In ASBA, the amount is blocked in

A. Trading members account

B. Investors own account

C. Both A and B

D. None of the above

The Capital Market Segment of NSE commenced operations in

A. Sep-96

B. Nov-94

C. Aug-96

D. Nov-96

The first two characters in ISIN code for a security represents _____.

A. issuer type

B. security type

C. country code

D. company identity

American option are frequently deduced from those of its European counterpart

A. True

B. False

In the Black-Scholes Option Pricing Model, as S becomes very large, both N(d1) and N(d2) are both
close to 1.0.

A. True

B. False

In the case of index futures contracts, the daily settlement price is the ______.

A. closing price of futures contract

B. opening price of futures contract

C. closing spot index value

The Black-Scholes option pricing model was developed in _____.

A. 1923

B. 1973

C. 1887

D. 1987

Spot Price = Rs. 100. Call Option Strike Price = Rs. 98. Premium = Rs. 4. An investor buys the Option
contract. On Expiry of the Option the Spot price is Rs. 108. Net profit for the Buyer of the Option is
___.

A. 6

B. 5

C. 2

D. 4

An investor owns one thousand shares of Reliance. Around budget time, he gets uncomfortable with
the price movements. One contract on Reliance is equivalent to 100 shares. Which of the following
will give him the hedge he desires?

A. Buy 5 Reliance futures contracts

B. Sell 10 Reliance futures contracts

C. Sell 5 Reliance futures contracts

D. Buy 10 Reliance futures contracts

NSE trades Nifty, CNX IT, BANK Nifty, Nifty Midcap 50 and Mini Nifty futures contracts having all the
expiry cycles, except.

A. Two-month expiry cycles

B. Four month expiry cycles

C. Three-month expiry cycles

D. One-month expiry cycles

The open position for the proprietary trades will be on a ______

A. Net Basis
B. Gross Basis

With the introduction of derivatives the underlying cash market witnesses

A. lower volumes

B. sometimes higher, sometimes lower

C. higher volumes

D. volumes same as before

Trading member Shantilal took proprietary purchase in a March 2000 contract. He bought 1500 units
@Rs.1200 and sold 1400 units @ Rs. 1220. The end of day settlement price was Rs. 1221. What is
the outstanding position on which initial margin will be calculated?

A. 300 Units

B. 200 Units

C. 100 Units

D. 500 Units

An option which gives the holder the right to sell a stock at a specified price at some time in the
future is called a ___________.

A. Naked Option

B. Call Option

C. Out of the money option

D. Put Option

Greek letter measures a dimension to_______________ in an option position

A. the risk

B. the premium

C. the relationship

D. None

Which of the following are the most liquid stocks?

A. All Infotech stocks

B. Stocks listed/permitted to trade at the NSE

D. Stocks in the CNX Nifty Junior Index

The value of a call option ___________ with a decrease in the spot price

A. increases

B. does not change

C. decreases

D. increases or decreases

A January month Nifty Futures contract will expire on the last _____ of January

A. Monday

B. Thursday

C. Tuesday

D. Wednesday

A stock broker means a member of_______.

A. SEBI

B. any exchange

C. a recognized stock exchange

D. any stock exchange

Ashish is bullish about HLL which trades in the spot market at Rs.210. He buys 10 three-month call
option contracts on HLL with a strike of 230 at a premium of Rs.1.05 per call. Three months later, HLL
closes at Rs. 250. Assuming 1 contract = 100 shares, his profit on the position is ____.

A. Rs.18,950

B. Rs.19,500

C. Rs.10,000

D. Rs.20,000

The bull spread can be created by only buying and selling

A. basket option

B. futures
C. warrant

D. options

The beta of Reliance is 1.3. A person has a long Reliance position of Rs. 200,000 coupled with a short
Nifty position of Rs.100,000. Which of the following is TRUE?

A. He is bullish on Nifty and bearish on Jet Airways

B. He has a partial hedge against fluctuations of Nifty

C. He is bearish on Nifty as well as on Jet Airways

D. He has a complete hedge against fluctuations of Nifty

An investor is bearish about Tata Motors and sells ten one-month ABC Ltd. futures contracts at
Rs.6,06,000. On the last Thursday of the month, Tata Motors closes at Rs.600. He makes a
_________. (assume one lot = 100)

A. Profit of Rs. 6,000

B. Loss of Rs. 6,000

C. Profit of Rs. 8,000

D. Loss of Rs. 8,000

Manoj 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
futures contract = 100 shares) ?.

A. Buy 5 ABC Ltd.futures contracts

B. Sell 5 ABC Ltd.futures contracts

C. Sell 10 ABC Ltd.futures contracts

D. Buy 10 ABC Ltd.futures contracts

A dealer sold one January Nifty futures contract for Rs.250,000 on 15th January. Each Nifty futures
contract is for delivery of 50 Nifties. On 25th January, the index closed at 5100. How much
profit/loss did he make ?

A. Profit of Rs. 9000

B. Loss of Rs. 8000

C. Loss of Rs. 9500

D. Loss of Rs. 5000

A. True

B. False

The favorable difference received by buyer/holder on the exercise/expiry date, between the final
settlement price as and the strike price, will be recognized as ___________

A. Income

B. Expenses

C. Cannot Say

D. None

Mr. Ram buys 100 calls on a stock with a strike of Rs.1,200. He pays a premium of Rs.50/call. A
month later the stock trades in the market at Rs.1,300. Upon exercise he will receive __________.

A. Rs. 10000

B. Rs. 1200

C. Rs. 6000

D. Rs. 1150

All of the following are true regarding futures contracts except

A. they are regulated by RBI

B. they require payment of a performance bond

C. they are a legally enforceable promise

D. they are market to market

All open positions in the index futures contracts are daily settled at the

A. mark-to-market settlement price

B. net settlement price

C. opening price

D. closing price

Usually, open interest is maximum in the _______ contract.

B. far month

C. middle month

D. near month

ANSWER: D

Which of the following is not a derivative transaction?

A. An investor buying index futures in the hope that the index will go up.

B. A copper fabricator entering into futures contracts to buy his annual requirements of
copper.

C. A farmer selling his crop at a future date

D. An exporter selling dollars in the spot market

The current stock price of XYZ Ltd. is Rs. 30. At an exercise price of Rs. 30, put option on XYZ is priced
at Rs. 2.15 each and the call options are priced at Rs. 2.89 each. Each contract consists of 100
options. What is the maximum profit if you buy a call?

A. Rs. 3289

B. Unlimited

C. Rs. 2711

D. Rs. 3000

The intrinsic value of a put option is the maximum of _____.

A. (Spot Price - Strike Price), and zero

B. (Strike Price - Spot Price), and zero

C. (Strike Price - Spot Price - Premium), and zero

D. (Spot Price - Strike Price - Premium), and zero

An investor Mr. B, sells 2 ATM Call Options, Buys 1 ITM call option and buys 1 OTM call option. The
strategy is a ___ strategy.

A. Bear spread

B. Short Condor

C. Long Call Butterfly

D. Bull spread