Derivatives Dealers(8)

Q1.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

Q2.An investor has buy position in a scrip, he can make his position nil in the settlement by
a) selling any security of equal quantity.
b) selling the same scrip and same quantity.
c) selling any index scrip of equal quantity
d) selling any A-group scrip for equal quantity.

Q3.The futures market has its own terminology. If a trader was long in the market, what would that
mean?
a) The trader sold a future contract
b) The trader bought a futures contract
c) The trader’s open positions exceeded his net worth
d) None of the above

Q4.Forward contracts can be cancelled with any counterparty in the market and not necessarily with the same counterparty with whom it was entered into
a) True
b) False
c) True only in Japan
d) True only in Africa


Q5.Hedgers and speculators strike a balance due to their needs as
a) Hedger has to take risk while speculator has to give up risk
b) Both hedgers and speculators have to take risk
c) Both hedgers and speculators have to give up risk
d) Hedger avoids risk while the speculator takes risk

Q6. If you have bought a Sensex future at 3200 and sold at 3600 what is your profit/loss?
a) loss Rs.18,000
b) gain Rs.20,000
c) gain Rs.18,000
d) loss Rs.20,000

Q7.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?
a) 0
b) 10
c) 20
d) None of these

Q8.Otc derivatives are consider risky because
a)There is no formal house margin system .
b)they dont follow any formal rules .
c)they are not settled on a clearing
d)all of the above 

Q9.An investor has an open position of 10
contracts short and 23 contracts long in March
and April Series respectively. How many contracts
are covered under calendar spread?
a) 23
b) 13
c) 10
d) None of these

Q10. The existence of a derivatives market lends to complete market.
a)True
b)False

Derivatives Dealers(7)

Q1.cash market  is a market with immediate or near immediate delivery

• True
• False
• True in USA
• True Only on Euorope

Q2.Future contracts may or may not be traded on an exchange

• True 
• False
• True only on 2012
• True only 2002 

Q3. a future contracts is very standardized contracts that leaves very little (except the price) open to negotiation.

• True 
• False 
• True only in Mumbai
• True only Delhi

Q4 OTC Derivatives stand for ________.

• Over the Counter Derivatives
• Outstanding Transaction Credit Derivatives
• Options Trade Credit Derivatives
• Commodity price risks

Q5 Under normal circumstances the Futures price trades at a ____ price than the Spot price :

• Higher 
• Lower
• Same price as spot
• Depends on the type of contract

Q6.For stop-loss buy order, the trigger price is ______ the limit price.

• Less than
• Greater than
• Equal to
• None of the above

Q7.A Trading Member can trade __________

• on their own account
• on behalf of their clients
• on behalf of participants
• all of the above

Q8 . Index calculation frequency for NSE NIFTY 50 is _____

• Real Time 
• offline 
• Not mention by NSE

Q9. Currently the tick size in the scrip listed on the exchange is ______

• 5 paisa
• 10 paisa
• .o5 paisa
• none of the above

Q10. Which is not a part of security market

• Commodity
• Real state 
• Equity
• Derivaties

Derivatives Dealers(6)

Q1-In future contracts , the contract maturity period is defined by-

• The exchange 
• by the RBI
• by the parties to the contracts 
• by the government 

Q2-A long or short position in a future contract can be closed easily by initiating a reverse trade.

• True
• False
• True only in Mumbai
• True only in delhi

Q3-A warrant could be understood as

• A derivative instrument
• Akind of equity share
• A kind of debenture 
• A kind of financial bond 

Q4-Use of index future for hedging helps us eliminating the following risk

• Stock specific risk
• All possible risk  
• No risk 
• Market risk

Q5- Systematic risk is an investment risk peculiar to a company which can be reduced by diversifying one's portfolio

• False 
• True 
• True only in africa 
• True only in japan 

Q6- One of the method to control financial risk is to have

• Exposure limits 
• Un-interrupted power supply unit 
• Speculate heavily 
• None of the above

Q7-Credit risk on a derivative transaction includes

• Power outage 
• Riots in the country 
• Credit exposure in the event of default and the probability of a counter party's default.
• Bank strikes

Q8-In case on NSE Index futures, The mpnthly series matures on

• First Thursday of the month 
• Last Thursday of the month 
• First Wednesday of the month 
• Last Wednesday of the month  

Q9-Which of the following can be the underlying in a financial future ?

• Sugar
• T Notes
• Coffee
• Pork bellies 

Q-10-You sold January satyam futures @ Rs 248 and the lot size is 1200. What is your profit or loss If you purchase at Rs 274?

