FMM Model Questions

C) Option

1. Which of the following is a contract where both parties are committed? A) Forward B) Both the above C) Option D) Future

B) False

10. Volatility is of little practical relevance in estimation the value of options. A) True B) False

D) the Securities and Exchange Board of India

11. SEBI is _______________. A) The Securities and Exchange Broadcast of India C) the Standards and E-commerce Board of India B) The Security Emergency Board of India D) the Securities and Exchange Board of India

C) The Depository

12. ________ maintains records of securities dematerialsed and rematerialised? A) The stock exchange. B) The SEBI. C) The Depository D) The RBI.

B) Companies Act, 1956

13. A Depository means a company formed and registered under the _______? A) SC(R)A, 1956. B) Companies Act, 1956 C) SC(R) R, 1957 D) Depositories Act, 1996.

A) Investor protection

14. What does SEBI aim to provide? A) Investor protection B) Legal information C) Large volumes on the stock market D) Market the securities business in India

A) Corporates raise resources directly from the investors through the primary market, whereas in the secondary markets, investors buy and sell securities to / from one another.

15. The difference between primary markets and secondary markets is __________. A) Corporates raise resources directly from the investors through the primary market, whereas in the secondary markets, investors buy and sell securities to / from one another. B) Primary markets deal in shares whereas the secondary markets deal in debentures. C) Primary markets are legal whereas secondary markets are not. D) The initial public issues are made in primary market whereas all subsequent issues are made in the secondary markets.

B) Promoting and developing Forex Market in India.

16. Which of the following is not the main objective of SEBI? A) Promoting the development of securities market B) Promoting and developing Forex Market in India. C) Regulating the securities market D) Protecting the interest of investors in securities market

C) Securities and Exchange Board of India.

17. The authority regulating the issue of shares by companies in the primary markets is the ________. A) National Stock Exchange. B) Reserve Bank of India. C) Securities and Exchange Board of India. D) Controller of Capital Issues.

D) Primary markets refer to the direct solicitation of funds from the public by companies.

18. Which of the following is TRUE about primary markets? A) Primary markets are places where only short term instruments are traded. B) Primary markets are markets where commodities are sold. C) Primary markets are places where members of the public can buy and sell securities with one another. D) Primary markets refer to the direct solicitation of funds from the public by companies.

A) Assess risk-return profile of the investment.

19. Which of the following needs to be considered by an investor, while investing? A) Assess risk-return profile of the investment. B) Assess return profile of the investment. C) Obtain written documents explaining the investment. D) All of the above

D) Any of the above

2. Swaps can be based on A) Interest B) Equity C) Principal and Interest D) Any of the above

A) Securities and Exchange Board of India

20. The power to withdraw recognition to a Stock Exchange vests in ______. A) Securities and Exchange Board of India B) Reserve Bank of India C) IDBI D) Department of Company Affairs.

A) The ability of a business to continue operations in the face of a disaster

21. What is Business Continuity planning? A) The ability of a business to continue operations in the face of a disaster B) The ability of a business to continue operations in the face of a transfer C) The ability of a business to continue operations in the face of a recovery D) The ability of a business to continue operations in the face of a upgradation

B) Will be better able to continue doing what it did before a disaster

22. A business with a viable business continuity plan _____. A) Will be better able to continue doing what it did before a relocation B) Will be better able to continue doing what it did before a disaster C) Will be better able to continue doing what it did before a transfer D) Will be better able to continue doing what it did before an expansion

B) Identifying risks to critical functions

23. Business Continuity means _____. A) Identifying critical business functions B) Identifying risks to critical functions C) Identifying ways to avoid or mitigate the risks D) All of the above

C) a company dealing in securities of any other company while in possession of any published price sensitive information

24) The prohibition on dealing, communicating or counseling on matters relating to insider trading does not apply to ____________. A) a company dealing in securities of any other company while in possession of any B) unpublished price sensitive information C) a company dealing in securities of any other company while in possession of any published price sensitive information D) a company dealing in securities of any associate of the other company while in E) possession of any unpublished price sensitive information F) I am not attempting the question

C) A person admitted as a member by the Exchange.

25) Who is a 'Trading member'? A) A person who has delivered documents in pursuant to a contract. B) A person admitted as a member by the NSCCL. C) A person admitted as a member by the Exchange. D) A person who has received documents in pursuant to a contract. E) I am not attempting the question

D. providing unpublished Price Sensitive Information

26) Guidelines to be followed by listed companies with respect to disclosure / dissemination of Price Sensitive Information with special reference to Analysts, Institutional Investors, as per the SEBI (Prohibition of Insider Trading) Regulations, 1992 includes the following: ____________. A. recording of discussion with analysts, Institutional Investors B. only public information to be provided C. press release to be given after every such meet D. providing unpublished Price Sensitive Information E. I am not attempting the question

B) A contract for the delivery and payment within such time not exceeding 14 days

27) What is 'Hand delivery contract'? A) A contract for delivery of securities by hand. B) A contract for the delivery and payment within such time not exceeding 14 days C) From date of contract. D) A contract for delivery of securities and payment by hand. E) A contract for the delivery and payment within such time exceeding 14 days from F) Date of contract. G) I am not attempting the question

A. Yes

28) NSE's Certification in Financial Markets (NCFM) is a necessary qualification for becoming a trading member. A. Yes B. No C. I am not attempting the question

A) TRUE

29) Growth option is for those investors who are looking for capital appreciation. A) TRUE B) FALSE

A) Call

3. An option to buy an underlying is called Forward A) Call B) Put C) None of the above

C) Securities & Exchange Board of India

30) SEBI stands for A) Securities & Exchange Board Institute B) Securities & Exchanges Board of India C) Securities & Exchange Board of India D) Securities & Exchanges Board of Institute

A) less than 1 year

31) Money Markets refers to that part of the debt market where the maturity is. A) less than 1 year B) less than 1 month C) less than 6 months D) more than 1 year

B) SEBI

32) A company making a public issue of securities has to file a draft prospectus with ____ A) RBI B) SEBI C) Ministry of Finance D) None of the above E) I am not attempting the question

C) Rs.10 crs.

