NISM Series 8 Equity Derivatives Free Mock Tests [2023]

Introduction: NISM Series 8 Equity Derivatives Free Mock Test

NISM Series 8 Equity Derivatives Free Mock Test consists of 92 Multiple choice questions. The National Institute of Securities Market (NISM) conducts the NISM Series 8 – Equity Derivatives Certification Exam at NSE centres across different cities. This free mock test will give an idea of the level of questions being asked in the real exam. Take this demo of the NISM Series 8 Equity Derivatives Free Mock Test.

NISM Equity Derivatives Mock Test Free

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1. Cost of carry model states that ______________.

a. Price of Futures = Spot + Cost of Carry

b. Price of Futures = Spot - Cost of Carry

c. Price of Futures = Spot Price

d. Price of Futures = Cost of Carry

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2. 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?

a. Rs 3,48,075

b. Rs 4,05,000

c. Rs 5,87,500

d. Rs 7,53,075

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3. 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?

a. There is no need to maintain liquid assets

b. Both Mr. Ram and Mr. Shyam have the same level of exposure

c. Mr Ram has a higher exposure level than Mr. Shyam

d. Mr Shyam has a higher exposure level than Mr. Ram

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4. 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 ____________.

a. implied volatility

b. historical volatility

c. expected volatility

d. forecast volatility

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

a. Option expiring in a week

b. Option expiring in one month

c. Option expiring in two months

d. Option expiring in three months

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

a. True

b. False

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

a. by selling Nifty futures of Rs 25 lacs

b. by selling Nifty futures of Rs 28 lacs

c. by selling Nifty futures of Rs 30 lacs

d. by buying Nifty futures of Rs 28 lacs

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8. Financial derivatives provide the facility for __________.

a. Trading

b. Hedging

c. Arbitraging

d. All of the above

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

a. It allows brokers to trade on only one exchange but clear and settle their trades through multiple clearing corporations

b. it will lead to an increase in trading costs

c. it allows brokers to trade on any exchange but clear and settle trades through the clearing corporation of any other exchange

d. it will reduce competition among clearing corporations

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

a. True only for European options

b. True only for American options

c. True for all options

d. False for all options

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11. 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.

a. Rs 3000

b. Rs 2500

c. Rs -3000

d. Rs -2500

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

a. True

b. False

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

a. Securities and Exchange Board of India

b. Central Vigilance Commission

c. Reserve Bank of India

d. Financial Intelligence Unit – India

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14. 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?

a. 16,600

b. 15,600

c. -15,600

d. -16,600

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

a. Clients of Special Categories

b. High Networth Clients

c. Institutional Clients

d. High Risk Clients

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

a. True

b. False

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17. Operational risks include losses due to ____________.

a. Inadequate disaster planning

b. Too much of management control

c. Income tax regulations

d. Government policies

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

a. Securities Transaction Tax

b. Impact cost

c. SEBI charges

d. Brokerage

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

a. True

b. False

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20. 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 ___________.

a. Bullish spread

b. Bearish spread

c. Butterfly spread

d. Calendar spread

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

a. Hedging

b. Trading

c. Speculation

d. Arbitrage

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

a. An option with a negative intrinsic value

b. An option which cannot be profitably exercised by the holder immediately

c. An option with a positive intrinsic value

d. An option with zero time value

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23. An index option is a __________________.

a. Debt instrument

b. Derivative product

c. Cash market product

d. Money market instrument

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

a. futures and options on the same stock

b. call options on the same stock with the same maturity but different strike prices

c. put and call options on the same stock but different strike prices and different maturity

d. call and put options on the same stock with the same strike prices and same maturity

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

a. Lower

b. Higher

c. No effect of volatility

d. zero

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