Practice Test

Q1) For portfolio hedging by institutions & mutual funds, index based derivatives are more suitable & are much more cost effective than derivative based on individual stocks Show Answer

Q2) The main objective of derivative is to enable market participants to ______. Show Answer

Q3) A market index is very important for its use _____. Show Answer

Q4) An equity based Mutual Fund can sell index futures to hedge its position. Show Answer

Q5) In Indian context, derivative includes: A) a security derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or any other form of security; B) a contract which derives its value from the prices, or index of prices, of underlying securities. Show Answer

Q6) In case of index numerical changes are more important than percentage changes. Show Answer

Q7) A stock index is an indicator of the performance of overall market. Show Answer

Q8) Indices can be underlying for derivatives contract. Show Answer

Q9) Index construction is all about choosing the index stock and deciding on the index calculation methodology. Show Answer

Q10) Maintenance means adjusting the index for corporate action such as Show Answer

Q11) Decision of inclusion or removal of a securities form the index is taken by __________ committee. Show Answer

Q12) __________ fund invest in a specific index. Show Answer

Q13) Index derivatives contracts have the .as the underlying asset. Show Answer

Q14) ETF is a basket of securities that trades like individual stock on an exchange Show Answer

Q15) Impact cost is the measure of liquidity. Show Answer

Q16) ETFs is basket of securities that trade like individual stock on an exchange. Show Answer

Q17) Index futures is – Show Answer

Q18) When a stock which is part of the index has a stock split, it does not have an impact on the index. Show Answer

Q19) An Index option like NIFTY option is a _______. Show Answer

Q20) Calculate the market capitalization of a company whose share price is 105 and having 2,00,000 outstanding shares. Show Answer

Q21) Nifty consists of securities having ______ market capitalization stocks Show Answer

Q22) The market impact cost on a trade of Rs.4 million of the S&P CNX Nifty works out to be about 0.06%. This means that if S&P CNX Nifty is at 4000,a sell order of that value will go through at a price of Rs._______ Show Answer

Q23) A market index is very important for use Show Answer

Q24) Nifty index computed and maintained by Show Answer

Q25) It is easy to manipulate stock index when compare to individual stocks. Show Answer

Q26) You have bought shares of Ranbaxy of Rs.1 lakh. The beta of Ranbaxy is 1.3. In order to hedge your risk you have shorted Nifty of Rs.1.50 lakhs. Which of the below is true? Show Answer

Q27) Which of the following statement is true? Show Answer

Q28) A good market index should have following attributes except, Show Answer

Q29) If bid price for a stock is Rs 388 and ask price is Rs 388.05 calculate bid -ASK spread Show Answer

Q30) Index construction, maintenance and revision process is generally done by __________. Show Answer

Q31) Index funds invest with an objective to generate returns __________ to the index return. Show Answer

Q32) SENSEX index is group of __________ companies Show Answer

Q33) Equity Index options are a form of _______. Show Answer

Q34) Nifty consists of securities having ________ market capitalization stock. Show Answer

Q35) In an F&O segment of NSE one can trade in the following derivative instruments except ________. Show Answer

Q36) Impact cost is low when the liquidity in the system is poor. Show Answer

Q37) Impact cost is low when _______. Show Answer

Q38) Of the below options, which is more difficult to manipulate? Show Answer

Q39) Calculate the market capitalization of a company whose share price is 210 and having 2,00,000 outstanding shares. Show Answer

Q40) Calculate the market capitalization of a company whose share price is 110 and having 2,00,000 outstanding shares. Show Answer

Q41) The market impact cost on a trade of Rs. 3 million of the S&P CNX Nifty works out to be about 0.05%.This means that if S&P CNX Nifty is at 2000,a sell order of that value will go through at a price of Rs. ___________. Show Answer

Q42) Assume that a base value of a market capitalization weighted index were 1000 and the base market capitalization were Rs.35,000 crore.If the current market capitalization is Rs.77,000 crore, the index is at Rs._____. Show Answer

Q43) The market impact cost on a trade of Rs. 3 million of the S&P CNX Nifty works out to be about 0.05%.This means that if S&P CNX Nifty is at 2000, a sell order of that value will go through at a price of Rs. ___________. Show Answer

Q44) Assume that a base value of a market capitalization weighted index were 1000 and the base market capitalization were Rs.35,000 crore. If the current market capitalization is Rs.77,000 crore, the index is at Rs._____. Show Answer

Q45) A market index is a very important for its use _______ Show Answer

Q46) Going from ______ stocks gives very little reduction in risk Show Answer

Q47) The first ETF in India ________ based on S&P CNX Nifty was launched in Dec 2001 Show Answer

Q48) Which of the following statement is true? Show Answer

Q49) As criteria of indices no single ineligible stock in the index should have a weightage of more than ____ in the index Show Answer

Q50) Assume that the base value of a market capitalization weighted index was 1000 and the base market capitalization was Rs. 35,000 crore. If the current market capitalization is Rs.77, 000 crore, the index is at Rs._____ Show Answer

Q51) The market impact costs on a trade of Rs.3 million of the S&P CNX Nifty works out to be about 0.05%. This means that if S&P CNX Nifty is at 2000, a sell order of that value will go through at a price of Rs______ Show Answer

Q52) Impact cost is low when the liquidity in the system is poor. Show Answer

Q53) Which of the following is not an applicable of indices? Show Answer

Q54) A portfolio with 50 different stocks is twice as risky as another portfolio with 100 stocks in it. Show Answer

Q55) In an equity scheme, the Mutual Fund can hedge its equity exposure by selling stock index futures. Show Answer

Q56) Index is a __________ indicator that measures change in the economy in general. Show Answer

Q57) An equally -Weighted index makes no distinction between __________ and __________ companies. Show Answer

Q58) Calculate ideal price if Bid price is 300 and ask price is 325 Show Answer

Q59) Ideal price of a stock with best bid price Rs 158 and best ask price Rs 162 is Show Answer

Q60) A good index is a tradeoff between __________ & __________. Show Answer