Q .1- The premium of a put option …………… with an increase in spot price.

 increases
 decreases
 remains constant
 either increases or decreases
CORRECT ANSWER
decreases

Q .2- State True or False - The mark-to-market of index futures is daily valuation of open positions as per
the current market prices.
 True
 False
CORRECT ANSWER
True

Q .3- When you sell a PUT option, you expect ……….

 A decrease in the price of the underlying asset
 A increase in the price of the underlying asset
 No change in the price of the underlying asset
 Both 2 and 3
CORRECT ANSWER
Both 2 and 3

Q .4- Broker are allowed to and expected to fund margin requirements of their clients but they may or may
not collect such margins from their clients - State True or False?
 True
 False

CORRECT ANSWER
False
Q .5- If the interest rate increases, the premium on CALL option will also increase - State True or False?
 True
 False
CORRECT ANSWER
True

Q .6- On the derivatives exchange, a trading cum clearing member has a client who has purchased and sold
600 and 350 contracts respectively in the August series of POR futures (contract multiplier 50). The trading
cum clearing member has purchased and sold 300 and 850 contracts respectively on his own account in the
same August series of POR futures. What is the outstanding liability (open position) of the member towards
Clearing corporation in the number of contacts?
 300
 800
 200
 550
CORRECT ANSWER
800

Q .7- Two stocks A and B stocks are quoted at Rs 500 per share. Keeping everything else constant, if Ais
more volatile than B, which ‘put’ will be priced higher?
 The put of stock A
 The put of stock B
 Both the puts will be equally priced
CORRECT ANSWER
The put of stock A

Q .8- When we trade in Commodities in a future exchange, it involves buying and selling …………..
 Forward contracts on commodities
 Actual commodities
 Future contracts on commodities
 Commodity stocks
CORRECT ANSWER
Future Contracts on Commodities

Q .9- Arbitrage is simultaneous purchase and sale of an asset or replicating asset in the market in an attempt
to profit from discrepancies in their prices - State True or False?
 True
 False
CORRECT ANSWER
True

Q .10- Mr. X does not hold any shares of ABC company so he cannot write a CALL option on it - State True
or False?
 True
 False
CORRECT ANSWER
False

Q .11- What is the role of speculators in the market?

 They stabilise the markets
 They reduce their risks by speculating
 They maintain the Dollar-Rupee price parity
 They add to the liquidity in the futures market
CORRECT ANSWER
They add to the liquidity in the futures market

Q .12- In case of forward contracts, the rules regarding the minimum amount by which the price would
change and the price limits are specified by an authority - State True or False?
 True
 False
CORRECT ANSWER
False

Q .13- What does an Option gives the buyer?

  The right but not the obligation
 The obligation but not the right
 Gives both the right and obligation
 Neither the right not the obligation
CORRECT ANSWER
The right but not the obligation

Q .14- An ideal index should contain …………… shares

 More than 50
 As many as possible
 As few as possible
 As per the objective of the index
CORRECT ANSWER
As per the objective of the index

Q .15- Mr. Ashish is a portfolio manager and he is bullish on the market. What should be his course of
action?
 He should sell index futures
 He should sell index call option
 He should buy index futures
 He should sell his complete portfolio
CORRECT ANSWER
He should buy index futures

Q .16- A mutual fund manager is bearish on the market and wishes to reduce its exposure to equities from
50% to
40%, without selling any of his equity holdings. Can he sell index futures for it?
 Yes, he can sell index futures
 No, Mutual funds are not allowed to sell index futures
CORRECT ANSWER
Yes, He can sell index futures
Q .17- In stock markets, Beta is a statistical measure of the sensitivity of the movement of a share price to
the movement of prevailing interest rates - State True or False?
 True
 False
CORRECT ANSWER
False

Q .18- Future prices are usually more transparent than Forward prices - State True or False?
 True
 False
CORRECT ANSWER:
True

Q .19- Who can clear trades in index options?

 All AMFI and IRDA members
 Members of a stock exchange
 Members and sub brokers of the stock exchange
 Clearing members registered in the derivatives segment.

CORRECT ANSWER
Clearing members registered in the derivatives segment

Q .20- If one does a calendar spread contract in index futures, then it attracts.
 Lower margin than sum of two independent legs of futures contract
 No margin need to be paid for calendar spread positions
 Higher margin than sum of two independent legs of futures contract
 Same margin as sum of two independent legs of futures contract
CORRECT ANSWER:
Lower margin than sum of two independent legs of futures contract
Q .21- “You sold one Zee Ent Ltd. futures contract at Rs.260 and the lot size is 1,000. What is your profit
or loss, if you purchase the contract back at Rs.251?
 9000
 -9000
 7500
 -7500
CORRECT ANSWER
9000

Q .22- “Options which are traded on a recognised exchange ie. Exchange traded options
are……………………….
 Usually in-the-money options
 Usually out-of-the money options
 Standardized options
 Customized options
CORRECT ANSWER
Standardized options

Q .23- An in-the-money option is a option with………………

 A negative intrinsic value
 A positive intrinsic value
 Either negative or positive intrinsic value
 zero time value
CORRECT ANSWER
A positive intrinsic value

Q .24- Liquid stocks in a market have low impact cost when compared to illiquid stocks - State True or
False?
 True
 False
CORRECT ANSWER
True

Q .25- If you have sold a ITC futures contract (contract multiplier 500) at 300 and bought it back at 328,
what is
your gain/loss?
 Again of RS. 6,800
 Aloss of Rs. 6,800
 Aloss of Rs. 14,000
 Again of Rs. 14,000
CORRECT ANSWER
Aloss of Rs. 14,000

Q .26- Value-at-risk is calculated ……………

 For a specific time frame
 At a specific confidence level
 Only when stocks are very volatile
 Both 1 and 2
CORRECT ANSWER
Both 1 and 2

Q .27- Who monitors the collection of Initial margin and allows exposure to members based on that?
 The Stock Exchange
 The Clearing Corporation
 NSDL or CDSL
 SEBI
CORRECT ANSWER
The Clearing Corporation

Q .28- If you are a buyer of put option, it will give you the right to sell how much of the underlying to the
writer of the option?
 The specified quantity or less than the specified quantity
 The specified quantity or more than the specified quantity
  Only the specified quantity (lot size of the option contract)
 Any quantity
CORRECT ANSWER
Only the specified quantity (lot size of the option contract)

Q .29- In the Option segment, if you sell a CALL at a premium of Rs 45 at the Strike Price of Rs 400, lotis
of 200 shares, then the maximum possible Profit is……………..
 Rs 9000
 Rs 18000
 Rs 30000
 Unlimited
CORRECT ANSWER
Rs 9000

Q .30- The settlement in futures contract happen only in ……………….

 Cash
 Physical Delivery
 Cash or Delivery
 None of the above
CORRECT ANSWER
Cash or Delivery

Q .31- Along position in a call option can be closed out by taking a long position in a put option with identical
exercise date and exercise price - State True or False?
 True
 False
CORRECT ANSWER
False

Q .32- Intrinsic value is always positive for in-the-money options and zero for out-of-the money options -
State True or False?
 True
 False
CORRECT ANSWER
True
Q .33- For a derivative exchange, the networth requirement for a clearing member is always less than that
for a non-clearing member - State True or False?
 True
 False
CORRECT ANSWER
False

Q .34- All the 50 stocks of NSE Nifty index are equally weighed while calculating the index - State True or
False?
 True
 False
CORRECT ANSWER
False

Q .35- If futures price is higher than spot price of an underlying asset, this is known as
 Maximization
 Normalization
 Backwardation
 Contango
CORRECT ANSWER
Contango

Q .36- What is the beta of a portfolio?

 It’s the value weighted average of the beta’s of the constituent securities in that portfolio
 It’s the same as the beta of the stock with the highest market capitalization
 It’s the sum of the betas the constituent securities in that portfolio
 It’s the simple average of the beta’s of the constituent securities in that portfolio

CORRECT ANSWER
It’s the value weighted average of the beta’s of the constituent securities in that portfolio
Q .37- In a derivative segment, the initial margin is collected from the clearing member on a net basis ie.
After netting all buy and sell positions of all clients together - State True or False?
 True
 False
CORRECT ANSWER
False

Q .38- What happens to the unmatched portion of the order in an Immediate or cancel (IOC) order?
 It will be added to the order book as a limit order
 It will be executed on the next trading day
 It will be executed in the next one hour
 It will be cancelled
CORRECT ANSWER
It will be cancelled

Q .39- A feature of a forward contract is ……………….

 It’s traded one-to-one between counterparties
 It has good liquidity
 It cannot be of a tenor of more than one year
 It does not carry any credit risk
CORRECT ANSWER
It’s traded one-to-one between counterparties

Q .40- …………… can write an option in the Indian stock market.

 Common individuals
 Market makers
 Foreign Financial Institutions (FIl)
 All of the above
CORRECT ANSWER
All of the above
Q .41- Suppose you are a trading member and have bought 14 contracts of April series index futures and
sold 7 contracts of April series index futures on your own account. What will be your exposure on these
transactions?
 It will grossed up to 21 contracts
 It will be netted to 7 contracts
 Higher of 14 and 7 ie. 14 contracts
 The Stock Exchange can decide to either to gross up or net out the exposure depending on the past record
of the trading member
CORRECT ANSWER
It will be netted to 7 contracts

Q .42- When there is a ‘Closing buy transaction’, this will have the effect of partly or fully
offsetting ………….. .
 Across position
 Ashort position
 A high position
 A long position
CORRECT ANSWER
A Short Position

Q .43- Which Option gives the holder a right to buy the underlying asset on or before a particular date for
a certain price?
 European call option
 European put option
 American call option
 American put option
CORRECT ANSWER
American call option

Q .44- The main proof of whether a futures transaction is for speculation or hedging is based on whether
there already exists a related commercial position which is exposed to risk of loss due to price movement –
State True or False?
  True
 False
CORRECT ANSWER
True

Q .45- What is an Index Future?

 It’s a synthetic option
 It’s a cash market product
 It’s a derivative product
 It’s an option
CORRECT ANSWER
It’s a derivative product

Q .46- The beta of a stock is 0.7 and you have a buy position of Rs 3,00,000 in it. Which of the below options
will give you a complete hedge?
 Sell Rs 2,10,000 Nifty
 Buy Rs 2,10,000 Nifty
 Buy Rs 3,00,00 Nifty
 Sell Rs 3,00,000 Nifty
CORRECT ANSWER
Sell Rs 2,10,000 Nifty

Q .47- What is the intrinsic value of a call option if the spot price is Rs 300 and the strike price is Rs 250?
 zero
 50
 650
 None of the above
CORRECT ANSWER
50

Q .48- For which type of options is it profitable to exercise the options?

 In the Money
  At the Money
 Out of the Money
 None of the above
CORRECT ANSWER
In the Money

Q .49- Losses due to Operational risks include losses due to………………….

State Government policies
Income tax regulations
Inadequate disaster planning
Excessive management control
CORRECT ANSWER
Inadequate disaster planning

Q .50- Mr R wants to sell 17 contracts of January series at Rs.4550 and Mr § 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?
 Rs 3,48,075
 Rs 4,05,000
 Rs 5,87,500
 Rs 7,53,075
CORRECT ANSWER
Rs 7,53,075

Q .51- The Spot price ie. 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?
 206
 200
 203
 224
CORRECT ANSWER
206

Q .52- If a person buys a share in one market and the simultaneously sells in a different market to benefit
from differentials is known as.
 Log trading
 Arbitrage
 Speculation
 Jobbing
CORRECT ANSWER
Arbitrage

Q .53- Can client’s position be netted off against each other while calculating initial Margin on the
derivatives segment.
 No
 Yes
CORRECT ANSWER
No

Q .54- Trade Guarantee Fund (TGF) is maintained for –

 Protecting the interests of investors
 Inculcating confidence in the minds of investors and brokers
 Guaranteeing the settlement of trades
 All of the above
CORRECT ANSWER
All of the above

Q .55- In an equity scheme, the Mutual Fund can hedge its equity exposure by selling stock index futures -
True or False?
  True
 False
CORRECT ANSWER
True

Q .56- All the orders entered on the Trading System of a Derivative Exchange are at Prices exclusive of
brokerage. True or False?
 False
 True
CORRECT ANSWER
True

Q .57- Ms. Rita sold a put option of strike price Rs. 90 and she received a premium of Rs. 6 from the option
buyer.
Theoretically, what can be the maximum loss on this trade?
 90
 84
 96
 0
CORRECT ANSWER
84

Q .58- 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?
 There is no need to maintain liquid assets
 Both Mr. Ram and Mr. Shyam have the same level of exposure
 Mr Ram has a higher exposure level than Mr. Shyam
 Mr Shyam has a higher exposure level than Mr Ram
CORRECT ANSWER
Mr Ram has a higher exposure level than Mr. Shyam

Q .59- An exchange traded option after maturity

  Can be traded after 2 days ie. after pay in/ pay out
 Can be traded in the spot market
 Cannot be traded
 None of the above
CORRECT ANSWER
Cannot be traded

Q .60- You have bought a CALL of SBI of Strike price of Rs 200 of January. To close the position, you will
buy a
PUT of same strike price of January. True or False?
 True
 False
CORRECT ANSWER
False

Q .61- Margins in ‘Futures’ trading are to be paid by:

 Only the buyer
 Only the seller
 Both the buyer and the seller
 The clearing corporation
CORRECT ANSWER
Both the buyer and the seller

Q .62- How can be risks be controlled in the derivatives segment by the stock exchange?
 By implementing an effective margin system
 By having a well-organized control systems and audit procedures
 By periodic evaluation of member positions
 All of the above
CORRECT ANSWER
All of the above

Q .63- What does Beta of 1 mean?

