CLASS TEST

FINANCIAL DERIVATIVES
 All questions carry 1 mark except numerical problem
 The only problem carries 4 marks.
1. A person bought call option of strike price 700 by paying a premium of Rs.20 .
On expiry day the spot price is 680 . What happens then?
1) He exercises the option
2)The option expires worthless.
3)He squares off the option before market closes.

(a) Only 2
(b) Both 1 & 3
(c ) 2 or 3
(d)Only 1

1. Option (c )

2.A person buys American call option of strike price 100 for Rs.10 . The next day
underlying asset price is 115 .Expiry is after 20 days. Can he exercise the option?
(a) Yes
(b)No
(c)Can’t say

2. (a)- Yes

3.In India, commodity futures are

(a)Cash settled
(b)Delivery settled
(c )Both
(d)Neither

3. (b)

4.Intrinsic value of put option is

(a)Positive value of Strike price – Spot price
(b)Negative value of Strike price – Spot price
(c)Any value of Strike price – Spot price

4. (a) Positive value of Strike price – Spot price

5.An out-of -money option has

(a) Intrinsic value and time value
(b) Only time value
(c)Only intrinsic value
(d) Neither

5. (b) Only time value

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6.A person bought a call option and put option for Rs. 10 and Rs.5 respectively .Strike
price is 150 . If the settlement price is 190, his profit/loss is +25

7.A future if not sold will be squared off by exchange at closing price

8. Derivatives must be used for hedging and not for speculation

9.Open interest is sum of all unsettled/settled /squared off transactions. Unsettled

10.Only in the money options can be exercised.

11. Who provides counter party guarantee for all trades executed on NSEIL?
(a) NSE Clearing House
(b) NSEIL
(c) NSDL
(d) NSCCL

10. NSCCL

12. The Client registration form is filled by the client when option c________.

(a) client delivers spurious shares

(b) broker has to file FIR against client
(c) client enrolls himself with the broker
(d) client defaults in making payments

13. A stockbroker means a member of _________.

(a) SEBI
(b) any exchange
(c) a recognized stock exchange
(d) any stock exchange

Option (d)- a recognized stock exchange

14. Which of the following is NOT true about SEBI?

(a) It determines the premium/discounts at which securities are to be issued.

(b) It can specify the matters to be disclosed and the standards of disclosure
required for the protection of investors in respect of issues.
(c) Its regulatory jurisdiction extends over all intermediaries and persons
associated with the securities market.
(d) Its regulatory jurisdiction extends over corporates in the issuance of capital and
transfer of securities.

15. Which of the following statement(s) is/are true pertaining to Mark - to - Market margin
a) It is calculated by marking each transaction in security to the closing price of the
security at the end of trading.
b)The margin is collected before the start of the trading of the next day.
c) The MTM margin is collected on the gross open position of the member.
(a) a,b
(b) a,b,c
(c) a,c
(d) b,c

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16. The securities market has two segments primary and secondary. Is the
above statement : True or False True

17.A call writer has potential of

(a) Limited loss and unlimited profit
(b)Limited loss and limited profit
(c )Unlimited loss and unlimited profit
(d)Unlimited loss and limited profit

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 Nagar Yuwak Shikshan Sanstha’s
Datta Meghe Institute of Management Studies
Atrey Layout, Nagpur-440022

HUMAN RESOURCE MANAGEMENT

NAME OF FACULTY: Mrs. SOMA SHARMA
SECOND SEMESTER (BETA SECTION)
Jan 2013- June 2013