Section-A

Answer the following ten marks questions

1. Discuss the participants of derivatives in the trading context.
2. ‘Derivatives are effective risk management tools’. Comment on the statement.
3. Highlight the various functions of derivatives.
4. Explain the derivatives market in India. Also discuss the important eligibility/regulatory
conditions specified by SEBI.
5. What are the rules of derivative trading?
6. Explain the main benefits and limitation of forward contracts.
7. Write down the various types of future contracts.
8. Write a detailed note on the important terms and trading mechanism of option market.
9. Illustrate ‘in-the-money’ and ‘out-of-the-money’ positions in both call option and put
option
10. Briefly discuss the factors affecting option value.
11. What are the basic principles of option valuation?
12. State the basic feature and assumptions of Black-Scholes Option Valuation.
13. What do you mean by ‘binomial’? Explain with suitable example the application of
Binomial model for the valuation of options.
14. Explain the various types of margins.
15. What are the regulations for derivatives trading in India?