Question Bank TY-BFM

(Sem 5)
Derivatives Market

1) Define Derivatives. What are the types of Derivatives? What

are the types of Generic Derivatives?

2) a. Differentiate between Forward Contracts and Future

Contracts

b. Differentiate between different participants in the market.

3) Explain the following terms:

Contract Size, Contract Multiplier, Tick Size, Open Interest, Volume, Initial
Margin, Mark to Market Margin, SPAN.

4) What are the effects of the following on the Call and Put
Options :

a. Cash Price of the asset

b. Strike Price

c. Volatility of the underlying Price.

d. Time to Expiration

e. Interest Rate.

5) a. What is Hedging? Explain different types of Hedging used in

the Market.

b. Write a Note on Arbitrage. Explain different types of Arbitrage.

6) a) What is Options? What are the types of Options? Explain

with the help of Pay off charts for

all positions possible in the market.

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Question Bank TY-BFM
(Sem 5)
b) Draw comparisons between Futures and Options.

7) What do you mean by Synthetic Positions? What is the purpose

of creating Synthetic Positions?

Explain with the help of Examples.

8) a. Explain the process of creating Synthetic Short Put

Positions.

b. Explain the process of creating Synthetic Long Call Positons.

9) A trader goes long on 5 lots of Tata Steel CA with strike price

of Rs.500/- @ Rs. 5/-. The CMP of Tata Steel is Rs.495. One Lot size
of Tata Steel is 1000. What are the different payoff of the trader at
the following levels of the share:

a. 480

b. 495

c. 500

d. 520

e. 540

10) A trader has a position of 1000 shares of Reliance. The trader

is of the opinion that due to the market conditions there is a
temporary down fall in the share price but in the long term the price
will go up. The trader wants to hedge is position for the downfall
expected in the portfolio value. He expects the share price to go
upto Rs.950. CMP of the share is Rs.1020. Guide him what should
he do.

11) Give a detailed analysis of Vertical Bullish Spreads with the

help of an example using puts.

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Question Bank TY-BFM
(Sem 5)
12) You expect a very substantial move in the market. The
direction of which is unknown to you. How do you trade explain with
the help of an example. If you have an view in the market about a
direction what changes will you make in the trades.

13) Solve the following:

Call premium Put premium

Shar Current Strike 3 months 6 3 6
e price price months months months
A 52 50 3 4 0.35 1.05
B 40 45 1 1.25 5.50 6.00
C 35 30 6 6.30 0.45 0.65

1. If you purchase one 3 month call contract on A, what profit or

loss will you make on maturity if the price of A at that time is Rs. 57/-
2. If B’s price is Rs. 35 on maturity of the 6 month option,
determine the value of five 6 month put contracts at their maturity date
3. If you had purchased five 3-month call options of C and the price
of C is Rs. 32 on maturity, determine your profit or loss on the investment
4. If you had purchased five 3-month puts on C, what would be your
profit or loss on maturity if the share price was Rs.32/-
5. If your client wrote five 6-month call options on B’s share, what is
his profit or loss on maturity if price of B at that time is Rs. 43/-
6. If your client wrote five 6-month put options on B, what would his
profit or loss be on maturity if share price then was Rs. 43/-

14) a. Explain the concepts of Protected Put

b. What is a Covered Call

15) a. What is Protected Call? Explain

b. What is a Reverse Collar?

16) What is Covered Put? Explain Collar.

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Question Bank TY-BFM
(Sem 5)
17) Explain the strategy of Condor. What is the difference between
Condor and Butterfly.

18) Explain the strategy of Strip and Strap in detail.

19) Explain the Option Greeks

a. Delta

b. Gamma

c. Vega

d. Lambda

20) Chintan is on the view that Bajaj Auto has a given a position
break out at current market price of Rs.2010/- but he also believes
that the price shall only go upto 2040. Not beyond that which
option. Spread can he use, and prepare a table to show pay off at
price levels of 1980, 2010, 2040, 2070, 2010.

