NISM Series XIII | Common Derivatives | Mock Test 1.7 | 50 Solved Questions part 1
NISM Series XIII: Common Derivatives
Mock Test 1.7: Solved MCQs (Part 1: Q1 - Q50)
📝 TEST INSTRUCTIONS:
This section covers the first 50 questions of Mock Test 1.7. Focus on MTM Calculations, Option Strategies, and Regulatory Guidelines. Click each question to reveal the answer.
Q 1. A person sells GBPINR and buys EURINR for an equivalent amount. What view has he expressed?
A) INR appreciation against GBP
B) EUR appreciation against GBP
C) EUR depreciation against GBP
D) INR depreciation against GBP
View Answer
Answer: EUR appreciation against GBP
Explanation: Selling GBPINR - view is weakening of GBP against INR. Buying EURINR - view is strengthening of EUR against INR. Taking a collective view - GBP weakening against EUR or EUR strengthening against GBP.
Q 2. An active trader in currency options market wants to execute his view on change in volatility over a period of time and wants to be insulated from changes in other factors impacting option pricing. What option strategy is he likely to use?
A) Covered call
B) Calendar spread
C) Long option
D) Short option
View Answer
Answer: Calendar spread
Explanation: A Calendar Spread involves buying and selling options of the same strike but different expiry dates. It is mainly used to profit from changes in volatility, especially when expecting volatility to rise. This strategy is neutral to price direction, so it limits exposure to other factors.
Q 3. Mr. Satish in India expects gold prices to appreciate. He buys 30g gold at Rs. 25000/g and sells 15 lots of 6-month USDINR futures at 60. Later, he sells gold at Rs 28000/g and unwinds futures at Rs 63. Which best describes the return and strategy?
A) Positive returns, Long USDINR futures
B) Negative returns, Short USDINR futures
C) Positive returns, Short USDINR futures
D) Negative returns, Long USDINR futures
View Answer
Answer: Positive returns, Short USDINR futures
Explanation: Gold profit = (28000 - 25000) x 30 = Rs 90000. Futures loss = (60 - 63) X 15 X 1000 = 45000 Loss. Net Position: 90000 Profit - 45000 Loss = 45000 Net Profit.
Q 4. With respect to OTC market, what is TRUE for value date of a forward contract?
A) Customized for a maximum period of one year
B) Customized for a maximum period of six months
C) Value dates are only available for month end date
D) It can be customized for any period upto 6 month maturity for USDINR and upto 1 year for other currency pairs
View Answer
Answer: It can be customized for any period upto 6 month maturity for USDINR and upto 1 year for other currency pairs
Q 5. Mr. Madan buys 70 lots GBPINR futures at 91.5 and sells 80 lots at 91.6 on day 1. Settlement price is 91.20. What is the MTM margin on open positions?
A) 4000
B) -4000
C) 5000
D) -5000
View Answer
Answer: 4000
Explanation: Open position is Short 10 lots (80-70) at 91.60. MTM = (91.60 - 91.20) x 10 x 1000 = 4000.
Q 6. A person enters a limit order to buy GBPINR at 80.50 when current price is 80.80. Market moves in range 80.40 to 81. At what price is order executed?
A) 80.50
B) At or below 80.50
C) Any price above 80.50
D) Any price between 80.40 and 81
View Answer
Answer: 80.50
Q 7. SEBI guidelines on brokers advertising their business in public media?
A) Advertisements must be ethical only
B) Should not advertise publicly unless permitted by exchange
C) License for 5+ years required
D) License for 10+ years required
View Answer
Answer: A broker should not advertise his business publicly unless permitted by the exchange
Q 8. Ms. Mamta buys 10 lots @ 65.00/65.10 and squares off 5 lots @ 65.15/65.35. Profits/Losses?
A) -500
B) 500
C) 250
D) 1250
View Answer
Answer: 250
Explanation: Buy @ 65.10. Sell @ 65.15. Profit = 0.05 per USD. For 5 lots: 0.05 x 5 x 1000 = 250.
Q 9. Internationally for most of the currency pairs, the base currency is ________.
A) INR
B) GBP
C) EUR
D) USD
View Answer
Answer: USD
Q 10. A 'DERIVATIVE PRODUCT' can be best described as a ________.
A) Complex bank product
B) Product whose value is derived from underlying variables
C) Equity/Currency exchange product
D) None of the above
View Answer
Answer: product whose value is derived from value of one or more underlying variables
Q 11. If a trader expects INR to depreciate against the USD, he will sell USDINR - True or False?
