you made a pro"it o" 2s. 176777.

8hich o" the "ollowin# closin# actions would have enabled

you to #enerate this pro"it= 9/ou may i#nore brokera#e costs.;
NISM Series VIII: Equity Derivatives %ellin# 1 >une 0/ "utures contract  at &77
?uyin# 1 >une 0/ "utures contract  at &77
Certification Examination ?uyin# 1 >une 0/ "utures contract at &77 [Correct answer NOT selected]
%ellin# 1 >une 0/ "utures contract  at &77
1. An index option is a __________________.
__________________.
Debt instrument 4. 8hich o" the "ollowin# is closest to the "orward price o" a share6 i" Cash @rice  2s.3-76
Derivative product [Correct answer NOT selected] 'orward Contract Maturity   months "rom date6 Market *nterest rate  1B=
Cash market
Cash market  product 33.-
Money market instrument 3- [Correct answer NOT selected]
4(7
. !he purchase o" a share in one market and the simultaneous sale in a di""erent market to (7.4
 bene"it "rom price di""erentials is known as ____________.
____________.
Mort#a#e . *" you have sold a 0/ "utures contract  9contract multiplier -7; at &177 and bou#ht it
Arbitra#e [Correct answer NOT selected]  back at &&776 what is your #ainloss=
$ed#in# A loss o" 2s. 176777 [Correct answer NOT selected]
%peculation A #ain o" 2s. 176777
A loss o" 2s. -6777
&. 'inancial
&. 'inancial  derivatives provide the "acility "or __________. A #ain o" 2s. -6777
%peculation
$ed#in# 17. A calendar spread contract in index "utures attracts ___________.
Arbitra#in# %ame mar#in as sum o" two independent le#s o" "utures contract
All o" the above
above [Correct answer NOT selected] Eower mar#in than sum o" two independent le#s o" "utures contract [Correct answer NOT
selected]
(. )perational risks include losses due to ____________. $i#her mar#in than sum o" two independent le#s o" "utures contract
*nade+uate disaster plannin#
plannin# [Correct answer NOT selected]  Fo mar#in need to be paid "or calendar spread positions
!oo
!oo much o" mana#ement control 11. Client A has purchased 17 contracts o" December series and sold 3 contracts o" >anuary
*ncome tax re#ulations series o" the F%G Fi"ty "utures. $ow many lots will #et cate#ori5ed as re#ular 9non<spread;
,overnment policies open positions=
17
-. *mpact cost is low when the li+uidity in the system is poor. 3
!rue & [Correct answer NOT selected]
'alse [Correct answer NOT selected] 13

. /ou sold one 0/ %tock  'utures

 'utures contract  at 2s. 34 and the lot si5e is 1677. 8hat is 1. *n an e+uity scheme6 "und can hed#e its e+uity exposure by sellin# stock index "utures.
your pro"it 9:; or loss 9<;6 i" you purchase the contract back at 2s. -= !rue [Correct answer NOT selected]
1677 'alse
1-677 [Correct answer NOT selected]
<1-677 1&. Mar#ins in H'uturesH tradin# are to be paid by _______.
<1677 )nly the buyer
)nly the seller
3. /o
/ou have taken a short position o" one contract
contrac t in >une 0/ "utures 9contract multiplier ?oth the buyer and the seller [Correct answer NOT selected]
-7; at a price o" 2s. &6(77. 8hen you closed this position a"ter a "ew days6 you reali5ed that !he clearin# corporation
1(. 8hen the near le# o" the calendar spread transaction on index "utures expires6 the "arther 1. A european call option #ives the buyer the ri#ht but not the obli#ation to buy "rom the
le# becomes a re#ular open position. seller an underlyin# at the prevailin# market price Jon or be"oreJ the expiry date.
!rue [Correct answer NOT selected] !rue
'alse 'alse [Correct answer NOT selected]

