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NISM 8 Chapter 1 MCQs

The document contains multiple-choice questions (MCQs) related to derivatives, covering topics such as definitions, types, market participants, and regulatory bodies. Key concepts include the nature of derivatives, the roles of hedgers and speculators, and the types of contracts available in the derivatives market. It also highlights the importance of derivatives in risk management and identifies the regulatory authority in India.

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201 views5 pages

NISM 8 Chapter 1 MCQs

The document contains multiple-choice questions (MCQs) related to derivatives, covering topics such as definitions, types, market participants, and regulatory bodies. Key concepts include the nature of derivatives, the roles of hedgers and speculators, and the types of contracts available in the derivatives market. It also highlights the importance of derivatives in risk management and identifies the regulatory authority in India.

Uploaded by

rjservice106
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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NISM Series VIII - Chapter 1: Introduction to Derivatives (MCQs)

1. A derivative is a financial contract whose value is derived from:

A. Government policies

B. Stock exchange indices

C. Underlying assets

D. Currency values

Answer: C

2. Which of the following is NOT a type of derivative?

A. Forward

B. Option

C. Bond

D. Future

Answer: C

3. In a call option, the buyer has the:

A. Right to sell

B. Obligation to sell

C. Right to buy

D. Obligation to buy

Answer: C

4. The main participants in the derivatives market include all EXCEPT:

A. Arbitrageurs

B. Hedgers

C. Speculators

D. Auditors

Answer: D

5. Which of these is traded on an exchange?

A. Forward contracts

B. OTC swaps

C. Futures contracts

D. Real estate

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NISM Series VIII - Chapter 1: Introduction to Derivatives (MCQs)

Answer: C

6. The regulator of the equity derivatives market in India is:

A. RBI

B. SEBI

C. IRDA

D. NSE

Answer: B

7. Derivatives help in:

A. Increasing inflation

B. Risk management

C. Reducing liquidity

D. Eliminating markets

Answer: B

8. Hedgers use derivatives to:

A. Make profit from speculation

B. Avoid taxes

C. Eliminate price risk

D. Increase volatility

Answer: C

9. Arbitrage is:

A. Betting on market movement

B. Hedging against inflation

C. Risk-free profit from price differences

D. Investing in mutual funds

Answer: C

10. Which of the following is a standardized product?

A. Forward contract

B. Futures contract

C. Swap

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NISM Series VIII - Chapter 1: Introduction to Derivatives (MCQs)

D. Bank loan

Answer: B

11. Derivatives are considered:

A. Non-financial instruments

B. Direct assets

C. Leverage instruments

D. Traditional investments

Answer: C

12. Which of these is NOT an underlying asset for derivatives?

A. Commodities

B. Interest rates

C. Real estate

D. Stocks

Answer: C

13. Options give the buyer:

A. An obligation

B. A promise

C. A right

D. A guarantee

Answer: C

14. Which participant type makes risk-free profits?

A. Speculator

B. Arbitrageur

C. Hedger

D. Investor

Answer: B

15. Forward contracts are:

A. Traded on NSE

B. Regulated by SEBI

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NISM Series VIII - Chapter 1: Introduction to Derivatives (MCQs)

C. Private agreements

D. Settled daily

Answer: C

16. Derivatives started in India with:

A. Commodity futures

B. Currency futures

C. Index futures

D. Stock options

Answer: C

17. A put option gives the right to:

A. Buy the asset

B. Sell the asset

C. Hold the asset

D. Transfer the asset

Answer: B

18. Which risk arises from a counterparty default?

A. Market risk

B. Operational risk

C. Credit risk

D. Liquidity risk

Answer: C

19. The exchange that first introduced equity derivatives in India is:

A. BSE

B. MCX

C. NSE

D. NCDEX

Answer: C

20. Speculators use derivatives for:

A. Compliance

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NISM Series VIII - Chapter 1: Introduction to Derivatives (MCQs)

B. Risk reduction

C. Profit from price changes

D. Tax savings

Answer: C

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