Q 1. A market index is very important for its use ___________.
in portfolio management
as a benchmark of portfolio performance
as a barometer for market behavior
All of the above
Q 2. If a stock fails to meet the retention criteria for equity derivatives trading for three months
consecutively, existing unexpired contracts may be permitted to trade till expiry and new
strikes may also be introduced in the existing contract months - True or False ?
True
False
Q 3. The clearing member/trading member is required to disclose to the clearing corporation
details of any person(s) acting in concert who together own _____% or more of the open
interest of all futures and options contracts on a particular underlying index on the stock
exchange.
12
15
17
20
Q 4. What penalty is levied for first instance margin / limit violation ?
0.07% per day
0.07% per day + Rs.5,000/- per instance
0.07% per day + Rs.20,000/-
None of the above
Q 5. Which of the following factor(s) do not affect the value of an option ?
The Open Interest
The Spot Price
The volatility in underlying instruments
The strike price
Q 6. You sold a Put option on a share. The strike price of the put was Rs.245 and you received
a premium of Rs.49 from the option buyer. Theoretically, what can be the maximum loss on
this position?
206
196
49
NIL
Q 7. An Equity based Mutual Fund can sell Index Futures to hedge its position - True or False ?
True
False
Q 8. Futures differs from forwards in the sense that ________.
settlement of contract takes place in the future
both parties are bound to give/take delivery
positions are marked-to-market everyday
contracts are custom designed
Q 9. Which of these PUT's are In the Money ?
Spot 300 ; Strike Price 300
Spot 300 ; Strike Price 280
Spot 300 ; Strike Price 320
None of the above
Q 10. In Indian context, derivative includes: A) A security derived from a debt instrument,
share, loan whether secured or unsecured, risk instrument or contract for differences or any
other form of security; B) A contract which derives its value from the prices, or index of prices,
of underlying securities.
B
Both A and B
Niether A or B
Q 11. The beta of SBI is 0.9. If a trader has a buy position of Rs 3,00,000 of SBI, which of the
following will give him a complete hedge ?
Sell Nifty of 270000
Sell Nifty of 330000
Sell Nifty of 300000
Beta of below 1 cannot be hedged
Q 12. A stock broker applies for registration to SEBI _________. directly on his own
through stock exchange(s) of which he or she is admitted as a member
through Ministry of Finance
through association of members
Q 13. An investor has bought 100 SBI shares at Rs 2000. How will he hedge it ? The Current
market price of SBI is Rs 2000.
Buy SBI futures at Rs 1000
Buy SBI Call options of strike price 2000
Buy SBI Put options at strike price 2000
Sell SBI Put options at strike price 2000
Q 14. **An trader purchases three contracts of Reliance Industries in the futures market at Rs
900. On the expiry day, Reliance closes at Rs 918. Lot size is 250 shares. What will the trader
receive ?
He will receive 750 shares of Reliance Industries
He will receive nothing as he has not squared up his position
He will receive the difference between the purchase price and closing/expiry price
None of the above
Q 15. Irrespective of the type of option, the option value is directly proportional to _______ .
Interest rate difference and strike price
Underlying asset price and strike price
Time to maturity and volatility
Volatility and strike price
Q 16. As per the rules of European Call Option, it gives the right but not the obligation to buy
from the seller an underlying at the prevailing market price on or before the expiry - True or
False ?
False
True
Q 17. **If an investor buys a future contract but does not sell it till expiry than what happens to
that contract ?
The investor will receive the delivery of the underlying
The exchange will square up the position by the closing price
A new buy position will be automatically be created in the next month
The client has to pay a stiff penalty
Q 18. What is the intrinsic value of a call option of SBI if the spot price is 2000 and the strike
price is 1950.
50
-50
2000
Q 19. **Margins in futures trading are applicable to -
Only Institutional players.
Both the buyer and the seller
Only the buyer
Only the Seller
Q 20. **Mr Manoj buys a put option on PQR stock for Rs 20 of strike price Rs 130. If on the
exercise day, the spot price of PQR is Rs 175, Mr Manoj will choose _______.
Not to exercise the option
To exercise the option
Q 21. The Clearing Corporation can transfer a defaulting members client's position to
___________ .
Liability a/c.
Another solvent member
Investor Protection Fund a/c.
The Stock Exchange
Q 22. The Spot Price of ABC Stock is Rs. 347. Rs. 325 strike call is quoted at Rs. 39. What is
the Intrinsic Value?
22
39
61
Q 23. **Mr. Deshmukh took a short position of one contract in May Nifty futures (Contract
multiplier 50) at a price of Rs. 5600. When he closed this position after a few days, he realized
that he has made a profit of Rs.5000. Which of the following closing actions would have
enabled him to generate this profit ?
Selling 1 May Nifty futures contract at 5700
Buying 1 May Nifty futures contract at 5700
Buying 1 May Nifty futures contract at 5500
Selling 1 May Nifty futures contract at 5500
Q 24. **By using Financial derivatives one can engage in _________.
Hedging
Arbitraging
Speculation
All of the above
Q 25. **If an trader does an calender spread in index futures and the near leg of the calendar
spread expires, the Further leg becomes a regular open position. True or False ?
True
False
Q 26. **Mr. Nayar has purchased 8 contracts of March series and sold 6 contracts of April
series of the NSE Nifty futures. How many lots will get categorized as Regular (non-spread)
open positions?
14
Q 27. If the price of a stock is volatile, then the option premium would be relatively ______.
Lower
Higher
No effect of volatility
zero
Q 28. The strategy in which an trader buys a call option of lower strike price and sells another
call option with a higher strike price of the same share and same expiry date is called
___________.
Butterfly spread
Bearish spread
Calendar spread
Bullish spread
Q 29. **The spot price of Grasim Industries Ltd share is Rs 2900, the call option of Strike Price
Rs 2800 is _____ .
At the money
Out of the money
In the money
None of the above
Q 30. Of the below mentioned options, which would attract margins ?
Buyer of PUT Option
Seller of CALL Option
Seller of PUT Option
Both 2 and 3
