NISM Series VIII: Equity Derivatives | Mega Mock Test 2 | 100 Solved Questions

NISM Series VIII: Equity Derivatives - Mega Mock Test 2

🎯 FINAL PREP CHALLENGE:

This test contains 100 detailed questions. Use this to find your weak spots before the actual exam. Click each question to reveal the logic!

Q 1. A client Mr. P has bought a March series contract and another client Mr. Q has sold a March series contract. Does this qualify as a calendar spread?

A) Yes
B) No

View Answer & Logic

Answer: B) No

Explanation: A calendar spread requires the same client to have opposite positions in different expiry months. Here, the clients and the expiry are different/same incorrectly for a spread.

Q 2. The adjustment factor for a stock issuing a Bonus in the ratio A : B is:

A) (A + B) / B
B) (A - B) / B
C) (A + B) x B
D) (A - B) x A

View Answer & Logic

Answer: A) (A + B) / B

Q 3. Spot price is 200. Trader buys 195 strike Call for 10 premium. Expiry settlement is 220. Net profit?

A) Rs 25
B) Rs 15
C) Rs 10
D) NIL

View Answer & Logic

Answer: B) Rs 15

Math: (220 - 195) - 10 = 25 - 10 = 15 profit.

Q 4. Theoretical futures price is used for daily MTM settlement if the contract is not traded. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 5. Delivery based settlement in single stock futures is provided by:

A) BSE
B) NSE
C) OTCEI
D) Both BSE and NSE

View Answer & Logic

Answer: D) Both BSE and NSE

Q 6. Final Settlement Price in Options is the Closing price of the underlying on the last day. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 7. Nifty consists of securities having __________ market capitalisation.

A) Large
B) Medium
C) Small
D) All

View Answer & Logic

Answer: A) Large

Q 8. A Bull Spread can be created by:

A) Buying/Selling Futures
B) Buying/Selling Options
C) Cash/Futures mix
D) ETFs

View Answer & Logic

Answer: B) Buying and selling Options

Explanation: Usually, buying a lower strike call and selling a higher strike call.

Q 9. Penalty for increasing position in a banned security (Min/Max)?

A) 5000, 100000
B) 5000, 50000
C) 10000, 100000
D) 10000, 25000

View Answer & Logic

Answer: B) 5000, 50000

Q 10. Lowest level of hierarchy in a trading firm?

A) Speculator
B) Dealer
C) Branch Manager
D) Regional Manager

View Answer & Logic

Answer: B) Dealer

Q 11. Does a Call option BUYER pay STT at the time of purchase?

A) Yes
B) No

View Answer & Logic

Answer: B) No

Explanation: In F&O, STT is paid only by the SELLER on sale/expiry (unless exercised).

Q 12. Open position of a Trading Member is:

A) Only Prop positions
B) Only Client positions
C) Prop + Client positions
D) Netted Prop/Client

View Answer & Logic

Answer: C) Adding both - proprietary and all clients net outstanding positions

Q 13. Investor wants to protect ICICI Bank shares against a fall. What to do?

A) Buy ICICI Put
B) Buy ICICI Call
C) Buy Nifty Futures
D) Buy Bank Nifty

View Answer & Logic

Answer: A) Buy ICICI Put Option

Explanation: This is a Protective Put strategy.

Q 14. Spread designed to profit if prices go down?

A) Hedge Spread
B) Arbitrage Spread
C) Bull Spread
D) Bear Spread

View Answer & Logic

Answer: D) Bear Spread

Q 15. Time value of an option is:

A) Strike - Premium
B) Strike - Spot
C) Premium - Spot
D) Premium - Intrinsic Value

View Answer & Logic

Answer: D) Premium - Intrinsic value

Q 16. Which cannot be traded on NSE F&O?

A) Index Futures
B) Stock Options
C) Index Options
D) Individual Warrant Options

View Answer & Logic

Answer: D) individual warrant options

Q 17. Future bought at 100, sold at 87. Lot size 1000. Payoff?

A) NIL
B) +13000
C) -13000
D) -8700

View Answer & Logic

Answer: C) - 13000

Math: (87 - 100) * 1000 = -13000.

Q 18. Price at which asset is bought/sold on exercise:

A) Spot Price
B) Risk Premium
C) Strike Price
D) Option Premium

View Answer & Logic

Answer: C) Strike Price

Q 19. Seniors/Risk-averse investors should always invest in derivatives. True or False?

A) True
B) False

View Answer & Logic

Answer: B) False

Explanation: Derivatives are highly risky. They should only be used by those with appropriate risk tolerance or for hedging.

Q 20. Speculator accepts risks in search of profits. True or False?

