Derivatives Dealers(5)

Q1-A fund manager bullish on the market what should be his course of action ?

1. Buy index future 
2. Sell the index future
3. Sell his entire portfolio
4. None of the above

Q2-Tick size is

1. The minimum daily movement permitted in the price of the contract
2. The minimum permitted price movement during the entire life of the contract
3. The minimum permitted price movement in a futures contract 
4. None of the above

Q3-In the case of future the initial margin is paid only by seller and not by the buyers

1. True
2. False

Q4-If you have sold  june sensex future @4800 , you will make profit only if

1. Future price goes up
2. Future price go down 
3. None of the above

Q5-Generally higher the price volatility , higher would be intial margin requirement

1. True
2. True in africa  
3. True in Japan 
4. False

Q6-A derivative exchange faces

1. Legal risk
2. Operational risk
3. Liquidity risk
4. All of the above

Q7-The risk which is measured by a BETA value is called

1. Unsystematic risk
2. Systematic risk
3. Default risk
4. None of the above

Q8-a investor has done the following two spread trades in sensexfuture contracts what is her profit (+) or loss(-)? bought 10 contract jan-feb@2, sold 10  jan-feb @ 17

1. 1500
2. 7500
3. 375000
4. None of the above

Solution -
purchase price Rs- 2
sale price Rs- 17
Number of contracts- 10
Lot Size - 50
profit = (17-2) * 10 *50= 7500


Q9-At sensex future price level of 3000, what will be the value of one sensex  future contract

1. 3000
2. 300000
3. 150000
4. None of the above

Solution -
Sensex Price - 3000
Lot Size- 50
Value -  3000*50=150000

Q10-Taking position in futures opposite to that in cash market for protecting cash market holding is

1. Hedging
2. Speculating
3. Arbitrage
4. None of the above