NISM VIII: End of Lesson 3

Raman was long on Insys Future at Rs. 1500 (Lot size 600) & short on PCL Future at Rs. 400 (Lot size 1800). On expiry Insys spot was Rs. 1600 & PCL Rs. 415. What was Raman’s profit/ Loss?

Number of contracts for a perfect hedge is:

The terms of a forward contract are decided:

It is very difficult for parties to exit from the forward contract before the contract’s maturity. This is:

Which of the following is true with respect to Futures?

1. He who buys a futures contract, takes a long position.
2. He who sells a futures contract, takes a short position.

Which of the following is true with regards to Futures?

1. Futures contract carry the counter party risks
2. Future contracts are liquid
3. Future contracts are not time bound
4. Future contracts have standardized lots

Ask price is the price at which:

For a long position, Rollover means selling the expiring contract and buying the next month contract. True or False?

The fair value of Insys 2 month future contract with 50 days to expiry is Rs. 1513 (Spot is currently Rs. 1500). However, in the futures market because of overall bearish sentiment, the 2 month future is trading at Rs. 1506. Multiplier is 400. What would be the arbitrage opportunity be like?

An open interest is the total number of contracts which are not settled (outstanding) for an underlying asset.

Niranjan sold a Nifty August Futures contract. He can close his position by:

The Beta of a portfolio worth Rs. 10 lakh is 1.5. Value of Nifty (Index) future is Rs. 11000 (Multiplier = 75). What is the number of Nifty contracts to be sold for a perfect hedge?

A non- dividend paying stock X is trading at Rs. 1000. What should be the fair value of futures of X, if the time to expiry is 25 days? Consider the rate of interest to 8%.

Radha sold a Reliant Inc August Future @1100 on Aug 5. Reliant future closed at 1110 on Aug 5. If the Initial margin required is 20% & lot size is 1000, calculate Initial & MTM margin ?

At the start of the month, which future contracts are most traded?

Arbitrage produces ____________ profits and makes use of __________ in markets.

A portfolio has only 2 stocks in equal proportion. Stock A has a beta of 1.5 & Stock B has a beta of 0.7. What is the portfolio beta?

When we come close to maturity the spot and future prices tend to: