PRACTICE QUESTIONS-4 – 50 Ques

What will be the value of one lot of ABC futures contract if the price is 3200 and the contract size is 150?

How can risks be controlled in the derivatives segment by the stock exchange?

What is Unsystematic Risk?

In derivative exchanges, the exposure amount possible for each member broker is linked to the amount of deposits/margins kept by the member with the clearing house – True or False?

The Clearing Corporation gives exposure limits to Clearing Members based on the number of Trading Members using the services of that Clearing Member – State True or False?

If the interest rate increases, the premium on CALL option will also increase – State True or False?

All types of investors should allot some portion of their portfolio to derivative products in order to increase the portfolio returns irrespective of their risk tolerance levels – State True or False?

In general terms, if the number of participants in a market are more, the liquidity will be low – State True or False?

The initial margin in derivatives market depends on the volatility of the underlying market. Usually

In an ‘Opening Buy Transaction’ the effect will be that of creating or increasing

The price at which the underlying asset can be bought or sold on exercise of an option is called

Losses incurred on derivative transactions on a ‘recognized stock exchange’ can be carried forward to subsequent assessment year and set off against any other non-speculative business income for _ years.

A call option gives its holder the right to buy ‘any quantity’ of the underlying asset from the writer of the call option at a pre-specified price – State True or False?

Which of these strategies is not a HEDGE?

In the derivatives market, the mark to market margin is equal to the initial margin – State True or False?

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?

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

The absolute amount of minimum capital adequacy requirement for derivative clearing member is higher than that of spot market – State whether True or False?

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

It’s the duty of the Clearing Corporation to continuously analyse and modify the initial margin requirements as the stock markets tend to be very volatile – 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.

A penalty or suspension of registration of a stock broker from derivatives exchange/segment under SEBI Regulations, 1992 can take place if

Counterparty risk can also be called as

As a Call option moves more Out-Of-The-Money, the absolute value of Delta will

Brokers and dealers of derivative exchanges have also to be registered with SEBI in addition to their registration with stock exchange – 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?

How many shares should be ideally there in an index?

A forward contract is

Tick size is