A) False
B) True

View Answer & Logic

Answer: B) True

Q 21. Derivatives trades in India are cleared through:

A) SBI
B) Euroclear
C) SEBI approved CC
D) Interbank House

View Answer & Logic

Answer: C) SEBI approved Clearing Corporation / Clearing House

Q 22. Calendar spread involves opposite positions in two futures with:

A) Diff asset, same month
B) Diff month, diff asset
C) Diff month, same asset
D) Stock vs Index

View Answer & Logic

Answer: C) two differently delivery months and same underlying asset

Q 23. Excess premium over intrinsic value is time value. True or False?

A) False
B) True

View Answer & Logic

Answer: B) True

Q 24. Simultaneous buy/sell of two different tenors in same underlying:

A) Limit order
B) Short hedge
C) Spread trade
D) Long hedge

View Answer & Logic

Answer: C) Spread trade

Q 25. Delta is the change in price given a 1% change in interest rates. True or False?

A) False
B) True

View Answer & Logic

Answer: A) False

Explanation: Rho measures interest rate sensitivity. Delta measures sensitivity to underlying price.

Q 26. If volatility decreases, Call premium will:

A) Increase
B) Decrease
C) Not change
D) Random

View Answer & Logic

Answer: B) Decrease

Explanation: Less risk (volatility) leads to lower premiums.

Q 27. Investors who believe market will FALL are Bulls. True or False?

A) True
B) False

View Answer & Logic

Answer: B) False

Explanation: Bulls expect markets to RISE. Bears expect them to FALL.

Q 28. MTM debits for stock options are done on a ______ basis.

A) Fortnightly
B) Monthly
C) Daily
D) Weekly

View Answer & Logic

Answer: C) daily basis

Q 29. CC can disable a member from trading if they fail to pay dues. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 30. Derivative losses can be carried forward for ______ assessment years.

A) 5
B) 8
C) 12
D) 15

View Answer & Logic

Answer: B) 8 years

Q 31. A Forward contract can be cancelled if the counter party agrees. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 32. Can a CM give 'Fixed Deposits' as part of liquid assets?

A) Yes
B) No

View Answer & Logic

Answer: A) Yes

Q 33. Premium is adjusted against exercise price on settlement if exercised. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 34. CM must deposit minimum ______ with the CC as security deposit.

A) 50 Lakhs
B) 100 Lakhs
C) 150 Lakhs
D) 20 Lakhs

View Answer & Logic

Answer: A) Rs. 50 lakhs

Q 35. SHORT SELLING a stock means:

A) Has a month to deliver
B) Owns the stock
C) Deliver in short time
D) Does not own the stock

View Answer & Logic

Answer: D) He does not own the stock he is supposed to deliver

Q 36. Buying a Put option on a stock you own is:

A) Calendar Spread
B) Aggressive Put
C) Protective Put
D) Straddle

View Answer & Logic

Answer: C) protective put

Q 37. Scarcity of underlying will generally cause futures price to rise. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 38. Trader can place a bid/offer:

A) Within daily circuit filter
B) At any price
C) Negotiated with exchange
D) Any price he deems fit

View Answer & Logic

Answer: A) At a price which is within the daily circuit filter limits

Q 39. Decrease in interest rates will:

A) Increase Put premium
B) Decrease Put premium
C) Expire puts
D) No effect

View Answer & Logic

Answer: A) Increase the premium on the put option

Q 40. Value of one lot ABC futures at 3200 (multiplier 150)?

A) 2,40,000
B) 3,20,000
C) 5,40,000
D) 4,80,000

View Answer & Logic

Answer: D) Rs. 4,80,000

Math: 3200 * 150 = 4,80,000.

Q 41. Professional Clearing Member:

A) Must be cash member
B) Cash member within 2 years
C) Provides prop trades
D) Has no trading rights

View Answer & Logic

Answer: D) does not have any trading rights

Q 42. Future price increases. Margin account:

A) Buyer credited
B) Seller debited
C) Both 1 & 2
D) None

View Answer & Logic

Answer: C) Both 1 and 2

Q 43. Theta measures sensitivity to market volatility. True or False?

A) True
B) False

View Answer & Logic

Answer: B) False

Explanation: Vega measures volatility. Theta measures time decay.

Q 44. When strike price increases, Call premium decreases. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 45. Future sold at 268, lot size 1500. Bought back at 274. P&L?

A) +9000
B) +18000
C) -9000
D) -18000

View Answer & Logic

Answer: C) -9000

Math: (268 - 274) * 1500 = -6 * 1500 = -9000.

