NISM Series XIII: Common Derivative Certification Mock Test

NISM Series XIII Mock Test

Here are 150 sample MCQs to help you prepare for the NISM Series XIII: Common Derivatives Certification Examination.

1 / 150

1.

A defaulting member's clients’ positions could be transferred to ____________ by the Clearing Corporation.

2 / 150

2. Which Greek indicates the impact of time decay on an option?

3 / 150

3. Position limit for EURUSD at trading member level is?

4 / 150

4. When the index future is used to hedge against the market risk on a portfolio, then it can be called as a cross hedge.

5 / 150

5. What should the affected stock exchange do to restore normalcy of operations during an outage?

6 / 150

6. The purpose of interest rate swaps is to:

7 / 150

7. __________ net worth shall be computed as liquid assets less initial margin and extreme loss margin payable at any point in time.

8 / 150

8.

At 11 am RBI announced the credit policy and a deduction in interest rates. Generally such a step will lead to ______ of rupees

9 / 150

9.

For the open positions on last trading day, the seller must notify the Clearing Corporation his intention to deliver by the close of ____

10 / 150

10.

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

11 / 150

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

12 / 150

12.

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?

13 / 150

13.

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

14 / 150

14. A person has invested USD 100,000 in US equities with a view of appreciation of US stock market. In next one year, his investments in US equities appreciated in value to USD120,000. The investor decided to sell off his portfolio and repatriate the capital and profits to India. At the time of investing abroad the exchange rate was 44.5 and at the time of converting USD back into INR, he received an exchange rate of 46. How much is the return on investment in USD and in INR respectively?

15 / 150

15. Which of these is NOT a characteristic of a forward contract?

16 / 150

16. The current yield cannot be considered as true return because it does not consider the ________.

17 / 150

17. Market risk or systematic risk can be reduced by using index derivatives.

18 / 150

18. Which of these is true about a European Option?

19 / 150

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

20 / 150

20.

If the annual interest rate is 5% and the dividend yield on a stock is 2%, what is the six-month futures price of a stock currently trading at Rs 500 in the spot market?

21 / 150

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

22 / 150

22. A trader shorted a future at ₹1,000. Price rose to ₹1,050. The loss is:

23 / 150

23.

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?

24 / 150

24. Margin money in futures contracts is meant to:

25 / 150

25. Order lying unmatched in the system is called _____________.

26 / 150

26.

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 ___

27 / 150

27.

Consider a scenario in which USDINR was quoting as 63.40/63.42 and EURUSD as 1.1450/1.1453 in the morning and by the day end USDINR moves to 63.10/63.12 while EURUSD moves to 1.1420/1.1422. What would best describe the movement of currency during the day?

28 / 150

28.

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

29 / 150

29. A company, which is due to receive a payment in a foreign currency on a future date, enters into a forward transaction with a bank agreeing to sell the foreign currency and receive a predetermined quantity of domestic currency. This is an example of Hedging.

30 / 150

30. A trader sells a future and buys the same stock. He is:

31 / 150

31.

A ________ order is classified as price related condition.

32 / 150

32. Which organization guarantees financial settlement in derivatives?

33 / 150

33.  What best describes a derivative?

34 / 150

34. The ____________ model was developed by William Sharpe in 1978.

35 / 150

35.

Assume that the one-year interest rate is 1% in US, 2% in UK and 7% in India. If current GBPINR spot rate is 91.60, what would be the one-year future rate of GBPINR?

36 / 150

36. Find out the Intrinsic value of a CALL option of ABC. Spot is Rs 2000. Strike is Rs 2020.

37 / 150

37. A Trading Member has two Clients: Client A and Client B. Client A has net Long Position of 12 and Client B has net Short Position of 10. What is the net position for the Trading Member?

38 / 150

38. Which act empowers SEBI to regulate securities markets?

39 / 150

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

40 / 150

40. The investor has the right to demand prepayment on specified dates before maturity in case of _______.

41 / 150

41. The counterparty risk in exchange-traded derivatives is borne by:

42 / 150

42. Which of these best defines basis in futures trading?

43 / 150

43.

Hedging for multiple bonds in a portfolio can be done by using _____

44 / 150

44. The _______ deviation is calculated using the Exponential Weighted Moving Average (EWMA).

45 / 150

45.

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?

46 / 150

46.

