NISM Series XIII Mock Test 8

NISM Series XIII Exam | Mock Test 8

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1. Option buyer faces ________ risk and option seller faces __________ risk.

A. Limited, Unlimited

B. Limited, Limited

C. Unlimited, Limited

D. Unlimited, Unlimited

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2. RBI guideline on Rupee Interest Rate Derivatives (Reserve Bank) Directions, 2019 permit _______________ to participate in interest rate derivatives contract.

A. Non-Residents

B. Non-Retail

C. Retail

D. All of the above

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3. An option is _________, if on exercising it, the option buyer gets negative cash flow.

A. In the money

B. At the money

C. Out of the money

D. None of the above

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4. Participants buy a put option with strike price of 98.50 at a premium of Rs. 0.20. On Expiry the bond price is Rs. 98.50. What is his net pay-off?

A. Profit of Rs. 0.20

B. Profit of Rs. 0.25

C. No profit & no loss

D. Loss of Rs. 0.20

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5. Corporate actions are broadly classified under _____________ and _____________.

A. stock benefits and cash benefits

B. stock options and bonus

C. stock futures and bonus

D. none of the above

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6. Loss on derivative transactions which are carried out in a “recognized stock exchange” can be set off against any other income during the year, except _________.

A. Business income

B. Income from other sources

C. Salary income

D. None of the above

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7. A ________ order is classified as price related condition.

A. Market

B. Day

C. IOC

D. None of the above

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8. In the clearing corporation, clearing is carried out by a process called _______ netting.

A. Multilateral

B. Closed

C. Open

D. Gross

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9. A _________ is where a trader buys a particular month contract (Futures or Options) and sell (i.e., take an opposite position) of the same contract of a different month.

A. Calendar spread

B. Option spread

C. Contract spread

D. All of the above

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10. The position limit is the limit on an investor's share in the total open interest.

A. True

B. False

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11. If the base rate of Overnight MIBOR futures is 5, then its operating range will be _______.

A. 5.05 & 4.95

B. 5.10 & 4.90

C. 5.25 & 4.75

D. 5.50 & 4.50

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12. Time value of an option is _____________.

A. the difference between its premium and its strike price

B. the difference between its premium and intrinsic value

C. the difference between its strike price and intrinsic value

D. none of the above

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13. ____________ are the maximum exposure levels which the entire market can go up to and each trading member or investor can go up to.

A. Open interest

B. Value at Risk

C. Position limits

D. Price bands

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14. Limitation of Interest Rate Derivatives for Hedgers is mainly due to __________.

Z. Standardised Contract

B. Non availability on all kind of underlying instruments

C. Both (A) and (B) above

D. None of the above

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15. Interoperability of clearing corporation framework is allowed for all the products available in the Indian securities markets, EXCEPT: __________.

A. Commodity Derivatives

B. Interest rate derivatives

C. Index Derivatives

D. Index Options

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16. A stock is currently selling at Rs. 165. The put option at Rs. 163 strike price costs Rs.3. What is the time value of the option?

A. Rs. 3

B. Rs. 2

C. Rs. 1

D. Rs. 1.50

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17. A client can place order in exchange traded interest rate derivatives through _______.

A. Phone

B. Internet

C. Direct Market Access

D. All of the above

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18. In terms of jurisdiction of regulator, the regulation of interest rate derivatives is similar to that of ___________.

A. Equity Derivatives

B. Cash Market

C. Commodity Derivatives

D. Currency Derivatives

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19. Arbitration is a ________ judicial process.

A. Quasi

B. Fully

C. Non

D. None of the above

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20. Horizontal spread is also known as Calendar spread!

A. True

B. False

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21.

Daily Mark to market settlement of Exchange traded interest rate future contract is __________.

A. Cash settled

B. Adjusted to liquid asset

C. Both (A) & (B) above

D. None of the above

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22. Exchanges provide __________ separately for taking calendar spread combination.

A. Limit order book

B. Stop order book

C. Spread order book

D. Market order book

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23.

Insurance companies are allowed to participate in interest rate futures only for _____.

A. Long Hedge

B. Short Hedge

C. Both A and B

D. None of the above

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24. Which of the following accounting standards of Institute of Chartered Accountants of India (ICAI) defines the accounting for derivatives?

A. AS 6

B. AS 10

C. AS 9

D. AS 30

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25. _______ is the price that is used to compute the price range for the opening trade on any trading day.

A. Base price

B. Cap price

C. Limit price

D. Trigger price

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26. What is the client level position limit in derivative trading?

A. positions not to exceed 1 % of the free float market capitalisation or 5 % open interest in the same underlying stock

B. positions not to exceed 5 % of the free float market capitalisation or 1 % open interest in the same underlying stock

C. positions not to exceed 10 % of the free float market capitalisation or 1 % open interest in the same underlying stock

D. None of the above

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27. The underlying super asset class consists of _______.