Q 46. Intrinsic Value is zero for OTM but always positive for ITM. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 47. Stock index like Nifty:

A) Basket of stocks
B) Easily manipulated
C) Both 1 & 2
D) None

View Answer & Logic

Answer: A) is a basket of stocks

Q 48. Call buyer on index receives excess of spot over strike on exercise. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 49. Higher flexibility in fixing FORWARD contract vs FUTURE. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 50. Tick size is:

A) Size of contract
B) Max permitted move
C) Min permitted move
D) Average of high/low

View Answer & Logic

Answer: C) Tick size is the minimum permitted movement in the price of the contract

Q 51. Functions of Derivative Market include:

A) Price discovery
B) Organized speculation
C) Both 1 & 2
D) None

View Answer & Logic

Answer: C) Both 1 and 2

Q 52. Who appoints SEBI board members?

A) Maharashtra Govt
B) President
C) Central Govt
D) Stock Exchanges

View Answer & Logic

Answer: C) The Central Government

Q 53. Expiry for June series Index Futures on BSE?

A) Last Thursday in June
B) Last Thursday in July
C) Last Thursday in Aug
D) Last Thursday in Sep

View Answer & Logic

Answer: A) Last Thursday in June

Q 54. Call option allows buyer to buy 'ANY' quantity from writer. True or False?

A) True
B) False

View Answer & Logic

Answer: B) False

Explanation: Only the specified **Lot Size** can be bought.

Q 55. Institutional investors pay lower margins than individuals. True or False?

A) True
B) False

View Answer & Logic

Answer: B) False

Explanation: Margin requirements are based on the contract risk, not the category of the investor.

Q 56. Generally, American options value is LOWER than European. True or False?

A) True
B) False
C) Inadequate info
D) Depends on market

View Answer & Logic

Answer: B) False

Explanation: American options are usually worth more because they offer more flexibility (can be exercised anytime before expiry).

Q 57. Short Put can be closed by taking Long Put in same series. True or False?

A) False
B) True

View Answer & Logic

Answer: B) True

Q 58. Higher the volatility, ______ the initial margin.

A) Lower
B) Higher
C) Same
D) None

View Answer & Logic

Answer: B) Higher the volatility, Higher the initial margin

Q 59. Forward with longer maturity trades at higher price in normal market. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 60. Option contracts can be settled:

A) Only cash
B) Buyer's choice
C) Cash or Delivery (as per terms)
D) Seller's choice

View Answer & Logic

Answer: C) in cash or settled by delivery depending on the terms of the contract

Q 61. A Trading Member does NOT have Clearing rights. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Explanation: Only TCM (Trading-cum-Clearing) or SCM have clearing rights.

Q 62. CM exposure levels are _______ correlated with Liquid Assets.

A) Positively
B) Negatively
C) Not related
D) Exponentially

View Answer & Logic

Answer: A) Positively

Q 63. Vega measures change in Delta w.r.t underlying price. True or False?

A) True
B) False

View Answer & Logic

Answer: B) False

Explanation: Gamma measures change in Delta. Vega measures sensitivity to Volatility.

Q 64. A fall in stock price INCREASES the value of a call option. True or False?

A) True
B) False

View Answer & Logic

Answer: B) False

Q 65. If market participants are more, liquidity will be LOW. True or False?

A) True
B) False

View Answer & Logic

Answer: B) False

Q 66. Holder of Long Put will gain if price _______.

A) Increases
B) Decreases
C) No change
D) Expires worthless

View Answer & Logic

Answer: B) Decreases

Q 67. True for Futures:

A) Settled through CC
B) Standardized
C) Traded on Exchange
D) All

View Answer & Logic

Answer: D) All of the above

Q 68. Which complaint can Exchange redress?

A) Land dealings
B) Subject of Arbitrage
C) Notional loss
D) Unauthorized transactions

View Answer & Logic

Answer: D) Claims regarding unauthorized transaction in the client’s account

Q 69. Client money cannot be attached for broker prop account. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 70. SL Sell at 450 (Trigger). Spot 470. Released when?

A) At 470
B) At 450
C) Immediately
D) At 460

View Answer & Logic

Answer: B) As soon as the market price of ABC touches Rs. 450

Q 71. Index futures are settled by:

A) Delivery
B) Cash
C) Both
D) Gold

View Answer & Logic

Answer: B) cash settlement on maturity

Q 72. Negative news on Govt. Best active trade?

A) Buy Index Futures
B) Sell Index Futures
C) Buy Blue Chip
D) Double Prop

View Answer & Logic

Answer: B) Sell index futures

Q 73. Cash dividends DECREASE call values. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 74. Exchange needs SEBI approval for EVERY new stock future once bye-laws approved. True or False?

A) True
B) False

View Answer & Logic

Answer: B) False

Explanation: Once framework is approved, exchange follows the rules for new additions.

Q 75. MTM margin is always equal to initial margin. True or False?

A) True
B) False

View Answer & Logic

Answer: B) False

Q 76. Option buyer recognizes favorable settlement difference as:

A) Income
B) Expense
C) Loan
D) Amortization

View Answer & Logic

Answer: A) Income

Q 77. Sold Put (Strike 300) for 20. Lot 1000. Expiry at 250. P&L?

