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?