Derivatives Dealers 19

1-The buyer of an option can lose no more than the option premium paid
a) True
b) False

2-Only shareholders of company can write an option.
a) True
b) False

3-Stock price is same as
a) Strike price
b) Exercise price
c) Price of the underlying
d) None of the above

4-Higher the volatility of the stock, lower the premium the call option would fetch.
a) True
b) False 

5-Daily Mark-to-market margin for index futures contract
a) is calculated on the daily closing price of index futures
b) is calculated on the basis of weighted average of the index.
c) is calculated on the basis of average of last 30 minutes values of the index.
d) None of the above

6-The margin requirements for the derivatives segment would be prescribed by
a) The SEBI
b) The Stock Exchange
c) The RBI
d) None of the above

7-Margins’ in ‘Futures’ trading are to be paid by
a) only the buyer
b) only the seller
c) both the buyer and seller
d) the clearing corporation

8-The derivatives market would be under the same governing council as the cash segment in one
exchange
a) True
b) False

9-You have bought Satyam Call strike price Rs. 240 at a premium of Rs.25. Lot size is 1,200. What is your profit (+) or loss(-) if you sell the Call at Rs 40?
a) Rs.19,000
b) Rs.17,000
c) Rs.18,000
d) None of these

10-. . . . .S&P CNX Nifty is based on the price of 50 securities only.
a)True
b)False 

Derivatives Dealers 18

1-. . . . .Stock index futures are financial futures.
a) True
b) False

2-Volatility of prices of the underlying assets and dividend yield do not affect the option values.
a) True
b) False

3-In an In-the-money call option the exercise price would be lower that the market price.
a) True
b) False
c) True only in Mumbai
d) None of the above

4-Intrinsic value of an option cannot be negative.
a) True
b) False

5-Premium of Infosys call option can be more than market price of Infosys.
a) True
b) False
c) True only in USA
d) True only in Japan

6-With decrease in strike price, the premium on call decreases.
a) True
b) False
c) True only in USA
d) True only

7-Buyer of OTM put option is
a) bullish - payer of premium
b) bullish - receiver of premium
c) bearish - payer of premium
d) bearish - receiver of premium

8-An investor entering into a bear spread is expecting
a) increase in the price of underlying asset
b) decrease in the price of underlying asset
c) no change in the price of underlying asset
d) Cannot Say

9-In an European option, the exercise date and expiration date
a) always differ.
b) may be the same.
c) are necessarily the same.
d) None of the above.

10-Time value and Intrinsic value together comprise option premium.
a) True
b) False

Capital Market 3

1.A stock broker, whose application for grant of a certificate has been refuses by the board-
A. shall not, on& from the date of the receipt of the communication buy ,sell, or deal in securities    as a stock broker
B. can start his normal trading as a stock broker after 2 months
C. only A 
D. Both A & B

2.When a stock broker fails to pay the fees as provided in regulation, the board may suspend the ____________.
A. Driving license
B. Ration card
C. Registration certificate 
D. Pan card


3.The eligible criteria for registration as a sub broker (an individual) shall be as follows:
A. The applicant is not less than 21 years of age & has not been convicted of any offence         involving fraud or default
B.He has at least passed 12th standard 
C. He is a fit & proper person
D. All of the above

4.Which is the following can apply to SEBI for registration?
A. Stock-broker 
B. Sub-broker
C. Both a & b
D. None of the above

5.An applicant who desires to act as a clearing member, in addition to complying with the requirements of the regulation, shall have a minimum net worth of Rs _____lacs & shall deposit at least a sum of Rs _________ lacs of higher amount with the clearing house of the derivative exchange or derivative segment in the form specified from time to time
A. 200, 150
B. 100, 50 
C. 150, 300
D. 400, 500

6.________ handles the complaints received by the investors against the trading members.
A. Investor Grievance cell 
B. Investor Appeal court
C. Investor Dispute Court
D. Consumer Law Court

7.Which type of arbitrator is appointed if the claim amount is up to Rs. 25 lakhs?
A. A panel of Arbitrator 
B. A sole Arbitrator
C. Depends on the client
D. None of the above


8-How much would we pay for Rs. 121.67, to be received five years in future, if our opportunity cost were 4% ?
A. 100 
B. 121.67
C. 112
D. 105

9.What is the present value of Rs. 6000 receivable after two years at a discount rate of 5% under continuous discounting?
A. Rs. 5429.02 
B. Rs. 6000

C. Rs. 6900

D. Rs. 5900

10.The Future value of Rs. 10000 investment done today, which gives an annual rate of return of 20% per annum, after one year should be________. 

