Derivatives Dealers 11

Q1. Each forward contract

1. can be structured as required by the buyer and seller
2. will have the same specifications
3. specifications are decided by the RBI
4. None of the above .

Q2. A forward contract is an agreement to enter into a contract at a pre-specified future date.

1. True
2. False
3. True only in Europe
4. True only in Africa

Q3. A Call Option gives the Holder the right

1. to buy the underlying asset
2. to sell the underlying asset
3. to either sell or buy the underlying asset, as he wishes
4. None of the above

Q4. Which of the following is true?

1. European options can be exercised anytime before the expiration date
2. European options can be exercised on or before the expiration date
3. European options must be exercised on the expiration date
4. European options can be exercised only on the expiration date

Q5. An European Option

1. can be exercised anytime during the life of the Option
2. can be exercised only at maturity
3. is traded only on the European Exchange
4. is a floating rate option

Q6. The holder of a long position in call option benefits if the price of underlying asset

1. increases
2. decreases
3. does not change
4. can not say

Q7.In an options contract on futures, the underlying asset is a

1. Present contract
2. Past contract
3. Futures contract
4. None of the above.

Q8. The bid is the price at which market maker is prepared

1. to buy.
2. to sell.
3. to remain idle
4. None of the above

Q9. An investor has open position of 10 contract long, 10 contract long and 10 contract short in

sensex future March, April and May series respectively. What are her spreads across

March-April?

1. 0
2. 10
3. 20
4. None of these

Q10. If you have short sold a Sensex future at 3000 and bought it at 3100, what is your gain / loss?

1. A loss of Rs. 5000
2. A gain of Rs. 500
3. A gain of Rs. 5000
4. A loss of Rs. 500