NISM Series XIII Mock Test 18

NISM Series XIII Exam | Mock Test 18

1 / 50

If in case of Put buy, Spot Price < Strike Price then it means buyer is

A. In the money

B. At the money

C. Out of money

2 / 50

A company expects to receive USD 100,000 in 2 months. Current USDINR is 83.40. To hedge, it sells USD futures at 83.60. If INR appreciates to 83.00 at expiry, what is the profit?

A. 60,000

B. 40,000

C. 83,000

D. 1,00,000

3 / 50

If a trader is short on a near-month contract and long on a far-month contract of the same futures, what type of position it represent?

Naked position

Arbitrage position

Hedged position

Calendar spread position

4 / 50

A Paddy farmer buys weather insurance to protect from less rainfall. Its like a derivatives contract where the underlying is ____

A. Weather temperature recorded

B. Storms and Hurricane

C. Actual Rainfall

D. Paddy growth

5 / 50

A trader enters into a long futures contract at Rs 400. If the market price of the underlying asset at expiry is Rs 470, what is the payoff? Additionally, what would be the payoff if the market price at expiry is Rs 340?

A. Rs 70 Profit, Rs 60 Loss

B. Rs 60 Profit, Rs 70 Loss

C. Rs 70 Profit, Rs 70 Loss

D. Rs 60 Profit, Rs 60 Loss

6 / 50

If an investor holds a nifty put option with a strike price of 18400 and the current spot price is 18500, what is the options intrinsic value?

A. 0

B. 100

C. -100

D. 18400

7 / 50

The expiry date for interest rate future is

A. The settlement date of the interest rate futures contract

B.The last trading day of the interest rate futures contract

C. Both a and b

D. None of the above

8 / 50

What is the profit or loss for a short futures position entered at Rs 180 if the market price at expiry is Rs 230?

A. Rs 50 profit

B. Rs 50 loss

C. Rs 230 profit

D. Rs 180 loss

9 / 50

A trading member buys 70 lots of GBPINR one month future on day 1 at 91.50 and sells 80 lots of the same contract on the same day at 91.60 in his proprietary book. The settlement for the day was at 91.20. What would be the mark to market margin on the open position in INR?

A. 4000

B. -4000

C. 5000

D. -5000

10 / 50

______ is used to describe a market where the futures price is higher than spot price

A. Backwardation

B. Normal market

C. Contango

D. Arbitrage

11 / 50

Which of the following is an example of inter-commodity spread?

A. Buying and selling gold futures

B. Buying and selling index futures

C. Buying and selling futures contract of the same product with different maturities

D. Buying soybean futures and selling soybean oil futures

12 / 50

Traders grievance against any trading member are settled by arbitration. The arbitrator conducts the process and passes an award normally within ____ from the date of initial hearing

15 days

45 days

1 month

4 months

13 / 50

What is the fair price of a futures contract according to the cost of carry model?

A. Spot price of the underlying asset

B. Futures price minus cost of carrying the contract

C. Futures price of the underlying asset

D. Spot price plus cost of carrying the asset from today until delivery

14 / 50

If you expect interest rates to rise in the future, today you should

A. Sell futures

B. Buy futures

C. Cannot say

15 / 50

When one party in a forward contract fails to fulfill its obligation. It’s called ___

A. Price risk

B. Market risk

C. Liquidity risk

D. Counterparty risk

16 / 50

Why is the percentage change of an index is more important than the actual numeric value?

A. The base value is constantly changing

B. It allows for easier comparison across different indices

C. It reflects the overall market sentiment

D. All of the above

17 / 50

What is a pre-decided contractual agreement between two parties to exchange an underlying asset at a certain future date for a pre-decided price, negotiated over the counter?

A. Forwards

B. Futures

C. Options

D. Swaps

18 / 50

Which of the following costs is not actually paid by the market participants but arises due to lack of liquidity?

A. Securities Transaction Tax

B. Impact cost

C. SEBI charges

D. Brokerage

19 / 50

Other things remain constant, Modified Duration will ____ if coupon payment frequency of bond increases?

A. Decrease

B. Increase

C. Either increase or decrease

D. None of the above

20 / 50

Which of the following is true for Netting?

A. Proprietary trades are offset

B. Buy and Sell trades of the same client are offset

C. Both a and b

D. None of the above

21 / 50

What is the Market-Wide Position Limit (MWPL) for futures and options contracts on individual securities?

A. 10% of the number of shares held by non-promoters

B. 20% of the number of shares held by non-promoters

C. 15% of the number of shares held by non-promoters

D. 25% of the number of shares held by non-promoters

22 / 50

What is the primary objective of SPAN in the context of margining?

A. To calculate the maximum potential gain of a portfolio

B. To monitor trading volume

C. To predict market trends

D. To identify overall potential risk in a portfolio

23 / 50

Spot price of USDINR is 82.80, one month futures is 83.10. What should an arbitrageur do?

A. Buy USD in spot, sell futures

B. Sell USD in spot, buy futures

C. Buy both spot and futures

D. Sell both spot and futures

24 / 50

If a futures price is rising and open interest is also increasing, what does this indicate?

A. Bullish trend

B. Long liquidation

C. Bearish trend

D. Short covering

25 / 50

An Authorised Person (AP) is related to which of the following entities?

