NISM VIII CHAPTER 3

—- is an agreement made directly between two parties to buy or sell an asset on a specific date in the future, at the terms decided today.

Under —- contract both the parties both the parties are most likely obliged to go through with the contract irrespective of the value of the underlying asset at the point of delivery.

Forwards are —-

Forward help in avoiding —-

Which of the following is a major limitation of forward contract?

Forward contract are:

—– is an agreement made through an organized exchange to buy or sell a fixed amount of a commodity or a financial asset on a future date at an agreed price.

Which of the following is a feature of future contract?

Which of the following is not an advantage of trading in future as compared to forwards?

The price at which an asset trades in the cash market is known as:

—- is minimum move allowed in the price quotations.

The difference e between the spot price and the futures price is called—

On maturity of future contract basis turns to –

The amount one needs to deposit in the margin account at the time of entering a futures contract is known as —

Which of the following is required to pay the initial margin?

Higher the price volatility in the underlying asset the initial margin requirement for futures —

In case of futures profits and losses are settled on day-to-day basis called—

In case of future since profits and losses are settled on day-to-day basis who collects these margins from the loss making participants and pays to the gainers on day-to-day basis.

— is the total number of contracts outstanding for an underlying asset.

—indicates the price range within which a contract is permitted to trade during a day.

Price band is calculated:

— in futures market means a long or short position in any futures contract without having any position in the underlying asset.

—position is a combination of two positions in futures on the same underlying – long on one maturity contract and short on a different maturity contract.

Which of the following is not a limitation of future contract?

Which of the following has linear pay off

Mr B goes long in a Nifty future contract at strike price of 11000 and currently Nifty is trading at 12500? What is his pay off?

Mr H has bought 200 shares of XYZ Ltd. @ Rs150 per share and is worried about the price fall which of the following option can he choose to hedge his position?

Mr T is bearish on Reliance stock which position he should take on basis of his expectation:

Under cash and carry model the future fair price is:

Which of the following is an assumption of cash and carry model?

People are deriving convenience, just by holding the asset. This is termed as:

According to expectancy model which of the following is true for futures?

If futures price is higher than spot price of an underlying asset, market participants may expect the spot price to go up in near future. This expectedly rising market is called—

39 If futures price is lower than spot price of an asset, market participants may expect the spot price to come down in future. This expectedly falling market is called

— is the component of price risk that is unique to particular events of the company and/or industry.

— risk could be reduced to a certain extent by diversifying the portfolio.

Variability in a security’s total returns that are directly associated with overall movements in the general market or economy is—

Systematic risk is separable from investment and tradable in the market with the help of—

— is a measure of systematic risk.

—measures the sensitivity of a stock / portfolio vis-a-vis index movement over a period of time

Hedge ratio=

When futures contract on an asset is not available, market participants look forward to an asset that is closely associated with their underlying and trades in the futures market of that closely associated asset, for hedging purpose. They may trade in futures in this asset to protect the value of their asset in cash market. This is called

When two opposite positions (one long and one short) are taken either in two contracts with same maturity on different products is known as:

. An index option is a __________________.

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

Financial derivatives provide the facility for __________.

Which of the following is closest to the forward price of a share, if Cash Price = Rs.750, Forward Contract Maturity = 6 months from date, Market Interest rate = 12%?

If you have sold a XYZ futures contract (contract multiplier 50) at 3100 and bought it back at 3300, what is your gain/loss?

Trader A wants to sell 20 contracts of August series at Rs 4500 and Trader B wants to sell 17 contracts of September series at Rs 4550. Lot size is 50 for both these contracts. The Initial Margin is fixed at 6%. How much Initial Margin is required to be collected from both these investors (sum of initial margins of A and B) by the broker?

— establish an efficient link between different markets.

— take the risk which hedgers plan to offload from their exposure

Mr J short sell 2 one months future of Reliance at strike price of 1400 and if current spot price is 1500, what is his pay off?

The level of open interest indicates depth in the market.

The last Thursday of respective month or the day before if the last Thursday is a trading holiday is the — of future contract.

— is the risk of an economic loss from the failure of counterparty to fulfil its contractual obligation.

—is the relationship between futures prices and spot prices.

If price of a futures contract decreases, the margin account of the buyer of this futures contract is debited for the loss.