NISM Series XIII Mock Test 6

NISM Series XIII (Common Derivative) Exam | Mock Test 6

1 / 50

An index option is a __________________.

A. Debt instrument

B. Derivative product

C. Cash market product

D. Money market instrument

2 / 50

The purchase of a share in one market and the simultaneous sale in a different market to benefit from price differentials is known as ____________.

A. Mortgage

B. Arbitrage

C. Hedging

D. Speculation

3 / 50

Financial derivatives provide the facility for __________.

A. Trading

B. Hedging

C. Arbitraging

D. All of the above

4 / 50

Operational risks include losses due to ____________.

A. Inadequate disaster planning

B. Too much of management control

C. Income tax regulations

D. Government policies

5 / 50

State whether TRUE or FALSE: Impact cost is low when the liquidity in the system is poor.

A. True

B. False

6 / 50

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

A. Securities Transaction Tax

B. Impact cost

C. SEBI charges

D. Brokerage

7 / 50

You sold one XYZ Stock Futures contract at Rs. 278 and the lot size is 1,200. What is your profit (+) or loss (-), if you purchase the contract back at Rs. 265?

A. 16,600

B. 15,600

C. -15,600

D. -16,600

8 / 50

You have taken a short position of one contract in June XYZ futures (contract multiplier 50) at a price of Rs. 3,400. When you closed this position after a few days, you realized that you made a profit of Rs. 10,000. Which of the following closing actions would have enabled you to generate this profit? (You may ignore brokerage costs.)

A. Selling 1 June XYZ futures contract at 3600

B. Buying 1 June XYZ futures contract at 3600

C. Buying 1 June XYZ futures contract at 3200

D. Selling 1 June XYZ futures contract at 3200

9 / 50

A calendar spread contract in index futures attracts ___________.

A. Same margin as sum of two independent legs of futures contract

B. Lower margin than sum of two independent legs of futures contract

C. Higher margin than sum of two independent legs of futures contract

D. No margin need to be paid for calendar spread positions

10 / 50

Margins in 'Futures' trading are to be paid by _______.

A. Only the buyer

B. Only the seller

C. Both the buyer and the seller

D. The clearing corporation

11 / 50

When the near leg of the calendar spread transaction on index futures expires, the farther leg becomes a regular open position.

A. True

B. False

Explanation:
When you sell a put option, your maximum loss = Strike Price – Premium = 250 – 50 = Rs 200

12 / 50

You sold a put option on a share. The strike price of the put was Rs 250 & you received a premium of Rs 50. Theoretically, what can be your maximum loss in this position?

A. 250

B. 0

C. 300

D. 200

13 / 50

Current price of XYZ stock is Rs 286. Rs 260 strike call is quoted at Rs 45. What is the Intrinsic Value?

A. 19

B. 26

C. 0

D. 45

14 / 50

Who purchases an asset at a low price in one market & sells it at higher price in another?

A. Hedgers

B. Arbitragers

C. Market Makers

D. Speculators

15 / 50

What is the primary purpose of requiring margins in futures contracts?

A. To increase liquidity

B. To guarantee settlement

C. To reduce transaction cost

D. To simplify trading

16 / 50

In a futures market, the ___ decides all the terms of the contract other than price

A. Government

B. Traders

C. Exchange

D. Clearing Corporation

17 / 50

Open interest represents the total number of ____ for an underlying asset

A. Contracts traded in a day

B. Contracts outstanding

C. Contracts entered

D. Contracts closed

18 / 50

What is the agreement called where two parties agree to exchange cash flows in the future based on a pre-determined formula?

A. Forward

B. Futures

C. Options

D. Swaps

19 / 50

When did SEBI permit BSE & NSE to introduce the equity derivatives segment?

A. June-2000

B. June-1998

C. June-2003

D. March-2004

20 / 50

You expect GBP/USD to rise from 1.63 to 1.68. How should you trade GBP/INR & USD/INR futures?

A. Short GBP/INR & Long USD/INR

B. Long GBP/INR & Short INR/USD

C. Short GBP/INR & Long INR/USD

D. Long GBP/INR & Short USD/INR

21 / 50

What risk do you face if the prices of cash T-bill & T-bill futures are not the same?

A. Yield Curve Spread Risk

B. Basis Risk

C. Market Liquidity Risk

D. None of the above

22 / 50

Given in-the-money situation, with an increase in Strike Price, the premium for Call Option ______ & for Put Option ______

Aa. Increases, Decreases

B. Decreases, Increases

C. Increases, Increases

D. Decreases, Decreases

Explanation:

Sell USD at OTC @ 84.00
Buy back USD via Futures at 84.50 (i.e., locking future purchase lower than current sale)
Arbitrage profit: 84.75 (OTC bid) – 84.00 (Futures ask) = ₹0.75

23 / 50

In OTC, USD/INR is 83.75/84.00. Futures quote at 84.50/84.60. What is the best arbitrage trade & profit per USD?

