NISM Series XIII Mock Test 13

NISM Series XIII Exam | Mock Test 13

1 / 50

A trader feels that INR should depreciate against USD in next few months. What currency futures trade will be profitable to him if his views comes correct?

A. Buy USDINR

B. Sell USDINR

C. Buy USDEUR

D. Sell USDEUR

2 / 50

Theta is the rate of change in option premium for a unit change in ____

Volatility

Interest rates

Time to expiry

Price of the underlying asset

3 / 50

Identify the true formula for Cost of Carry Model

A. Price of futures = Cost of Carry

B. Price of Futures = Spot Price

C. Price of Futures = Spot – Cost of Carry

D. Price of Futures = Spot + Cost of Carry

4 / 50

Assume that price of a USDINR call option is quoted as INR 0.45/0.47 ( bid price/as price ). Given this quote, at what price could a company buy the call option?

A. 0.45

B. 0.46

C. 0.47

D. 0.48

5 / 50

A calendar spread contract in index futures attracts ___________.

Same margin as sum of two independent legs of futures contract

Lower margin than sum of two independent legs of futures contract

Higher margin than sum of two independent legs of futures contract

No margin needs to be paid for calendar spread positions

6 / 50

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

futures and options on the same stock

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

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

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

7 / 50

An importer takes a long position in USDINR futures contract at a price of 53 by buying 20 lots. At the expiry, the settlement price is 54.3. how much profit or loss did the importer make?

A. Profit of 2600

B. Profit of 26000

C. Loss of 2600

D. Loss of 26000

8 / 50

When SEBI has approved the approves bye-laws of a derivative exchange, the exchange is free to introduce futures contracts on any number of stocks and it does not require to go to SEBI every time.

A. True

N. False

9 / 50

You sold a Put option on a share. The strike price of the put was Rs. 245 and you received a premium of Rs 49 from the option buyer. Theoretically, what can be the maximum loss on this position?

A.196

B. 206

C. 0

D. 49

10 / 50

10.

A trading member buys 70 lots of GBPINR one month futures on day 1 at 91.50 7 also sells 80 lots of the same contract on the same day at 91.60 in his proprietary book. The settlement price for the day was Rs 91.20. What would be MTM margin on the open position ( in rupees )?

4000

-4000

5000

-5000

11 / 50

11.

If a speculator purchases a naked call option, this means he/she has ____

Mixed view

Bullish view

Myopic view

Bearish view

12 / 50

12.

When does the monthly series mature for Nifty index futures?

First Thursday of the month

First Wednesday of the month

Third Wednesday of the month

Last Thursday of the month

13 / 50

13.

The risk connected with trading in derivatives have to be laid down in which document?

It can be conveyed verbally to the client

Contract note which is sent to the client

The Risk Disclosure Document

None of the above

14 / 50

14.

Mr. John sells one ABC stock futures contract at Rs 745. What is his profit or loss if he purchases the contract back at Rs 754, lot size is 1500

A. +13,500

B. -13,500

C. +9800

D. -9800

15 / 50

15.

___ is the process of computing open positions and determining mark to market margins

A. Clearing

B. Settlement

C. Pay in

D. Pay out

16 / 50

16.

What is the order called which if not executed during the day, the system cancels the order automatically at the end of the day?

Immediate or Cancel Order ( IOC )

Stop Loss Order

Good till cancelled order

Day order

17 / 50

17.

A trader in currency markets believes that USDJPY will move from 105 to 108 in next 1 month. Which of the following would you do to execute this view using currency futures contract of JPYINR and USDINR?

Long JPYINR

Short JPYINR

Long JPYINR and short USDINR

Short JPYINR and long USDINR

18 / 50

18.

‘Rho’ is connected to the ____

Volatility of the underlying

Price of the underlying asset

Time to expiry of the option

Interest rates in the market

19 / 50

19.

Is it true that at expiration, the value of an option is its intrinsic value

A. Yes, it’s true for all options

B. No. it’s not true for all options

C. Yes, it’s true but only for call options

D. Yes, it’s true but only for put options

20 / 50

20.

Delta refers to rate of change in the ____

A. Option premium per day

B. Option premium for a unit change in spot price of the underlying

C. Option premium for a unit change in interest rate

D. Option premium for a unit change in volatility of the underlying

21 / 50

21.

The strategy of ____ involves options with different strike prices but same expiry dates

A. Straddle

B. Calendar Spread

C. Vertical Spread

D. Diagonal Spread

22 / 50

22.

What is the risk of bad delivery in an index futures contract?

The risk does not exist

The risk is there but very low

The risk is very high

None of the above

23 / 50

23.

When a client defaults in making payments in respect of a daily settlement, the contract is closed out. The amount not paid by the client is adjusted against the ___

Bank fixed deposits of the client

Shares deposited by client with the trading member

Initial margin paid by client

PPF balance of the client

24 / 50

24.

What happens to the intrinsic value of a put option if the strike price is taken down?

The intrinsic value goes up

The intrinsic value goes down

There is no change in the intrinsic value

25 / 50

25.

Which of the following is interest rate derivative?

A. Forward rate agreement

B. Interest rate swaps

C. Interest rate futures

D. All of the above

26 / 50

26.