1 month 2010 call 15 1 month

1 month 2050 call 5

1 month 1980 call 35

21) Explain the basis and concept of future pricing with the
help of an example.
Calculate future prices from the following?
Spot Price= 5,410
Time for expiration= 30 days
Interest rate = 12% p.a

22) Explain the exercise and Assignment Process. Also show the
exercise settlement
computation.

23) Explain the comprehensive Risk management Mechanisms

adopted by NSCCL.

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Question Bank TY-BFM
(Sem 5)
24) What are the different types of margins

25) Expalin the accounting process of futures

26) Expalin the accounting procees of options

Foreign Exchange Markets

1) Important terms and concepts

a) Direct quotes

b) Indirect quotes

c) American quotes

d) European quotes

e) Bid/offer rate

f) Ask/sell rate

g) Vehicle currency

h) Spot transaction

i) Forward transactions

j) Cross rates

k) Correspondent banks

l) Non-deliverable forward

2) Difference between direct and indirect rates?

3) What are nostro, vostro and loro accounts?

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Question Bank TY-BFM
(Sem 5)
4) What is triangular arbitrage? Explain with the help of an
example?

5) Explain in brief gold exchange standards?

6) Explain Bretton woods system?

7) What is triffine paradox?

8) Explain in brief Smithsonian agreement

9) What is fixed exchange rate system? Give the case for and
against fixed exchange rate system

10) What is floating exchange rate system ?give the case for and
against floating exchange rate system

11) What is crawling peg and adjustable peg system

12) What is the exchange rate mechanism in India

13) Short note -CHIPS

14) Short note -CHAPS

15) Short note – risk element in foreign exchange markets

16) Need and importance of foreign exchange management

17) What are the various methods adopted for foreign exchange
management

18) What is the impact of LPG on India’s foreign exchange market

and inbound and outbound investment

19) What is the role of RBI in directing and controlling forex

market in India

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Question Bank TY-BFM
(Sem 5)
20) What is capital account convertibility? What are its pros and
cons

21) What are the learning from Asian financial crisis with reference
to capital account convertibility

22) What is the impact of Indian MNC’s on foreign exchange?

23) What is the FEMS in the Indian forex market?

24) What are Eurocurrency markets and factors which led to their
growth?

25) Special features of the euro currency markets

26) What is LIBOR?

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Question Bank TY-BFM
(Sem 5)

Regulation of Securities Markets

1. Define regulation. What are the benefits of a regulated / controlled
market?
2. What is the need for regulating financial markets in India?
3. Explain insider trading with the help of an example?
4. Discuss briefly the nature of savings and investments in India?
5. Define the terms Savings and Investments. Explain the features of
Investments.
6. What is meant by "investor profile". Explain the factors determining
the profile of an investor?
7. Explain with reasons whether the profile of Indian investor
changing?
8. What is an investment plan? Discuss the factors determining
investment decisions of an Indian investor?
9. Why is there a need to provide protection to the retail investor?
10. What are 'Vanishing Companies'? Discuss about the "vanishing
companies of Ninetees".

11. What is an IPO? Discuss the various economic offences

occurred through IPO Scams?

12. Discuss the various entities governing the securities market in

India?

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Question Bank TY-BFM
(Sem 5)
13. Explain briefly the Securities Contract (Regulation) Act of
1956.
14. What are the special regulatory requirements for Derivative
Markets?
15. Critically evaluate the functions of the 'Department of
Company Affairs'.
16. Describe the role of the 'Department of Economic Affairs
(India)'.
17. What are the functions of RBI?
18. Is there a need for Self-Regulation in Financial Markets? Why?
19. Write Short Notes On:
a) Growth of Indian Securities Markets
b) Financial Planning and Forecasting
c) SEBI Act, 1992
d) Depositories Act, 1996
e) Insurance Acts in India
f) Forward Market Commission (FMC)
g) Insurance Regulatory and Development Authority (IRDA)

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Global Capital Markets

1 What are the major markets of the world and their
characteristic?

2. Name some of the emerging stock markets of the world?

3. What is multiple listing and its advantages and

disadvantages?