A. Rs. 12200 

B. Rs. 12500 

C. Rs. 12000 

D. Rs. 12640 

Capital Market 2

1-The status of a security is indicated in the screen market by price. „P‟ indicates that the security is in the _____________ & „S‟ indicates that the security is_____________.
A. Pre-open phase, suspended.
B. Purchased, sold.
C. Profit, special.
D. Purchased, special term order

2-Who settles the trades executed at NSE?
A. NSDL
B. Clearing members
C. SEBI
D. NSCCL 

3-In the current scenario, which system is followed for settlement of cash market transaction?
A. T+1
B. T+5
C. T+2 
D. T day

4-.Who provides for electronic transfer of securities in the stock market?
A. RBI
B. Depositories 
C. Clearing Agencies
D. SEBI

5-Name the depository from the list given below.
A. NSE
B. NSCCL
C. NSDL 
D. RBI

6-Who moves the securities available in the account of the members to the NSCCL?
A. Clearing banks
B. Custodians
C. Clearing members
D. Depositories 

7-Which agency links Clearing Members & NSCCL for funds settlement?
A. Clearing Banks 
B. Depositories 
C.Clearing members
D.NSE

8-The Board shall take into account for considering the grant of a certificate for all matters relating /dealing in securities & in particular the following , namely, whether the stock broker:
A. Is eligible to be admitted as a member of a stock exchange
B. Has the necessary infrastructure like adequate office space, manpower etc.
C. Is subjected to disciplinary proceedings under the rules, regulations & bye-laws of a stock exchange with respect to his business as a stock-broker
D. All of the above 

9-An applicant, whose registration certificate has been refused by the Board, may reapply within a period of _________ from the date of receipt of such intimation, to the board for reconsideration of its decision.
A. 30 days 
B. one month
C. 15 days
D. 6 months

10-Name the special category of members admitted by NSCCL as clearing members.
A. Supporting clearing member
B. Custodians
C. Registered clearing member
D. Professional clearing member 

Capital Market 1

1-The first ticker window, by default, displays all the _____________ traded in the future & option segment. 

A. Derivatives contract. 

B. Nifty securities. 

C. Mid cap Securities. 

D. Nifty junior stocks. 

2-The ticker selection facility is confined to the securities of ______________ segment only. 

A. Derivative market. 

B. Capital market. 

C. Commodity market. 

D. Auction market. 

3-The message window enables the user to view messages broadcast by the__________ such as corporate actions, any market news etc. 

A. Exchange. 

B. RBI. 

C. GOVT. 

D. CRISIL 

4-The one line market information displayed in the market watch screen is for current best price orders available in the _______________ . 

A. Odd lot book. 

B. RETDEBT book. 

C. Regular lot book. 

D. Auction order book 

5-One of the best features of NEAT software is that the user has the facility to set up___ securities in the market watch. 

A. 100 

B. 150 

C. 500 

D. 400 

6-The purpose of market by price is to enable the user to view ________________ in the market aggregated at each price & is displayed in order of best prices. 

