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For NISM Series VIII: Equity Derivatives Certification Examination

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NISM Series VIII: Equity Derivatives Certification Examination –
FREE MOCK TEST
The examination seeks to create a common minimum knowledge benchmark for associated
persons functioning in equity derivatives markets in India. The examination covers knowledge
competencies related to the understanding of the financial structure in India and the
importance of the different rules and regulations governing the Indian securities market,
especially those related to the equity derivatives segment.
On successful completion of the examination the candidate should:
• Know the basics of the Indian equity derivatives market.
• Understand the various trading strategies that can be built using futures and options
on both stocks and stock indices.
• Understand the clearing, settlement and risk management as well as the operational
mechanism related to equity derivatives markets.
• Know the regulatory environment in which the equity derivatives markets operate in
India.
The NISM-Series-VIII: ED Examination will be a 100 marks examination to be completed in 2
hours. It will have 100 questions of 1 mark each. There will be negative marking of 25% of the
marks assigned to a question. The passing score for the examination is 60%.

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NISM Mock Test Questions – Equity Derivatives
Q1. A penalty or suspension of registration of a stock
broker from derivatives exchange/segment under SEBI
(Stock Broker and Sub-broker) Regulations, 1992 can
take place if ________
• The Stock Broker fails to pay fees
• The Stock Broker is suspended by the Stock Broker
• The stock broker violates the conditions of registration
• In any of the above situations

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NISM Mock Test Questions – Equity Derivatives
Q2. 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;
• A
• B
• Both of the above
• None of the above

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NISM Mock Test Questions – Equity Derivatives
Q3. 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?
• Pay-in of Rs.32,000
• Pay-in of Rs.72,000
• Pay-out of Rs.96,000
• Pay-out of Rs.32,000

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NISM Mock Test Questions – Equity Derivatives
Q4. The initial margin amount is large enough to cover
a one-day loss that can be encountered on ______% of
the days.
• 95
• 99
• 90
• 50

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NISM Mock Test Questions – Equity Derivatives
Q5. The NEAT F&O trading system _____________.
• does not allow combination trades
• allows only a single order placement at a time
• allows one to enter combination trades
• none of the above

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NISM Mock Test Questions – Equity Derivatives
Q6. Cyrus is short 600 WIPRO July Puts at strike Rs.
1520 for a premium of Rs. 33 each on July 22, 2002.
On July 25, 2002 (the expiration day 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?
• Yes. Rs.18,900 pay-out
• Yes. Rs.19,800 pay-out
• Yes. Rs.18,900 pay-in
• No pay in or pay-out on expiration of contract

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NISM Mock Test Questions – Equity Derivatives
Q7. The spot price of TISCO is Rs. 2050 and the cost of
financing is 10%. What is the fair price of a one month
futures contract on TISCO?
• 2,085.15
• 2,099.40
• 2,082.80
• 2,066.30

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NISM Mock Test Questions – Equity Derivatives
Q8. You have bought a portfolio of securities on the
exchange. To eliminate the risk arising out of market,
you should _____.
• buy index futures
• buy stock futures
• sell index futures
• sell stock futures

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NISM Mock Test Questions – Equity Derivatives
Q9. VaR methodology seeks to measure the amount of
value that a portfolio may stand to lose within a certain
horizon time period due to potential changes in
______________.
• underlying exposures
• underlying stock volatility
• underlying asset spot price
• underlying index volatility

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NISM Mock Test Questions – Equity Derivatives
Q10. Ms. Shetty has sold 300 calls on WIPRO at a
strike price of Rs.1503 for a premium of Rs.28 per call
on April 1, 2002. The closing price of equity shares of
WIPRO is Rs. 1553 on that day. If the call option is
assigned against her on that day, what is her net
obligation on April 01, 2002?
• Pay-out of Rs.13,400
• Pay-out of Rs. 21,600
• Pay-in of Rs.15,000
• Pay-in of Rs.6,600

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