Practice Set - 3 | Practice Set | NISM Series VIII: Equity Derivatives Certification Examination

Question 1

Which participant is primarily concerned with minimizing exposure to price changes?

Question 2

Which of the following is a key advantage of derivatives for portfolio management?

Question 3

Which of the following best describes derivatives as financial instruments?

Question 4

Which of the following scenarios best represents arbitrage?

Question 5

Which scenario best demonstrates speculative behavior?

Question 6

Which type of participant is most likely to engage in arbitrage?

Question 7

Which of the following risks is most relevant when market participants cannot exit positions quickly?

Question 8

Which derivative participant is least concerned with price risk?

Question 9

Which factor contributes to reduced transaction costs in derivatives markets?

Question 10

Which of the following participants is most likely to stabilize markets by taking opposite positions of hedgers?

Question 11

Which of the following best explains why derivatives can increase systemic risk?

Question 12

A trader engages in derivatives without owning the underlying asset and takes only one directional position. This is:

Question 13

Which type of derivative contract allows full customization of terms?

Question 14

Which factor distinguishes arbitrage from speculation?

Question 15

In derivatives trading, which risk arises due to improper legal enforceability of contracts?

Question 16

Which market type is most suitable for customized hedging needs?

Question 17

Which of the following is NOT a benefit of derivatives?

Question 18

A derivative contract traded through an exchange eliminates which key limitation of forward contracts?

Question 19

Which participant benefits most from price volatility?

Question 20

Which of the following is a direct benefit of clearing corporations?

Question 21

A trader enters into a forward contract and later wants to exit before maturity but cannot find a counterparty. This situation primarily reflects:

Question 22

Which factor makes futures contracts more liquid than forwards?

Question 23

A trader expects prices to rise and enters into a derivatives contract accordingly. Which position is taken?

Question 24

Which situation demonstrates operational risk?

Question 25

Which of the following best explains why derivatives are considered leveraged instruments?

Question 26

Why are OTC derivatives considered less transparent?

Question 27

Which of the following is a characteristic of speculative trading in derivatives?

Question 28

Which risk is associated with inability to enforce contract terms legally?

Question 29

Which of the following best describes exchange-traded derivatives?

Question 30

Practice Set - 3