NISM Series 8 Equity Derivatives Free Mock Test

1. Selling short a stock means ___________.

2. If you have sold a XYZ futures contract (contract multiplier 50) at 3100 and bought it back at 3300, what is your gain/loss?

3. Current Price of XYZ Stock is Rs 286. Rs. 260 strike call is quoted at Rs 45. What is the Intrinsic Value?

4. Cost of carry model states that ______________.

5. What role do speculators play in the futures market?

6. Which of the following situations indicates a bullish trend in the underlying?

7. On the derivative exchanges, all the orders entered on the Trading System are at prices exclusive of brokerage.

8. You have taken a short position of one contract in June XYZ futures (contract multiplier 50) at a price of Rs. 3,400. When you closed this position after a few days, you realized that you made a profit of Rs. 10,000. Which of the following closing actions would have enabled you to generate this profit? (You may ignore brokerage costs.)

9. Margins in 'Futures' trading are to be paid by _______.

10. Initial margin collection is monitored by the _________.

11. A portfolio of Rs 25 lacs has a beta of 1.20. A complete hedge is obtained by __________

12. Mr R wants to sell 17 contracts of January series at Rs.4550 and Mr S wants to sell 20 contracts of February series at Rs. 4500. Lot size is 50. The Initial Margin is fixed at 9%. How much Initial Margin is required to be collected from both these investors by the broker?

13. A calendar spread contract in index futures attracts ___________.

14. In the KYC process, Politically Exposed Persons are termed as:

15. You sold one XYZ Stock Futures contract at Rs. 278 and the lot size is 1,200. What is your profit (+) or loss (-), if you purchase the contract back at Rs. 265?

16. Value-at-risk provides the ______________.

17. The purchase of a share in one market and the simultaneous sale in a different market to benefit from price differentials is known as ____________.

18. ________ is a deal that produces profit by exploiting a price difference in a product in two different markets.

19. Mark-to-market margins are collected ___________.

20. A defaulting member's clients’ positions could be transferred to ____________ by the Clearing Corporation.

21. Financial derivatives provide the facility for __________.

22. On the Clearing Council of the Clearing Corporation of the derivatives segment, broker-members are allowed.

23. Mr. X purchases 100 put option on stock S at Rs 30 per call with strike price of Rs280. If on exercise date, stock price is Rs 350, ignoring transaction cost, Mr. X will choose ________

24. Profits from derivatives transactions for Indian investors are taxed as: __________.

25. A member has two clients C1 and C2. C1 has purchased 800 contracts and C2 has sold 900 contracts in August XYZ futures series. What is the outstanding liability (open position) of the member towards Clearing Corporation in number of contracts?

26. A calendar spread will attract _______ margin.

27. Clearing corporation on a derivatives exchange becomes a legal counterparty to all trades and be responsible for guaranteeing settlement for all open positions.

28. Impact cost is low when the liquidity in the system is poor.

29. An in-the-money option is _____________.

30. Initial margin is calculated based on ______

31. Under the Anti-Money Laundering (AML) and Combating of Financial Terrorism (CFT) regulations, suspicious transactions must be reported to ___________.

32. When establishing a relationship with a new client, the trading member takes reasonable steps to assess the background, genuineness, beneficial identify, financial soundness of such person and his investment/trading objectives.

33. All the trades and open positions on a derivative exchange are guaranteed by the Clearing Corporation and it becomes a legal counterparty.

34. Put-call parity refers to the relationship between: ________.

35. Three Call series of XYZ stock - January, February and March are quoted. Which will have the lowest Option Premium (same strikes)?

36. A trader buys a call and a put option of same strike price and same expiry. This is called as ________

37. An index option is a __________________.

38. All the orders entered on the Trading System of a Derivative Exchange are at Prices exclusive of brokerage. True or False?

39. A stock exchange has ON LINE SURVEILLANCE capability to monitor the ________

40. Who is eligible for clearing trades in index options?

41. Which of the following options on ABC Ltd stock with a strike price of Rs.500 has the highest time value?

42. Which is the ratio of change in option premium for the unit change in interest rates?

43. The Spot price i.e., the market price of a share is Rs 200 and the interest rate is 12% pa. Which of the below price is closest to 3 months future maturity?

44. A buyer of Call Option -

45. Which of the following measures was introduced by SEBI to prevent brokers from allowing excessive intraday leverage to their clients?

46. _______ is a deal that produces profit by exploiting a price difference in a product in two different markets.

47. Value-at-risk measures ___________.

48. A trader has bought 100 shares of XYZ at Rs 780 per share. He expects the price to go up but wants to protect himself if the price falls. He does not want to lose more than Rs1000 on this long position in XYZ. What should the trader do?

49. Trader A wants to sell 20 contracts of August series at Rs 4500 and Trader B wants to sell 17 contracts of September series at Rs 4550. Lot size is 50 for both these contracts. The Initial Margin is fixed at 6%. How much Initial Margin is required to be collected from both these investors (sum of initial margins of A and B) by the broker?