4. What are depositary receipts?

5. What are ADR’s?

6. What are GDR’s?

7. What are the parties involved in ADR/ GDR?

8. What the different types of ADR’s?

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Question Bank TY-BFM
(Sem 5)
9. Give brief history and explain about global financial
markets.

1 What is the role of media and technology in the global

0. financial markets?

1 What the benefits of Global Capital Markets?

1. (Diversification).

1 What are mergers and acquisitions?

2.

1 What is the need for Mergers and Acquisitions?

3.
1 What the advantages of Mergers and Acquisitions?
4.

1 What are domestic bonds?

5.

1 What are Euro bonds?

6.

1 What are the foreign bonds?

7.

1 What are the participants in global bond markets?

8.

1 What are the credit rating agencies and what is their role in
9. capital markets?
2 What are the global rating agencies in the world?
0.

2 Explain the advantages and disadvantages of CRA’s?

1.

2 Explain the procedure for using Euro Bonds?

2.

2 Explain the obstacles to international investments?

3.

Insurance Fund Management

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Question Bank TY-BFM
(Sem 5)
Q.1 a. Define insurance and explain the benefits of insurance.
8M
b. Briefly describe the characteristics of insurance.
7M

Q.2 Describe different types of insurance and discuss the risk

covered by it. 15M

Q.3 a. What are the different types of insurance organizations?

Briefly discuss. 8M
b. Write a shot note on types of insurance organizations
existing in India. 7M

Q.4 Explain in detail the principles of insurance.

15M

Q.5 a. What are the different types of life insurance policies

prevailing in market? 8M
b. Discuss ‘Unit Linked Insurance Policies’ in detail.
7M

Q.6 a. Explain different types of annuities.

8M
b. Distinguish between ‘Annuity Contracts’ and ‘Life insurance
Contracts’. 7M

Q.7 a. Discuss the history and evolution of insurance industry in

India. 8M
b. When IRDA was formed? What is the role played by IRDA for
insurance sector
in India?
7M
Q.8 Write a note on formation of Malhotra Committee and state its
objectives and recommendations.
15M

Q.9 Explain the following concepts briefly:

15M
a. Days of grace
b. Lapsation of policy
c. Nomination
d. Assignment
e. Surrender Value

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Question Bank TY-BFM
(Sem 5)
Q.10 a. Distinguish between ‘Nomination’ and ‘Assignment’ of
insurance policy. 8M
b. What are the different options available to avoid forfeiture
of policy? Explain
briefly.
7M

Q.11 a. Explain the concept of ‘underwriting’. Discuss the

classification of physical
hazards/ risks from underwriting perspective.
7M
b. Write short notes on:
8M
I. Financial underwriting
II. Medical underwriting

Q.12 a. What are the physical factors impacting the risk related to
life of policy holder? 8M
b. Explain different sources of risk related information.
7M

Q.13 a. What is the meaning of ‘mortality risk’? Explain the

relevance of mortality rate
for life insurance.
7M
b. Explain the various sources of ‘investment funds’ for
insurance company. 8M

Q.14 a. Discuss the principles of investment in detail.

8M
b. Provide the details of ‘exposure norms’ prescribed by IRDA
for investments
of insurance company.
7M

Q.15 a. Briefly describe the process of valuation of insurance

policies. 8M
b. What are the several options of granting bonus to insurance
policies? 7M

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Question Bank TY-BFM
(Sem 5)

Q.16 a. Define risk and explain classification of risk.

