Practice Test

Q1) A trading member allowed to clear his own trades only is known as_______. Show Answer

Q2) A defaulting member’s client’s positions could be transferred to by the Clearing Corporation. Show Answer

Q3) Clients’ positions cannot be netted off against each other while calculating initial margin on the derivatives segment Show Answer

Q4) Mark-to-market margins is collected ________ Show Answer

Q5) The initial margin amount is large enough to cover a one-day loss that can be encountered on _______% of the days Show Answer

Q6) What is the outstanding position on which initial margin will be levied if no proprietary is done and the details of client trading are: one client buys 500 units @1260.The second client buys 900 units @Rs.1255 and sells 1000 units @Rs.1260? Show Answer

Q7) What is the outstanding position on which initial margin will be levied if no proprietary trading is done and the details of client trading are :one client buys 1000 units@1260. The second client buys 1000 units @Rs.1225 and sells 1000 units @ Rs.1260? Show Answer

Q8) The margin at the time a future contract is first entered into is known as Show Answer

Q9) Clearing corporation on a derivatives exchange becomes a legal counterparty to all trades and be responsible for guaranteeing settlement for all open positions. Show Answer

Q10) Initial margin collection is monitored by the _________ Show Answer

Q11) Market to market margin and Initial margin one are same for derivative contract. Show Answer

Q12) 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? Show Answer

Q13) Clients' positions cannot be netted off against each other while calculating initial margin on the derivatives segment. Show Answer

Q14) Mark-to-market margins are collected ___________. Show Answer

Q15) Clearing corporation on a derivatives exchange becomes a legal counterparty to all trades and be responsible for guaranteeing settlement for all open positions. Show Answer

Q16) Initial margin collection is monitored by the _________. Show Answer

Q17) Liquid Assets maintained by Mr. A (Clearing Member) are higher than that maintained by Mr. B (Clearing Member). Which of the following statements is true? Show Answer

Q18) The total number of outstanding / unsettled contracts in the market, at any point of time is known as OPEN INTEREST. Show Answer

Q19) In a derivative exchange, the net worth requirement for a clearing member is higher than that of a non-clearing member. Show Answer

Q20) A high initial margin level improves solvency & financial capability of the clearing corporation? Show Answer

Q21) A clearing member is responsible to the exchange for his transactions & also for the position of his trading member under him. Show Answer

Q22) The clearing of trades on a Stock Exchange can be done by ________. Show Answer

Q23) The daily settlement prices of equity derivatives are decided by _____. Show Answer

Q24) Mr. Anand asks his broker to buy certain number of contracts at the market price, this instruction is called_____. Show Answer

Q25) Value-at-risk provides for ______. Show Answer

Q26) NSCCL’s on-line position monitoring system monitors open position of ______ on a real time basis. Show Answer

Q27) Clearing Corporation on a derivative exchange becomes a legal counter party to all trades & is responsible for guaranteeing settlement for all open positions. Show Answer

Q28) To safeguard against potential losses on outstanding positions, ______ is collected. Show Answer

Q29) As per the rules, the minimum net worth of clearing members who handle & clears/ settles only deals executed by him is higher than those clearing members who handle institutional trades. Show Answer

Q30) A short seller has a time of a week to deliver the stocks. Show Answer

Q31) The major reason for collecting high initial margin is to improve the solvency of the clearing corporation. Show Answer

Q32) A trading member can also be a clearing member. Show Answer

Q33) The option premium paid by the option buyer remains with the exchange till the time it is closed out or expired. Show Answer

Q34) A short seller _____. Show Answer

Q35) The Clearing Corporation has the power to charge special margin if it may think fit. Show Answer

Q36) If the initial margin is changed then it will apply only to fresh contracts & not to previous outstanding contracts. Show Answer

Q37) A manger / dealer in cash market with a registered trading member, can also become a manager/ dealer in the derivatives segment without any additional formalities. Show Answer

Q38) The initial margin in derivatives is fixed depending upon the volatility of the stock. Show Answer

Q39) Margins are collected on a ______. Show Answer

Q40) The option seller has an obligation & since his losses can be unlimited, he can be a potential risk for the stability of the system. Therefore he has to pay ________. Show Answer

