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 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 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

Derivatives Dealers 15

Q1. Nifty futures is trading at Rs. 3975 and an investor buys a 4000 call for current month
for Rs. 100. What should be the closing price of Nifty only above which the investor starts to
make Profits if he holds his long option position? 1 lot of Nifty = 50 shares.

• 4000
• 4100
• 4075
• 3975

Q2. An investor buys 2 contracts of TCS futures for Rs. 570 each. He sells of one contract at
Rs. 585. TCS futures closes the day at Rs. 550. What is the net payment the investor has to
pay/ receive from his broker? 1 TCS contract = 1000 shares

• Receive Rs. 15000 from the broker
• Pay Rs. 5000 to the broker
• Receive Rs. 5000 from the broker
• Pay Rs. 20000 to the broker

Q3. Nifty futures is trading at Rs. 4955. An investor feels the market will not go beyond
5100. He can ____.

• Sell 5000 Nifty put
• Sell 5100 Nifty put
• Sell 5100 Nifty Call
• Sell 5000 Nifty call

Q4. The maximum expiry for individual stock options contract is :

• 6 months
• 3 months
• 1 months
• 2 months

Q5. SBI is trading at Rs. 1800 in the cash market. What would be the price of SBI futures
expiring three months from today. Risk free rate = 8% p.a.

• 1844
• 1836
• 1895
• 1814

Q6. Security descriptor for stock Futures contract is :

• OPTSTK
• FUTSTK
• OPTIDX
• FUTIDX

Q7. Nifty futures is trading at Rs. 3325 and an investor buys a 3400 call for current month
for Rs. 100. What should be the closing price of Nifty only above which the investor starts to
make Profits if he holds his long option position? 1 lot of Nifty = 50 shares.

• 3400
• 3325
• 3500
• 3425

Q8. Like Futures contracts there is daily settlement of options contracts.

• depends on the expiry
• TRUE
• FALSE
• depends if the option is call or put

Q9. An investor bought a put option on a stock with a strike price Rs. 2000 for Rs. 200. The
option will be in the money when _______.

• The stock price is greater than Rs. 2200
• The stock price is less than Rs. 2000
• The stock price is less than Rs. 1800
• The stock price is greater than Rs. 2000

Q10. The value of a put option is positively related to all of the following EXCEPT:

• exercise price
• risk-free rate
• time to maturity

Derivatives Dealers 14

Q1. An investor buys a 1 lot of Nifty futures at Rs. 4927 and sells it at Rs. 4567 If one
contract is 50 shares what is the Profit/ Loss in the transaction?

• Profit Rs. 18000
• Loss Rs. 22000
• Loss Rs. 18000
• Profit Rs. 22000

Q2. When the strike price is lower than the spot price of the underlying, a call option will be
____.

• At the money
• Out of the money
• In the money
• American Type

Q3. As more and more ____ trades take place, the difference between spot and futures prices
would narrow.

• arbitrage
• delta
• speculative
• hedge

Q4. In a business daily to get information about the top gainers in the futures market, one has
to look in the heading :

• Open Interest
• Positive trend
• Negative trend
• Contract details

Q5. Which of the following is NOT a hedge for a long position in an underlying stock?

• Sell put option
• Sell call option
• Sell futures
• Buy Put option

Q6. TCS is trading at Rs. 420 in the spot market and Rs. 435 in the futures market. Is there
an arbitrage opportunity? The Futures contract is settling today.

• Yes
• Depends on Market Sentiment
• No

Q7. All Stock Options are American in nature.

• FALSE
• TRUE

Q8. On 1st January, SBI is trading at Rs. 2310. An investor is bullish on the company because
of the earnings of last quarter and buys a SBI futures at Rs. 2310. He sells SBI futures at Rs.
2335. What is the Profit / Loss for the investor if 1 lot of SBI is 250 shares?

• Rs. -6250
• Rs. 6250
• Rs. 0
• Rs. -10000

Q9. In India, all Options traded on Nifty are :

• European options
• Asian Options
• American options
• Continental Options

Q10. Reliance is trading at Rs. 1520 in the cash market. What should be the fair price of
Reliance futures expiring 90 days from today. Risk free rate is 8% p.a.

• 1563
• 1529
• 1551
• 1537

Derivatives Dealers 13

Q1.Which of the following cannot be an underlying asset for financial derivative contract?

1. Equity index
2. interest rate
3. commodities 
4. foreign exchange

Q2. in an option contracts, the option lies with the . . . .

1. buyer 
2. seller 
3. both
4. exchange 

Q3. the potential returns on a future positions are 

1. limited 
2. unlimited 
3. a function of the volatility of the index 
4. none of the above

Q4. The maximum brokerage chargeable by trading member in relation to trades effected in the contracts on the f&o segment of the nse  is fixed at . . .  of the contract value, exclusive of satutory levies.