33) A company proposing to list on the NSE must have a minimum paid up equity capital of _____ A) Rs.50 crs. B) Rs.20 crs. C) Rs.10 crs. D) Rs.30 crs. E) I am not attempting the question

D) All of the above

34) The market for government securities comprises the securities issued by the_________ A) Central Govt. B) State Govt. C) State sponsored entities D) All of the above E) I am not attempting the question

A) sell

35) An exporter would _____ dollar forwards to lock in an exchange rate. A) sell B) buy C) hold D) exchange E) I am not attempting the question

B) buy

36) If you are bullish about a stock, you would ____ call options on the stock. A) sell B) buy C) short D) write E) I am not attempting the question

B) buy

37) If you are bearish about a stock, you would ____ put options on the stock. A) sell B) buy C) short D) write E) I am not attempting the question

D) Open Interest

38) ______ is the total number of outstanding contracts that are held by market participants at the end of each day. A) Outstanding position B) Outstanding Interest C) Open position D) Open Interest E) I am not attempting the question

D) Free Reserves

39) A company may purchase its own shares, out of _____. A) Its promoters money B) Its Equity Capital C) Profits D) Free Reserves E) I am not attempting the question

C) Rs. 301.76

4. If the security is priced at Rs. 300, what will be the price in 1 month, taking continuous compounding rate of 7%? A) Rs. 321 B) Rs. 301.75 C) Rs. 301.76 D) Rs. 301.74

C) Rs.793.83

40) What is the present value of Rs.1000 payable 3 years hence, if the interest rate is 8% per annum? A) Rs.779.42 B) Rs.788.23 C) Rs.793.83 D) Rs.785.54 E) I am not attempting the question

C) Rs.620.92

41) What is the present value of Rs.1000 payable 5 years hence, if the interest rate is 10% per annum? A) Rs.680.64 B) Rs.656.56 C) Rs.620.92 D) Rs.690.76 E) I am not attempting the question

a) Gross Profit/Net Sales

42) Gross Profit Ratio is given by __________. a) Gross Profit/Net Sales b) Net Profit/ Cost of Sales c) Net Profit/Sales d) Gross Profit/Cost of Sales e) I am not attempting the question

C) country code

43) The first two characters in ISIN code for a security represents _____. A) issuer type B) security type C) country code D) company identity

B) security is non-convertible preference share

44) If the eighth and ninth character of the ISIN is mentioned as 04, what does it indicate? A) security is security receipt B) security is non-convertible preference share C) security is a warrant D) security is equity share / mutual fund

B) TRUE

45) Clearing and settlement of trades and risk management are central functions of NSCCL. A) FALSE B) TRUE C) Not Attempt

D) NSCCL

46) Who provides counter party guarantee for all trades executed on NSEIL? A) NSE Clearing House B) NSEIL C) NSDL D) NSCCL

D) Dematerialized securities have distinct numbers.

47) Which of the following statements is NOT correct? A) Depository is registered owner of the securities held in demat form. B) Securities in a depository are fungible. C) Securities in a depository are held in dematerialized form. D) Dematerialized securities have distinct numbers.

C) a recognized stock exchange

48) A stockbroker means a member of _________ A) SEBI B) any exchange C) a recognized stock exchange D) any stock exchange

D) 1000 shares will get traded at Rs.155 per share.

49) Member A places a buy order for 1000 shares of ABC Ltd. in the NEAT system at 11:22:01 for Rs.155 per share. Member B places a sell order for 2000 shares of ABC Ltd. at 11:22:02 for Rs.150 per share. Assume that no other orders were available in the system during this time. Whether the trade will take place and if yes, at what price? A) 1000 shares get traded at Rs.150 per share. B) 1000 shares get traded at Rs.150.50 per share. C) 1000 shares get traded at Rs.152.50 per share. D) 1000 shares will get traded at Rs.155 per share.

C) American call

5. Which of the following is exercisable before expiry? A) Forward B) Future C) American call D) European put

B) for remainder of the day

50) Nifty index drops by 15% at 3:00 pm. Market will be halted _____. A) by half an hour B) for remainder of the day C) for ten minutes D) for fifteen minutes

C) Φ

6. Normal distribution is denoted by the following symbol A) ND B) ∆ C) Φ D) Π

A) 95.45

7. Mean ± 2 Standard Deviation covers _____% of the area under the curve. A) 95.45 B) 68.27 C) 99.73 D) 62.50%

B) False

8. Normal distribution is a suitable assumption to capture the behavior of stock prices. A) True B) False

C) 2.71828

9. The value of 'e' is A) 2.81728 B) 2.71282 C) 2.71828 D) 2.82718