SMART DISHA ACADEMY (Chandkheda, Ahmedabad)

Capital market and Derivative market (dealers) module Test-March (3) 2019

NAME: ___________________________________________ Date: _______________

Q1. The steps taken by NSCCL on account of settlement fund shortage include.

a) Trading may not be permitted c) Both of the above

b) Securities payout with held d) None of the above

Q2. What is FALSE about an outstanding order on the NEAT system?

a) It is an order that has been entered by the user and is partially matched
b) It is a stop loss order that has not yet been triggered in the market
c) It is an order that has been entered by users and not yet been traded
d) It is an order that has been entered by users, but which has not been completely traded or cancelled

Q3. Stop loss, Disclosed quantity order and market orders are not possible in block trades.

a) True b) False

Q4. Who settles the trades executed at NSE?

a) NSDL b) Clearing members c) SEBI d) NSCCL

Q5. Disclosed quantity allows the users the disclose…………

a) only a portion of the order quantity to the market c) All of the order quantity
b) 50% of the order quantity d) None of the above

Q6. Which of the following statements is not correct?

a) Depository is registered owner of the securities held in demat form

b) Securities in a depository are fungible
c) Securities in a depository are held in dematerialized form
d) Dematerialized securities have distinct numbers

Q7. Auction is held in PQR for 10000 shares. The closing price of the PQR on that day was Rs.249. The last traded
price of PQR on that day was Rs.244. The close price of PQR last Friday was Rs.245. The previous day close price
of the PQR on that day was Rs.254. What is the maximum allowable price at which the member can put a sell
order in the auction for PQR? (Assume price band applicable for auction market id +/- 20%).

a) Rs.304.80 b) Rs.380.35 c) Rs.354 d) Rs.344

Q8. The first two characters in the ISIN code for a security represents………..

a) Issuer Type b) Security type c) Country code d) Company identity

Q9. The copy of advertisement should be retained for a period of

a) 1 year b) 3 years c) 5 years d) forever

Q10. Market capitalization ratio is used as measure of stock market size

 a) True b) False

Q11. Penalty points are charged to members for………….

a) only for gross exposure & turnover violations

b) Only for violation in respect in respect of client code notifications
c) Only for violation in respect of non-confirmation of custodial trades
d) All of the above

Q12. Sis it not compulsory for a trading member to maintain a separate bank account for the clients?

a) True, unless his client request for opening a bank account

b) True
c) True, only if his client are not his relatives
d) False

Q13. The capital market system has four type of market………..

a) Normal market, odd lot market, RETDEBT market, and auction market
b) Limit order market, odd lot market, RETDEBT market, and auction market
c) Normal market, odd lot market, whole sale debt market, and auction market
d) RETDEBT market, Bulk trade market, Normal market, and auction market

Q14. Find the value of Rs.50000 deposited for a period of 3 years at the end of the period when the interest is
10% and continuous compounding is done.

a) Rs.67493.00 b) Rs.57493.00 c) Rs.767493.00

Q15. In case of a 20% movement of the nifty index before 1 P.M., trading shall be halted for

a) 1 hr. b) 2 hr. c) Remainder of the day d) trading will continue

Q16. What does ‘S’ indicates as status in the ‘Auction Inquiry’ screen in the NEAT system?

a) Auction is in solicitor period c) Auction is deleted

b) System is matching the orders d) Auction is pending and yet to begin

Q17. ………….. Are orders for which price is specified as ‘MKT’ at the time the order is entered

a) Day order b) IOC c) Market order d) Stop loss order

Q18. Financial leverage ratio is defined as……….

a) Debt/ Equity b) Equity/ Debt c) Net profit/ Net sales d) None of the above

Q19. No lock-in-period for deposits is applicable in the case of trading member, who is

a) Snot SEBI registered c) SEBI registered and enabled but not trade at all
b) SEBI registered but not enabled d) All of the above

Q20. Is it compulsory for a trading member to maintain a separate bank account for the clients?

a) Yes b) No c) Yes, only if clients are not his relatives

Q21. Calendar spreads attract lower margins because they are not exposed to market risk of the underlying.

a) True b) False
Q22.The parties for the futures contract have the flexibility of closing out the contract prior to the maturity by squaring of
the transactions in the market. Statement True or False?

a) True b) False

Q23. Forward contracts are………………….contracts.