It means that the expected percentage in stock price will be more than the percentage change in index
It means that the expected percentage in stock price will be twice the percentage change in index
It means that the expected percentage in stock price will be less than the percentage change in index
It means that the expected percentage in stock price will be equal to the percentage change in index
CORRECT ANSWER
It means that the expected percentage in stock price will be equal to the percentage change in index

Q .64- A person has buy position in a stock, how can he cover his long position in the stock?
 by Selling any security of equal quantity
 by Selling any index stock of equal quantity
 by Selling the same stock and same quantity
 by Selling any ‘A group stock of equal quantity
CORRECT ANSWER
by Selling the same stock and same quantity

Q .65- ‘Netting’ is the process by which a future contract is terminated by a transaction that is equal and
opposite to the original transaction - State True or False?
True
False
CORRECT ANSWER
False

Q .66- The seller or writer of an option is required to pay initial margin for entering into the option contract.
Where is this shown in the balance sheet?
 Under Current Assets
 Under Current Liabilities
 Under Fixed Assets
 Under Fixed Liabilities
CORRECT ANSWER
Under Current Assets

Q .67- Is it true that a buyer of a CALL OPTION cannot lose more than the option premium paid?
 True only for European options
 True only for American options
  True for all type of options
 False for all type of options
CORRECT ANSWER
True for all type of options

Q .68- Each investor who wishes to trade in the derivatives segment is required to satisfy minimum net
worth conditions - State True or False?
 True
 False
CORRECT ANSWER
True

Q .69- The minimum Networth for clearing members of the derivatives clearing corporation/house shall
be ………….
 Rs. 1 crore
 Rs 5 crore
 Rs 10 crore
 None of the above
CORRECT ANSWER
None of the above

Q .70- The trades done by dealers in their own account has to be totally segregated from the trades done in
their clients account - State True or False?
 True
 False
CORRECT ANSWER
True

Q .71- Can a broker take any amount of exposure once he has satisfied the minimum net worth and
minimum deposit with the exchange in the form of liquid assets?
 Yes
 No
CORRECT ANSWER
No
Q .72- In the derivative segment, once initial margin requirement is fixed, it cannot be changed by the
exchange, during the lifetime of the futures contract - State True or False?
 True
 False
CORRECT ANSWER
False

Q .73- If on the auction day, there are no sellers for a particular short delivery, what will the Clearing
Corporation do regarding the outstanding transaction?
 The transaction is cancelled
 One more auction is held the next day
 The transaction is annulled
 The transaction is closed out
CORRECT ANSWER
The transaction is closed out

Q .74- The book net worth criterion for Professional Clearing Members is the same as that for Trading cum
Clearing members - State True or False?
 True
 False
CORRECT ANSWER
False

Q .75- Mr P and Mr Q are clearing members of a stock exchange. Both of them have maintained Rs 7 crores
of liquid assets consisting of equity shares and other assets. Both have the same exposure limits on day one.
Based on this, which of the following statements is true?
 The minimum exposure possible for the two brokers may change from time to time based on the changes
in those asset valuations, even if they do not withdraw the assets deposited
 The minimum exposure possible for the two brokers will remain same for ever, even if they withdraw the
asset deposited subsequently
 The minimum exposure possible for the two brokers will remain the same forever as long as they do not
withdraw the assets deposited
 None of the above
CORRECT ANSWER
The minimum exposure possible for the two brokers may change from time to time based on the changes in those
asset valuations, even if they do not withdraw the assets deposited

Q .76- The option premium is affected by the difference in the exercise price and the spot price - State True
or False?
 True
 False
CORRECT ANSWER
True

Q .77- In derivative exchanges, the exposure amount possible for each member broker is linked to the
amount of
deposits / margins kept by the member with the clearing house - True or False?
 True
 False
CORRECT ANSWER
True

Q .78- Foreign Exchange can be a part of liquid assets to be maintained by Clearing Members with the
clearing corporation - State True or False?
 True
 False
CORRECT ANSWER
False

Q .79- In respect of Margin account - What will be done if the prices of future contract increases?
 The margin account of the seller of futures will be debited for the notional loss
 The margin account of the buyer of futures will be credited for the notional gain
 Both 1 and 2
 Neither 1 nor 2
CORRECT ANSWER
Both 1 and 2

Q .80- A person who provides two way quotes for various stocks is known as…………………..
 Arbitrageur
 Speculator
 Hedger
 Market Maker
CORRECT ANSWER
Market Maker

Q .81- Derivatives brokers/ dealers are expected to know their clients and to exercise care to ensure that the
derivative product being sold by them to a particular client is suitable to his understanding and financial
capabilities - State True or False?
 True
 False
CORRECT ANSWER
True

Q .82- The Time value of an option is the portion of option premium that is linked to the amount of time
left till expiry of the option contract and also due to the fact that the underlying components that determine
the value of option may change during that time - State True or False?
 True
 False
CORRECT ANSWER
True

Q .83- A portfolio of Rs 25 lacs has a beta of 1.20. A complete hedge is obtained by ……………..
 by selling Nifty futures of Rs 25 lacs
 by selling Nifty futures of Rs 28 lacs
 by selling Nifty futures of Rs 30 lacs
  by buying Nifty futures of Rs 26 lacs
CORRECT ANSWER
by selling Nifty futures of Rs 30 lacs

Q .84- Mr Gautam has sold a put option with strike of Rs.650 at a premium of Rs.60. What is the maximum
gain per share that he may have on expiry of this positon?
 650
 590
 60
 0
CORRECT ANSWER
60

Q .85- When the price of a futures contract goes down, the margin account of the buyer of this futures
contract is debited for the loss - True or False?
 False
 True
CORRECT ANSWER
True

Q .86- If the share price of XYZ share increases by Rs 2 and the delta of its option is 0.5, then by how much
will the option price rise?
 No change in option price
 Rs 10
 Rs 2
 Rs1
CORRECT ANSWER
Rs 1

Q .87- As per SEBI rules , a stock broker can be suspended from the derivatives segment if ………………….
  he violates the conditions of registration
 he is suspended by the stock exchange
 he fails to pay fees
 Any of above
CORRECT ANSWER
Any of above

Q .88- The liquid asset which are to be maintained by clearing members with clearing corporation can
include gold and silver jewellery after applying standard 20% haircut.
 True
 False
CORRECT ANSWER
False

Q .89- Mr Prashant has bought one lot of ABC futures for Rs 75 (lot size 2000) expecting that this share will
go up. But he also wants to protect himself against any loss of more than Rs 3000. What should he do?
 Put a stop loss sell order at Rs 74
  Put a stop loss sell order at Rs 73.5
 Place a buy order for 2000 shares of ABC at Rs 76.50 per
 None of the above
CORRECT ANSWER
Put a stop loss sell order at Rs 73.5

Q .90- Securities Transaction Tax is levied on …………………

 Purchase of Equity Shares
 Sale of Derivatives
 Purchase of Derivatives
 Only 1 and 2
CORRECT ANSWER
Only 1 and 2

Q .91- The maximum brokerage chargeable by a trading member in relation to trades effected in the
contracts admitted to dealing on the F&O segment of NSEIL is fixed at …………. of the contract value,
exclusive of statutory levies.
 1%
 2%
 2.5%
 3%
CORRECT ANSWER
2.5%

Q .92- Fil Long positions in Index Derivatives should not exceed the FIl's holding of …………….
 Stock futures and options
 Stock futures
 Cash, Govt securities, t bills etc
 Cash
CORRECT ANSWER
Cash, govt securities, t bills etc

Q .93- It is easy to manipulate the Stock Index when compared to individual stocks - True or False?
 True
 False
CORRECT ANSWER
False

Q .94- The market wide position limit for single stock futures and stock option contracts shall be linked to
the free float market capitalization and shall be equal to. of the number of shares held by non-promoters in
the relevant underlying security.
 10%
 20%
 30%
 40%
CORRECT ANSWER
20%

Q .95- In which options is the strike price favourable than the market price and therefore its profitable to
exercise
the option?
At the money option
In the money option
Out of the money option
Profitable money option
CORRECT ANSWER
In the money option

Q .96- A member has two clients M1 and M2. M1 has purchased 1000 contracts and M2 has sold 500
contracts in August XYZ futures series. What is the outstanding liability (open position) of the member
towards Clearing Corporation in number of contracts?
 500
 1500
 1000
 2500
CORRECT ANSWER
1500

Q .97- …………….is the second derivative option with regard to price of the underlying asset.
 Delta
 Gamma
 Theta
 Vega
CORRECT ANSWER
Gamma
Q .98- Which of the following is not the duty of the trading member?
 Execution of Client Broker Agreement
 Filling of ‘Know Your Client’ form
 Bringing risk factors to the knowledge of client
 Assisting the client to arrange for margins
CORRECT ANSWER
Assisting the client to arrange for margins

Q .99- The market wide limit of open position of futures and options contracts on a particular underlying
stock should be.
 10% of free float holding
 20% of free float holding
 25% of free float holding
 30% free float holding
CORRECT ANSWER
20% of free float holding

Q .100- Currency futures were first traded at …………………

 Chicago Stock Exchange
 International Monetary Market
 Berlin Currency Exchange
 css
CORRECT ANSWER
International Monetary Market

Q .101- Mr Dev bought a April Nifty future contract on 10th April which cost him Rs 562000. The initial
margin he had to pay was Rs 55400. On 23rd April he sold the Nifty future at 5710. How much profit or
loss did he make ? (Nifty lot 100)
 Loss of Rs 46400
 Profit of 10300
 Profit of Rs 9000
 Profit of Rs 7800
CORRECT ANSWER
Profit of Rs 9000
Q .102- Vertical Spread is also known as Calendar Spread - True or False?
 True
 False
CORRECT ANSWER
False

Q .102- Arbitrage is a ………………… .

 Strategy used by Mutual Funds only
 High Risk Strategy
 Risk Free Strategy
 strategy for bearish markets
CORRECT ANSWER
Risk Free Strategy

Q .103- Limitations of forward market is / are ……………………………….

 Illiquidity
 Counterparty Risk
 Lack of certralisation of trading
 All of the above
CORRECT ANSWER
All of the above

Q .104- You have bought shares of Wipro of Rs 1 lakh. The beta of Wipro is 1.3. In order to hedge your risk
you have
shorted Nifty of Rs 1.50 lakhs. Which of the below is true?
 You are Under Hedged
 You are Over Hedged
 You are perfectly hedged
 Data is insufficient
CORRECT ANSWER
You are Over Hedged
Q .105- Which exchange first started trading in financial futures?
 Chicago Board Option Exchange
 Chicago Mercantile Exchange
 Chicago Board of Trade
 London International Finance Futures and Options Exchange
CORRECT ANSWER
Chicago Mercantile Exchange

Q .105- Mr Rohit has bought 8 lots of contracts of June BSE Sensex futures and sold 6 lots of contracts of
July BSE sensex futures. What is his regular - non spread open position?
 14 lots
 2 lots
 & lots
 6 lots
CORRECT ANSWER
2 lots

Q .106- What is the difference between Spot Price and Future Price known as?
 Impact cost
 Basis
 Rho
 Swap
CORRECT ANSWER
Basis

Q .107- Mr. Ganesh thinks that the markets will go down, so he sell 10 lots of index futures at 3500. His
predictions come true and the index falls and Mr. Ganesh buys back the futures contract at 3410. What is
the profit Mr. Ganesh has made if one lot of index is of 50.
 35000
 45000
 55000
 65000
CORRECT ANSWER
45000
Q .108- An investor purchased one lot of Nifty futures at 6000. The closing price of Nifty on that day was
5967. The margin on Nifty is 10%. What will be the effective margin left in this contract? Nifty lot is of 50.
 30000
 28350
 29835
 25000
CORRECT ANSWER
28350

Q .109- Mr Shetty purchased a future contract of SBI at Rs 2000 on 10 September. That day the spot price
was 1985. On the expiry day, SBI closed at Rs 2033. What will be the approximate spot price?
 2000
 1985
 2033
 More details are required
CORRECT ANSWER
2033

Q .110- You buy a PUT option of strike price 400 when the spot price is Rs 380. This option is In the Money
- True or False?
 True
 False
CORRECT ANSWER
True

Q .111- What is time value of an option?

 Its the general bank interest rate
 Its the volatility of the underlying asset
 Its the difference between the intrinsic value and the premium
 Its the time left for the option to expiry
CORRECT ANSWER
Its the difference between the intrinsic value and the premium
Q .112- Cost of carry model means price of futures is equal to ………………. .
 Spot price + Cost of Carry
 Spot Price
 Cost of Carry
 Spot price — Cast of Carry
CORRECT ANSWER
Spot price + Cost of Carry

Q .113- A person has bought an option so cannot lose more than the option premium paid.
 False for all types of options
 True only for American options
 True only for European options
 True for all types of options
CORRECT ANSWER
True for all types of options

Q .114- An option buyer pays the option premium to the option seller.
 True
 False
CORRECT ANSWER
True

Q .115- Option Premium consists of two components —

 Intrinsic value and time value
 Sum of Call and Put premium
 Premium value and time value
 Intrinsic value and premium
CORRECT ANSWER
Intrinsic value and time value
Q .116- A trader believes that the future price of PQR company will rise and being a smart trader he
will ……….
 sell PQR futures now and buy them later when the price rises
 buy PQR futures now and sell them later when it rises
 wait till the price of POR futures and cash market price become same
 wait till the prices drop to the lowest level
CORRECT ANSWER
buy PQR futures now and sell them later when it rises

Q .117- Mr. Singh purchases a call option on a stock at Rs. 10 per call with strike price of Rs. 140. lf on
exercise date, stock price is Rs. 168 , ignoring transaction cost, Mr. Singh will choose ……………… .
 To exercise the option
 Not to exercise the option
 May or may not depending on the balance he has in his bank account
 May or may not depending on the recommendation of experts
CORRECT ANSWER
To exercise the option

Q .118- Which of the following statements is TRUE with respect to time value of options?
 Only an In the Money Option has time value
 Only Call options have time value
 The time value of the option is the sum of its intrinsic value and premium
 The longer the time to expiration, greater is the option time value
CORRECT ANSWER
The longer the time to expiration, greater is the option time value

Q .119- Hedging is ………………….

 long security, long futures
 long security, short futures
 short security, long futures
 short security, short futures
CORRECT ANSWER
long security, short futures
Q .120- The Lot size of Options are…………..
 Same as that of Futures
 Double that of futures as only the premium is payable / received
 Very different from futures
 Half of Futures.
CORRECT ANSWER
Same as that of Futures

Q .121- Which of the following is the duty of the trading member?

