or False?

Options contracts have two types of settlements:______premium settlement and Final settlement

Mr. Ganesh sells 10 lots of index futures at 3500 and buys back at 3410. If one lot is 50, what is his profit?

When the price of a future contract decreases, the margin account .

In the derivatives segment, who has to pay the margins as specified by the Clearing Corporation?

What does a seller of Put Option expect?

When a seller SHORT SELLS a stock, it means .

Bulls’ are those investors who believe the market will rise – State True or False?

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

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

Clearing Corporation of an Exchange guarantees settlement of exchange traded contracts
– State whether True or False?

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

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?

Q3. 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?

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?

What advantage does screen-based trading have over floor trading?

How should a seller of an option treat the premium received in his books of accounts?

If there is no cross margining between cash and derivatives segments of an exchange, this will

______________guarantees the performance of exchange traded contracts.

Identify the FALSE statement.

Identify the true formula for the Cost of Carry model.

Ms. Deepika is bearish on the market, so she is expecting the market to           .

Mr. P and Mr. Q are brokers with Rs. 7 crores in liquid assets. Which statement is true?

When there is a ‘Closing buy transaction’, this will have the effect of partly or fully offsetting_____.

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?

In the Options segment, if you buy a PUT, you expect the market / scrip to move ___________ .

The Time value of an option is the portion of option premium that is linked to the amount of time left till expiry of the option contract and also due to the fact that the underlying components that determine the value of option may change during that time – State True or False?

The trades done by dealers in their own account has to be totally segregated from the trades done in their clients account – 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?

As per news, the Government can lose a vote of confidence and this can affect the stock markets. What should an active trader ideally do?

Excess of premium in an option over the intrinsic value is known as the time value – State True or False?

If the volatility of the underlying stock is decreasing, the premium of call option would____________.

The simultaneous purchase and sale of two different tenors futures contracts in the same underlying is known as a .