A. Equity

B. Forex

C. Both 1 & 2

D. None of the above

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28. Execution of Power of attorney by the client in favour of stock broker is _________.

A. Mandatory at the time of placing an order

B. Mandatory at the time of KYCl

C. Optional

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29. Due to denial of matched orders by client/s, which type of risk arises?

A. Operational

B. Market

C. Regulatory

D. None of the above

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30. The initial margin amount is large enough to cover a one day loss that can be encountered on ________ of the days.

A. 90%

B. 95%

C. 99%

D. 50%

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31. Subsequent to KYC, broker has to upload the KYC information in _______ system.

A. Depository

B. KRA

C. Clearing Bank

D. SEBI

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32. Hedging for multiple bonds in portfolio can be done by using _________.

A. Duration based hedge ratio

B. Market value ratio

C. Year to maturity ratio

D. None of the above

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33. In Bullish vertical spread using put strategy, trader _________.

A. Buy put option with lower strike and sell a put option with higher strike

B. Buy put option with higher strike and sell a put option with lower strike

C. Buy call with lower strike and sell a put option with higher strike

D. None of the above

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34. If you expect the interest rate will go up in future, today you should _________.

A. Sell GOI Bond futures

B. Buy GOI bond futures

C. Buy underlying bond

D. None of the above

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35. The difference between the interest rate applicable to a non-sovereign borrowers and corresponding rate for sovereign borrower is called _______.

A. Market spread

B. Interest rate spread

C. Sovereign spread

D. Credit spread

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36.

Position limits guideline for Exchange traded interest rate derivatives is provided by __________.

A. RBI

B. SEBI

C. Ministry of Finance

D. None of the above

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37.

Loss on derivative transactions which are carried out in a “recognized stock exchange” can be carried forward for a period of ________ assessment years.

A. 5

B. 6

C. 7

D. 8

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38.

What is the Base Minimum Capital requirement specified by the SEBI for only Proprietary trading without Algorithmic trading (Algo)?

A. Rs. 25 Lakhs

B. Rs. 20 Lakhs

C. Rs. 50 Lakhs

D. Rs. 10 Lakhs

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39. The difference between option premium and intrinsic value is __________.

A. Strike Price

B. Time Value

C. Expiry Value

D. Option Value

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40. Usually, income from Exchange traded derivatives is treated as _________.

A. Business income

B. Income from other sources

C. Professional income

D. None of the above

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41.

Assume that on 1st December 2020, USD-INR spot was at 45, premium for January 2021 maturity put option at strike of 45.5 is INR 0.54/0.55 and premium for January 2021 maturity call option at strike of 45 is INR 0.71/0.72. A client executes a trade wherein he buys put at a strike of 45.5 and sells a call at a strike of 45. On expiry the RBI reference rate is 44.75. How much net profit/loss did the client make per USD?

A. Loss of INR 0.2

B. Profit of INR 0.15

C. Profit of INR 0.91

D. Loss of INR 0.96

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42.

__________ is the fund created to take care of legitimate investment claims, which are not of speculative nature of the clients of defaulting member.

A. Investor protection fund

B. Investor grievance fund

C. member default fund

D. Core settlement guarantee fund

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43. The ratio of change in delta for a unit change in the price of underlying is called ________.

A. Vega

B. Theta

C. Alpha

D. Gamma

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44. As a Risk Reduction Measure, all unexecuted orders shall be cancelled once stock broker breaches ________ collateral utilization level.

A. 90 percent

B. 75 percent

C. 50 percent

D. None of the above

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45. Forex rates can be quoted as spot or, _______ contracts.

A. Future contract

B. Forward contract

C. Valid contract

D. Unilateral contract

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46. When the forex strike rate increases, the put option premium _______.

A. Increases

B. Decreases

C. No Change

D. None of the above

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47.

Guidance Notes on Accounting for Derivatives Contract recognise following type of hedging for hedge accounting: ____________.

A. Fair Value hedge accounting model

B. The cash flow hedge accounting model

C. The hedge of a net investment in a foreign operation

D. All of the above

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48. A Buy or a Sell order(s) which is/are lying unmatched in the order book are known as ________________.

A. Active Orders

B. Passive Orders

C. Best Orders

D. None of the above

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49. Investors can have grievances against _______________.

A. Brokers

B. Intermediaries

C. Company

D. All of the above

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50. The yield to maturity assumes that the term structure of zero rates is ______ by using the same rate for all cash flows.

A. Parallel

B. Steep

C. Flat

D. Either 1 or 2

Your score is

The average score is 76%

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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