 Sending the periodical statement of accounts to clients
 Maintaining unique client codes
 Ensuring timely pay-in and pay-out of funds
 All of the above
CORRECT ANSWER
All of the above

Q .122- Which of the following cannot be an underlying for a Financial Derivative contract?
 Foreign Exchange
 Interest Rate
 Commodities
 Equity Index
CORRECT ANSWER
Commodities

Q .123- VaR methodology seeks to measure the amount of value that a Portfolio may stand to lose within a
certain
horizon time period due to potential changes in …………..
 underlying stock volatility
 underlying exposures
 underlying index volatility
 underlying asset spot price
CORRECT ANSWER
underlying asset spot price

Q .124- A stock broker is allowed to buy, sell or deal in securities …………..

 on submission of document with stock exchange for admission
 only on being admitted as a member of a stock exchange
 on submission of document with SEBI for registration
 only on having a certificate of registration granted by SEBI
CORRECT ANSWER
only on having a certificate of registration granted by SEBI

Q .125- Which of the following statement is true?

 NSE does not allow basket trading in it's F&O Segment.
  F&O Segment has a Basket trading facility.
 Basket trading has been discontinued in the F&O Segment.
 Basket trading is illegal in India.
CORRECT ANSWER
F&O Segment has a Basket trading facility.

Q .126- The value of a call option …………… with a decrease in spot price.
 increases
 decreases
 remains constant
 either increases or decreases depending on Nifty movements
CORRECT ANSWER
decreases

Q .127- On the derivative exchanges, all the orders entered on the Trading System are at prices inclusive of
brokerage.
 True
 False
CORRECT ANSWER
False

Q .128- You have bought a portfolio of securities on the exchange. To eliminate the risk arising out of
market, you should …………… .
 buy index futures
 sell index futures
 buy stock futures
 sell stock futures
CORRECT ANSWER
sell index futures

Q .129- Nifty future is trading at 4850. A trader buys a 4900 current month call at 100. What should be the
closing price of Nifty above which the investor starts to make profits ?
 4850
 4900
 5000
 5100
CORRECT ANSWER
5000
Q .130- Clearing Corporation on a derivative exchange becomes a legal counterparty to all trades and is
responsible for guaranteeing settlement for all open postions - True or False?
 True
 False
CORRECT ANSWER
True

Q .131- Three Call series of ABC stock - February, March and April are quoted. Which will have the highest
Option Premium (same strikes)?
 March
 February
 April
 All will be almost equal
CORRECT ANSWER
April

Q .132- To safeguard against potential losses on outstanding positions, …………… is collected.

 Assignment Margin
 Initial Margin
 Premium Margin
 None of the above
CORRECT ANSWER
Initial Margin

Q .133- Ascrip will be banned in the derivatives market if the open interest
 exceeds 85% of the market wide position limits
 exceeds 90% of the market wide position limits
 exceeds 95% of the market wide position limits
 exceeds 97% of the market wide position limits
CORRECT ANSWER
exceeds 95% of the market wide position limits

Q .134- In case a Future Contract is not traded in a day, which of the following prices is reckoned for daily
mark to market settlement?
 Closing price of the underlying
  Theoretical price
 Closing price of the last traded day
 Closing price of the futures contract
CORRECT ANSWER
Theoretical price

Q .135- The Indian derivatives market has 6 underlying futures contract available at a given time - True or
False?
 False
 True
CORRECT ANSWER
False

Q .136- Forward Contracts are those contracts which can be customised as per the requirements of the
concerned parties - True or False?
 False
 True
CORRECT ANSWER
True

Q .137- Ms. Gayatri buys a call option of strike price Rs. 300 when the spot price is Rs 337. What is the
intrinsic value of this call option?
 -37
 37
 zero
 637
CORRECT ANSWER
37
Q .138- if the lot size of Reliance Industries future contract is 600 shares, what will be the lot size of its
Option contract?
 500
 250
 100
 1000
CORRECT ANSWER
500

Q .139- The daily settlement of all open positions in futures contract is called -

 Exercising of the futures contract

 Mark to Mark settlement
 VaR settlement
 None of the above
CORRECT ANSWER
Mark to Mark settlement

Q .140- Which of these CALL options are Out of The Money (OTM)?
 The spot price is Rs 350 and strike price is Rs 330
 The spot price is Rs 350 and strike price is Rs 370
 The spot price is Rs 350 and strike price is Rs 350
 Depends on the Delta of the option
CORRECT ANSWER
The spot price is Rs 350 and strike price is Rs 370

Q .141- Mr. Sunil wishes to buy a futures contract of Tata Steel shares. He should ………
 make payments for the full value of the contract
 make the margin payments as calculated by the exchange
 hedge his position in Tata Steel in the Options market
 None of the above
CORRECT ANSWER
make the margin payments as calculated by the exchange
Q .142- You have bought a call option of XYZ stock of strike price 400 at a premium of Rs 30. The current
spot/market price is Rs 410. At what market price will this call break even?
 370
 400
 430
 440
CORRECT ANSWER
430

Q .143- What is done if a client defaults in making payments in respect to his daily settlement?
 The contract is transferred to a special ‘Default Account’
 The contract is closed out
 The contract is transferred to another client’s account who has sufficient funds
 A week’s notice is given to that client
CORRECT ANSWER
The contract is closed out

Q .144- ………….. measure of the sensitivity of an option price to changes in market volatility.
 Rho
 Theta
 Gamma
 Vega
CORRECT ANSWER
Vega

Q .145- Mr Ranjan sold a ABC stock put contract of Rs 300 strike price at Rs 28. What will be his profit /
loss if he buys it back at Rs 13. The lot size is 1000 shares.
 18000
 -18000
 15000
 -15000
CORRECT ANSWER
15000
Q .146- You own a portfolio of various stock for long term but currently you are unsure of the market. The
best possible action to safe guard your investments is:
 Buy more stocks
 Sell the Stocks
 Sell Index Futures as a hedge
 None of the above
CORRECT ANSWER
Sell Index Futures as a hedge

Q .147- The system in which trading is done through various computers which are attached to a central
computer is called Online trading.
 Flase
 True
CORRECT ANSWER
True

Q .148- Intrinsic value of an OUT OF MONEY option is ………..

 zero
 1
 -1
 none of the above
CORRECT ANSWER
zero

Q .149- A penalty or suspension of registration of a stock broker from derivatives exchange/segment under
SEBI (Stock Broker and Sub-broker) Regulations, 1992 can take place if ……………….
 The stock broker violates the conditions of registration
 The stock broker fails to pay fees
 The stock broker is suspended by the stock exchange
 In any of the above situations
CORRECT ANSWER
In any of the above situations

Q .150- An ‘authorised person’ in the Futures & Options segment is ……………..

 a person authorised by the exchange as an approved user of a trading member
 any person who is acting in any capacity on behalf of the trading member or a participant for any activity
relating to the trades done and executed
 an approved user of a participant
 all of the above
CORRECT ANSWER
all of the above

Q .151- A butterfly spread is an extension of …………….. strategy.

 Covered call
 Long straddle
 Short straddle
  Long Strangle
CORRECT ANSWER
Short straddle

Q .152- In the derivatives segment , Clients’ positions cannot be netted off against each other while
calculating initial margin - True or False?
 False
 True
CORRECT ANSWER
True

Q .153- After SPAN has scanned the 16 different scenarios of underlying market price and volatility
changes, it
selects the ………….. loss.
 Average Loss
 Smallest Loss
 Largest Loss
 Medium Loss
CORRECT ANSWER
Largest Loss

Q .154- If you sell a put option with strike of Rs. 375 at a premium of Rs.50, how much is the maximum gain
that you may have on expiry of this position?
 Unlimited
 Rs 50
 Rs 325
 None of the above
CORRECT ANSWER
Rs 50

Q .155- ………….. being anticipated profit should be ignored and no credit for the same should be taken in
the profit and loss account.
 Credit balance in the "Mark-to-Market Margin Account"
 Debit balance in the "Mark-to-Market Margin Account"
 Debit balance in the Intial Margin A/c
 Credit balance in the Intial Margin Alc
CORRECT ANSWER
Credit balance in the "Mark-to-Market Margin Account"

Q .156- Which statement is false with respect to Futures market?

 There is daily settlement
 There are standardised contract terms
 No margin payment is required
 Traded on organised exchanges
CORRECT ANSWER
No margin payment is required

Q .157- …………… of the option is the one who by paying the option premium buys the right but not the
obligation to exercise his option on the seller.
 Buyer
 Seller
 Buyer or Seller
 None of the above
CORRECT ANSWER
Buyer

Q .158- INTINSIC Value OT AN VUT OT Ine wioney Option Is…………… .

 1
 -1
 zero
 None of the above
CORRECT ANSWER
zero

Q .159- Around 60% of the trading volume on the American Stock Exchange is from -
 Index Futures
 Index Funds
 ETFs
 Index Options
CORRECT ANSWER
ETFs

Q .160- Spot value of Reliance Industry share is Rs 800 and an investor buys one month Reliance call option
of strike price 820 at a premium of Rs 3. The option is ……………
  In the Money
 At the Money
 Out of the Money
 Deep In the Money
CORRECT ANSWER
Out of the Money

Q .161- When an investor buys a futures contact, he or she takes a long position in the futures market -
State True or False?
 True
 False

CORRECT ANSWER
True

Q .162- In the derivatives market, as the strike price goes down, the premium of PUT option ……………
 will increase
 will decrease
 there will be no change
 can increase or decrease
CORRECT ANSWER
will decrease

Q .163- As per the recommendations of the L.C.Gupta Committee, CROSS MARGINING (which takes into
account the combined position in the cash and derivative market) is currently not permitted.
 False
 True
CORRECT ANSWER
True

Q .164- An option with zero intrinsic value is called ……………..

 OTM - Out of The Money option
 ATM - At The Money option
 ITM - In The Money option
  Both - At The Money and Out of The Money options
CORRECT ANSWER
Both - At The Money and Out of The Money options

Q .165- *…………… measures the sensitivity of the option value to a given small change in the price of the
underlying asset.
 Delta
 Theta
 Rho
 Vega
CORRECT ANSWER
Delta

Q .166- A stock exchange has ON LINE SURVEILLANCE capability to monitor the……………..

 Volumes
 Prices
 Positions
 All of the above
CORRECT ANSWER
All of the above

Q .167- Theta is ……………………. .

 Is the change in option price given a one percentage point change in the risk-free interest rate
 A measure of the sensitivity of an option price to changes in market volatility
 The change in option price given a one-day decrease in time to expiration.
 Speed with which an option moves with respect to price of the underlying asset.
CORRECT ANSWER
The change in option price given a one-day decrease in time to expiration.

Q .168- The basic test of whether a trade done in the future market is for hedgeing or speculation is centered
on the premise that there already exist a related commercial position which is exposed to the risk due to
price fluctuations.
 True
 False
CORRECT ANSWER
True

Q .169- The options which are traded on a exchange are standardised.

 True
 False
CORRECT ANSWER
True

Q .170- You are long in ICICI Bank Ltd futures at price Rs 200. The prices rises to Rs 220 next day. The
Mark to Market margin will be credited to your account. True or False?
 False
 True
CORRECT ANSWER
True

Q .171- The networth of clearing members does not include -

 Bad Deliveries
 Doubtful Debts
 Unlisted Securities
 All of the Above
CORRECT ANSWER
All of the Above






 




Q .172- The Option which gives its holder a positive cash flow is called a ……………….
 At the money option
 Out of the money aption
 In the money option
 Delta
CORRECT ANSWER
In the money option

Q .173- In case of CALL OPTION, it gives the buyer the right to …………….
 buy the underlying at market price
 buy the underlying at set price
 sell the underlying at market price
 sell the underlying at set price
CORRECT ANSWER
buy the underlying at set price

Q .174- You have bought a CALL of Reliance of Strike price of Rs 900 of January. To close the position,
you will SELL a PUT of same strike price of January. True or False?
 False
 True
CORRECT ANSWER
False

Q .175- Tick size depends on —

 The Delta of the security
 Its fixed by the exchange
 Volume in that security
 The Interest rates
CORRECT ANSWER
Its fixed by the exchange

Q .176- The Strangle strategy is similar to straddle strategy in outlook but different in ……………….
 implementation
 aggression
 cost
 All of the above
CORRECT ANSWER:
All of the above

Q .177- If you are a seller of put option, you expect …………..

 No change in the price
 Increase in the price
 Decrease in the price
 Both 1 and 2
CORRECT ANSWER
Both 1 and 2

Q .178- ………….is not an application of indices.

 Venture capital funds
 Index Funds
 Index Derivatives
 Exchange Traded Funds
CORRECT ANSWER
Venture capital funds

Q .179- The features of Futures are quiet similar to …………………….