a) Multilateral b) Tri-lateral c) Future d) Bilateral

Q24. Which risk estimation methodology is used measuring initial margins for futures/options market?

a) Value at risk b) Law of probability c) Standard deviation d) None of the above

Q25. Client A has purchased 10 contracts of December series and sold 7 contracts of January series of the NSE Nifty Futures.
How many lots will get categorized as regular (non-spread) open positions?

a) 17 b) 7 c) 3 d) 10

Q26. If price of a futures contract decreases, the margin account of the buyer of this futures contract is debited for the loss

a) False b) True

Q27. 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 200 units@ 1260. The second client buys 900 units @ Rs. 1255 and sells 1650 units @
Rs.1260?

a) 1900 units b) 2400 units c) 500 units d) 950 units

Q28. Delivery based settlement in single stock future is provided by…………………

a) NSE b) BSE c) OTCEI d) None of the above

Q29. Short straddle is a strategy with………………

a) Unlimited profit & Limited loss c) Limited profit & Limited loss
b) Unlimited profit & Unlimited loss d) Limited profit & Unlimited loss

Q30. The value of a put option is positively related to all of the following EXCEPT.

a) Exercise price b) Risk free rate c) Time to maturity

Q31. State which of the following statement is correct?

a) A buy order with a lower price gets a higher priority and similarly, a sell order with a price higher price gets a higher
priority.
b) If there is more than one order at the same price, the order entered later gets a higher priority
c) A buy order with a higher price gets a higher priority and similarly, a sell order with a price lower price gets a higher
priority
d) The best sell order id the order with the highest price and a best buy order is the order with the lowest price

Q32. ………………………….. with to bet on future movements in the price of an asset.

a) Hedgers b) Arbitrage c) Speculators

Q33. The initial margin amount is large enough to cover a one day loss that can be encountered on………………..% of the days.

a) 90 b) 95 c) 99 d) 50

Q34. Which of the following statement is true about futures?

 a) The payoff for a person who buys a futures contract is similar to the payoff for a person who holds an asset
b) The payoff for a person who sells a futures contract is similar to the payoff for a person who sells an asset
c) Futures contracts have linear payoffs
d) All of the above

Q35. In case of open position of any NRI exceeding the specified limit, the penalty charged on the clearing member for each
day of violation would be:

a) 1% of the value of the quantity in violation per client of Rs.1,00,000 per client, whichever is lower.
b) 1% of the value of the quantity in violation per client of Rs.5,00,000 per client, whichever is lower.
c) 1% of the total quantity in violation per client of Rs.1,00,000 per client, whichever is higher.
d) 1% of the total quantity in violation per client of Rs.1,00,000 per client, whichever is lower.

Q36. Stock index is less volatile when compared to individual stock prices and hence needs less margin requirement.

a) True b) False

Q37. If a stock is excluded from the f & o list, is shall not be considered for re-inclusion for a period of………………….

a) Six month b) 2 years c) One year d) 3 months

Q38. Who has to pay margin while trading in futures?

a) Buyer of the contract c) Both of the above

b) Seller of the contract d) None of the above

Q39. Reliance is trading at Rs.1520 in the cash market. What should be the fair price of reliance futures expiring 90 days from
today? Risk free rate is 8% p.a.

a) Rs.1529 b) Rs.1537 c) Rs.1551 d) Rs.1563

Q40. Which of the following is the duty of the trading member?

a) Employing large numbers of research analytics

b) Executing his own orders prior to client orders
c) Bringing risk factors to the knowledge of client
d) None of the above

------------------END OF TEST------------------

NO. OF QUESTIONS AETTEMPETED: ______

NO. OF QUESTIONS ANSWERED CORRECT: ______

NO. OF QUESTIONS ANSWERED WRONG: ______

SCORE: ______

RESULT: ______

------------------------------------------------------------------------------------------------------------------------------------------

Review by Trainer/Faculty:
 ANSWERS

1. C
2. B
3. A
4. D
5. A
6. D
7. A
8. C
9. B
10. A
11.D
12. D
13. A
14. A
15. C
16. A
17. C
18. A
19. D
20. A
21. A
22. A
23. D
24. A
25. C
26. B
27. D
28. B
29. D
30. B
31. C
32. C
33. C
34. D
35. A
36. A
37. C
38. C
39. C
40. C