NISM Series VIII: Equity Derivatives Mock Test - Free Demo /10 NISM Series VIII: Equity Derivatives Mock Test – Free Demo 1 / 10 1. Which of the following prices is approximately closest to the three-month future maturity, given a spot price (market price) of Rs 200 and an interest rate of 12% per annum? a) 224 b) 206 c) 200 d) 203 Explanation:Price of a future contract is generally the spot price plus interest for the time period.Yearly Interest Rate is 12%. Full year’s interest = 12% of 200 ie. Rs 24 (200 x 12 / 100)So for 3 months the cost of interest is Rs 6. ( 24/12 x 3)Therefore the 3 month future contract will have an price of appx. Rs 206. (200 + 6) 2 / 10 2. The strategy in which a trader sells a lower strike price CALL option and simultaneously buys a higher strike price CALL option, both for the same scrip and with the same expiry date, is known as _______. a) Bullish Spread b) Butterfly c) Bearish Spread d) Long term Investment Explanation:A bear call spread is a limited profit, limited risk option strategy that can be used when the options trader is moderately bearish on the underlying security.It is entered by buying call options of a certain strike price and selling the same number of call options of lower strike price (in the money) on the same underlying security with the same expiration month. 3 / 10 3. From the choices below, when is the April index futures contract scheduled to be introduced on NSE? a) On the 1st trading day after last Friday in January b) On the 1st trading day after last Thursday in January c) On the 1st trading day after last Friday in March d) On the 1st trading day after last Thursday in March Explanation:There are always 3 contracts running. So for eg. we will have Jan-Feb-Mar contracts trading in January.When January contracts expire on last Thursday of January, on Friday the April contracts will be introduced and so we will have Feb-Mar-April contracts. 4 / 10 4. Concluding a long position in a CALL option is possible by initiating a short position in a PUT option. a) True b) False Explanation:A long position in any option can be closed by selling that option and not in any other way.So a long position in a CALL option can be closed by selling that CALL option. 5 / 10 5. Among the options listed below, which one would necessitate margin requirements? a) Seller of CALL Option b) Buyer of PUT Option c) Seller of PUT Option d) Both 1 and 3 Explanation:Buyers of Options pay the premium and that is the maximum loss they can suffer – so they need not pay any margin.A seller of options receives the premium but he can suffer infinte losses – so margins are collected both from sellers of Call and Put options. 6 / 10 6. A stock exchange employs ON-LINE SURVEILLANCE capability to monitor the _________. a) Volumes b) Prices c) Positions d) All of the above Explanation:All modern stock exchanges have highly developed online surveillance sytems to monitor the volumes / position and prices of all listed products and also check any unusual activity etc. in them. 7 / 10 7. Initial margin is computed based on _______. a) As per the The Black & Scholes Model b) Fixed at 25% for most of the scrips and 35% for volatile scrips c) Value-At-Risk (VAR) based margining. d) Average price movement in the last 5 working days Explanation:Initial margin requirements are based on 99% value at risk over a one day time horizon. 8 / 10 8. ______ is a transaction that generates profit by taking advantage of a price disparity in a product across two distinct markets. a) Hedging b) Trading c) Speculation d) Arbitrage Explanation:Arbitrage means buying a security in one market while simultaneously selling the same security in a different market, to benefit from price differential. 9 / 10 9. _______ represents an expense for market participants but is not specified in the contract note. a) SEBI turnover fees b) Securities Transaction Tax c) Impact Cost d) Exchange transaction charges Explanation:Impact cost is the cost that a buyer or seller of stocks incurs while executing a transaction due to the prevailing liquidity condition on the counter. Lower the liquidity, higher will be the impact cost.The impact cost is not reflected in the contract notes. 10 / 10 10. ‘SCORES’ is the name given to ________ . a) SEBI’s web-based compliant redressal system b) Securities Collateral Records System c) Exchange’s risk management and margin system d) Suspicious transaction reporting system Explanation:SEBI’s web-based complaints redressal system is called SCORES (Sebi COmplaints REdress System).SCORES is a centralized grievance management system with tracking mechanism to know the latest updates and time taken for complaint resolution. Your score is 0% Restart quiz Exit
