Intro to Derivatives / Futures

The first exchange traded financial derivative in India commenced with the trading of _______.

• Index options

• Index futures

• Stock options

• Stock futures

OTC derivatives are considered risky because

• There is no formal margining system.

• They are not settled on a clearing house.

• They do not follow any formal rules or mechanisms.

• All of the above

what is the difference between the Free Float and the Market Capitalization Weighted Index method?

• Free Float method takes into account the price of the shares.

  
  

• Market Capitalization Weighted Index calculates the value of a company's shares based on the market value of all outstanding shares.

• Free Float method focuses on the market value of all outstanding shares.

• Market Capitalization Weighted Index provides insight into the value of a company's publicly traded shares.

What is the purpose of the Free Float Market Capitalization Weighted Index?

• To track the performance of a group of stocks.

• To calculate the market value of all outstanding shares.

• To provide insight into the value of a company's publicly traded shares.

• To evaluate investment opportunities and track market trends.

Which of the following method uses Investible Weight Factor to calculate Index?

• Market Capitalization Weighted Index

• Free float market capitalization weighted index

• Price weighted index

• None of the above

_________ take a view on the future direction of the markets. Buy or sell futures and options to try and make profit from the future price movements of the underlying asset.

• Hedgers

• Speculators

• Arbitragers

• None of the above

_________  take short and long positions in the same or different contracts at the same time to create a position which can generate a riskless profit.

• Hedgers

• Speculators

• Arbitragers

• None of the above

Investors with a present or anticipated exposure to the underlying asset which is subject to price risk. Use derivative market primarily for price risk management of assets and portfolios.

• Arbitragers

• Hedgers

• Speculators

• None of the above

Which of the following is not a use of Index?

• As a barometer for market behaviour

• 1. As an underlying in derivative instruments like Index futures, Index options etc

• 1. In passive fund management

• None of the above

• _________ is subsidiary of NSE Strategic Investment Corporation ltd which introduced the free float market capitalization method for its main four indices.

• NSDL

• NSCCL

• NSE IT

• IISL