All the 50 stocks of NSE NIFTY index are equally weighted while calculating the index.

47 / 150

47.

A call option gives the buyer the right to buy the underlying at market price

48 / 150

48. Derivative transactions before FY 2005–06 were considered:

49 / 150

49. The ___________ has a strong international presence and second-largest and second-most traded currency in the international markets.

50 / 150

50.

Regulations on buying and selling of T bills and T bond futures for NRIs and FII investors?

51 / 150

51. A put option becomes profitable when:

52 / 150

52. Which of the following instruments is used for hedging index exposure?

53 / 150

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

54 / 150

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

55 / 150

55. The computation of turnover is a very important factor as the applicability of _________ is determined on the basis of turnover.

56 / 150

56. Convenience return for a commodity is likely to be different for different people, depending on the way they use it.

57 / 150

57.

The lot size for EURINR futures contract is

58 / 150

58. Which of the following qualifies as Liquid Assets for margin?

59 / 150

59.

Limitation of Interest Rate Derivatives for Hedgers is mainly due to ____

60 / 150

60.

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?

61 / 150

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

62 / 150

62. If an option is exercised, the STT is applicable on:

63 / 150

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

64 / 150

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

65 / 150

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

66 / 150

66. Total number of derivatives contracts outstanding is called __________

67 / 150

67. In India, currency futures are regulated by:

68 / 150

68. Which of the following is true?

69 / 150

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

70 / 150

70. What is the settlement method for 91-day bill futures?

71 / 150

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

72 / 150

72. The futures hedge is simultaneously exposed to both basis risk and yield curve spread risk.

73 / 150

73.  

Rahul owns five hundred shares of ABC Ltd. Around budget time, he gets uncomfortable with the price movements. Which of the following will give him the hedge he desires (assuming that one ABC futures contract = 100 shares) ?

74 / 150

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

75 / 150

75. Gaurav Buys USD-INR 16 contracts (1 lot= USD 1000) at Rs. 49.25 per unit. If tick size is Re.0025 how much he will gain or lose if there is upward movement of 10 ticks?

76 / 150

76.

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.

77 / 150

77. What is the settlement method for USDINR futures?

78 / 150

78. Credit spread is the price of ___________.

79 / 150

79. A calendar spread contract in index futures attracts ___________.

80 / 150

80.

Which of the following segments of market participants are allowed to trade in currency futures?

81 / 150

81. If participant buy 10 lot of single bond futures at Rs. 99, then contract value _________.

82 / 150

82. What is “Impact cost” in the context of an index?

83 / 150

83.

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?

84 / 150

84. Traditionally, the _______ serves the function of production-consumption in international trade.

85 / 150

85. As a trader you believe EURUSD will move from 1.58 to 1.44 in next 2 months. Which of the following would you do to execute this view using currency futures contract of EURINR and USDINR?

86 / 150

86.

A Professional Clearing Member of derivatives segment _______

87 / 150

87. A person has invested INR 100,000 in an Indian corporate bond for a year giving a
return of 16% in one year. The person plans to use the proceeds from the maturity of
corporate bond to fund his son's education on US. At the time of investing in the
corporate bond, USDINR spot rate was 70 and one year premium was 4%. The person
decides to hedge currency risk using USDINR one year futures. At the end of one year,
how many USD can this person remit to his son.

88 / 150

88. Which of the following is true about put options?

89 / 150

89.

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

90 / 150

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

91 / 150

91.

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?

92 / 150

92. An option is _________, if on exercising it, the option buyer gets positive cash flow.

93 / 150

93. A covered call strategy involves:

94 / 150

94. Consider a scenario in which USDINR was quoting as 63.40/63.42 and EURUSD as 1.1450 / 1.1453 in the morning and by the day end USDINR moves to 63.10/63.12 while EURUSD moves to 1.1420/1.1422. What would best describe the movement of currency during the day ?

95 / 150

95. Which one of the following statements is FALSE?

96 / 150

96. The most traded currency pair is:

97 / 150

97. Which user is at the lowest level in the heirarchy of trading firm?

98 / 150

98. Which of the following is the last trading day for cash settled 10-year bond futures?

99 / 150

99.

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

100 / 150

100. The relationship between bond price and yield to maturity is _______.

101 / 150

101. Which one is true about SEBI’s regulation on derivatives?

102 / 150

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

103 / 150

103. On the derivative exchanges, all the orders entered on the Trading System are at prices exclusive of brokerage.

104 / 150

104.