 Options
 Swaps
 Debentures
 Forwards
CORRECT ANSWER
Forwards

Q .180- The Bye Laws of an Indian Stock Exchange are to be approved by …………… .
 Finance Ministry
 RBI
 Clearing Corporation
 SEBI
CORRECT ANSWER
SEBI

Q .181- On exercise of the option, the seller/writer will pay the adverse difference, between the final
settlement price as on the exercise/ expiry date and the strike price. Such payment will be recognised as
a ……………………. .
 Profit
 Loss
 Debt
 None of the above
CORRECT ANSWER
Loss

Q .182- Are Treasury Bills included in the list of permitted liquid assets which can be offered to Clearing
Corporation by the Clearing Members?
 Yes
 No
CORRECT ANSWER
Yes

Q .183- Cross margining between cash and derivative segments of an exchange helps reduce the overall
margin level applicable to investors and traders - State True or False?
 True
 False
CORRECT ANSWER
True
Q .184- The Clearing Corporation can transfer client positions from one broker member to another broker
member in the event of a default by the first broker member. No SEBI approval is required for this action
- State True or False?
 True
 False
CORRECT ANSWER
False

Q .185- A short position in futures contract can be reversed only with the same counter party to whom the
contract was originally sold - State True or False?
 True
 False
CORRECT ANSWER
False

Q .186- The price at which the market maker is ready to buy is known as BID price - State True or False?
 True
 False
CORRECT ANSWER
True

Q .187- High level of initial margins deter brokers and clients from trading in the derivatives market - State
True or
False?
 True
 False
CORRECT ANSWER
True
Q .188- Among the given options, which one can be the principal driver of the movement of stock index?
 Inflation
 Price movement in underlying shares
 Interest Rates
 Currency Rates
CORRECT ANSWER
Price movement in underlying shares

Q .189- If a Day Order is not executed during the day, it will ……………..
 get cancelled automatically once the trading time for the day is over
 get executed the next day if it’s in the price range
 get executed in the special auction market
 None of the above
CORRECT ANSWER
get cancelled automatically once the trading time for the day is over

Q .190- The Intrinsic value of an In the Money option is the difference between the Market Price and the
Exercise price - State True or False?
 True
 False
CORRECT ANSWER
True

Q .191- Outsiders ie. Non Broker members are allowed to be appointed on the Governing Board of the
Clearing Corporation of the Derivatives segment - State True or False?
 True
 False
CORRECT ANSWER
True
Q .192- The losses for a seller of a Call options are ……………..
 limited
 unlimited
CORRECT ANSWER
unlimited

Q .193- A Professional Clearing Member can act only for Institutional clients - State True or False?
 True
 False
CORRECT ANSWER
False

Q .194- A writer of a naked PUT option is …………………

 Bullish and pays the premium
 Bullish and receives the premium
 Bearish and pays the premium
 Bearish and receives the premium
CORRECT ANSWER
Bullish and receives the premium

Q .195- The quality of the underlying asset is standardized by the ……….. in case of futures contract.
 RBI
 SEBI
 Exchange
 The buyer and seller
CORRECT ANSWER
Exchange

Q .196- Strike price is the price per share for which the underlying security may be purchased or sold by
the option holder - State True or False?
 True
  False
CORRECT ANSWER
True

Q .197- The ratio of change in delta for a unit change in the price of underlying is called …………….
 Vega
 Theta
 Alpha
 Gamma
CORRECT ANSWER
Gamma

Q .198- What happens when the price of the underlying rises after a future contract is initiated?
 Price changes in the underlying will not effect the price of futures
 The short position will become profitable
 The long position will become profitable
 The long position will become unprofitable
CORRECT ANSWER
The long position will become profitable

Q .199- When the price of a future contract rises, the margin account ……………
 of the buyer is credited for the gain
 of the seller is debited for the loss
 Both 1 and 2
 None of the above
CORRECT ANSWER
Both 1 and 2

Q .200- When a new client opens a trading account with a trading member, which of the following
documents have to be compulsorily given to him?
 SEBI rules regarding trading in stock markets
 Risk disclosure documents
 All the rules of the Stock Exchange
 All of the above
CORRECT ANSWER
Risk disclosure documents
Q .201- A trader sells a PUT option of strike Rs 100 on ABC stock for a premium of Rs 25. On expiry day,
the ABC stock closed at Rs 50. What is the trader's profit or loss in Rs.? (Lot size is 1000)
 + 25000
 - 25000
 + 50000
 - 50000
CORRECT ANSWER
- 25000

Q .202- When an option moves more in the money, the absolute value of Delta will ……………
 Increase
 Decrease
 No effect on delta
 tend to become zero
CORRECT ANSWER
Increase

Q .203- The liquid assets which are to be deposited by the clearing member can be in the form of …………
 Only cash
 Only cash and approved securities
 Cash, Bank Guarantees, Equity Securities and other Cash Equivalents
 None of the above
CORRECT ANSWER
Cash, Bank Guarantees, Equity Securities and other Cash Equivalents

Q .204- Which one of the below mentioned option will result in a Bear Spread?
 Selling a Call of a lower strike price and buying a Call of a higher strike price
 Selling a Put of a lower strike price and buying a Call of a higher strike price
 Selling one Call of a lower strike price and buying two Puts of a higher strike price
 None of the above
CORRECT ANSWER
Selling a Call of a lower strike price and buying a Call of a higher strike price

Q .205- We can get high returns from many investment products in the market in an absolutely risk free
manner -
State True or False?
 True
 False
CORRECT ANSWER
False

Q .206- Which tax is applicable for equity transactions done on a recognized stock exchange?
 Securities Trading Tax
 Equity Trading and Service Tax
 Derivatives Transaction Tax
 Securities Transaction Tax
CORRECT ANSWER
Securities Transaction Tax

Q .207- When a futures contract is entered, ………………..

 no margin is exchanged between the buyer and seller
 only the buyer pays the margin to the seller
 only the seller pays margin to buyer
 the buyer and seller pay margins to each other
CORRECT ANSWER
no margin is exchanged between the buyer and seller

Q .208- A European option can be exercised only on expiry date - State True or False?
 True
 False
CORRECT ANSWER
True

Q .209- Clearing member Ram has 6 trading members who are all in Mumbai and Clearing member Shyam
has 6 trading members who are all outside Mumbai. Both of them have deposited same amount of liquid
assets with the clearing corporation. Which amongst the following statement is True?
 Clearing Member Ram will have a higher exposure limit than Clearing Member Shyam
 Clearing Member Shyam will have a higher exposure limit than Clearing Member Ram
 Both Ram and Shyam will have the equal exposure limits
 None of the above
CORRECT ANSWER
Both Ram and Shyam will have the equal exposure limits

Q .210- The potential exposure is calculated by the clearing corporation …………….

 on the last trading day of the contract month
 on the last trading day of the week
 at the end of the trading day
 on real time basis
CORRET ANSWER
on real time basis

Q .211- If the far month futures prices are less than near month futures prices, this is Known as ……………
 Delta Hedging
 Contango
 Basis
 Backwardation
CORRET ANSWER
Backwardation
Q .212- Atrader sells a future contract and prices rises. The trader will …………….. if he squares up the
position.
 make a profit
 make a loss
 Insufficient data
 None of the above
CORRET ANSWER
make a loss

Q .213- Mr. Ais a risk averse investor. He would prefer secure investments like fixed deposits and other
debt instruments and not market oriented investments - State True or False?
 True
 False
CORRECT ANSWER
True

Q .214- Which amongst the following comes under the purview of Securities Contracts (Regulation) Act-
1956?
 Currency
 Securities
 Gold
 Commodities
CORRECT ANSWER
Securities

Q .215- Option premium depends on ………………….

 volatility of the underlying
 current price and the strike price
 interest rates in the economy and the time to expiry
  All of the above
CORRET ANSWER
All of the above

Q .216- Among the following options, in which future contract, the contract cannot be used as a means to
acquire the
underlying asset?
 Copper
 Gold
 Individual securities
 Stock index
CORRET ANSWER
Stock index
Q .217- If the price of the underlying stock of a PUT option is very volatile, …………..
 the premium will comparatively be lower
 the premium will comparatively be higher
 the premium will be zero
 No effect on option premium
CORRECT ANSWER
the premium will comparatively be higher

Q .218- A trader is long on ABC stock April futures at 3100. He shall make a loss if the futures price moves
to …………………
 3300
 3200
 3400
 3000
CORRET ANSWER
3000

Q .219- ……………….. are eligible to clear trades in Index Options.

 All trading members of a recognised stock exchange
 All trading members and their sub brokers
 Only members who are registered as clearing members with the derivative exchange
 All Public sector banks
CORRET ANSWER
Only members who are registered as clearing members with the derivative exchange

Q .220- If an investor is exposed to a price risk in a stock, by hedging he would be able to …………….
  make the outcome more profitable
 make the outcome as per SEBI and Stock market regulations
 make the outcome more certain
 make the outcome more volatile
CORRET ANSWER
make the outcome more certain

Q .221- Writing a covered call is ……………………… .

 More risky than writing a naked call
 Less risky than writing a naked call
 As risky as writing a naked call
 Covered call cannot be written in Indian markets
CORRET ANSWER:
Less risky than writing a naked call

Q .222- The Risk Return profile for a Future contract is symmetric while that of an Option contract is
asymmetric -
State True or False?
 True
 False
CORRECT ANSWER
True

Q .223- Derivatives can have ………………….. as an underlying.

 a bond
 another derivative
 stock index
 All of the above
CORRET ANSWER
All of the above
Q .224- The daily Mark to Market gain or loss is realized ………………
 in the equity spot market
 in the futures market
 in Swap trading
 in forwards market
CORRECT ANSWER
in the futures market

Q .225- When a call option on an index is exercised, the call option holder receives from the option writer
an amount equal to excess of spot price over the strike price of that call option - State True or False?
 True
 False
CORRECT ANSWER
True

Q .226- It is recommended but not compulsory for the trading members to have dealers and sales personal
in the derivatives market who have passed a certification programme approved by SEBI - State True or
False?
 True
 False
CORRET ANSWER
False

Q .227- There is only CASH settlement for Nifty futures contract - State True or False?
 True
 False
CORRECT ANSWER
True

Q .228- Margins in the derivative segment has to be collected from all clients, including Financial
Institutions and Fils - State True or False?
  True
 False
CORRECT ANSWER
True

Q .229- Investors who are called Bulls are those investors who believe the market or stock will fall - State
True or False?
 True
 False
CORRECT ANSWER
False

Q .230- A Mutual Fund floats a new fund offer of a 100% equity scheme. Till the time it invests this cash in
equities, the fund can take equity exposure by buying stock index futures - State True or False?
 True
 False
CORRET ANSWER
True

Q .231- A portfolio with 200 stocks is only half as risky as another portfolio with 100 stocks - State True or
False?
 True
 False
CORRECT ANSWER
True

Q .232- A writer / seller of a deep out of the money CALL option is ………..
 Bullish - receiver of premium
 Bullish - payer of premium
 Bearish- receiver of premium
 Bearish - payer of premium
CORRECT ANSWER
Bearish- receiver of premium
Q .233- The net worth requirements of Clearing Members and Trading Members is the same for the
derivatives exchange - State True or False?
 True
 False
CORRET ANSWER
False

Q .234- You have created a Short Position on futures contract. This can be squared up by ………….
 by executing a purchase of a Call option of the same security
 by executing a forward contract
 by executing a purchase of the same futures contract
 by executing a sale of the same futures contract
CORRET ANSWER
by executing a purchase of the same futures contract

Q .235- A separate client account has to be maintained to keep the money and securities deposited by clients
– State True or False?
 True
 False
CORRECT ANSWER
True

Q .236- One can use Index Futures for hedging to eliminate or reduce the ………….
 Unsystematic Risk
 Systematic Risk
 Sector specific Risk
 Operational Risk
CORRECT ANSWER
Systematic Risk

Q .237- If a Trading member defaults in the derivative segment, he can still continue the trading business
in the cash segment. - True or False?
  False
 True
CORRECT ANSWER
False

Q .238- Can Professional Clearing members act only on behalf of institutional clients?
 Yes
 No
CORRECT ANSWER
Yes

Q .239- Trading members shall maintain a higher level of Book networth than the clearing members - State
True or
False?
 True
 False
CORRECT ANSWER
False

Q .240- If you have a long or short position in a futures contract, this can be closed by initiating a reverse
trade – True or False?
 True
 False
CORRECT ANSWER
True

Q .241- The idea and economic rational of introducing forward contracts is to …………….
 help arbitrage
 help trading
 help hedgeing
 both 1 and 3
CORRECT ANSWER
help hedgeing
Q .242- As per Accounting Standards, the initial margin paid by an option seller is shown
under …………….. in the balance sheet
 Bad Debts
 Fixed Assets
 Current Assets
 Current Liabilities
CORRECT ANSWER
Current Assets

Q .243- A person who is bullish and a payer of premium is a ………………

 buyer of call option
 seller of call option
 buyer of put option
 seller of put option
CORRECT ANSWER
buyer of call option

Q .244- Investor Mr. X wants to sell 11 contracts of Feb series at Rs.6300 & investor Mr. Y wants to sell 13
contracts of March series at Rs.6450. 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 margin of
X and Y) by the broker?
 Rs 251550
 Rs 459450
 Rs 640000
 Rs 374900
CORRECT ANSWER
Rs 459450

Q .245- A trader has taken a short position of one contract in Sept ABC futures (contract multiplier 50) at
a price of Rs.1800. When he closed this position after a few days, he realized that he has made a profit an
Rs.5000.
Which of the foll closing actions would have enabled him to generate the profit? (Please ignore brokerage
costs).
 Buying 1 Sept ABC futures contract at 1900
 Buying 1 Sept ABC futures contract at 1700
 Selling 1 Sept ABC futures contract at 1900
 Selling 1 Sept ABC futures contract at 1700
CORRECT ANSWER
Buying 1 Sept ABC futures contract at 1700

Q .246- The option which gives the holder a right to buy the underlying asset on or before a particular date
for a certain price, is called as …………………….
 European put option
 American put option
 American call option
 European call option
CORRECT ANSWER
American call option

Q .247- A call option gives the holder a right to buy how much of the underlying from the writer of the
option?
 The specified quantity or less than the specified quantity
 The specified quantity or more than the specified quantity
 Only the specified quantity
 None of the above
CORRECT ANSWER
Only the specified quantity

Q .248- Which of the following is closest to the forward price of a share if cash price is Rs 425, forward
contract maturity=12 months from date, market interest rate 12%
 425
 482
 476
 437
CORRECT ANSWER
476

Q .249- A trader is very bearish on specific companies. However he is bullish on the market as a whole.
Which of the following is the most appropriate strategy to take advantage from this view?
  sell the shares of those specific companies and also sell index futures
 sell the shares of those specific companies and buy index futures
 buy the shares of those specific companies and sell index futures.
 do nothing
CORRECT ANSWER
sell the shares of those specific companies and buy index futures
Q .250- The concept in which the derivative trader gets a higher exposure for the small portion of margin
amount brought by him is called as:
 Arbitrage
 Leverage
 Delta Hedgeing
 Speculation
CORRECT ANSWER
Leverage

Q .251- Which of the following problem(s) that exist in the forward contracts are solved by the Futures
contracts?
 acentral agency for monitoring
 settlement problems
 counter party risk
 all of the above
CORRECT ANSWER
all of the above

Q .252- Loss incurred on derivatives transactions can be carried forward for a period of 12 assessment years
– State whether True or False?
 True
 False
CORRECT ANSWER
False

Q .253- A short position in a CALL option can be closed out by taking a long position in a PUT option with
same exercise date and exercise price - State True or False?
 True
 False
CORRECT ANSWER
False

Q .254- Which of the following compliants can be taken up by the exchange for redressal?
  Claims for notional loss, opportunity loss for the disputed period or trade
 Complaints pertaining to trades not executed on the Exchange by the complainant
 Claims of sub-broker/authorized persons for private commercial dealings with the trading member
 Excess Brokerage charged by Trading Member / Sub-broker
CORRECT ANSWER
Excess Brokerage charged by Trading Member / Sub-broker

