Section-A

Answer the following one mark questions

1. What is hedging?
2. List out the instruments traded in derivative market.
3. What is an American style of option?
4. What is a European style of option?
5. Define market order?
6. Define initial margin?
7. Define variation margin?
8. What is forward contract?
9. Define mark to market?
10. Define commodities derivatives?
11. What is out of the money?
12. What is in the money?
13. What is at the money?
14. What is basis?
15. What is derivative?

Section-B
Answer the following ten marks questions
1. Explain different types of options?
2. Distinguish between a forward and futures contract.
3. Explain the features of derivatives contract?
4. Explain the functions of derivatives?
5. Explain carefully the difference between hedging, speculation and arbitrage in the context
of financial derivatives.
6. Explain the features of futures contract.