Who acts as a central counter party to JPYINR futures trade in India?

The currency broker who executed the trade

Bank trading and clearing member

Clearing corporation

Exchange

27 / 50

27.

In currency future contract, daily mark to market will be on a ____

A. T+1 Basis

B. T+2 Basis

C. T+3 Basis

D. T+4 Basis

28 / 50

28.

Specify the lot size of EURINR futures contract

1000 EUR

10000 EUR

1000 INR

10000 INR

29 / 50

29.

Shyam is a chartered accountant and Ram is a commerce graduate. Both are clearing members of a recognized exchange. Based on this information, identify the true statement

Ram will enjoy higher exposure limits than Shyam

Shyam will enjoy higher exposure limits than Ram

Both of them will enjoy same exposure limits

Insufficient information to draw a conclusion

30 / 50

30.

In a system of 100 currencies with no vehicle currencies, potentially there would be ____ currency pairs

A. 100

B. 500

C. 495

D. 4950

31 / 50

31.

A member has two clients C1 and C2. C1 has purchased 800 contracts and C2 has sold 900 contracts in August XYZ futures series. What is the outstanding liability (open position) of the member towards Clearing Corporation in number of contracts?

A. 800

B. 1700

C. 900

D. 100

32 / 50

32.

Vega for long call or long put is always

A. Positive

B. Negative

C. Zero

D. None of the above

33 / 50

33.

What does ‘ Near Month ‘ futures contract mean?

It is the current month of the futures contract

It is the next month after the current month of the futures contract

It is the month of expiry of futures contract

None of the above

34 / 50

34.

A speculator in currency market buys a long position in USDINR futures contract at a price of 52 and he buys 25 lots of the same. On expiry the settlement price is announced at 52.35. What will be his profit or loss?

A. Profit of 875

B. Loss of 875

C. Profit 8750

D. Loss of 8750

35 / 50

35.

Margins across the various clients of a member are collected on a gross basis

A. True

B. False

36 / 50

36.

If you expect the USDINR to breakout of a trading range, then which strategy you can adopt?

A. Long Strangle

B. Long Straddle

C. Short Butterfly

D. Any of the above

37 / 50

37.

When the spot forex rate increases, the call option premium

A. Increase

B. Decreases

C. No change

D. None of the above

38 / 50

38.

When there is a ‘Closing Buy Transaction’ this will have the effect of partly or fully offsetting __

A. A cross position

B. A short position

C. A long position

D. A high position

39 / 50

39.

The Beta of a portfolio is the ____

Sum of the beta’s of the constituent securities in that portfolio

Simple average of the beta’s of the constituent securities in that portfolio

Same as beta of the stock with highest market capitalization

Value weighted average of the beta’s of the constituent securities in that portfolio

40 / 50

40.

Hedgers and Speculators are two important participants of a securities market and they strike a balance due to their needs as ___

A. Hedger wants to avoid risk while speculator wants to take risk

B. Hedger wants to take risk while speculator wants to avoid risk

C. Both hedgers and speculators want to avoid risk

D. Both hedgers and speculators want to take risk

41 / 50

41.

Which member of a stock exchange is not a Trading Member itself but clears and settles the trades of Trading members and institutional clients?

A Professional Clearing member

A Trading-cum-Clearing Member

A Self Clearing Member

None of the above

42 / 50

42.

A client sells a USD call option at a strike price of 53.80 and receives premium of INR 0.30. What would be the breakeven point for the transaction?

A. 54.10

B. 53.80

C. 53.50

D. 54.50

43 / 50

43.

How should a seller of an option treat the premium received in his books of accounts?

A. As an income

B. As an expense

C. As an asset

D. As a liability

44 / 50

44.

If an investor buys a call option with lower strike price and sells another call option with higher strike price, both on the same underlying share and same expiration date, the strategy is called ___________.

A. Bullish spread

B. Butterfly spread

C. Butterfly spread

D. Calendar spread

45 / 50

45.

Identify the FALSE statement

A. For Call Options: with decrease in strike price, the premium on call increase

B. For Call Options: with increase in strike price, the premium on call increases

C. For Put Options: with increase in strike price, the premium on put increases

D. For Put Options: with decrease in strike price, the premium on put decreases

46 / 50

46.

Excess of premium in an option over the intrinsic value is known as the time value

A. True

B. False

47 / 50

47.

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

A. True

B. False

48 / 50

48.

If the trading member is long in 200 contracts and is short in 120 contracts, the net proprietary open position is ____

A. 320

B. 80

C. 120

D. 200

49 / 50

49.

When the interest rate differential between a base and quoting currency increases, the call option premium

A. Increases

B. Decreases

C. No change

D. None of the above

50 / 50

50.

____ can write an option in Indian stock market

Market makers

FPIs

Individuals

All of the above

Your score is

The average score is 74%

This NISM Series XIII mock test will help you familiarize yourself with the exam format, assess your knowledge, and identify areas that may need further study.

Remember that while mock tests can benefit practice, it’s important to understand the concepts and principles behind each question thoroughly.

Good luck with your preparation for the NISM Series XIII (Derivatives) exam!

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