A) True
B) False
View Answer
Answer: False
Explanation: If INR depreciates, USD strengthen. The rate USDINR will rise. Therefore, he will BUY USDINR.
Q 12. Aditya has a 10 lac loan for USA. Payment in 1 month. Strike rate 50. How many lots to buy to hedge?
A) 20 Lots
B) 50 Lots
C) 30 Lots
D) 40 Lots
View Answer
Answer: 20 Lots
Explanation: 10,00,000 / 50 = 20,000 USD. Lot size is 1000. 20,000 / 1000 = 20 Lots.
Q 13. Permissions for trading in 'PRO ACCOUNT' from multiple locations?
A) Member must get Exchange permission
B) Multiple locations allowed freely
C) Only one location allowed by CC
D) Specific location approved by SEBI
View Answer
Answer: A trading member has to get Exchange's permission if he wants to enter 'Pro account' orders from multiple locations
Q 14. Mr. Vaibhav believes USDINR will appreciate hugely. His view is correct but profits are NOT increasing with appreciation. What contract?
A) Long Call
B) Long Put
C) Short Call
D) Short Put
View Answer
Answer: Short Put option
Explanation: Short Put is bullish, but gains are capped at the premium received.
Q 15. Spot: 66. Call strike 65.50 @ 0.45. Put strike 66 @ 0.38. Buys Put (66), Sells Call (65.50). Expiry @ 66. P&L?
A) Profit 350
B) Profit 410
C) Loss 430
D) Loss 370
View Answer
Answer: Loss of Rs. 430
Explanation: Put loss = premium (380). Call loss = (65.50-66) + 0.45 = 0.05 loss (50). Total = 430.
Q 16. Act responsible for governing security trading in India?
A) IRDA Act
B) SEBI Act
C) FEMA 1999
D) SC(R)A 1956
View Answer
Answer: SC(R)A 1956
Q 17. USDINR stable at 73 expected. 1m premium 40 paise. Action?
A) Sell 1 month futures, 40 paisa profit
B) Sell 3 month futures
C) Buy 1 month futures
D) Buy 3 month futures
View Answer
Answer: Sell 1 month USDINR futures, 40 paisa
Q 18. Kohli 1L @ 60 exchange. 18% USD gain. Repat @ 62. INR return?
A) 20.78%
B) 19.42%
C) 21.93%
D) 17.66%
View Answer
Answer: 21.93%
Explanation: $1666.67 x 1.18 x 62 = 121933.54. Return is 21.93%.
Q 19. Sells GBPINR, Buys EURINR. View?
A) INR app vs GBP
B) INR dep vs GBP
C) EUR app vs GBP
D) EUR dep vs GBP
View Answer
Answer: EUR appreciation against GBP
Q 20. Dinesh (exporter) sells 200 lots @ 73. Expiry settle @ 72.70. P&L?
A) Loss 60k
B) Loss 45k
C) Profit 45k
D) Profit 60k
View Answer
Answer: Profit of Rs. 60,000
Explanation: (73 - 72.70) x 200 x 1000 = 60,000 profit.
Q 21. How can TM recover MTM if client defaults?
A) Equity margin
B) Initial margin
C) Credit line
D) New trade profit
View Answer
Answer: It can be recovered from the initial margin
Q 22. Relationship for stop loss SELL order?
A) No relationship
B) Equal
C) Trigger > Limit
D) Trigger < Limit
View Answer
Answer: Trigger price is more than limit price
Q 23. Term describing JPY currency:
A) Free Floating
B) Pegged to USD
C) Pegged to INR
D) Pegged to Gold
View Answer
Answer: Free Floating
Q 24. Bank option book parameters:
A) NW, CAR, NPA%
B) NW, years, profit
C) NW, Profit, CAR, NPA%
D) Only NPA%
View Answer
Answer: Net worth, profitability, capital adequacy and Non Performing Assets %
Q 25. Sells 8 lots EURINR @ 72.60/70, sq off 7 @ 71.50/70. P&L?
A) Loss 7800
B) Profit 6500
C) Loss 8100
D) Profit 6300
View Answer
Answer: Profit of Rs 6300
Explanation: (72.60 - 71.70) x 7 x 1000 = 6300 Profit.
Q 26. Gold coin price risks:
A) USD/GOLD and USD/INR
B) USD/INR
C) USD/GOLD
D) EUR/USD
View Answer
Answer: USD/GOLD and USD/INR
Q 27. Quotes 75.31/35. Buy 1 unit, Sell 1 unit at diff banks. Loss vs same bank?