7M
b. Briefly explain the process of risk management process and
tools for
controlling risks.
8M

Q.17 a. What are the different investment instruments where funds

can be invested by insurance companies?
8M
b. Distinguish between mutual fund schemes and unit linked
insurance plans. 7M

Q.18 Describe the various marketing techniques adopted by

insurance companies for
promotion of insurance products.
15M

Q.19 a. Define premium and discuss the concept of risk premium,

net premium and
level premiums.
7M
b. Compute premium in following cases:
I. Tabular premium: Rs.55
4M
No rebate for mode of payment
Rebate for sum assured above Rs. 50000: Rs.2 per thousand
Double Accident Benefit rider cost: Rs.1.50 per thousand
Loading due to occupation: Rs. 2.50 per thousand
Calculate half yearly premium for Sum Assured of Rs.150000.

II. Tabular premium: Rs.33.10

4M
Sum Assured: Rs.100000
Rebate for yearly payment of premium: Rs.2 per thousand.

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Question Bank TY-BFM
(Sem 5)
Rebate for half yearly payment of premium: Rs.1 per thousand.
Double Accident Benefit rider: Rs.1 per thousand
Occupation loading: Rs. 4 per thousand.
Calculate premium for yearly payment.

Q.20 a. What is the role of an actuary in the insurance sector?

8M
b. Write a short note on ‘Ombudsman’.
7M

Q.21 Write a detailed note on procedure for setting up of an

insurance company. 15M

Q.22 a. What are the subject matters covered by marine insurance?

8M
b. Briefly explain different types of fire insurance policies.
7M

Q.23 a. Write a short note on ‘Re-insurance’

7M
b. What is ‘health insurance’? Discuss various types of health
insurance
policies.
8M

Q.24 a. Define risk and distinguish between risk and uncertainty.

8M
b. What is surplus and what are various sources of surplus?
7M

Q.25 a. Explain the classification of investment funds of the life

insurance company 8M
b. State the ‘investment pattern’ prescribed by IRDA for
different classes
of investment funds of life insurance company
7M.

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Question Bank TY-BFM
(Sem 5)
==============================================
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Portfolio Management
Chapter 1
1. What is Investment? Explain the objectives of Investment?
2. Define Investment? Explain difference between Gambling,
Speculation & Genuine Investment.

3. What is Portfolio Management? Explain its objectives.

4. Evaluate Equity as an Investment?

5. Explain various Tax Saving Schemes.

6. What are Mutual Funds? Explain its various schemes with

example.

7. Explain the need for designing an Investment Portfolio.

8. Relevance of Portfolio Management in different sectors of

Financial Markets.

9. Short Notes:

a. Real Estate

b. Insurance Investment

c. Government Securities

d. Bank Deposits

Chapter 2

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Question Bank TY-BFM
(Sem 5)
1. Explain the difference between Traditional & Modern Theory of
Portfolio.

2. Explain Modern Theory/Markowitz Theory.

3. What is Capital Assets Pricing Model (CAPM)? Explain its

importance.

4. Explain different types of Risks in Investment.

5. Short Notes:
a. Security Market Line
b. Arbitrage Pricing Theory

c. Capital Market Line

d. Optimal Portfolio

6. Problems:

a. Expected Return

b. Standard Deviation

c. Beta Calculation

d. Variance

e. Holding Period Return

f. CAMP

Chapter 3

1. What is Efficient Market Hypothesis (EMH)? Explain its types.

2. Explain various factors affecting performance measures.

3. Compare Treynor, Sharpe & Jenson portfolio performance

measure.

4. What is Portfolio Evaluation?

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Question Bank TY-BFM
(Sem 5)
5. Explain performance Evaluation Measures.

6. Problems:

a. Treynor

b. Sharpe

c. Jenson

Chapter 4

1. Explain various Portfolio Management Services (PMS) in India.

2. Explain the procedure for setting up of Portfolio Management

Services (PMS).

3. Explain SEBI Norms for Portfolio Management Services (PMS).

4. Short Notes:

a. Future prospects of Portfolio Management Services (PMS)

b. Registration Procedure of Portfolio Managers

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