Q41) A stock broker applies for registration to SEBI _______ Show Answer

Q42) Investor A wants to sell 20 contracts of august series at Rs.4500 and Investor 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? Show Answer

Q43) On the Clearing Council of the Clearing Corporation of the derivatives segment, broker-members are allowed Show Answer

Q44) Value-at-risk provides the_______ Show Answer

Q45) NSCCL’s on-line position monitoring system monitors open position of ________ on a real time basis Show Answer

Q46) A member has two clients C1 and C2. C1 has purchased 800 contracts and C2 has sold 900 contracts in August XYZ futures series. What is the outstanding liability (open position) of the member towards Clearing Corporation in number of contracts? Show Answer

Q47) On the Clearing Council of the Clearing Corporation of the derivatives segment, broker-members are allowed to admit. Show Answer

Q48) The clearing corporation may utilize the client account margins deposited with it for fulfilling the dues which a clearing member may owe to the clearing corporation for trades on the clearing members own account. State True or False? Show Answer

Q49) Does trading in derivative becomes expensive due to high margins? Show Answer

Q50) Liquid asset criterion for professional clearing members is different from that of the trading cum clearing members. Show Answer

Q51) The gain or loss is realized on daily basis due to mark to market mechanism in which of the following contract? Show Answer

Q52) Institutional investors pay higher margins than the individual investors for derivative trading. Show Answer

Q53) The concept in which derivative trader gets a higher exposure for the small portion of margin amount brought by him is called as _______. Show Answer

Q54) The mark to market margin debits for index options are made on ______. Show Answer

Q55) Margins in futures trading are applicable to- Show Answer

Q56) The initial margin amount is large enough to cover a one day loss that can be encountered on ___% of the days. Show Answer

Q57) Who can clear trade in index options? Show Answer

Q58) A member has 2 clients M1 & M2. M1 has purchased 1000 contracts & M2 has sold 500 contracts in August XYZ future series. What is the outstanding liability (open position) of the member towards Clearing Corporation in number of contracts? Show Answer

Q59) An investor purchased one lot of Nifty futures at 6000. The closing price of Nifty on that day was 5967. The margin on Nifty is 10%. What will be the effective margin left in this contract? Nifty lot is of 50. Show Answer

Q60) In the derivatives segment clients’ position cannot be netted off against each other while calculating initial margin. Show Answer

Q61) After SPAN has scanned the 16 different scenarios of underlying market price & volatility changes, it selects the ______ loss. Show Answer

Q62) What is the outstanding future position on which initial margin will be charged – client a purchases 800 shares & client B purchases 200 shares & sells 1000 shares? Show Answer

Q63) Initial margin is monitored by _______. Show Answer

Q64) Exercise settlement for the options contract takes place at __________. Show Answer

Q65) What does Value-at-risk measures? Show Answer

Q66) Are broker-Members allowed on the Clearing Council of the Clearing Corporation of the derivatives segment? Show Answer

Q67) A trading member can either clear his trades or use the services of Professional Clearing member. Show Answer

Q68) A broker or dealer who is already registered with an existing stock exchange will have to get additional registration for the Derivative Exchange. Show Answer

Q69) In the derivatives market, all the margins are collected by ______. Show Answer

Q70) A client can use cross margining across cash & derivatives segment. Show Answer

Q71) When a client default in making payment in respect of daily settlement, the action taken is ______. Show Answer

Q72) When different clearing members clear for clients / entities in Cash & Derivatives segments they are required to enter into necessary agreements for availing cross margining benefit. Show Answer

Q73) Equities can also be traded through Professional Clearing Members. Show Answer

Q74) On what occasion from below, the derivative segment of the stock market has to report to SEBI? Show Answer

Q75) Important element(s) of risk management is (are) – Show Answer

Q76) The clearing member/trading member is required to disclose to the clearing corporation details of any person(s) acting in concert who together own_____ % or more of the open interest of all futures and options contracts on a particular underlying index on the stock exchange Show Answer

Q77) Which of the following is not the duty of the trading member? Show Answer

Q78) A member has two clients Cl and C2. Cl has purchased SOO contracts and C2 has sold 900 contracts in August XYZ futures series. What is the outstanding liability (open position) of the member towards Clearing Corporation in number of contracts? Show Answer