Q .255- Mr. Ravi purchases 10 call option on stock at Rs. 20 per call with strike price of Rs 350. If on exercise
date,
stock price is Rs. 310, ignoring transaction cost, Mr. Ravi will choose ………………
 to exercise the option
 not to exercise the option
 may or may not exercise the option depending on whether he likes the company or not
 may or may not depending on whether he is in town or not
CORRECT ANSWER
not to exercise the option

Q .256- Trading members are required to possess a higher level of Capital Adequacy (as per balance sheet)
than clearing members- True or False?
 True
 False
CORRECT ANSWER:
False

Q .257- A trader sold a call option on a share of strike price Rs. 200 and received a premium of Rs. 12 from
the option
buyer. What can be his maximum loss on this position.
 Rs 200
 Rs 188
 Rs 12
 Unlimited
CORRECT ANSWER
Unlimited
Q .258- Investor protection fund for the derivatives segment is ……………
 same as that of cash segment
 Independent of that of cash segment
 contributed by ministry of finance
 no investor protection fund is there for the derivative segment
CORRECT ANSWER
Independent of that of cash segment

Q .259- The contract size in futures market is defined by ……………………

 The Stock Brokers
 The Stock Exchange
 The Parties to the contract
 SEBI
CORRECT ANSWER
The Stock Exchange

Q .260- In Options - the seller of a contract pays an upfront premium at the time of entering into the contract
- State
whether True or False?
 True
 False as the premium is paid on maturity
 False as the premium is paid by the buyer and not the seller
 None of the above
CORRECT ANSWER
False as the premium is paid by the buyer and not the seller

Q .261- The mark-to-market margin debits for index options are made on ……………
 weekly basis
 daily basis
 fortnightly basis
 every friday
CORRECT ANSWER
daily basis

Q .262- A calendar spread in index futures is treated as ……………… in a far month contract when the
near months
contract is expired.
  long position
 hedged position
 naked position
 Short position
CORRECT ANSWER
naked position

Q .263- The main objective of derivatives is to enable market participants to ………………..

 Trade
 Manage the risks
 Speculate
 Arbitrage
CORRECT ANSWER
Manage the risks
Q .264- Higher the interest rate the higher the CALL option premium - State True or False?
 True
 False
CORRECT ANSWER
True

Q .265- A Buyer or holder of the option is the party to the contract who has ……………..
 the obligation but not the right
 the right but not the obligation
 the right and the obligation
 None of the above
CORRECT ANSWER
the right but not the obligation

Q .266- The Trading members on the exchanges derivatives segment are not required to be registered with
SEBI. - State whether True or False?
False
True
CORRECT ANSWER
False

Q .267- A unique principle of futures trading makes trading possible for those who do not want to make or
take delivery of underlying assets. Which is that principle?
 Traded on a recognised exchange
 Price uncertainity
 Standardisation of contracts
  Cash settlement
CORRECT ANSWER
Cash settlement

Q .268- On the National Stock Exchange, for its index futures, what would be the opening day of its April
series?
 Last Friday of March month
 Last Friday of April month
 Last Friday of Jan month
 Last Friday of February month
CORRECT ANSWER
Last Friday of Jan month

Q .269- Operational risks include losses due to…………………

 natural calamities
 inadequate contingency planning
 power failure
 all of the above
CORRECT ANSWER
inadequate contingency planning

Q .270- The total number of outstanding / unsettled contracts in the market, at any point of time is known
as “OPEN
INTEREST” - True or False?
 True
 False
CORRECT ANSWER
True

Q .271- The clearing corporation may utilize the client account margins deposited with it for fulfilling the
dues which a clearing member may owe to the clearing corporation for the trades on the clearing members
own account. State True or False?
 True
 False
CORRECT ANSWER
False

Q .272- A clearing member has deposited eligible liquid assets of Rs.75 lacs. The exchange has minimum
liquid net worth requirement of Rs. 50 lakhs. The member has not entered into any transactions so far.
What is the margin available for trading. (in lakhs)
 75
 50
 25
 125
CORRECT ANSWER
25

Q .273- Is it true that an efficient cash market is required for an efficient futures market? Yes or No?
 Yes
 No
CORRECT ANSWER
Yes

Q .274- If the price of a future contract increases, the mark to market margin account of the holder of the
short position in that contract is credited for the gain. State whether True or False?
 True
 False
CORRECT ANSWER
False

Q .275- The absolute amount of minimum capital adequacy requirement for derivative brokers is same as
that for cash market - True or False?
 True
 False
CORRECT ANSWER
False
Q .276- Change in option premium for a unit change in ……….. is known as Rho.
 market volatility
 Price of the underlying asset
 Risk free interest rate
 liquidity
CORRECT ANSWER
Risk free interest rate

Q .277- The ask price is the price at which …………..

 the cleaning corporation settles the transaction
 the trader is prepared to sell the share
 the trader is prepared to purchase the share
 the trader is prepared to either buy or sell the share
CORRECT ANSWER
the trader is prepared to sell the share

Q .278- in India, futures and options on individual stocks are allowed on …………….
 A few selected stocks only
 All stocks listed on any of the exchanges
 All stocks with stock price of more than Rs.100 or Rs 50 in A and B group resp.
 Only those stocks which are simultaneously listed on all the stock exchange in India
CORRECT ANSWER
A few selected stocks only

Q .279- Higher the price volatility, higher would be the initial margin requirement - State True or False?
 True
 False
CORRECT ANSWER
True
Q .280- In a derivative exchange, the networth requirement for a clearing member is higher than that of a
non-clearing member.
 True
 False
CORRECT ANSWER
True

Q .281- Money and securities deposited by clients with the trading members should be kept by them in a
separate clients account - True or False?
 True
 False
CORRECT ANSWER
True

Q .282- All active members of the Exchange are required to make initial contribution towards Trade
Guarantee Fund of the Exchange - State True or False?
 True
 False
CORRECT ANSWER
True

Q .283- An increase in the interest rates will lead to ……………

 increase the premium on put options
 decrease the premium on put options
 No effect on put options
 Expiration of the aption automatically
CORRECT ANSWER
decrease the premium on put options

Q .284- In a forward contract, the party that’s agrees to sell the underlying asset on a certain specified date
for a certain specified price is said to have assumed ……………
 Along position
 a square off position
 a short position
 a trade off position
CORRECT ANSWER
a trade off position

Q .285- Mr. Hitesh is a trading member. One of his clients has purchased 12 contracts of March series index
futures and another client as has sold 10 contracts of March series index futures. The exposure of Mr. Hitesh
as trading member is ……………
 grossed up at 22 contracts
 netted out at 2 contracts
 maximum of 10 and 12 which is 12 contracts
 The Exchange will decide to either gross up or net out the exposure depending upon his past record
CORRECT ANSWER
grossed up at 22 contracts

Q .286- In case of Call options, if the market price is less than the exercise (strike) price, the option
will …………..
 expire worthless
 seller of the option will exercise it
 will definitely get exercised
 none of the above
CORRECT ANSWER
expire worthless

Q .287- Does the difference between exercise price of the option and spot price affects option premium?
State Yes or
No.
 Yes
 No
CORRECT ANSWER
Yes

Q .288- A high initial margin level improves solvency & financial capability of the clearing corporation -
True or False?
 True
 False
CORRECT ANSWER
True
Q .289- An American put option gives the buyer the right but not the obligations to sell to the writer an
underlying asset at a specified price on or before the expiry date - State whether True or False?
 True
 False
CORRECT ANSWER
True

Q .290- State True or False - A futures contract is usually referred to by its delivery month.
 True
 False
CORRECT ANSWER
True

Q .291- Mr A sold a put option of strike Rs.400 on PQR stock for a premium of Rs.32. The lot size is 500.
On the expiry day, PQR stock closed at Rs. 350. What is your net profit or loss?
 -25000 (Loss)
 -9000 (Loss)
 9000 (Profit)
 25000 (Profit)
CORRECT ANSWER
-9000 (Loss)

Q .292- In an Index Futures contract, the tick size is 0.2 of an index point & the index multiple is Rs 50, then
‘a tick’ is valued at, …………………
 Rs 50
 Rs 100
 Rs 10
 Rs 2.50
CORRECT ANSWER
Rs 10

Q .293- The securities which are placed by clearing members with the clearing corporation as a part of
liquid assets are ……………
 marked to market on a periodical basis
 is not marked to market as they are blue chip shares
 may or may not be marked to market depending on the decision of the Stock Exchange
 None of the above
CORRECT ANSWER
marked to market on a periodical basis

Q .294- Contract month means……………..

 Month in which the transaction is done
 Month of expiry of the futures contract
 Month of beginning of the futures contract
 None of the above
CORRECT ANSWER
Month of expiry of the futures contract

Q .295- Initial margin is calculated based on…………….

 Average price movement in the last 5 working days
 Value-At-Risk (VAR) based margining
 fixed at 25% for most of the scrips and 35% for volatile scrips
 As per the The Black & Scholes Model
CORRECT ANSWER
Value-At-Risk (VAR) based margining

Q .296- Daily ‘Trading Price Limits’ define the maximum percentage by which the price of a future contract
can rise above or fall below the previous days settlement price - State whether True or False?
 True
 False
CORRECT ANSWER
True

Q .297- For portfolio hedging by institutions and mutual funds, index based derivatives are more suitable
and are much more cost effective than derivative based on individual stocks - State True or False?
 True
 False
CORRECT ANSWER
True

Q .298- A Clearing Member is responsible to the exchange for his transactions & also for the position of his
trading members under him - True or False?
 False
 True
CORRECT ANSWER
True

Q .299- A default by a member in the derivatives segment will be not be treated as default in the cash
segments of that exchange - State True or False?
 False
 True
CORRECT ANSWER
Yes

Q .300- Does trading in derivatives become expensive due to high margins? State Yes or No.
 Yes
 No
CORRECT ANSWER
Yes

Q .301- ……………….. risk is the component of price risk that is unique to particular events of the company
and/or industry and this risk could be reduced to a certain extent by diversifying the portfolio.
 Unsystematic Risk
 Systematic Risk
 Arbitrage Risk
 Interest Rate Risk
CORRECT ANSWER
Unsystematic Risk
Q .302- The Clearing of trades on a stock exchange can be done by…………….
  by the trading members
 by the clearing members
 both by clearing members and trading members
 none of the above
CORRECT ANSWER
by the clearing members

Q .303- In an In the money PUT option ……………….

 strike price would be lower than the market price
 exercise price would be equal to the market price
 strike price would be higher than the market price
 strike price would be zero
CORRECT ANSWER:
strike price would be higher than the market price

Q .304- Delta measures the expected change in the option premium for a unit change in …………
 Volatility of underlying asset
 treasury interest rates
 time to option expiry
 spot price of underlying asset
CORRECT ANSWER
spot price of underlying asset

Q .305- In an out-of-the money put option ………………

 Strike price would be higher than the market price
 Exercise price would be equal to the market
 Strike price would be lower than the market price
 strike price would be zero
CORRECT ANSWER
Strike price would be lower than the market price

Q .306- Liquid assets criterion for professional clearing members is different from that of the trading cum
clearing members - True or False?
 True
 False
CORRECT ANSWER
True

Q .307- A trader sold on ABC Stock Futures Contract at Rs.354 & the lot size is 900. What is your profit or
loss if you purchase the contract back at Rs.341 ?
 Rs 11700
 - Rs 11700 (Loss)
 Rs 8300
 - Rs 8300 (Loss)
CORRECT ANSWER
Rs 11700

Q .308- When would a trader make a profit on a short position of September futures?
 when he buys a October future at a lower price
 when he sells another September future at a lower price
 he square of this short position by buying the September future at lower price
 when he sells October futures at a lower price.
CORRECT ANSWER
he square of this short position by buying the September future at lower price

Q .309- Which of the following is not an application of indices?

 index derivatives
 exchange traded funds
 private equity funds
 Index funds
CORRECT ANSWER
private equity funds

Q .310- Options contracts are not symmetrical with respect to rights & obligations of the parties involved -
State True or False?
 True
 False
CORRECT ANSWER
True
Q .311- Time value and intrinsic value of a call option are always either positive or zero- True or False?
 True
 False
CORRECT ANSWER
True

Q .312- The gain or loss is realized on daily basis due to mark to market mechanism in which of the following
contracts?
 Forward Contracts
 Contracts in Swaps
 Future market contracts
 Equity Cash Market contracts
CORRECT ANSWER
Future market contracts

Q .313- Stock Brokers are allowed to fund margin requirement of their clients. They may not collect such
margins from their clients - State True or False?
 True
 False
CORRECT ANSWER
False

Q .314- The main logic behind Position limits is to………………

 prevent the market being unduly influenced by the activities of an individual/group of investors
 prevent the market being unduly influenced by Central Govt policies
 give direction to the market to move up or down as determined by SEBI
 to encourage high networth investors to provide direction to the market

CORRECT ANSWER
prevent the market being unduly influenced by the activities of an individual/group of investors

Q .315- The seller of the put option gains if price of underlying asset……………….
  Decreases
 Increases
 Does not change
 Both 2 and 3
CORRECT ANSWER
Both 2 and3

Q .316- A portfolio with 50 different stocks is twice as risky as another portfolio with 100 stocks in it - State
whether True or False?
 True
 False
CORRECT ANSWER
True

Q .317- Mr A 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…………….
 Bull Spread
 Bear Spread
 Butterfly Spread
 Calendar Spread
CORRECT ANSWER
Bull Spread

Q .318- Futures trading is considered more risky than equity trading due to ………………
 high leverage
 High pressure
 high volatility
 high liquidity
CORRECT ANSWER
high leverage

Q .319- Institutional investors pay higher margins than the individual investors for derivatives trading -
State True or
False?
  True
 False
CORRECT ANSWER
False

Q .320- The derivatives segment of a Stock Exchange is under the same governing council as the cash
segment -
State True or False?
True
False
CORRECT ANSWER
False

Q .321- You have bought a futures contract and the price drops, you will……………..
 Make a profit
 Make a loss
 given information is incomplete to arrive at a conclusion
 none of the above
CORRECT ANSWER
Make a loss