A. Central Bank

B. Professional Clearing Member

C. Sub Broker

D. Stock Exchange

26 / 50

Who receives end of day report from all branches and dealers under same trading member?

A.Corporate Manager

B. Branch Manager

C. Trader

D. Dealer

27 / 50

What is the similarity between a protective put and a long call?

A. Both have limited profit potential

B. Both have unlimited profit potential with limited loss

C. Both have unlimited loss potential

D. Both involve selling options

28 / 50

Cash-and-carry arbitrage involves ____

A. Buying a futures contract and holding it until expiry

B. Selling a stock in the cash market and buying a futures contract

C. Shorting a futures contract and waiting for the price to go up

D. Buying a stock in the cash market and selling a futures contract

29 / 50

An exporter sells 10 lots of EURINR futures at 63. The settlement price is 63.70. what is the result?

A. Profit of 7000

B. Loss of 7000

C. Profit of 5000

D. None of the above

30 / 50

How are proprietary positions calculated for a Trading Member?

A. On a gross basis ( buy+sell )

B. On a net basis ( buy-sell )

C. By averaging the buy and sell quantities

D. By considering only the buy quantities

31 / 50

What is the breakeven point (BEP) for a call option with a strike price of 17500 and a premium of 185?

A. 17685

B. 17500

C. 17300

D. 17800

32 / 50

Why have many stock indices globally moved to the free float basis?

A. To better reflect market activity and liquidity

B. To exclude individual investors

C. To decrease market volatility

D. To include only large cap companies

33 / 50

If 1 year interest rate is 2% in USA and 10% in India, and USDINR is at 44, what is the expected 6 month future rate?

A. 45.74

B. 46.80

C. 47.52

D. 44.90

34 / 50

In a payoff graph, on which axis is the price of underlying asset plotted?

A. X-axis

B. Neither X-axis nor Y-axis

C. Both X and Y-axis

D. Y-axis

35 / 50

Which of the following is true about the payoff of a short call option position?

A. The maximum loss is zero

B. The maximum profit is unlimited

C. The maximum profit is limited to the premium received

D. The maximum loss is limited to the premium received

36 / 50

Assume the price of government bond futures is 115, find market value of 1 contract?

A. 2,30,000

B. 23,000

C. 2300

D. 2,00,000

37 / 50

If a futures price is rising and open interest is also increasing, what does this indicate?

A. Bullish trend

B. Long liquidation

C. Bearish trend

D. Short covering

38 / 50

What is the first step in clearing process?

A. Calculating open positions and obligations of clearing members

B. Performing actual settlement

C. Monitoring market conditions

D. Setting position limits

39 / 50

A trading member has two clients in currency futures segment and one client in currency option segment. At the end of a trading day, one of the clients in currency futures segment has 5000 USD short position and the other client has 4000 USD long position. Additionally, the currency option client has 2000 USD long position. What is the gross open position for the trading member for the purpose of monitoring open position?

A. 11000 USD

B. 4000 USD

C. 20000 USD

D. 2000 short for currency futures and 2000 long for currency options

40 / 50

What is the similarity between a protective put and a long call?

Both have limited profit potential

Both have unlimited profit potential with limited loss

Both have unlimited loss potential

Both involve selling options

41 / 50

What is the minimum net worth a company needs to have for it to be eligible for applying to become authorized exchange for currency futures?

A. Rs 200 crore

B. Rs 100 crore

C. Rs 50 crore

D. Rs 75 crore

42 / 50

Which of the following organization issues guidelines for accounting of currency futures contract?

A. ICSI

B. ICWAI

C. ICAI

D. IIM

43 / 50

What is the maximum loss for a long call option position?

A. The strike price

B. The difference between strike price and spot price

C. Unlimited

D. The premium paid

44 / 50

_______ commenced introduction of Exchange Traded Currency Futures in India

A. Ministry of Finance

B. NSE Currency Futures Committee

C. Currency Futures Standing Committee

D. RBI-SEBI Standing Technical Committee

45 / 50

Value at Risk (VaR) is a measure of maximum likely price change ove

A. A given interval ( called horizon )

B. A given confidence level ( called percentile )

C. Both a and b

D. None of the above

46 / 50

As per the Forex Management Act, an AD Category 1 Bank should have a minimum net worth of ____ to become a trading and clearing member of Currency Futures segment in for a recognized stock exchange.

A. Rs 50 crore

B. Rs 100 crore Rs 300 crore

C. Rs 300 crore

D. Rs 500 crore

47 / 50

A market order is executed at ______

A. The previous day’s closing price

B. A price within a 10% range of the base price

C. A specified price

D. The best bid/offer price currently available

48 / 50

What is the maximum exposure level the entire market or a trading member can go up to?

A. Value at Risk

B. Price band

C. Position Limit

D. None of the above

49 / 50

______ measures the sensitivity of an option’s price to changes in market volatility

A. Vega

B. Delta

C. Gamma

D. Theta

50 / 50

Brokers of recognized stock exchange should promptly issue ____ to his clients as well as clients of his sub brokers

A. Transaction Report

B. Brokerage Report

C. Notes on Account

D. Contract Note

Your score is

The average score is 75%

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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