Q79) Cyrus is short 600 WIPRO July Puts at strike of Rs.1520 for a premium of Rs.33 each on July 22,2002.On July 25, 2002 (the expiration of the contract), the spot price of WIPRO closes at Rs.1553, while the July futures on WIPRO close at 1555.Does Cyrus have an obligation to the Clearing Corporation on his positions, and how much .if any? Show Answer

Q80) June futures contract on WIPRO closed at Rs.1153 on May 20 and at Rs.1150 on May 21,2002.Raju has a short position of 4000 in the June futures contract. On May 21,2002,he sells 3000 units of 10-June-2002 expiring Put Options on WIPRO at strike price of Rs.1145 for a premium of Rs.28 per unit. What is his net obligation to/from the clearing corporation for May 21,2002? Show Answer

Q81) Liquid Assets maintained by Mr. A (Clearing Member) are higher than that maintained by Mr. B (Clearing Member). Which of the following statements is true? Show Answer

Q82) Who is eligible for clearing trades in index options? Show Answer

Q83) Clearing and settlement activities in the F&O, segment are not undertaken by NSCCL with the following entities Show Answer

Q84) _______ determine short position, which are eligible to be assigned and then allocates the exercised position to any one or more short position. Show Answer

Q85) A defaulting member's clients’ positions could be transferred to ____________ by the Clearing Corporation. Show Answer

Q86) If the price of a future contract increases, the mark to market margin account of the holder of the short position in that contract is credited for the gain. Show Answer

Q87) Stock brokers are allowed to fund margin requirement of their clients. They may not collect such margins from their clients. Show Answer

Q88) Investor Mr. X wants to sell 11 contracts of Feb series at Rs.6300 & Investor Mr. Y wants to sell 13 contracts of March series at Rs.6450. 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 margin of X & Y) by the broker? Show Answer

Q89) What penalty is levied for first instant margin / limit violation? Show Answer

Q90) . _______ to be paid on assigned positions of clearing members towards final exercise settlement obligation for option contracts on individual securities till such obligations are fulfilled. Show Answer

Q91) Mr. P has bought 10 lots of August Nifty & Mr. Q has sold 7 lots of August Nifty. For paying the initial margins, their positions can be netted by the clearing member & pay margin only on 4 lots. Show Answer

Q92) In case of open positions of any NRI exceeding the specified limit, the penalty charged on the clearing member for each day of the violation would be _______. Show Answer

Q93) Any member or client who increases his existing positions or has created a new position in F&O banned security, the client/ trading members will be subject to a penalty 1% of the value of increased position subject to a minimum of Rs. _______ & maximum of Rs. _____. Show Answer

Q94) The normal trading in the derivatives banned scrip is resumed after the open outstanding position comes down to ______ or below of the market wide position limit. Show Answer

Q95) The penalty levied for the 9th instance of margin/limit violation in a month is ________. Show Answer

Q96) Any person or persons acting in concert who together own ______ or more of the open interest shall be required to report this fact to the exchange. Show Answer

Q97) The open position of a Trading Member is arrived by _______. Show Answer

Q98) If a stock exchange introduces physical settlement in stock derivatives in a phased manner, the same should be completed in ______. Show Answer

Q99) A member has 2 clients Rohit & Mohit. Rohit has purchased 100 contracts & Mohit has sold 300 contracts in March TATA Steel futures series. What is the outstanding liability (open position) of a member towards Clearing Corporation in number of contracts? Show Answer

Q100) Initial margin is _______. Show Answer

Q101) A stock broker has 2 clients P & Q. P has purchased 200 contracts & Q has sold 300 contracts in May TATA steel futures series. What is the outstanding liability (open position) of the members towards Clearing Corporation in number of contracts? Show Answer

Q102) The stock broker/ clearing member ha full authority to close out a transaction of his client if ________. Show Answer

Q103) A clearing member is required to bring in Interest free security deposit(IFSD) of Rs. ____ lakhs & Collateral deposit security(CDS) of Rs. ___ lakhs per trading member he undertake to clear & settle. Show Answer

Q104) Clearing Corporation acts as a legal counter party to all trades on F&O segment & also guarantees their financial settlement. Show Answer

Q105) Value-At-Risk calculations are done on the basis of ______. Show Answer