Financial Derivatives

The purchase of a share in one market and the simultaneous sale in a different market to benefit from price differentials is known as ____________.

• Mortgage

• Arbitrage

• Hedging

• Speculation

Financial derivatives provide the facility for __________.

• Trading

• Hedging

• Arbitraging

• All of the these

Which of the following is not traded on exchange ?

• Forward

• Futures

• Options

• None of these

In an equity scheme, fund can hedge its equity exposure by selling stock index futures.

• True

• False

Selling short a stock means ___________.

• Seller does not own the stock he is supposed to deliver

• Seller has to deliver the stock within a short time

• Seller owns the stock he is supposed to deliver

• Seller has more than a year's time to deliver the stock which he sold

Margins in 'Futures' trading are to be paid by _______.

• Only the Buyer

• Only the seller

• Both Buyer and Seller

• No Margins are required

You sold one XYZ Stock Futures contract at Rs. 278 and the lot size is 1,200. What is your profit (+) or loss (-), if you purchase the contract back at Rs. 265?

• 16,600

• 15,600

• -15,600

• -16,600

You have taken a short position of one contract in June XYZ futures (contract multiplier 50) at a price of Rs. 3,400. When you closed this position after a few days, you realized that you made a profit of Rs. 10,000. Which of the following closing actions would have enabled you to generate this profit?

• Selling 1 June XYZ futures contract at 3600

• Buying 1 June XYZ futures contract at 3600 153

• Buying 1 June XYZ futures contract at 3200

• Selling 1 June XYZ futures contract at 3200

If you have sold a XYZ futures contract (contract multiplier 50) at 3100 and bought it back at 3300, what is your gain/loss?

• A loss of Rs. 10,000

• A gain of Rs. 10,000

• A loss of Rs. 5,000

• A gain of Rs. 5,000

Which of the following is closest to the forward price of a share, if Cash Price = Rs.750, Forward Contract Maturity = 6 months from date, Market Interest rate = 12%

• 772.5

• 795

• 840

• 940.8