According to the Securities Contracts (Regulation) Rules, 1957, what is the minimum age for an individual to become a trading member?

105 / 150

105. If a member has payable obligation towards pay-in as well as margins, then ________.

106 / 150

106. The minimum net worth required for a Clearing Member is:

107 / 150

107. Initial margin requirements shall be based on 99% _________ over a one day time horizon.

108 / 150

108. The yield to maturity amortizes the capital gain or loss at redemption over the bond's life and adds it to the _______.

109 / 150

109. Following derivatives contracts are traded only on Exchanges?

110 / 150

110.

Identify the contract which is cleared and settled bilaterally

111 / 150

111. SEBI-registered brokers can introduce DMA facility to their clients after obtaining permission from respective ____________.

112 / 150

112. Which of the following has higher credit risk?

113 / 150

113.

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

114 / 150

114. The interest rate on ______ is the benchmark for determining the interest rate on other debt instruments.

115 / 150

115. SEBI was established under which year’s Act?

116 / 150

116. ______ specifies how to convert the payment period into year fraction.

117 / 150

117.

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

118 / 150

118. A speculator's aim in derivatives is to:

119 / 150

119.

What is the net payoff for Ms. Sakshi, who purchased a Rs 21.50 strike call option for Rs 0.20, if the underlying bond price closes at Rs 21.70 on the expiry date?

120 / 150

120. You are the owner of a 15 million portfolio with a beta 1.0. You would like to insure your portfolio against a fall in the index of magnitude higher than 10%. Spot Nifty stands at 9000. Put options on the Nifty are available at three strike prices. Which strike will give you the insurance you want?

121 / 150

121. Which is the most active currency pair in the world?

122 / 150

122. The margins shall be collected /adjusted from the _________ assets of the member on a real time basis.

123 / 150

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

124 / 150

124. Which of the following derivatives have the largest market size globally?

125 / 150

125.

Execution of Power of attorney by the client in favor of stockbroker is _____

126 / 150

126. Which category of market participants seeks to reduce risk exposure?

127 / 150

127. An institution buys a put option on 10Y G-Sec at strike 98. If price falls to 96, what is the intrinsic value?

128 / 150

128. Which of the following is NOT an example of a derivative?

129 / 150

129. Bearish Vertical Spreads can be implemented by the use of _________.

130 / 150

130. Operational risks include losses due to ____________.

131 / 150

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

132 / 150

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

133 / 150

133. Maximum loss for a short straddle is:

134 / 150

134. Clearing members are responsible for:

135 / 150

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

136 / 150

136. The price which option buyer pays to option seller to acquire the right is called as ___________.

137 / 150

137. 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?

138 / 150

138. In India, index derivatives are available on:

139 / 150

139. Securities Transaction Tax (STT) in case of Sale of an option in securities is payable by_______.

140 / 150

140. In case of Clearing Member default, which funds are used first?

141 / 150

141. Unsystematic risk can be reduced by portfolio diversification.

142 / 150

142. A penalty or suspension of registration of a stock broker from derivatives exchange/segment under the SEBI (Stock Broker) Regulations, 1992 can take place if _______________.

143 / 150

143.

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

144 / 150

144. A penalty or suspension of registration of a stock broker from derivatives exchange/segment under the SEBI (Stock Broker) Regulations, 1992 can take place if _______________.

145 / 150

145.

How are proprietary positions calculated for a Trading Member?

146 / 150

146. Nifty and Sensex originally followed which methodology?

147 / 150

147. Government securities & T-Bills can be considered as _________ of collateral deposits given to clearing corporation by its members.

148 / 150

148. For equity derivatives, carrying cost is the interest paid to finance the purchase less (minus) dividend earned.

149 / 150

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

150 / 150

150.

A naked position involves holding an equivalent position in the underlying asset

Your score is

The average score is 67%

0%

This 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 Common Derivatives exam!
NISM Series XIII mock test

Mock Test 1  |  Mock Test 2  |  Mock Test 3  |  Mock Test 4  |  Mock Test 5  |  Mock Test 6  |  Mock Test 7  |  Mock Test 8 Mock Test 9 Mock Test 10

For the latest and most accurate information, please visit the NISM website at https://certifications.nism.ac.in/nismaol/.