Q .322- Stock price is …………..

 same as in the near month future contract
 same as exercise price of an option
 same as strike price of an option
 the price of the underlying in the spot market
CORRECT ANSWER
the price of the underlying in the spot market

Q .323- A naked call option means that the writer does not currently owns the underlying - State True or
False?
 True
 False
CORRECT ANSWER
True
Q .324- Factor(s) influencing option pricing include which of the following?
 time to expire
 volatility of the underlying shares
 dividend pay out
 all of the above
CORRECT ANSWER
all of the above

Q .325- When ordinary cash dividends are declared, put option values will decrease - State True or False?
 True
 False
CORRECT ANSWER
False

Q .326- A Writer of an option………….

 has obligation in the contract
 receives the premium
 has choice in the contract
 Both 1 and 2
CORRECT ANSWER
Both 1 and 2

Q .327- The daily settlement prices of equity derivatives are decided by………………
 Clearing Corporation
 SEBI
 Brokers Association
 RBI
CORRECT ANSWER
Clearing Corporation

Q .328- The maximum possible loss for the option buyer is the premium paid, but the profits can be higher
depending on the underlying price movement. This is true for which type of options?
 true for all types of options
 true for American options only
 true for European options only
 false for all types options
CORRECT ANSWER
true for all types of options

Q .329- If a Clearing members defaults, the margin paid on his own account only is allowed to be used by
the clearing corporation for realizing its dues from the member. The clients margin remain unaffected -
State True or False?
 True
 False
CORRECT ANSWER
True

Q .330- A future contract is a very standardized contract that leaves very little (except the price) open to
negotiation - State True or False?
 False
 True
CORRECT ANSWER
True

Q .331- Shorter the time to maturity of the call option, higher will be the time value - State whether True
or False?
 True
 False
CORRECT ANSWER
False

Q .332- Mr. Anand asks his broker to buy certain number of contracts at the market price, this instruction
is called, ………..
 arbitrage order
 limit order
 stop loss order
 market order
CORRECT ANSWER
market order

Q .333- A client registration form contains clients ………………

 investment objectives
 background
 beneficial identity
 all of the above
CORRECT ANSWER
all of the above

Q .334- Any person who wishes to open a Trading Account must be given the following documents by his
trading member -
 Complete version of all the laws of SEBI
 Risk disclosure document
 All the rules & regulations of the exchange
 SEBI guidelines on the subject
CORRECT ANSWER
Risk disclosure document

Q .335- The ‘ASK’ price is always…………..

 greater than the bid price
 equal to bid price
 lower than the bid price
 none of the above
CORRECT ANSWER
greater than the bid price

Q .336- Mr. Mohan entered into a contract with Mr. Soham to buy 500 bags of Cotton at a price of Rs 800
per bag. Delivery of goods and payment of money will take place 4 months from now. Both Mr. Moham and
Mr. Soham have a right as well as an obligation under this contract. What type of contract is this?
 Options
 Forwards
 Futures
 Swaps
CORRECT ANSWER
Forwards

Q .337- The process by which a futures contract is terminated by a transaction that is equal and opposite to
the
original transaction is called…………….
 netting
 off setting
 hedgeing
 mark to market
CORRECT ANSWER
off setting

Q .338- The Stock Exchanges and Stock Brokers decide the option premiums — True or False?
 True
 False
CORRECT ANSWER
False

Q .339- The Indian Stock Future Markets deals in …………………

 Swaps
 Equity Cash
 Equity Derivative
 All of the above
CORRECT ANSWER
Equity Derivative

Q .340- Usually as the level of risk rises, the expected rate of return on that investment should also rise -
True or
False?
 True
 False
CORRECT ANSWER
True

Q .341- The system of SEBI which enables investors to lodge and follow up their complaints and track the
status of redressal of such complaints from anywhere is called SCORES -— True or False?
 True
 False
CORRECT ANSWER
True

Q .342- A short seller has the time of one week to deliver the stocks - True or False?
 True
 False
CORRECT ANSWER
False

Q .343- The total liquid assets comprise of at least 60% of the cash component and the rest is non cash
component - True or False?
 True
 False
CORRECT ANSWER
False

Q .344- In the accounting system of open options as on Balance Sheet day, the "Provision for Loss on Equity
Index/stock Option Account" is shown as deduction from "Equity Index/ stock Option Premium" which is
shown under …………………...
 Current Assets
 Current Liabilities
 Short term Debts
 None of the above
CORRECT ANSWER
Current Assets
Q .345- Operational risks include losses due to………………….
 Inadequate disaster planning
 Too much of management control
 Government policies
 Income tax regulations
CORRECT ANSWER
Inadequate disaster planning

Q .346- A tax which is clearly mentioned in the Contract Note is …………………

 Long Term Capital Gain Tax
 Short Term Capital Gain Tax
 Both 1 and 2
 Securities Transaction Tax (STT)
CORRECT ANSWER
Securities Transaction Tax (STT)

Q .347- ……………………….refers to when securities professionals making unnecessary and excessive

trades in customer accounts for the sole purpose of generating commissions.
 Hedging
 Arbitrage
 Churning
 Broking
CORRECT ANSWER
Churning

Q .348- What role do speculators play in the Futures Market?

 They add to the liquidity in the futures markets
 They produce the commodities traded at futures exchanges
 They take delivery of the commodities at expiration
 They transfer their risk to the hedgers
CORRECT ANSWER
They add to the liquidity in the futures markets

Q .349- As per the L.C-Gupta Committee recommendations a separate Investor Protection Fund must be
created for derivatives segment - True or False?
 True
 False
CORRECT ANSWER
True

Q .350- An index option is a Money Market Instrument - True or False?

 True
 False
CORRECT ANSWER
False

Q .351- Option which gives buyer a right to sell the underlying asset, is called ………… option
 Call
 Put
 American
 European
CORRECT ANSWER
Put

Q .352- If there is not much price movement, the OTM option will be beneficial to …………..
 Buyer of Call Option
 Seller of Call Option
 Buyer of Put Option
 None of the above
CORRECT ANSWER
Seller of Call Option

Q .353- A Trading member can either clear his trades or use the services of Professional Clearing members
- True or False?
 True
 False
CORRECT ANSWER
False

Q .354- A Broker or Dealer who is already registered with an existing stock exchange will have to get
additional registration for the Derivative Exchange - True or False?
 True
 False
CORRECT ANSWER
True

Q .355- The cash component of Liquid Securities can include Units of money market mutual fund and Gilt
funds where applicable haircut is 10%. — True or False?
 True
 False
CORRECT ANSWER
True

Q .356- As per J.R.Verma Committee recommendations, Volatility should be calculated based

on ……………… of logarithmic daily returns.
 Variance
 Delta
 Standard Deviation
 CAGR
CORRECT ANSWER
Standard Deviation

Q .357- Impact cost is low when ………………

 Volume/ liquidity is low
 Volume/ liquidity is high
 the scrip is trading at a all time high
 the scrip is trading at a all time low
CORRECT ANSWER
Volume/ liquidity is high

Q .358- In the Options segment, if you buy a CALL, you expect the market / scrip to move …………………
 Down
 Up
 One cannot buy a Call in options market
 Remain range bound
CORRECT ANSWER
Up

Q .359- An investor who is less risk averse would like to have greater exposure to equity and other risky
investments compared to fixed income instruments - State True or False?
 False
 True
CORRECT ANSWER
True

Q .360- Forward contracts are OTC contracts - True or False?

 True
 False
CORRECT ANSWER
True

Q .361- You are bullish on a stock but unsure of the overall market. The action you should take is:
 Buy Stock futures and sell Index futures
 Sell Index futures
 Buy Stock Futures
 None of the above
CORRECT ANSWER
Buy Stock futures and sell Index futures

Q .362- 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 ……………………
 Bearish Spread
 Bullish Spread
 Long term Investment
 Butterfly
CORRECT ANSWER
Bearish Spread

Q .363- The Over the counter options are ………………

  calculated based on the delta.
 standardised options
 customised options
 always in the money options
CORRECT ANSWER
customised options

Q .364- Financial Derivatives are used for-

 Speculation
 Hedgeing
 Arbitrage
 All of the above
CORRECT ANSWER
All of the above

Q .365- If you buy a PUT option at premium of Rs 20 at the Strike Price of Rs 250, lot is of 400 shares, then
the maximum possible loss is …………………….
 Rs 5000
 Rs 8000
 Rs 20,00,000
 Unlimited
CORRECT ANSWER
Rs 8000

Q .366- The future contracts are custom designed and hence each contract is different as per the terms of
the contracting parties.
 False
 True
CORRECT ANSWER
False

Q .367- Which risks can be managed by selling Index Futures?

 Mark to Market risks
 Time value risks
 Systematic Risks
 Unsystematic Risks
CORRECT ANSWER
Systematic Risks

Q .368- A buyer of Put Option —

 Has the obligation to take delivery of asset
 Has the right to buy the underlying asset
 Has the right to sell the underlying asset
 Has the obligation to give delivery of asset
CORRECT ANSWER
Has the right to sell the underlying asset

Q .369- Along position in a CALL option can be closed by taking a short position in PUT option.
 False
 True
CORRECT ANSWER
False

Q .370- If a stock has very low volatility then it would have a lower option premium.
 True
 False
CORRECT ANSWER
True
Q .371- In index futures, if the near leg of the calender spread transaction expires then the farther leg
becomes a regular open position.
 True
 False
CORRECT ANSWER
True

Q .372- In the derivatives market, all the margins are collected by ……………….
 Margin House
 SEBI
 Clearing House
 Clearing Banks
CORRECT ANSWER
Clearing House

Q .373- A ……………………. is created by shorting a call and a put option of same strike and same expiry.
 Long Straddle
 Short Straddle
 Bullish spread
 None of the above
CORRECT ANSWER
Short Straddle

Q .374- Theta is the rate of change in option premium for a change in the price of the underlying asset.
 True
 False
CORRECT ANSWER
False
Q .375- When a call option is ‘In The Money’ — the …………………………….
 Strike Price is lower than Spot Price
 Strike Price is higher than Spot Price
 Strike Price is same as Spot Price
 None of the Above
CORRECT ANSWER
Strike Price is lower than Spot Price

Q .376- Delta is the change in option price given a one-day decrease in time to expiration - State True or
False?
 True
 False
CORRECT ANSWER
False

Q .377- …………………. is minimum move allowed in the price quotations.

 Theta
 Ask Price
 Tick Size
 Bid Price
CORRECT ANSWER
Tick Size

Q .378- In the Options segment, if you buy a PUT, you expect the market/ scrip to
move ……………………………
 Up
 Down
 Range bound
 One cannot buy a PUT in options market.
CORRECT ANSWER
Down

Q .379- Arbitrage activities would ensure that the prices of futures contract is aligned with the prices of the
underlying assets. True or False?
 False
 True
CORRECT ANSWER
True

Q .380- In futures contract the lot size is determined by ……………………..

 The Stock Exchange
 Professional Clearing Member
 The Company
 SEBI
CORRECT ANSWER
The Stock Exchange

Q .381- As the expiry / maturity of a futures contract approaches, the spot price and future price tend to
become same. This is known as ………….
 Covariance
 Cosetting
 Convergence
 Corelation
CORRECT ANSWER
Convergence

Q .382- If you buy a PUT option at premium of Rs 37 at the Strike Price of Rs 260, then the maximum
possible loss on this position is …………………..
 Unlimited
 Rs 37
 Rs 297
 Rs 223
CORRECT ANSWER
Rs 37
Q .383- A low level of initial margin increases the possibility of defaults of a stock broker - State True or
False?
 True
 False
CORRECT ANSWER
True

Q .384- A calendar spread contract in index futures attracts higher margin than sum of two independent
legs of futures contract.
 False
 True
CORRECT ANSWER
False

Q .385- An American Option can be exercised only on the expiry date - State True or False?
 False
 True
CORRECT ANSWER
False

Q .386- If futures price are lower than spot price of an asset, market participants may expect the spot price
to come down in future. This situation is called -
 Contango
 Reverse System
 Backwardation
 impact costs
CORRECT ANSWER
Backwardation
Q .387- When the strike price decreases, the premium on call option increases.
 True
 False
CORRECT ANSWER
True

Q .388- In BID-ASK price, the bid price is the price at which …………………..
 the trader is willing to buy the asset
 the trader ts willing to sell the asset
 the trader is willing to either buy or sell the asset
 All of the above
CORRECT ANSWER
the trader is willing to buy the asset

Q .389- The major reason for collecting high initial margin is to improve the solvency of the clearing
corporations.
 True
 False
CORRECT ANSWER
True

Q .390- A Clearing member is required to provide liquid assets and these liquid assets should be at least
75% in cash, bank FD’s ete and balance 25% in non-cash assets. True or False?
 False
 True
CORRECT ANSWER
False
Q .391- Beta is the change in option price given a one percentage point change in the risk-free interest rate.
 True
 False
CORRECT ANSWER
False

Q .392- In futures market, basis is referred to as……………..

