NISM VIII: Lesson 3 | Topic 7

Question 1 of 4

1. Question

Cash and carry model of futures pricing works under certain assumptions. Which among the following is not an assumption?

Easy holding and maintaining of underlying asset.
The supply of Underlying asset in cash market has a limitation.
Zero transaction costs.
No margin requirements.

Question 2 of 4

2. Question

Today 25th July, 2018, you agreed to purchase 10 quintals of Basmati rice at Rs.6100/Qtl , on 25th September, 2018 (2 months from today), after a hard negotiation on price with the wholesaler. The prevailing price for instant delivery was Rs6000/ quintal. On 25^th Sept, 2018 (the day of purchase) you find the prevailing market rate to be Rs5900/ Qtl. You however made the payment as per the agreement. In the above transaction, you:

Earned a profit of Rs 2000
Suffered a loss of Rs 2000
Suffered a loss of Rs 200
Suffered a loss of Rs1000

Question 3 of 4

3. Question

Nityanand has bought Voltak Aug futures at 425. He was going away from his trading workstation. Knowing that the stock was volatile, he wanted to place a sell order above 425.

What is his option?

He can place sell order at any price.
He cannot place a sell order.
He can place the sell order at any price within the limits set by exchange.
He can only place a stop loss sell order.

Question 4 of 4

4. Question

For the derivative of a dividend paying stock, Fair Price is :

Spot price – Cost of carry + Dividends
Spot price + Cost of carry ‐ Dividends
Spot price – Cost of carry ‐ Dividends
Spot price + Cost of carry + Dividends

NISM VIII: Lesson 3 | Topic 7