1-. %ellin# short a stock means ___________. . A put option #ives the buyer a ri#ht to sell how much o" the underlyin# to the writer o" the
%eller does not own the stock he is supposed to deliver [Correct answer NOT selected] option=
%eller has to deliver the stock within a short time Any +uantity
%eller owns the stock he is supposed to deliver )nly the speci"ied +uantity 9lot si5e o" the option contract; [Correct answer NOT selected]
%eller has more than a yearHs time to deliver the stock which he sold !he speci"ied +uantity or less than the speci"ied +uantity
!he speci"ied +uantity or more than the speci"ied +uantity
1. !he buyer o" an option cannot lose more than the option premium paid.
!rue only "or Guropean options &. An in<the<money option is _____________.
!rue only "or American options An option with a ne#ative intrinsic value
!rue "or all options [Correct answer NOT selected] An option which cannot be pro"itably exercised by the holder immediately
'alse "or all options An option with a positive intrinsic value [Correct answer NOT selected]
An option with 5ero time value
13. Cost o" carry model states that ______________.
@rice o" 'utures  %pot : Cost o" Carry [Correct answer NOT selected] (. An option with a delta o" 7.- will increase in value approximately by how much6 i" the
@rice o" 'utures  %pot < Cost o" Carry underlyin# share price increases by 2s =
@rice o" 'utures  %pot @rice 2s 1 [Correct answer NOT selected]
@rice o" 'utures  Cost o" Carry 2s 
2s (
14. 8hat role do speculators play in the "utures market= !here would be no chan#e
!hey take delivery o" the commodities at expiration
!hey produce the commodities traded at "utures exchan#es -. Gxchan#e traded options are _______________.
!hey add to the li+uidity in the "utures markets [Correct answer NOT selected] %tandardised options [Correct answer NOT selected]
!hey trans"er their risk to the hed#ers Always in<the<money options
Customised options
1. /ou sold a @ut option on a share. !he strike price o" the put was 2s.(- and you received Always out<o"<the money options
a premium o" 2s.( "rom the option buyer. !heoretically6 what can be the maximum loss on
this position= . $i#her the price volatility o" the underlyin# stock o" the put option6 ______________.
1 [Correct answer NOT selected] $i#her would be the premium [Correct answer NOT selected]
7 Eower would be the premium
7  Fil 95ero; would be the premium
( Iolatility does not e""ect put value

7. Current @rice o" 0/ %tock is 2s. 4. 2s. 7 strike call is +uoted at 2s. (-. 8hat is the 3. *n which option is the strike price better than the market price 9i.e.6 price di""erence is
*ntrinsic Ialue= advanta#eous to the option holder; and there"ore it is pro"itable to exercise the option=
1 )ut<o" the money option
 [Correct answer NOT selected] *n<the <money option [Correct answer NOT selected]
(- At<the<money option
7 $i#her<the<money option
 &(. A trader has bou#ht 177 shares o" 0/ at 2s.347 per share. $e expects the price to #o up
4. Mr. 0 purchases 177 put option on stock % at 2s. &7 per call with strike price o" 2s. 47. up but wants to protect himsel" i" the price "alls. $e does not want to lose more than 2s.1777
*" on exercise date6 stock price is 2s. &-76 i#norin# transaction cost6 Mr. 0 will choose on this lon# position in 0/. 8hat should the trader do=
 _____________. @lace a limit sell order "or 177 shares o" 0/ at 2s.337 per share
!o exercise the option @lace a stop loss sell order "or 177 shares o" 0/ at 2s.337 per share [Correct answer NOT
 Fot to exercise the option [Correct answer NOT selected] selected]
May or may not exercise the option dependin# on whether he is in his hometown or not at @lace a limit buy order "or 177 shares o" 0/ at 2s.37 per share
that time @lace a limit buy order "or 177 shares o" 0/ at 2s.337 per share
May or may not exercise the option dependin# on whether he like the company % or not
&-. *nvestor A wants to sell 7 contracts o" Au#ust series at 2s.(-77 and *nvestor ? wants to
. !hree Call series o" 0/ stock < >anuary6 'ebruary and March are +uoted. 8hich will sell 13 contracts o" %eptember series at 2s.(--7. Eot si5e is -7 "or both these constracts. !he
have the lowest )ption @remium 9same strikes;= *nitial Mar#in is "ixed at B. $ow much *nitial Mar#in is re+uired to be collected "rom both
>anuary [Correct answer NOT selected] these investors 9sum o" initial mar#ins o" A and ?; by the broker=
'ebruary 6376777
March -6767-7 [Correct answer NOT selected]
All will be e+ual 6&67-7
(6176777
&7. 8hich is the ratio o" chan#e in option premium "or the unit chan#e in interest rates=
Ie#a &. A member has two clients C1 and C. C1 has purchased 477 contracts and C has sold
2ho [Correct answer NOT selected] 77 contracts in Au#ust 0/ "utures series. 8hat is the outstandin# liability 9open position;
!heta o" the member towards Clearin# Corporation in number o" contracts=
,amma 477
1377 [Correct answer NOT selected]
&1. *" you sell a put option with strike o" 2s. (- at a premium o" 2s.(76 how much is the 77
maximum #ain that you may have on expiry o" this position= 177
4-
(7 [Correct answer NOT selected] &3. A de"aultin# memberHs clients positions could be trans"erred to ____________ by the
7 Clearin# Corporation.
7- Another solvent member [Correct answer NOT selected]
!he Gxchan#e
&. *" an investor buys a call option with lower strike price and sells another call option with A suspense account
hi#her strike price6 both on the same underlyin# share and same expiration date6 the strate#y Grror account
is called ___________.
?ullish spread [Correct answer NOT selected] &4. ClientsH positions cannot be netted o"" a#ainst each other while calculatin# initial mar#in
?earish spread on the derivatives se#ment.
?utter"ly spread !rue [Correct answer NOT selected]
Calendar spread 'alse