A. Buy in OTC, Sell in Futures, 75 paise

B. Sell in OTC, Buy in Futures, 75 paise

C. Buy in OTC, Sell in Futures, 50 paise

D. Sell in OTC, Buy in Futures, 50 paise

24 / 50

If an Option has a high Gamma, what can be said about Option’s Delta?

A. Delta changes rapidly with small changes in the underlying asset's price.

B. Delta is stable & changes slowly

Delta is close to zero

Delta is unaffected by the underlying assets price chages

25 / 50

Yield-to-maturity (YTM) assumes which of the following?

A. Term structure is flat

B. Shift in the term structure is parallel

C. Reinvestment rate is same as YTM

D. All of the above

E. None of the above

26 / 50

A person wants to buy GBP/INR one-month future at 80.50 when the current price is 80.80 & enters a limit order for 80.50. Assume the market moves in the range of 80.40–80.91 after he entered a limit order. At what price is his order likely to get executed?

A. 80.50

B. At or below 80.50

C. Any price above 80.50

D. None of the above

27 / 50

What is the underlying asset for an interest rate future?

A. Bond

B. Interest Rate

C. Commodity

D. Currency

28 / 50

A calendar spread consists of buying & selling futures on ______

A. Same underlying, same quantity, and same expiry maturity

B. Different underlying, same quantity, and different expiry month

C. Same underlying, different quantity, and same expiry month

D. Same underlying, same quantity, and different expiry month

29 / 50

If 1-year interest rate is 2% in the US & 10% in India, and USD/INR is 44, what is the expected 6-month future rate?

48.90

45.75

46.80

48.90

30 / 50

The notional value in a derivatives contract refers to:

Initial margin amount

Quantity x Price

MTM profit

Broker margin

31 / 50

Which of these is a valid hedging strategy?

Long call

Short put

Covered call

Naked call

32 / 50

Which order is most likely to execute at current market price?

Stop-loss order

Limit order

Market order

GTC order

33 / 50

If implied volatility increases, which of the following increases in value?

Option premium

Bond yield

NAV of debt funds

Repo rate

34 / 50

Which position benefits most from falling markets?

Long futures

Covered call

Protective put

Short futures

35 / 50

What is the role of margin maintenance in derivatives?

Ensures asset delivery

Reduces credit/default risk

C) Guarantees profits

Covers all market losses

36 / 50

What best describes a derivative?

Variable interest security

Contract based on underlying

Mutual fund hedge

Regulated debt instrument

37 / 50

In an interest rate swap, the floating leg is typically tied to:

Repo rate

LIBOR/IBOR

Call money rate

Equity index

38 / 50

Which of the following is a non-deliverable forward (NDF)?

USD/INR exchanged physically

Only P&L settled in INR

Futures on USD/INR

Exchange traded currency option

39 / 50

A call option on ABC Ltd. has a strike of Rs 1,000, stock price = Rs 1,100, and premium =
Rs 150. What is the breakeven price?

Rs 1,050

Rs 1,150

Rs 1,250

Rs 1,100

40 / 50

The market value of one contract is 2,000 times the quoted price and the market price is 106.10, the face value of 200,000. Compute the market value.

A. 2,72,300

B. 2,43,500

C. 2.12,200

D. 2,82,500

41 / 50

Which term best describes EUR currency?

A. Managed float

B. Pegged to USD

C. Pegged to gold

D. Free floating

42 / 50

Which of the following is true?

A. Base currency is the first currency in a currency pair

B. Base currency is the second currency in a currency pair

C. Quotation currency is the first currency in a currency pair

D. Exchange rates are quoted in per unit of quotation currency

43 / 50

Assume you are an exporter, and you want to sell USD that you have received as
export remittance. The bank quotes a price of 75.10 / 75.12 for USDINR. At what price
can you sell one unit of USD?

A. 75.12

B. 75.11

C. 75.09

D. 75.10

44 / 50

Which of the following is the role of derivatives?

A. Financing

B. Cash or liquidity management

C. Risk management

D. All of the above

45 / 50

Participant who take position in Currency Derivatives to reduce currency risk

A.Hedgers

B. Speculators

C. Arbitragers

D. None of the above

46 / 50

Which of the following is derivatives?

A.Currency Forward

B. Currency Swaps

C. Currency Futures

D. All of the above

47 / 50

Following derivatives contracts are traded only on Exchanges?

A.Currency Options

B. Currency Swaps

C. Currency Futures

D. FX Swaps

48 / 50

What is the settlement method for USDINR futures?

A. Cash

B. Physical / Based on Delivery

C. Can be cash or physical

D. None of the above

49 / 50

Person goes short in a GBPINR futures contract at Rs.99.75 and on expiry GBPINR
reference rate is Rs. 100.75, he will ________?

A. Make profit of Rs. 1

B. Make loss of Rs. 1

C. No profit no loss

D. None of the above

50 / 50

Which of the following is the last trading day for EURINR monthly futures contract?

A.One business days after the first business day of the Expiry Month

B. Seven business days before the last business day of the Expiry Month

C.Two working days prior to the last business day of the expiry month

D.Last Thursday of Contract Month

Your score is

The average score is 71%

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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