Documenti di Didattica
Documenti di Professioni
Documenti di Cultura
Options which can be exercised only on the expiration date are _________ options.
American Options
Indian Options
European Options
Commodity Options
Wrong Answer
Correct Answer:
European Options
Q 2:
The Spot price ie. the market price of a share is Rs 200 and the interest rate is 12%. Which of the
below price is closest to 3 months future maturity ?
206
200
203
224
Wrong Answer
Correct Answer:
206
Explanation
Yearly Interest Rate is 12%. Full year's interest = 12% of 200 ie. Rs 24 So for 3 months the cost of interest is
Rs 6. Therefore the 3 month future contract will have an price of appx. Rs 206.
Q 3:
A writer of a call option is a person who _____________.
goes long
shorts
hedges
does arbitrage in
Correct Answer
Q 5:
The index futures position are mark to marketed on a daily basis - True or False ?
TRUE
FALSE
Wrong Answer
Correct Answer:
TRUE
Explanation
All futures postions - for both Index and Stocks are marked to market every trading day.
Q 6:
A stock is currently selling at Rs. 90. The put option to sell the stock at Rs. 95 costs Rs. 12. What
is the time value of the option?
Rs 7
Rs 12
Rs 19
Rs 90
Wrong Answer
Correct Answer:
Rs 7
Explanation
Option premium consists of two components - intrinsic value and time value. Here the intrinsic value is Rs 5 (
95 -90 ) So the balance amount of option premium Rs 12 - Rs 5 = Rs 7 is the time value.
Q 7:
Seller of a put option expects ___________.
Explanation
When you sell a put option you expect the price to rise. Even if the price remains stable, you earn the option
premium.
Q 8:
All the orders entered on the Trading System of a Derivative Exchange are at Prices exclusive of
brokerage. True or False ?
FALSE
TRUE
Wrong Answer
Correct Answer:
TRUE
Explanation
The prices are exclusive ie. with out any brokerage. Brokerage is added later and is reflected in the contract
note.
Q 9:
Can clients position be netted off against each other while calculating initial Margin on the
derivatives segment.
No
Yes
Correct Answer
Explanation
Each clients open position is taken separately for calculating the initial margin. Positions of two
or more clients cannot be netted off against each other for calculation of initial margin. For eg -
If Mr A has bought 10 contarcts of Nifty and Mr B has sold 4 contracts of Nifty, then the broker
has to pay the initial margin on 14 contracts and not 6 contracts.
Q 10:
The beta of SBI is 1.4. A trader has a long position in SBI of Rs 400000 and a short position in
Nifty of Rs 410000. Which of the foll is true ?
American Options
Indian Options
European Options
Commodity Options
Wrong Answer
Correct Answer:
European Options
Q 2:
The Spot price ie. the market price of a share is Rs 200 and the interest rate is 12%. Which of the
below price is closest to 3 months future maturity ?
206
200
203
224
Wrong Answer
Correct Answer:
206
Explanation
Yearly Interest Rate is 12%. Full year's interest = 12% of 200 ie. Rs 24 So for 3 months the cost of interest is
Rs 6. Therefore the 3 month future contract will have an price of appx. Rs 206.
Q 3:
A writer of a call option is a person who _____________.
goes long
shorts
hedges
does arbitrage in
Correct Answer
Q 5:
The index futures position are mark to marketed on a daily basis - True or False ?
TRUE
FALSE
Wrong Answer
Correct Answer:
TRUE
Explanation
All futures postions - for both Index and Stocks are marked to market every trading day.
Q 6:
A stock is currently selling at Rs. 90. The put option to sell the stock at Rs. 95 costs Rs. 12. What
is the time value of the option?
Rs 7
Rs 12
Rs 19
Rs 90
Wrong Answer
Correct Answer:
Rs 7
Explanation
Option premium consists of two components - intrinsic value and time value. Here the intrinsic value is Rs 5 (
95 -90 ) So the balance amount of option premium Rs 12 - Rs 5 = Rs 7 is the time value.
Q 7:
Seller of a put option expects ___________.
FALSE
TRUE
Wrong Answer
Correct Answer:
TRUE
Explanation
The prices are exclusive ie. with out any brokerage. Brokerage is added later and is reflected in the contract
note.
Q 9:
Can clients position be netted off against each other while calculating initial Margin on the
derivatives segment.
No
Yes
Correct Answer
Explanation
Each clients open position is taken separately for calculating the initial margin. Positions of two
or more clients cannot be netted off against each other for calculation of initial margin. For eg -
If Mr A has bought 10 contarcts of Nifty and Mr B has sold 4 contracts of Nifty, then the broker
has to pay the initial margin on 14 contracts and not 6 contracts.
Q 10:
The beta of SBI is 1.4. A trader has a long position in SBI of Rs 400000 and a short position in
Nifty of Rs 410000. Which of the foll is true ?