A. Outstanding orders. 

B. Outstanding auctions. 

C. Outstanding buyers. 

D. Outstanding sellers 

7-Bank Guarantee  can be submitted as .....to NSCCL by trading member

A.warrenty 

B.surety 

C.Additional base capital 

D.None of these

8-A depository is an entity where securities of the investors are held in   

A.Physical form 

B.Electronic and physical 

C.Electronic form 

D.None of the above 

9-Member wise margin  payment  status report is a 

A.weekly 

B.daily 

C.monthly

D.None of the above

10.If .....attempts are made by user to log on with an incorrect password then the user is automatically disabled 

A.5

B.4

C.3

D.2 

Derivatives Dealers 17

1-A forward contract is an agreement to buy a certain asset at a certain future date for a price to be
determined in the future.
a) True
b) False
c) True only in Europe
d) True only in Africa

2-In the olden days, the area within the exchange where trading was conducted through open outcry,was known as the Pit.
a) True
b) False
c) none of the above

3-If the price of the underlying asset rises sharply after the initiation of a futures contract
a) the long position becomes profitable
b) the long position becomes unprofitable
c) the short position becomes profitable
d) none of the above

4-You can buy index futures in India regardless of whether you own the index shares or not.
a) True
b) False
c) True only in Mumbai
d) True only in Delhi

5-A scarce supply of the actual commodity generally causes futures price to fall.
a) True
b) False
c) True only in Mumbai
d) True only in Delhi

6-How are prices fixed in case of a forward contract?
a) They are decided at the time of entering into the contract.
b) They are decided at the end of the contract period
c) They are decided and revised from time to time based on market condition
d) None of the above

7-Future contracts are usually much more liquid than the Forward contracts
a) True
b) False
c) None of the above

8-The settlements of a forward contracts takes place on the date of  maturity
a) True
b) False
c) None of the above

9-You bought January Satyam Futures @ Rs 268 and the lot size is 1,200. What is your profit (+)
or loss(-) if you sell at Rs 225 ?
a) -50,600
b) -51,600
c) -52,600
d) None of these

10-  . . . . . .The stock index future were first introduced at CBOT in USA
a) True
b) False (Ans-Kansas city board of trade)

Derivatives Dealers 16

Q1. If an option is out of the money and the strike price of the option is lower than the spot
price of the underlying, then we are referring to ____.

• A Put Option
• A Call option
• An European Option
• An American option

Q2. Nifty is at 5200. A put option at 5000 strike price is trading at Rs . 150. What is the
intrinsic value of the option?

• 150
• 200
• 0
• 350

Q3. Which of the following is an exchange traded contract?

• Futures on Nifty
• Forward contract on oil
• A 10 year loan
• An interest rate swap

Q4. All December 2009 stock Futures contracts traded on NSE will expire on :

• 3rd Thursday of December 2009
• Exchanges decides on expiry day and will update the investors on 1st December 2009
• Last Thursday of December 2009
• Last Friday of December 2009

Q5. Nifty is at 3900. What should be the fair price of Nifty futures expiring 180 days from
today. Risk free rate is 8% p.a.

• 4027
• 4083
• 4059
• 4031

Q6. Derivatives help in ____.

• Improving Market Efficiency
• Risk Management
• Price Discovery of the underlying
• All of the above

Q7. An investor is long 2 contracts of Nifty futures purchased at Rs. 5035 each. The next morning a scam is disclosed of a large company because of which markets sell off and Nifty
futures goes down to Rs. 4855. What is the mark to market for the investor? (1 Nifty contract is 50 shares).

• Rs. 18000
• Rs. -9000
• Rs. 9000
• Rs. -18000

Q8. The parties for the Futures contract have the flexibility of closing out the contract prior
to the maturity by squaring off the transactions in the market. State true or false.

• FALSE
• TRUE

Q9. An investor has Unitech shares in her portfolio. RBI is increasing interest rates which is
negative for the stock. She wants to protect the downside in the stock as she feels RBI will
decide on increasing interest rates in the next 3 months. What should she do?

• Buy 2 month put option of Unitech
• Buy 1 month put option of Unitech
• Buy 3 month put option of Unitech
• Buy 3 month call option of Unitech

Q10. An investor sells 3 lots of Nifty futures at Rs. 5231 each. On that day Nifty closes at Rs.
5310 in the futures market. What is the mark to market for the investor if any? One lot of Nifty
is 50 shares

• Profit of Rs. 13000
• Profit of Rs. 11000
• Loss of Rs. 11850
• Loss of Rs. 10000