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

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)