&&. )n the derivative exchan#es6 all the orders entered on the !radin# %ystem are at prices &. Mark<to<market mar#ins are collected ___________.
exclusive o" brokera#e. )n a weekly basis
!rue [Correct answer NOT selected] Gvery  days
'alse Gvery & days
)n a daily basis [Correct answer NOT selected]
 (7. Ialue<at<risk measures ___________. (3. Ialue<at<risk provides the ______________.
Ialue o" proprietary port"olio Gxpected maximum loss6 which may be incurred by a port"olio over a #iven period o" time
2isk level o" a "inancial port"olio [Correct answer NOT selected] and speci"ied con"idence level [Correct answer NOT selected]
 Fetworth o" an investor Ialue o" securities which are very risky
Credit ratin# o" an investor Ialue o" speculative stocks
!heoretical value o" illi+uid stocks in a port"olio
(1. A penalty or suspension o" re#istration o" a stock broker "rom derivatives
exchan#ese#ment under the %G?* 9%tock ?roker and %ub<broker; 2e#ulations6 1 can take (4. 8ho is eli#ible "or clearin# trades in index options=
 place i" _______________. All *ndian citi5ens
!he stock broker "ails to pay "ees All members o" the stock exchan#e
!he stock broker violates the conditions o" re#istration All national level distributors
!he stock broker is suspended by the stock exchan#e )nly members6 who are re#istered with the Derivatives %e#ment as Clearin# Members
*n any o" the above situations [Correct answer NOT selected]  [Correct answer NOT selected]

(. Clearin# corporation on a derivatives exchan#e becomes a le#al counterparty to all trades (. *" price o" a "utures contract decreases6 the mar#in account o" the buyer o" this "utures
and be responsible "or #uaranteein# settlement "or all open positions. contract is debited "or the loss.
!rue [Correct answer NOT selected] !rue [Correct answer NOT selected]
'alse 'alse

(&. *nitial mar#in collection is monitored by the _________. -7. 8hen establishin# a relationship with a new client6 the tradin# member takes reasonable
2?* steps to assess the back#round6 #enuineness6 bene"icial identi"y6 "inancial soundness o" such
Clearin# Corporation [Correct answer NOT selected]  person and his investment obKectives.
%G?* !rue [Correct answer NOT selected]
Mar#in )""ice 'alse

((. Ei+uid Assets maintained by Mr A 9Clearin# Member; are hi#her than that maintained by
51. at maturity of a future contract the spot price and future price must be
Mr ? 9Clearin# Member;. 8hich o" the "ollowin# statements is true= approximately the same because of
Mr A can enKoy hi#her exposure levels in "utures than Mr ? [Correct answer NOT selected]
Mr ? can enKoy hi#her exposure levels in "utures than Mr A Marking to market
?oth Mr A and Mr ? enKoy the same exposure levels
 The convergence property [Correct answer NOT selected]
 Fo need to maintain li+uid assets "or exposure in derivatives markets
!he open intrest
(-. )n the Clearin# Council o" the Clearin# Corporation o" the derivatives se#ment6 broker<
members are allowed. !he triple witchin# hour 
!rue
-. a port"olio o" & million ha sbeta o" 1.(7 a complete hed#e is obtained by _______ .
'alse [Correct answer NOT selected]
?uyin# rs & million o" ni"ty "ut.
(. !he main obKective o" !rade ,uarantee 'und 9!,'; at the exchan#es is
%ellin# rs (. milion on ni"ty "uture [Correct answer NOT selected]
 _________________.
!o #uarantee settlement o" bona"ide transactions o" the members o" the exchan#e ?uyin# rs (. milion on ni"ty "uture
!o inculcate con"idence in the minds o" market participants
!o protect the interest o" the investors in securities %ellin# o" rs & million o" ni"ty "ut
All o" the above [Correct answer NOT selected]
-&.suppose the company wipro taded at (77 in the cash market and three month wipro "utures @led#ed securities members card
traded at (17 i" the transaction costs involved are 7.7(B what is the arbitra#e return possible
Doubt"ul debts and advances
.1B per month
All o" the above[Correct answer NOT selected]
7.37B [Correct answer NOT selected]
-4. daily settlement mark to market mar#in o" e+uity index "utures should be credited
7.47B debited to