A) 3p Profit
B) 7p Profit
C) 6p Loss
D) 4p Loss
View Answer
Answer: Loss of 4 paisa
Q 28. Buys USDINR, sells JPYINR. View?
A) JPY app vs USD
B) USD app vs JPY
C) INR weak vs USD
D) INR strong vs USD
View Answer
Answer: USD strengthening against JPY
Q 29. UK 2%, India 8%, Spot 70. 6m future rate GBPINR?
A) 72.90
B) 71.05
C) 73.80
D) 72.06
View Answer
Answer: 72.06
Q 30. Timing for collection of MTM margins?
A) T+1
B) 11:30 AM / 3:30 PM
C) Day 2 end
D) Expiry day
View Answer
Answer: T+1
Q 31. Trader feels INR should depreciate against USD. Transact?
A) Buy USDINR
B) Sell USDINR
C) No action
View Answer
Answer: Buy USDINR
Q 32. Process where actual payin-payout happens?
A) Payment Process
B) Settlement
C) Clearing
D) Margining
View Answer
Answer: Settlement
Q 33. BULLISH view USDINR, zero cash outgo?
A) Sell Call
B) Sell Put
C) Buy Call
D) Buy Put
View Answer
Answer: Sell USDINR Put option
Q 34. MTM gains/losses settled in cash before start of:
A) T+1
B) T+2
C) T
D) Real time
View Answer
Answer: T+1
Q 35. BID price means?
A) Price taker buys
B) Price taker sells
C) Market maker buys
D) Market maker sells
View Answer
Answer: The price at which market maker is willing to buy
Q 36. Sells @ 81.70 (limit). Price moves 81-82. Execution?
A) 81.70
B) 81.70 - 82
C) At/below 81.50
D) 81 - 81.50
View Answer
Answer: At 81.70
Q 37. Short PUT, once BEP crossed, losses increase with decreasing price. True or False?
A) Always True
B) Sometimes True
C) Never True
D) None
View Answer
Answer: Always true
Q 38. Risk aversion, money moves from emerging markets. Currency?
A) Appreciate
B) Depreciate
C) No effect
View Answer
Answer: Depreciate
Q 39. AD Cat I Bank Min Networth (Crores)?
A) 100
B) 200
C) 500
D) 750
View Answer
Answer: 500
Q 40. Future equals spot on ________.
A) First day
B) 10th day
C) 15th day
D) Expiry day
View Answer
Answer: expiry day of the contract
Q 41. USD Put strike 58.50, premium 1.00. BEP?
A) 57.50
B) 59.50
C) 58.50
D) 60
View Answer
Answer: 57.50
Q 42. Buy Option = right to sell?
A) Yes
B) No
C) Depends on Call or Put
View Answer
Answer: Depends on whether its a Call or Put option
Q 43. Redressal taken up by Exchange?
A) Notional loss
B) Sub-broker dealings
C) Non-receipt of funds
D) Existing arbitration subject
View Answer
Answer: Non-receipt of funds / securities
Q 44. Measure of uncertainty?
A) Volatility
B) Delta
C) Std Dev
D) Put
View Answer
Answer: Volatility
Q 45. Managed float local currency depreciates. Measure?
A) Reduce FPI limit
B) Increase FPI limit
C) Reduce capital inflow
D) None
View Answer
Answer: Increase the limit of Foreign Portfolio Investor (FPIs) holding in the stock markets
Q 46. Exporter USD 25m, payment 3 months. Forward eligibility?
A) 25m/3m
B) 25m/1m
C) 12.5m/3m
D) Any/6m
View Answer
Answer: Maximum of USD 25 million for a maximum maturity of three months
Q 47. T + 1 is called as:
A) Tom
B) Spot
C) Cash Date
D) None
View Answer
Answer: Tom
Q 48. FBIL reference rate publishes around?
A) 9 AM
B) 10:30 AM
C) 1:30 PM
D) 3 PM
View Answer
Answer: 1.30 pm
Q 49. Market timings for ETCD options (India)?
A) 11:00 AM - 5:00 PM
B) 9:00 AM - 5:00 PM
C) 9:30 AM - 5:30 PM
D) 24 hours
View Answer
Answer: 9:00 AM TO 5:00 PM
Q 50. Order to buy/sell at specified price or better?
A) Stop Loss
B) IOC
C) Market
D) Limit Price Order
View Answer
Answer: Limit Price Order
🚀 Master Your NISM Exam!
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Visit Apollo Alpha ShopDhaval Visariya
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