Work From Home

What does an open position in the derivatives market refer to?

• The total number of contracts settled during a trading session

• The outstanding buy positions in futures contracts

• The unsettled long or short positions in various derivative contracts

What is a calendar spread position in futures trading?

• A combination of long and short positions in different futures contracts on the same underlying asset

• A position where the trader buys and sells the same futures contract at different prices

• A position where the trader holds a long position in one futures contract and a short position in another futures contract

What does closing a position in futures trading involve?

• Opening a new position in a different futures contract

• Increasing the size of the existing open position

• Buying or selling a contract to reduce the existing open position

What is the purpose of a payoff chart for futures contracts?

• To visualize the price movements of the underlying asset

• To calculate the initial margin requirement

• To represent the potential profit or loss at expiry based on different underlying asset prices

How are profits and losses represented on a payoff chart for futures contracts?

• Profits are shown on the left side and losses on the right side

• Profits are shown above the x-axis and losses below the x-axis

• Profits are shown below the x-axis and losses above the x-axis

• Profits and losses are both shown on the x-axis

If a person goes long in a futures contract at Rs. 100 and the price of the underlying asset at expiry is Rs. 150, what is the profit?

• 100

• 50

• 150

• 200

In a short futures position, what happens if the price of the underlying asset decreases?

• incurs a loss

• make profit

• break even

• remain unchanged

What is the primary purpose of using single stock futures in hedging?

• To eliminate systematic risk

• To manage unsystematic risk

• To speculate on individual stock prices

• To diversify the portfolio

Which type of risk can be reduced through diversification of the portfolio?

• systematic risk

• unsystematic risk

• market risk

• interest rate risk

How is beta calculated for a portfolio?

• It is the weighted average of the betas of individual stocks in the portfolio

• It is the sum of the betas of individual stocks in the portfolio

• It is the difference between the betas of individual stocks in the portfolio