1.7B Mark to market mar#in Le+uity index "utures account [Correct answer NOT selected]

-&. An export would _____ dollar "orward to lock exchan#e rate. -. which o" the "ollowin# exchan#es was the "irst to start tradin# "inancial "utures

sell[Correct answer NOT selected] Chica#o mercantile exchan#e[Correct answer NOT selected]

 buy 7.the Chica#o board o" the trade was "ormed primarilt "or

hold
exchan#e
-(. automatic exercise o" the option contract means_____ 
All in Lthe Lmoney contracts are exercise automatically on the expiration day. [Correct
answer NOT selected]
--. Ms shetty ha sold 1777 calls on abc ltd at a strike price o" 2s 44- "or a premium o" rs 3
 per call on april 1 the closin# price o" e+uity shares o" abc ltd is 2s 47 on that day i" the call
option is assi#ned a#ainst her on that day what is her obli#ation on april 71=
@ay out o" 2s &77
@rovidin# a centralised location "or buyers and sellers to ne#otiate "orward contract in
commodities. [Correct answer NOT selected]
1. i" the annual risk "ree rate is 11B then r used in the black schools "ormula should be
7.17([Correct answer NOT selected]
. the current level o" the %@ CF0 Fi"ty is -(77 the annual dividend yield on the %@
CF0 is -B the annual risk "ree intrest rate is B the "air "uture price "or a contract on the
%@ CF0 Fi"ty due to expire & months "rom now should be Ans. -(1(
(fair value =Se(r!"#t#
$%. &erivatives brokers 'dealers should avoid recommending opening futures
'options unless!

@ay in o" 2s 777  They have reasonable basis for belivinh that the cutomer has knoledge and
)nancial experience
@ay in o" 2s -777
 They have reasonable basis for beliving that the cutomer is applicable of
@ay out o" rs 777 [Correct answer NOT selected] exaluating and )nancially able to bear the risk of the transaction

-. clearin# members in ') se#ment are monitored by F%CCE )n the real time basis "or *oth of the above[Correct answer NOT selected]
 _______.
(. suppose Fi"ty is at --77 in Fovember an investor Mr A Gxecutes a short stran#le by
1. contact wise position limit violation sellin# a 2s -&77 Fi"ty @uts a premium o" rs & and a 2s -377 ni"ty call "or (& rs what will
 be his net payo"" i" ni"ty closes on expiry
2ulNes violation
Ans O [Correct answer NOT selected]
M!M value vioNation [Correct answer NOT selected]
65. which of the following is true about option spread starategies?
All the above
Limited prot and llimited loss [Correct answer NOT selected]
-3. to calculate the mimimum net worth o" derivative clearin# members the non allowabke
assets includes
. Mr y is bearish om market currently ni"ty is tradin# at -477 he short ni"ty option o" price
o" --77 at 2s &-7 and lon# a 777 call option at a premium o" 2s 77 what is the ?G@ "or
this strate#y=

Ans O--7 9?G@  loer strike : net premium recived ; --77:1-7

3. investors sell call and put option o" the same strike price and same expiry strate#y is
known as

%hort straddle

4. ehat is the maximum pro"it on lon# straddle option strate#y =

Pnlimited

. suppose ni"ty is at -(-7 on 3 th april an investor mr a enters into a short straddle by
sellin# a may rs --77 ni"ty put "or rs 4- and a may rs --77 ni"ty call "or rs 1 what is
maximum pro"it in this strate#y =

73 9premium resived 4-:1;

+,. . suppose ni"ty is at --77 in may an investor mr a executes a lon# stran#le by buyin# a rs
-&77 ni"ty put "or a premium o" rs & and a rs -377 ni"ty call "or rs (& what is the net payo""
i" ni"ty close at -477 on expiry

&( [Correct answer NOT selected]

31. %uppose ni"ty is at -477 in Fovember an investor Mr ram execute a short stran#le by
sellin# a rs -77 ni"ty put "or a premium o" rs ( and rs 777 ni"ty call "or rs 47 what will be
his maximum pro"it by this strate#y

1(( [Correct answer NOT selected] maximum pro"it on short stran#le is total premium
recived 9(:471((;

3. i" an investor has an short term neutral to moderately bullish view on the stock he holds
what optn strate#y he will apply

Coverd call [Correct answer NOT selected]

3&. mr a bou#ht xy5 ltd "or rs 77 nad simultaneously sell a call option at a strike pice o" rs
- what will be his ?G@=

-&- 9bep stock price Lcall premium recived; [Correct answer NOT selected]

3(. a collar strate#y is an extension o" covered call strate#y in this statement is "alse=

 Fo [Correct answer NOT selected]