50. If the liquid assets maintained by clearing member Mr. Ram are higher than that clearing member Mr. Shyam, which of the below options is/are true?

51. Clients' positions cannot be netted off against each other while calculating initial margin on the derivatives segment.

52. The type of volatility which is derived from the option price and indicates the volatility expected over the life of the option is termed as ____________.

53. The margining system for index futures is based on _______

54. When the near leg of the calendar spread transaction on index futures expires, the farther leg becomes a regular open position.

55. A long position in a CALL option can be closed by taking a short position in PUT option.

56. When you buy a put option on a stock you are owning, this strategy is called ________

57. When compared to cash market, there are more chances that an investor does not properly understand the risks involved in the derivatives market. True or False?

58. Which of the following is a hedged position?

59. The main objective of Trade Guarantee Fund (TGF) at the exchanges is ___________

60. A put option gives the buyer a right to sell how much of the underlying to the writer of the option?

61. The intrinsic value is the difference between Market Price and Strike Price of the option and it can never be negative.

62. You sold a Put option on a share. The strike price of the put was Rs245 and you received a premium of Rs 49 from the option buyer. Theoretically, what can be the maximum loss on this position?

63. A member has two clients Rohit and Mohit. Rohit has purchased 100 contracts and Mohit has sold 300 contracts in March Tata Steel futures series. What is the outstanding liability (open Position) of the member towards Clearing Corporation in number of contracts?

64. The buyer of an option cannot lose more than the option premium paid.

65. Client A has purchased 10 contracts of December series and sold 7 contracts of January series of the NSE Nifty futures. How many lots will get categorized as regular (non-spread) open positions?

66. If the price of a stock is volatile, then the option premium would be relatively _______

67. A trader sells a lower strike price CALL option and buys a higher strike price CALL option, both of the same scrip and same expiry date. This strategy is called _______

68. Operational risks include losses due to ____________.

69. A penalty or suspension of registration of a stock broker from derivatives exchange/segment under the SEBI (Stock Broker) Regulations, 1992 can take place if _____

70. If the lot size of Reliance Industries future contract is 500 shares, what will be the lot size of its Option contract?

71. Which of the following statements about interoperability of clearing corporations is TRUE?

72. Higher the price volatility of the underlying stock of the put option, ___________.

73. Which of the following is closest to the forward price of a share, if Cash Price = Rs.750, Forward Contract Maturity = 6 months from date, Market Interest rate = 12%?

74. Fixed deposits and Bank guarantees are NOT permitted to be offered by Clearing Members to the Clearing corpn as part of liquid assets - State whether True or False?

75. SCORES is: __________.

76. If an investor buys a call option with lower strike price and sells another call option with higher strike price, both on the same underlying share and same expiration date, the strategy is called ___________.

77. An investor, who is anticipating a broad stock market fall, but is not willing to sell his entire portfolio of stocks, can offset his potential losses by shorting a certain number of Index futures.

78. Mr. Kailash has bought 200 shares of ABC Industries Ltd. at Rs.850 per share. He expects the price to go up but wants to protect himself if the price falls. He does not want to lose more than Rs. 4000 on this long position. What should he do?

79. Of the below mentioned options, which would attract margins?

80. Exchange traded options are _______________.

81. In which option is the strike price better than the market price (i.e., price difference is advantageous to the option holder) and therefore it is profitable to exercise the option?

82. Mr. Ashu has bought 100 shares of ABC at Rs 980 per share. He expects the price to go up but wants to protect himself if price falls. He does not want to lose more than Rs. 1000 on this long position in ABC. What should Mr. Ashu do?

83. _________ is allotted on client onboarding and serves as an exclusive identification of the client.

84. If one does a calendar spread contract in index futures, then it attracts ___________

85. A European call option gives the buyer the right but not the obligation to buy from the seller an underlying at the prevailing market price "on or before" the expiry date.

86. A trader Mr. Raj wants to sell 10 contracts of June series at Rs.5200 and a trader Mr. Rahul wants to buy 5 contracts of July series at Rs. 5250. Lot size is 50 for both these contracts. The Initial Margin is fixed at 10%. They both have their accounts with the same broker. How much Initial Margin is required to be collected from both these investors by the broker?

87. If you sell a put option with strike of Rs 245 at a premium of Rs.40, how much is the maximum gain that you may have on expiry of this position?

88. If price of a futures contract decreases, the margin account of the buyer of this futures contract is debited for the loss.

89. Liquid Assets maintained by Mr A (Clearing Member) are higher than that maintained by Mr B (Clearing Member). Which of the following statements is true?

90. Which of the following costs is not actually paid by the market participants but arises due to lack of liquidity?

91. An option with a delta of 0.5 will increase in value approximately by how much, if the underlying share price increases by Rs 2?

92. Mr A buys an August futures contract of ICICI Bank at Rs 500. On the last Thursday of the month i.e., expiry, the last traded price in August futures is Rs 512 and the closing price in cash / spot market is Rs 510. What is the profit / loss of Mr if his position is sq-up by the exchange? Market lot of ICICI Bank is 250.