 Beta of the future stock
 Volatility of the market
 Price difference between Spot and Future price
 The Bid-Ask price
CORRECT ANSWER
Price difference between Spot and Future price

Q .393- An option which would give a zero cash flow to its holder if it were exercised immediately is know
as ……………………..
 At the money option
 Out of the money option
 In the money option
 None of the above
CORRECT ANSWER
At the money option

Q .394- When a clearing member / broker make unnecessary transactions in his clients account with the
sole aim of
making commissions, this is known as ………………..
 Technical Trading
 Stop Loss Trading
 Churning
 Portfolio Planning
CORRECT ANSWER
Churning

Q .395- You have sold one lot of JSW Steel futures for Rs 900 (lot size 250) expecting that this share will go
down.
But you also wants to protect yourself against any loss of more than Rs 2000. What should you do?
 Place a limit order to buy at Rs 908
 Place a stop loss buy order at Rs 892
 Place a stop loss buy order at Rs 908
 Place a limit sell order at Rs 908
CORRECT ANSWER
Place a stop loss buy order at Rs 908

Q .396- A buyer of Call Option —

 Has the obligation to take delivery of asset
 Has the obligation to give delivery of asset
 Has the right to buy the underlying asset
 Has the right to sell the underlying asset
CORRECT ANSWER
Has the right to buy the underlying asset

Q .397- You are interested in creating a perfect hedge for your F portfolio. For this you need to sell index
futures and
the index futures sold should be equal to ……………………..
 Value of your portfolio + Beta of your portfolio
 Value of your portfolio / Beta of your portfolio
 Value of your portfolio * Beta of your portfolio
 Value of your portfolio - Beta of your portfolio
CORRECT ANSWER
Value of your portfolio * Beta of your portfolio

Q .398- The holder of an option has ………..

 the obligation but no right
 the night but no obligation
 some rights but more obligations
 no rights and no obligations
CORRECT ANSWER:
the right but no obligation
Q .399- The intrinsic value is the difference between Market Price and Strike Price of the option and it can
never be negative.
 True
 False
CORRECT ANSWER
True

Q .400- The risk return profile of an option contract is …………….

 symmetric
 asymmetric
 like treasury bond
 like mutual funds
CORRECT ANSWER
asymmetric

Q .401- Arbitrage is a tool used to protects ones portfolio against any downturn by going short in index.
True or False?
 True
 False
CORRECT ANSWER
False

Q .402- When a person buys a call option, he has an

 Mixed View
 Slightly Long term view
 Bullish view
 Bearish view
CORRECT ANSWER
Bullish view

Q .403- In the Option segment, if you buy a CALL at a premium of Rs 35 at the Strike Price of Rs 400, lot
is of 200 shares, then the maximum possible Profit is …………………
 Rs 400
 Rs 7000
 Rs 43000
  Unlimited
CORRECT ANSWER
Unlimited

Q .404- In the Straddle Strategy both options have same strike price but in Strangle strategy, the strike
price are different and are mostly out of the money options- True or False?
 False
 True
CORRECT ANSWER:
True

Q .405- 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?
 True
 False
CORRECT ANSWER
True

Q .406- Hedgeing is a tool used to protects ones portfolio against any downturn by going short in index.
True or False?
 True
 False
CORRECT ANSWER
True

Q .407- The spot price of ABC share is Rs 500, the call option of Strike Price Rs 500 is —
 In the money
 Out of the money
 At the money
  None of the above
CORRECT ANSWER
At the money

Q .408- A client G1 has bought 1 contract of ABC futures May series at Rs 3240. The closing price of this
share when the market closed on last Thursday of May was Rs 3188. What is his Profit (+) or Loss (-)?
(Market lot 100)
 -3240
 -5188
 5600
 -5200
CORRECT ANSWER
-5200

Q .409- When a trader buys a put option, he has an -

 Mixed view
 Bearish view
 Bullish view
 Confused view
CORRECT ANSWER
Bearish view

Q .410- In a Derivatives Market, the person who takes the risk are………….
 Arbitrageus
 Speculators
 Hedgers
 None of the Above
CORRECT ANSWER
Speculators

Q .411- The difference between the bid price and the ask price is ……………..
 forward premium
 bid-ask spread
  the same as the difference between futures and forwards price
 the same as the difference between call and put option prices
CORRECT ANSWER
bid-ask spread

Q .412- A Trading Member can also be a Clearing Member — True or False?

 True
 False
CORRECT ANSWER
True

Q .413- The option premium paid by the option buyer remains with the exchange till the time it is closed
out or expired.
 True
 False
CORRECT ANSWER
False

Q .414- Higher the interest rate, higher will be the option premium - True or False?
 True
 False
CORRECT ANSWER
True

Q .415- A major recommendation of L.C.Gupta Committee was that a separate Investor Protection Fund
must be created for derivatives segment - State True or False?
 True
 False
CORRECT ANSWER
True

Q .416- A short seller ………………..

 Must own the share
  Must own at least 75% of the shares
 Need not own the shares
 None of the above
CORRECT ANSWER
Need not own the shares

Q .417- Position limits have been designed to ……………..

 prevent the markets from being wrongly influenced by Government policies
 support the market and determine its movements
 stop the markets being wrongly influenced by the trading activities of investor (s)
 all of the above
CORRECT ANSWER
stop the markets being wrongly influenced by the trading activities of investor (s)

Q .418- The mark to mark debits for stock futures are done on a —
 Daily basis
 Weekly basis
 Monthly basis
 Hourly basis when markets are very volatile
CORRECT ANSWER
Daily basis

Q .419- Derivatives market helps shift of speculative trades from unorganized market to organized market.
True or False?
 True
 False
CORRECT ANSWER
True

Q .420- If you have a long position in futures contract, you can square up it by ………………
 Buying a call option of that security
 Selling the same futures contract
 Selling the far month future contract so that you have more time and can earn more
 Buying a put option of that security
CORRECT ANSWER
Selling the same futures contract

Q .421- The Ask price is always greater than Bid price. True or False?
 True
 False
CORRECT ANSWER
True

Q .422- An investor who is risk averse will invest more in Fixed Income and Debt instruments than to equity
market related investments.
 True
 False
CORRECT ANSWER
True

Q .423- A stock broker has two clients P and Q. P has purchased 200 contracts and Q has sold 300 contracts
in May Tata Steel futures series. What is the outstanding liability (open Position) of the member towards
Clearing Corporation in number of contracts?
 100
 200
 300
 500
CORRECT ANSWER
500

Q .424- Impact Cost is the measure of liquidity - True or False?

 False
 True
CORRECT ANSWER
True

Q .425- The difference between the spot price and the futures price is called tick.
 False
 True
CORRECT ANSWER
False

Q .426- In the Options segment, if you sell a PUT, you expect the market/scrip to move …………
 Either up or down as you profit in both directions.
 One cannot sell a PUT in the options market
 Up
 Down
CORRECT ANSWER
Up

Q .427- A put option gives the buyer the right to …………………

 Buy the underlying at market price
 Buy the underlying at set price
 Sell the underlying at market price
 Sell the underlying at set price
CORRECT ANSWER
Sell the underlying at set price

Q .428- A person sells a put option of Strike Price 265, market lot 1000, at a premium of Rs 40, the maximum
profit
he can make is …………...
 Rs 25,000
 Rs 2,65,000
 Rs 40,000
  Unlimited
CORRECT ANSWER
Rs 40,000

Q .429- …………… pays the initial margin when entering into a futures contract.
 The Buyer
 The Seller
 Both Buyers and Sellers
 None of the above
CORRECT ANSWER
Both Buyers and Sellers

Q .430- The Clearing Corporation has the power to charge special margin if it may think fit.
 True
 False
CORRECT ANSWER
True

Q .431- The right to buy an asset for a certain price on or before a specified date is the characteristics of
a ………………
 American Put Option
 American Call Option
 European Put Option
 European Call Option
CORRECT ANSWER
American Call Option

Q .432- Contract month is the month in which futures contract —

 Expires
 Are at the lowest price
 Are at its highest price
 None of the above
CORRECT ANSWER
Expires
Q .433- Derivative markets mostly comprises of —
 Long term investors
 Speculators
 Hedgers
 Both 2&3
CORRECT ANSWER
Both 2&3

Q .434- Liquid Assets offered by a Clearing Member to the Clearing Corporation can include Mutual Fund
Units and Bank Guarantees. True or False?
 False
 True
CORRECT ANSWER
True








Q .435- In the Option segment, if you sell a CALL at a premium of Rs 45 at the Strike Price of Rs 400, lot
is of 200
shares, then the maximum possible loss is …………….
 Rs 9000
 Rs 20,000
 Rs 80,000
 Unlimited
CORRECT ANSWER
Unlimited
Explanation:
Q .436- When a person sells a call option, he has an —
 Bullish view
 Bearish view
 Long term view
 None of the above
CORRECT ANSWER
Bearish view

Q .437- The Stock Broker / Clearing Member has full authority to close out a transaction of his client
if………………
 the client has not paid the daily settlement amount
 the client not paid the initial margin
 Both 1 and 2
 A broker cannot close out a transaction
CORRECT ANSWER
Both 1 and 2

Q .438- A client can use cross margining across Cash and Derivatives segment - True or False?
 True
 False
CORRECT ANSWER
True

Q .439- When a Client default in making payment in respect of Daily Settlement, the action taken
is ……………..
 the client is given 2 days to clear the payments
 the contract is closed out
 the broker pays the money and the client refunds to him in 7 working days
 the client can give bank guarantee in 2 working days to avoid the contract being closed out.
CORRECT ANSWER
the contract is closed out

Q .440- At the year-end, any balance in the "Deposit for Mark-to-Market Margin Account” should be
shown as a deposit under the head "Current Assets" - True or False?
 True
 False
CORRECT ANSWER:
True
Q .441- Put option gives the buyer a right to ………….. the underlying asset,.
 Sell
 Buy
 Speculate
 None of the above
CORRECT ANSWER
Sell

Q .442- If all things remain constant throughout the contract period, the option price will always ………….
in price by expiry.
 Fall
 Rise
 Either Rise or Fall
 None of the Above
CORRECT ANSWER:
Fall

Q .443- The Non Cash Component of Liquid Assets which are given as a form of margin can include Equity
Shares which are physical form - True or False?
 False
 True
CORRECT ANSWER
False

Q .444- If the Initial Margin is changed then it will apply only to fresh contracts and not to previous
outstanding contracts - True or False?
 True
 False
CORRECT ANSWER
False

Q .445- Impact cost is low when the liquidity in the system is poor
 True
  False
CORRECT ANSWER
False

Q .446- The advantage of time decay usually goes to …………….

 Option Buyers
 Option Sellers
 Long Term Investors
 Short Term Investors
CORRECT ANSWER
Option Sellers

Q .447- Churning means ……………….

 A specialized arbitrage between Futures and Options
 Excessive unwarranted trading by brokers/agents for generating commissions
 Delta Hedging using Rho and Theta
 Specialized Portfolio Management
CORRECT ANSWER
Excessive unwarranted trading by brokers/agents for generating commissions

Q .448- When different Clearing Members clear for client/entities in Cash and Derivatives segments they
are required to enter into necessary agreements for availing cross margining benefit - True or False?
 True
 False
CORRECT ANSWER
True

Q .449- To facilitate Foreign Institutional Investors, SEBI has allowed them to make weekly payments of
Mark to Market Margin due to their huge volumes of trading - True or False?
 True
 False
CORRECT ANSWER
False
Q .450- As a special provision for NRI’s, the Mark to Market Margin payable them can be done on a
consolidated weekly basis — True or False?
 False
 True
CORRECT ANSWER
False

Q .451- SEBI's centralized web based complaints redress system which provides online access 24 x 7 is
called ……………
 SERA
 SEBI COMPSYS
 SWCOMP
 SCORES
CORRECT ANSWER
SCORES

Q .452- STT is applicable on all ……………. transactions for both futures and option contracts.
 Buy
 Sell
 Both Buy and Sell
 No STT on Futures Trading
CORRECT ANSWER
Sell

Q .453- A Manager / Dealer in the Cash market with a registered Trading Member, can also become a
Manager / Dealer in the Derivatives segment without any additional formalities — True or False
 True
 False
CORRECT ANSWER
False

Q .454- As per the regulations, the minimum contract value of a futures contract shall not be less than Rs.
1 Lakh - True or False?
 True
  False
CORRECT ANSWER
False

Q .455- Accounting for open options as on the balance sheet date is shown under the “Equity Index/Stock
Option Premium Account" — True or False?
 True
 False
CORRECT ANSWER
True

Q .456- In the Arbitration procedure, the arbitrator conducts the arbitration proceeding and passes the
award normally within a period of …………… months from the date of initial hearing.
 one
 two
 three
 four
CORRECT ANSWER
four

Q .457- The option premium is decided by …………………………

 SEBI
 Stock Exchanges
 By buyers and sellers
 By Stock Brokers
CORRECT ANSWER
By buyers and sellers

Q .458- Equities can also be traded through Professional Clearing Members.

 True
 False
CORRECT ANSWER
False

Q .459- ETFs is basket of securities that trade like individual stock on an exchange- True or False?
 True
  False
CORRECT ANSWER
True

Q .460- An option which would give a negative cash flow to its holder if it were exercised immediately is
know as …………….
 At the money option
 In the money option
 Out of the money option
 None of the above
CORRECT ANSWER
Out of the money option

Q .461- On what occasion form the below, the derivative segment of the stock market has to report to SEBI?
 Occasions when the 90% Value at Risk (VaR) limit has been violated
 Occasions when the 96.5% Value at Risk (VaR) limit has been violated
 Occasions when the 95% Value at Risk (VaR) limit has been violated
 Occasions when the 99% Value at Risk (VaR) limit has been violated
CORRECT ANSWER:
Occasions when the 99% Value at Risk (VaR) limit has been violated

Q .462- As an option moves more In The Money, the absolute value of Delta will …………………..
 Increase
 Decrease
 Remain same
 None of the above
CORRECT ANSWER
Increase

Q .463- Ms. Patil sold four futures contract of Bata India Ltd at Rs 820 (lot size 250 shares). What is her
profit or loss if she purchases back the contracts at Rs 806.
 Rs 3500
 Rs 9500
 Rs 14000
 Rs 16000
CORRECT ANSWER
Rs 14000

Q .464- If the price of Infosys stock rises, the call option premium will also rise.
 True
 False
CORRECT ANSWER
True

Q .465- ………………….. measures change in delta with respect to change in price of the underlying asset.
 Vega
 Rho
 Gamma
 Theta
CORRECT ANSWER
Gamma

Q .466- Diversification is used to control Systematic Risks - True or False?

 True
 False
CORRECT ANSWER:
False

Q .467- Ms. Geeta goes long in a PUT option of a higher strike price and shorts another PUT option of a
lower strike price, of the same scrip and same expiry. This strategy is called ……………...
 Bullish Spread
 Bearish Spread
  Calendar spread
 straddle
CORRECT ANSWER
Bearish Spread

Q .468- The initial margin in derivatives is fixed depending on the volatility of the stock. True / False?
 False
 True
CORRECT ANSWER
True

Q .469- If you SELL a PUT option at premium of Rs 30 at the Strike Price of Rs 200, lot is of 400 shares,
then the
maximum possible loss is ………………..
 Rs 6000
 Rs 63,000
 Rs 80,000
 Unlimted
CORRECT ANSWER
Rs 68,000

Q .470- Margins are collected on a ………………………

 3 hour basis
 Daily basis
 T+2, so on a two day basis
 Weekly basis, Monday to Friday.
CORRECT ANSWER
Daily basis

Q .471- Index futures is ………………

 An OTC product
 A Cash market security
 A derivative product
 An call or put option
CORRECT ANSWER
A derivative product

Q .472- NSE Nifty consists of ……………… stocks.