1. 1.5%
2. 2.0%
3. 1%
4. 2.5%

Q5. The best buy order for a given future contracts is the order to buy the index at the . . . . . .

1. highest price
2. lowest price
3. average of the highest and lowest price 
4. none of the above 

Q6. SPAN is a . . . . .based margining  system

1. portfolio 
2. options
3. futures
4. derivatives 

Q7. The regulatory framework for the derivative market in india has been developed by  the . . . .

1. L.C.Gupta committee
2. A.C.Gupta committee
3. J.R.Verma committee 
4. None of the above

Q8. The clearing member has to maintain a minimum liquid networth of . . . .

1. 35 Lakh
2. 80 Lakh
3. 50 Lakh 
4. 20 Lakh

Q9. The daily settlement price for index futures shall be decided by

1. SEBI
2. the Reserve Bank of India
3. the Clearing Corporation / house
4. None of the above

Q10. 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 ?

1.  -50,600
2. -51,600
3. -52,600
4. None of these

Derivatives Dealers 12

Q1. Liquidity risk can be caused by

1. sale of large number of shares which depress price significantly.
2. high market capitalisation
3. failure of VSAT.
4. low market capitalisation

Q2.The securities which are not delivered in the clearing house during pay-in, are purchased by the clearing house from the market. This process is known as

1. close-out
2. penalty
3. auction
4. upla badla

Q3. Forward contract is a good means of avoiding price risk, but it also entails element of risk because

1. The contract is not standardised
2. The party to the contract may not honour its part of obligation and default.
3. The contract value is fixed
4. None of the above

Q4. The shares of XYZ Ltd are currently quoted at Rs 100. Futures on this share are quoted at Rs 110. In what situation would you buy these futures?

1. You expect the price of the share to move up by 5%
2. You expect the price of the share to move up by 7%
3. You expect the price of the share to move up by 25%
4. You expect the price of the share to move up by 8%

Q5.A trader bought 10 Jan Sensex contracts at the BSE. How will the trader close out this position in the market?

1. Sell 10 Jan sensex contracts
2. Sell 15 Feb. nifty contracts
3. Buy 15 March sensex contracts
4. Buy 15 March nifty contracts

Q6. An Over The Counter option

1. is a standardised contract traded on an Exchange
2. is a contract tailored to suit individual requirements
3. is an option on stocks of pharmaceutical companies
4. can be bought from any option writer

Q7. An investor is bullish on a particular stock, but does not possess liquid cash to buy the scrip.What should he do?

1. buy an index-future
2. wait till he saves enough money
3. do nothing
4. buy an option on the particular stock

Q8. Three Call series of Sesa goa  - March, April and May are quoted. Which will have the lowest Option Premium?

1. April
2. May
3. March
4. All will be equal

Q9. the amount that must  be deposited in the margin account at the time a future contracts is first entered into is known as . . . . .

1. Initial Margin
2. Mark-to-Market
3. Maintenance Margin
4. None of the above

Q10. Index Options, have index as the underlying.

1. True 
2. False 
3. True not in India
4. False not  in india

Derivatives Dealers 10

Q1. At the end of each trading day, the Clearing House process of settling your account on a cash basis(funds added to your balance if your position has made a profit, deducted if you sustained a loss) is called:
a) Marking to the market.
b) Performance bond call.
c) Maintenance performance bond call.
d) Initial performance bond call.

Q2. Daily mark-to-market margin payments arise on adverse positions resulting from price movements in futures.
a) True
b) False
c) True only in 2001
d) True only in 2012

Q3. Mark-to-market margins will be collected on a
a) Weekly basis
b) every 2 days
c) every 3 days
d) daily basis

Q4. Who will be eligible for clearing trades in stock futures?
a) All Indian citizens
b) All members of the BSE
c) Only members who are registered with the Derivatives Segment as Clearing Members
d) All of the above

Q5. The daily settlement price for index futures shall be decided by
a) SEBI
b) the Reserve Bank of India
c) the Clearing Corporation / house
d) None of the above

Q6.  An investor has open position of 10 contract long and 20 contract short in sensex future March and April series respectively. What are her open positions in March series after considering the spread position.
a) 0
b) 10
c) 20
d) None of these

Q7. If you have short sold a Sensex future at 3000 and bought it at 3100, what is your gain / loss?
a) A loss of Rs. 5000
b) A gain of Rs. 500
c) A gain of Rs. 5000
d) A loss of Rs. 500

Q8.S&P CNX Nifty is a market- capitalization weighted index
a) True 
b) False
c)none of the above

Q9. Computational methodology followed for construction of stock market indices are
a) Free Float Market Capitalization weighted Index
b) Market Capitalization weighted index
c) Price Weighted Index.
d) True all of them 

Q10. . . . . .  are private agreements between two parties to exchange cash flow in future according to prearranged formula , They can be regarded as portfolio of forward contracts .
a) Swaps 
b) warrants
c) baskets
d) leaps