• -30,200
• -31200 
• -32200
• none of the above 

Solution-
Purchase Price : 274
Sales Price: 248
Loss per unit: 26
Lot size : 1200
Loss = (274-248)*1200 = 31200

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

Derivatives Dealers(4)

Q1-Which of the following is true ?

1. An american option can be exercised on an american option exchange 
2. An american option can be exercised on the expiration date.
3. An american option can be exercised on before the expiration date
4. An american option can be exercised on or before the expiration date. 

Q2-Expiration date is the date on or before which the option must be exercised

1. True
2. False
3. true only on USA
4. True only on japan 

Q3-The black-scholes model is used for the pricing of

1. Index futures 
2. option 
3. Equity share
4. Corporate debt 

Q4-A stock option is example of a

1. Commodity
2. Derivative instrument
3. Money market instrument
4. Foreign exchange contract

Q5-Who can write the option ?

1. Only market makers 
2. Only FIIS 
3. Any person  whether he owns underlying stock or not 
4. Any person owing underlying stock 

Q6-Selling long on the stock means ....

1. Seller does not own the stock he is suppose to deliver 
2. seller has to deliver the stock after a long time 
3. seller owns the stock  he is suppose to deliver  
4. seller  has to deliver the stock along with interest 

Q7-Purchase of a call option has expectation that stock price will

1. Increase 
2. Decrease 
3. Remain constant
4. None of the above 

Q8-Exercise price of option are specified by-

1.  Government 
2. Company 
3. Market makers 
4. Exchange

Q9-If you have bought a future contract and price drops , you will be making a profit.

1. True 
2. False 
3. Sometimes true
4. Some times false

Q10-The greater the number of participants in any market , generally lower the liquidity .

1. True 
2. False
3. True only for the year 2002
4. True only for the year 2001

Derivatives Dealers(3)

Q1-The derivatives contracts  initially developed in...

1. Commodities 
2. Futures
3. Options 
4. Cash  

Q2-The derivatives drive their name from their respective underlying asset

1.  True 
2. False

 Q3-The first contract to be launched on NSE was the nifty 50 index futures contracts

1. True
2. False

Q4-When SEBI allows exchange to trade  in index future

1. May 25, 2000
2. June 20, 2000
3. May 25, 2001
4. July 29, 2010

Q5-Maximum  expiration time for derivatives contract in NSE is

1. 3 months 
2. 4 months 
3. 6 months 
4. 1 year

Q6-The S&P CNX NIFTY index covers 21 sectors of the Indian economy

1. True
2. False

Q7-Participants on a derivative market

1. Hedger
2. Speculator 
3. Arbitrageurs
4. All of them  

Q8-Who provide depth in the market

1. Hedger
2. Speculator
3. Arbitrager

Q9-In forward contracts , delivery date, price and quantity are negotiated 

1. True
2. False

Q10-In which contract price are not available in public domain.

1. Forward
2. Future
3. Options
4. Cash

  

Derivatives Dealers (2)

Q1-If some one is 'bearish' in the market ? 

1. He expects market to rise 
2. He expects market to fall
3. He expects market to close 
4. Hes expects to market to close. 

Q2-The value of a derivatives instrument 

1. Is fixed
2. Depends on the value of an underlying asset
3. Is reset at fixed level
4. None of the above

Q3-In which market contract of each party faces of risk of default?

1. Forward 
2. Cash 
3. Futures 
4. Options

Q4-The future contract are thus refined Forward  contract in terms of standardization, performance, guarantee and liquidity  .

1. True
2. False

 Q5-A farward contract has zero value for both the parties involved .

1. True
2. False

Q6-A long or  a short position in a Futures contract can be closed easily by initiating a reserve trade

1. True 
2.  False

Q7-The  market impact cost on a trade of rs 3 million of the full NIFTY works out to be about 0.5%.This means  that if NIFTY is at 2000, a buy order will go through at roughly ....

1. 2010
2. 2050 
3. 2500 
4. None of the above 

Q8-If liquidity is poor , impact cost would be ....

1. High
2. Low 
3. Moderate 
4. None of the above

Q9-At the point of entering into the future contract 

1. Both the buyers and seller pay initial margin to the exchange
2. The buyer alone pays initial margin to the exchange
3. The seller alone pays the initial margin 
4. No margin are payable to the exchange by the buyer or the seller

Q10-If you have bought a future contract and the the price drops, you will be making a profit

1. True
2. False
3. Sometimes true
4. Some times false