 25
 30
 50
 60
CORRECT ANSWER
50

Q .473- When you buy a put option on a stock you are owning, this strategy is called ………………….
 Straddle
 writing a covered call
 calender spread
 protective put
CORRECT ANSWER
protective put

Q .474- A trader buys a call and a put option of same strike price and same expiry. This is called
as …………………….
 Butterfly
 Short Straddle
 Long Straddle
 Calendar Spread
CORRECT ANSWER
Long Straddle

Q .475- Vega is …………………….

 the change in option price given a one percentage point change in the risk-free interest rate
 a measure of the sensitivity of an option price to changes in market volatility
 the change in option price given a one-day decrease in time to expiration
  speed with which an option moves with respect to price of the underlying asset

CORRECT ANSWER
a measure of the sensitivity of an option price to changes in market volatility

Q .476- If a trader buys a put option with a higher strike price and sells a put option with a lower strike
price, both of the same underlying then this strategy is called ……………….
 Bullish Spread
 Bearish Spread
 Straddle
 Butterfly spread
CORRECT ANSWER
Bearish Spread

Q .477- A derivative contract made directly over telephone by two parties is called futures contract - True
or False?
 True
 False
CORRECT ANSWER
False

Q .478- Important element (s) of risk management is (are) :

 Monitoring capital adequacy requirements of members
 Regular evaluation of trading members positions
 Collection of Margins
 All of the above
CORRECT ANSWER
All of the above

Q .479- A calendar spread will attract ……………………. margin.

 Zero
 Higher
 Lower
 None of the above
CORRECT ANSWER
Lower
Q .480- Risk which are Non Systematic can be reduced by diversifying ones portfolio.
 True
 False
CORRECT ANSWER
True

Q .481- Ask price is the price at which —

 Buyer is willing to buy
 Seller is willing to sell
 Arbitrageur is willing to negotiate
 Hedger is willing to buy
CORRECT ANSWER
Seller is willing to sell

Q .482- With a fall in interest rates, the premium on CALL Options will ………………
 Rise
 Fall
 No Effect
 None of the above
CORRECT ANSWER
Fall

Q .483- When an stock which is part of the index has a stock split, it does not have an impact on the index.
 True
 False
CORRECT ANSWER
True

Q .484- A Call Option is said to be OUT OF THE MONEY,……………….

 when spot / market price is higher than strike price
 when spot / market price Is lower than strike price
 when spot / market price is equal to strike price
  strike price Is zero
CORRECT ANSWER
when spot / market price Is lower than strike price

Q .485- If a company declares a dividend, what will be the effect on the pricing of call options?
 Call option price will rise
 Call option price will fall
 No effect on option pricing
 None of the above
CORRECT ANSWER
Call option price will fall

Q .486- You have a short position in LPQ Stock futures at Rs 350 (one lot size is 500 shares) and you have
made a profit of Rs 28000. To do this you will have to -
 Sell one lot ar Rs 406
 Sell one lot at Rs 294
 Buy one lot at 406
 Buy one lot at Rs 294
CORRECT ANSWER
Buy one lot at Rs 294

Q .487- In case of futures, the initial margin is paid only by the sellers.
 True
 False
CORRECT ANSWER
False

Q .488- Hedging would ensure that your profits are always on the higher side compared to an unhedged
position - State True or False?
 True
 False
CORRECT ANSWER
False

Q .489- An equity index option like NIFTY OPTION is a …………….

 Treasury instrument
 Debt instrument
 Derivative Product
 Cash market product
CORRECT ANSWER
Derivative Product

Q .490- What is a covered call?

 Its a strategy to sell calls at various strike prices to profit from the premium received
 Its used to generate extra income from existing holdings in the cash market.
 Its a strategy of buying a call and sell its future for hedgeing
 Its done by buying a call and put of the same strike price.
CORRECT ANSWER
Its used to generate extra income from existing holdings in the cash market.

Q .491- Covered calls carry greater risk then Naked Calls — True or False?
 True
 False
CORRECT ANSWER
False

Q .492- A common individual investor cannot write an option.

 True
 False
CORRECT ANSWER
False

Q .493- In futures contract, the clearing house / clearing corporation practically becomes the counter party
for all transactions - State True or False?
 True
 False
CORRECT ANSWER
True

Q .494- Of the below options, which is more difficult to manipulate?

 Individual Stocks
 IT sector stocks
 Stock Index
 All of the above
CORRECT ANSWER
Stock Index

Q .495- The option seller has an obligation and since his losses can be unlimited, he can be a potential risk
for the stability of the system. Therefore he has to pay ……………….
 Extra Premium
 Special Loss Charges
 Margins
 All of the above
CORRECT ANSWER
Margins

Q .496- The Derivative markets mostly comprises of —

 Long term investors
 Hedgers
 Speculators
 Both 2 and 3
CORRECT ANSWER
Both 2 and 3
Q .497- OTC derivative market is less regulated market because these transactions occur in private among
qualified counterparties, who are supposed to be capable enough to take care of themselves. True or False?
 False
 True
CORRECT ANSWER
True

Q .498- An trader buys a June XYZ stock futures contract at Rs 242. After a few days the price of XYZ
futures was Rs 269. What will be your profit / loss if you square up your postion? (The market lot of XYZ
share is 1000)
 -20000
 -27000
 20000
 27000
CORRECT ANSWER
27000

Q .499- An Over the Counter Option is —

 A private contract
 Standardized
 Govemed by the rules of stock exchange
 All of the above
CORRECT ANSWER
A private contract
Q .500- If the tick size of a scrip is 5 paise and the spot price of that scrip is Rs. 70, what will be the next
upward tick?
 69.95
 70.005
 70.05
 70.50
CORRECT ANSWER
70.05

Q .501- Clearing Corporation acts as a legal counterparty to all trades on F&O segment and also guarantees
their financial settlement. True / False.
 True
 False
CORRECT ANSWER
True

Q .502- The networth of a trading member does not include —

 Intangible Assets
 Prepaid expenses
 Bad Deliveries
 All of the above
CORRECT ANSWER
All of the above










Q .503- 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?
 Rs 2,60,000
 Rs 1,31,250
 Rs 3,91,250
 Rs 1,28,750
CORRECT ANSWER
Rs 3,91,250

Q .504- Mr A had bought 300 shares of XYZ and wants to protect himself if the price falls. Which of the
below options will be preferred by him.
 Place a limit sell order
 Place a limit buy order
 Place a limit stop loss order
 Place an IOC ie. Immediate or Cancel order
CORRECT ANSWER
Place a limit stop loss order

Q .505- A risky trader / speculator believes that the future price of ABC company will fall and being a smart
trader he will ………………………
 buy ABC futures now and sell them later when it falls
 wait till the price of ABC futures and cash market price become same
 sell ABC futures now and buy them later when the price falls
 will do nothing as he had suffered a loss in his previous trade
CORRECT ANSWER
sell ABC futures now and buy them later when the price falls

Q .506- The spot price of LKK share is Rs 300, the put option of Strike Price Rs 280
is …………………………..
 In the money
 Out of the money
 At the money
 None of the above
CORRECT ANSWER
Out of the money

Q .507- The Brokers of an exchange can be a part of the Governing Board of the derivatives segment.
 False
 True
CORRECT ANSWER
False

Q .508- If price of a futures contract increases, the margin account of the seller of this futures contract is
debited for the loss.
 True
 False
CORRECT ANSWER
True

Q .509- Derivatives market helps in transfer of various risks from those who are exposed to risk but have
low risk
appetite to participants with high risk appetite. True or False?
False
True
CORRECT ANSWER
True

Q .510- A clearing member is required to bring in an additional incremental deposits of ……………………..

to clearing corporation for each additional TM he undertakes to clear and settle deals.
 Rs.5 lakhs
 Rs.10 lakhs
 Rs.15 lakhs
  Rs.20 lakhs
CORRECT ANSWER
Rs.10 lakhs

Q .511- The minimum Networth requirement for a clearing member of Capital Market Segment and F&O
segment is ..……………
 Rs 50 lakhs
 Rs 100 lakhs
 Rs 250 lakhs
 Rs 300 lakhs
CORRECT ANSWER
Rs 300 lakhs

Q .512- When trading in futures contract, the terms of the contract are decided mutually by the trading
parties.
 False
 True
CORRECT ANSWER
False

Q .513- Rho is ……………….

 is the change in option price given a one percentage point change in the risk-free interest rate
 the change in option price given a one-day decrease in time to expiration
 speed with which an option moves with respect to price of the underlying asset
 a measure of the sensitivity of an option price to changes in market volatility
CORRECT ANSWER
is the change in option price given a one percentage point change in the risk-free interest rate

Q .514- Derivative clearing members are required to maintain a net worth of minimum Rs 4 crores.
 True
 False
CORRECT ANSWER
False
 









Q .515- A call option is said to be ……………….. when spot price is higher than strike price.
 At the money
 Out of the money
 In the money
 Europeon
CORRECT ANSWER
In the money

Q .516- A long position in a January future contract can be reversed by a short position in that stock futures
of
February month - True / False?
 False
 True
CORRECT ANSWER
False

Q .517- When a person sells a put option, he has an —

 Bullish view
 Bearish view
 Mixed view
 Long term view
CORRECT ANSWER
Bullish view
Q .518- You have sold a put option of a strike price of Rs 370 for Rs 38. What is the maximum gain you can
have on expiry of this position?
 Unlimited
 Rs 370
 Rs 38
 Rs 332
CORRECT ANSWER
Rs 38

Q .519- Calendar spreads carry only ……………… risk.

 speculative
 market
 basis
 interest
CORRECT ANSWER
basis

Q .520- You have sold a CALL option on a stock at Rs. 16 per call with strike price of Rs. 170. lf on exercise
date, stock price is Rs. 196, ignoring transaction cost, you will choose …………………..
 to exercise the option
 not to exercise the option
 may or may not exercise the option depending on the company's background
 none of the above
CORRECT ANSWER
none of the above

Q .521- Non Systematic risks can be reduced by diversifying one’s portfolio - True or False?
 True
 False
CORRECT ANSWER
True
Q .522- In the Option segment, if you buy a CALL at a premium of Rs 35 at the Strike Price of Rs 400, lot
is of 200
shares, then the maximum possible loss is ……………….
 Unlimited
 Rs 400
 Rs 7000
 Rs 73000
CORRECT ANSWER
Rs 7000

Q .523- Longer the time to expiry/maturity of a call option, higher will be the time value.
 False
 True
CORRECT ANSWER
True

Q .524- Mr. Shah purchased two futures contract of Ambuja Cements Ltd at Rs. 180 (lot size 2000 shares).
What will be his profit or loss if he sells them at Rs 187?
 Rs 14000
 Rs 28000
 Rs 20000
 Rs 27500
CORRECT ANSWER
Rs 28000

Q .525- The Ask price is always greater than the Bid price.
 False
 True
CORRECT ANSWER
True

Q .526- An Out of the Money option will have:

 More than 1 intrinsic value
  Zero intrinsic value
 Negative intrinsic value
 None of the above
CORRECT ANSWER
Zero intrinsic value

Q .527- It is recommended but not compulsory that all Stock Exchanges of India have a uniform settlement
cycle. True or False?
 False
 True
CORRECT ANSWER
True

Q .528- A wheat exporter has entered into a contract to supply wheat after two months. He will be buying
that wheat
soon. But he is afraid that a sudden rise in wheat prices may erode his profits. What should he do?
 He should sell wheat futures.
 He should buy wheat futures.
 He should visit the farmers to see the possibility of wheat prices increasing or decreasing
 He can import wheat and export them at a later date
CORRECT ANSWER
He should buy wheat futures.

Q .529- The minimum price movement in a scrip is called BASIS.

 True
 False
CORRECT ANSWER
False
Q .530- Mr A buys a August futures contract of ICICI Bank at Rs 900. On the last Thursday of the month
ie. expiry, the last traded price in August futures is Rs 912 and the closing price in cash / spot market is Rs
910. What is the profit / loss of Mr A if his position is sq-up by the exchange. Market lot of ICICI] Bank is
250.
 Rs 3000
 Rs 2500
 Rs -3000
 Rs -2500
CORRECT ANSWER
Rs 2500

Q .531- …………………. is the change in option price given a one percentage point change in the risk-free
interest rate.
 Delta
 Rho
 Vega
 Gamma
CORRECT ANSWER
Rho

Q .532- In India the future contracts are available for -

 All scrips listed on NSE
 A few selected stocks
 All scrips above the price of Rs 100
 All stocks with a market cap of Rs 300 crore or more.
CORRECT ANSWER
A few selected stocks
Q .533- A cotton exporter has entered into a contract to supply cotton after three months. He will be buying
that cotton soon. But he is afraid that a sudden rise in cotton prices may erode his profits. What should he
do?
 He can import cotton and export them at a later date
 He should cancel the contract as cotton prices are very volatile
 He should buy cotton futures
 He should sell cotton futures
CORRECT ANSWER
He should buy cotton futures

Q .534- What is the main reason for which hedgers enter the futures market?
 to profit from price fluctuations
 to make long term investments
 to protect against any price uncertainities
 to make big profits
CORRECT ANSWER
to protect against any price uncertainities

Q .535- An Investor Mr Shah wants to buy 8 contracts of January series at Rs 740 and an investor Mr Patel
wants to sell 5 contracts of February series at Rs 754. Initial Margin is fixed at 6%. How much initial margin
has to be collected from them? Market lot is 250.
 Rs 56,550
 Rs 88,800
 Rs 1,45,350
 Rs 1,87,600
CORRECT ANSWER
Rs 1,45,350

Q .536- A commodity future exchange ……………………………….

 trades in cash and future commodities
  trades only in future of commodities
 trades in commodities of which it has stocks in its various godowns
 None of the above
CORRECT ANSWER
trades only in future of commodities

Q .537- Value-at-risk calculations are done on the basis of………………………….

 best possible market conditions
 ideal market conditions
 volatility
 90 % risk parameter
CORRECT ANSWER
volatility