Lesson 2: NISM 1
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Question 1 of 27
1. Question
Derivative is a contract or a product whose value is derived from a variable known as underlying. True or False?
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Question 2 of 27
2. Question
Near the end of 20th century, financial derivatives accounted for nearly ________ of daily derivative transactions.
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Question 3 of 27
3. Question
Securities Contracts (Regulation) Act, 1956 [SC(R)A] defines “derivative” to include‐ 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. True or False?
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Question 4 of 27
4. Question
Section 45U(a) of RBI act defines derivatives as an instrument, to be settled at a future date, whose value is derived from change in interest rate, foreign exchange rate, credit rating or credit index, price of securities. True or False?
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Question 5 of 27
5. Question
Which of the following is included as Derivative under the Section 45U(a) of RBI act:
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Question 6 of 27
6. Question
Which is not a derivative product?
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Question 7 of 27
7. Question
Swaps is a type of derivative. True or False?
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Question 8 of 27
8. Question
Increased fluctuations in underlying asset prices and integration of financial markets globally are some of the factors driving the growth of financial derivatives. True or False?
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Question 9 of 27
9. Question
The “futures price” of a derivative is the:
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Question 10 of 27
10. Question
___________ are also known as Over The Counter (OTC) contracts:
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Question 11 of 27
11. Question
A___________ is an agreement made between two parties to exchange cash flows in the future according to a formula.
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Question 12 of 27
12. Question
Interest rate Swap involves swapping only the interest related cash flows between the parties in different currency. True or False?
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Question 13 of 27
13. Question
Currency Swap involves swapping both principal and interest between the parties, with swapping of opposite cash flows in two different currencies. True or False?
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Question 14 of 27
14. Question
___________ use derivatives to offset price volatility risk in underlying market.
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Question 15 of 27
15. Question
You are expecting USDINR to move up. You are ________ on USDINR.
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Question 16 of 27
16. Question
You are not too sure of the price movement of Rupee vs Dollar. You wanted to purchase the share of an exporter company. All other things remaining same, you purchased the share of an exporter and sold shares of an importer company. You took a ________ position
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Question 17 of 27
17. Question
Who helps in maintaining parity of currency pair prices in different markets (exchanges)?
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Question 18 of 27
18. Question
_______________ brings in the much-needed liquidity in the financial markets?
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Question 19 of 27
19. Question
________ want to give away the risk whereas ________ are willing to take risk.
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Question 20 of 27
20. Question
Derivatives market helps in improving price discovery based on fair valuations and expectations. True or False?
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Question 21 of 27
21. Question
Trading of derivatives is governed by the regulatory framework under the SC(R)A. True or False?
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Question 22 of 27
22. Question
Which of the following is incorrect about derivatives?
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Question 23 of 27
23. Question
In a ____________ trade, contracts are tailor made to fit in the specific requirements of dealing counter-parties.
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Question 24 of 27
24. Question
_____________ contracts are standardized, traded on organized exchanges with prices determined by the interaction of buyers and sellers through anonymous auction platform.
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Question 25 of 27
25. Question
OTC derivative market is less regulated market because these transactions occur in private among qualified counter-parties
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Question 26 of 27
26. Question
Deepak, a currency trader is simultaneously trading in two geographically separated financial markets. He observes a difference in rate of EURUSD in Frankfurt and London. He buys 100 units EURUSD in Frankfurt and simultaneously sells 100 units in London. Deepak is a _________
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Question 27 of 27
27. Question
A rise in temperature by 3 deg is likely to have an adverse effect on produce of corn. A farmer, who sells his produce in the domestic market, is expecting the temperature to rise by around 5 deg, which would reduce his produce. To protect himself against economic loss, _________
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