A) -30000
B) 30000
C) 70000
D) -70000

View Answer & Logic

Answer: A) -30000

Math: (250 - 300) + 20 = -30. -30 * 1000 = -30000.

Q 78. European option exercise and expiry dates are:

A) Same
B) Diff
C) 28th only
D) May be same

View Answer & Logic

Answer: A) Always the same

Q 79. Opening Buy Transaction creates/increases:

A) Arbitrage
B) Cross
C) Long
D) Short

View Answer & Logic

Answer: C) Long position

Q 80. Advantage of screen-based trading?

A) No setup cost
B) Transparency
C) Low tech
D) No exchange needed

View Answer & Logic

Answer: B) There is transparency in trade execution and execution price

Q 81. Speculators are important because they:

A) Buy/Sell diff markets
B) Transfer risk to hedgers
C) Add liquidity
D) Take delivery

View Answer & Logic

Answer: C) They add to the liquidity to the futures markets

Q 82. Value-at-Risk (VaR) measures:

A) Volatile portfolio value
B) Risk level of portfolio
C) Illiquid value
D) Index PE

View Answer & Logic

Answer: B) Risk level of a financial portfolio

Q 83. Rohit bought 100, Mohit sold 300. Member liability to CC?

A) 100
B) 300
C) 400
D) 200

View Answer & Logic

Answer: C) 400

Explanation: Client positions are GROSSED at member level. 100 + 300 = 400.

Q 84. Are brokers allowed on Clearing Council?

A) Yes
B) No

View Answer & Logic

Answer: B) No

Q 85. TM must assess financial soundness of new clients. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 86. Kailash @ 850. Max loss limit 4000 on 200 shares. Step?

A) Limit Buy 830
B) Limit Sell 830
C) SL Sell 830
D) Limit Buy 870

View Answer & Logic

Answer: C) Place a stop loss sell order for 200 shares Rs.830 per share

Math: 4000/200 = 20 pts. 850 - 20 = 830.

Q 87. In which option is Strike better than Market?

A) ATM
B) OTM
C) ITM
D) None

View Answer & Logic

Answer: C) In the money option

Q 88. Selling short means:

A) Owns stock
B) Time to deliver
C) Does not own stock
D) Short time to deliver

View Answer & Logic

Answer: C) Seller does not own the stock he is supposed to deliver

Q 89. Open positions are guaranteed by CC. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 90. MTM margins collected on a ______ basis.

A) Monthly
B) Weekly
C) Bi-weekly
D) Daily

View Answer & Logic

Answer: D) daily

Q 91. STT means:

A) Stock Trading Tax
B) Stock Transaction Tax
C) Securities Transaction Tax
D) Securities Trading Tax

View Answer & Logic

Answer: C) Securities Transaction Tax

Q 92. April index contract introduced on:

A) Day after March last Thu
B) Day after March last Fri
C) Day after Jan last Thu
D) Day after Jan last Fri

View Answer & Logic

Answer: C) On the 1st trading day after last Thursday in January

Explanation: Contracts are for 3 months. When Jan expires, April starts.

Q 93. TGF objectives:

A) Protect investors
B) Inculcate confidence
C) Guarantee settlement
D) All

View Answer & Logic

Answer: D) All of the above

Q 94. Initial Margin is:

A) Paid at start of business
B) Paid at spot buy
C) Membership fee
D) Paid at future entry

View Answer & Logic

Answer: D) The margin which is paid at the time of entering futures contract

Q 95. In India, derivatives can be traded by:

A) Any NSE/BSE broker
B) Any SEBI broker
C) SEBI registered F&O brokers
D) All

View Answer & Logic

Answer: C) SEBI registered brokers for trading in derivatives

Q 96. Sells higher strike Put, buys lower strike Put. Strategy?

A) Bear Spread
B) Bull Spread
C) Calendar Spread
D) Straddle

View Answer & Logic

Answer: B) Bullish Spread

Q 97. Networth of SCM is higher than PCM. True or False?

A) False
B) True

View Answer & Logic

Answer: A) False

Q 98. Beta measures systematic risk. True or False?

A) True
B) False

View Answer & Logic

Answer: A) True

Q 99. To close Buy Call (Jan 200), you must Sell Call (Jan 200). True or False?

A) False
B) True

View Answer & Logic

Answer: B) True

Q 100. Long Put can be closed by taking Short Call. True or False?

A) True
B) False

View Answer & Logic

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Dhaval Visariya

AMFI Registered Distributor (ARN-327925) | Software Developer & Finance Enthusiast

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Disclaimer: I am an AMFI Registered Mutual Fund Distributor. Views expressed here are for educational purposes. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
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