Test Your NCFM Derivatives Market (Dealers) Module Mock Test Knowledge in 5 Minutes

1. An index option is a __________________.(NISM workbook)

A. Debt instrument B. Derivative product C. Cash market product D. Money market instrument

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

A. Mortgage B. Arbitrage C. Hedging D. Speculation

3. Financial derivatives provide the facility for __________.(NISM workbook)

A. Trading B. Hedging C. Arbitraging D. All of the above

4. Operational risks include losses due to ____________.(NISM workbook)

A. Inadequate disaster planning B. Too much of management control C. Income tax regulations D. Government policies

5. State whether TRUE or FALSE: Impact cost is low when the liquidity in the system is poor.(NISM workbook)

A. True B. False

6. Which of the following costs is not actually paid by the market participants but arises due to lack of liquidity? (NISM workbook)

A. Securities Transaction Tax B. Impact cost C. SEBI charges D. Brokerage

7. 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?(NISM workbook)

A. 16,600 B. 15,600 C. -15,600 D. -16,600

8. 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, you made a profit of Rs. 10,000. Which closing action enabled this profit?(NISM workbook)

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. A calendar spread contract in index futures attracts ___________.(NISM workbook)

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. Margins in 'Futures' trading are to be paid by _______.(NISM workbook)

A. Only the buyer B. Only the seller C. Both the buyer and the seller D. The clearing corporation