Stock Futures Level 1

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| By Dreamgains
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Quizzes Created: 4 | Total Attempts: 2,867
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  • 1/15 Questions

    Short Selling on Delivery Basis is possible in Stock Future Scrips.

    • True
    • False
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About This Quiz

The 'Stock futures Level 1' quiz assesses knowledge on derivatives, specifically focusing on futures. It covers distinctions between cash and futures markets, features of index futures, and trading specifics like expiry and lot sizes, essential for financial market professionals.

Stock Futures Level 1 - Quiz

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  • 2. 

    Lot Size and Contract Expiry are major differences between Spot and Derivatives Segment.

    • True

    • False

    Correct Answer
    A. True
    Explanation
    The statement is true because lot size refers to the number of units of an underlying asset in a derivatives contract, whereas in the spot market, the lot size is typically one unit. Contract expiry refers to the predetermined date at which a derivatives contract expires, whereas in the spot market, there is no fixed expiry date as the transaction is settled immediately. These differences highlight the distinct characteristics and trading mechanisms of the spot and derivatives segments.

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  • 3. 

    Our Risk to Reward Ratio for this product from our SL to 1st TGT is, ______.

    • 1:3

    • 2:1

    • 1:2

    • 1:1

    Correct Answer
    A. 1:1
    Explanation
    The given answer suggests that the risk to reward ratio for this product, from the stop loss (SL) to the first target (TGT), is 1:1. This means that for every unit of risk taken (SL), the potential reward (TGT) is also one unit. This indicates that the potential gain is equal to the potential loss, making it a balanced risk-reward ratio.

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  • 4. 

    Nifty Future and Banknifty Future falls into which of the following sub-category of Derivatives?

    • Index Future

    • Stock Future

    • Index Option

    • Stock Option

    Correct Answer
    A. Index Future
    Explanation
    Nifty Future and Banknifty Future fall into the sub-category of Derivatives called Index Future. Index futures are contracts that allow investors to buy or sell a basket of stocks comprising an index, such as Nifty or Banknifty, at a predetermined price and date in the future. These contracts are settled in cash and are commonly used by investors to speculate on the overall direction of the stock market or to hedge their portfolio against market fluctuations.

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  • 5. 

    All stock and index futures expire on ____________.

    • First Monday of Month

    • Last Friday of Month

    • Last Day of Month

    • Last Thursday of Month

    Correct Answer
    A. Last Thursday of Month
    Explanation
    All stock and index futures expire on the last Thursday of the month. This is a standard practice in the financial markets to ensure that all contracts are settled and new contracts can be initiated. By having a fixed expiration date, it allows for better planning and coordination among market participants. The last Thursday of the month is chosen as it provides a reasonable amount of time for traders to close out their positions and settle any outstanding obligations before the end of the month.

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  • 6. 

    In this product we provide ______________ for each call.

    • 3 SL, 1 TGT

    • 2 SL, 2 TGT

    • 1 SL, 3 TGT

    • 1 SL, 2 TGT

    Correct Answer
    A. 1 SL, 2 TGT
    Explanation
    This product offers one stop loss (SL) and two take profit targets (TGT) for each call.

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  • 7. 

    We provide minimum TGT/SL in any Stock Future calls is ____________.

    • 2000 Rs.

    • 4000 Rs.

    • 1% of Buy/Sell Price

    • 0.8% of Buy/Sell Price

    Correct Answer
    A. 4000 Rs.
    Explanation
    The minimum TGT/SL provided in any Stock Future calls is 4000 Rs. This means that when giving recommendations for Stock Future trades, the target (TGT) and stop loss (SL) levels will not be set below 4000 Rs. This ensures that there is a minimum potential profit or loss that traders can expect when following these calls.

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  • 8. 

    Scrips which are tradable in Futures (Derivatives) have a particular circuit limit in Spot (Cash).

    • True

    • False

    Correct Answer
    A. False
    Explanation
    This statement is false. Scrips that are tradable in futures (derivatives) do not have a particular circuit limit in spot (cash) markets. Circuit limits are set by stock exchanges to prevent extreme price volatility in individual stocks. These limits are applicable in the cash market and do not directly affect the futures market. Therefore, the statement is incorrect.

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  • 9. 

    NSE provides a facility to Trade in Half Lot of Stock Future if client has less margin to trade.

    • True

    • False

    Correct Answer
    A. False
    Explanation
    The statement is false because NSE does not provide a facility to trade in half lot of stock futures if a client has less margin to trade.

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  • 10. 

    Which of the following is not a type of Derivatives?

    • Futures

    • Forward

    • Swap

    • Nifty

    Correct Answer
    A. Nifty
    Explanation
    Nifty is not a type of derivative. It is a stock market index in India that represents the performance of the top 50 companies listed on the National Stock Exchange (NSE). On the other hand, futures, forward, and swap are all types of derivatives. Futures are standardized contracts to buy or sell an asset at a predetermined price and date, while forwards are similar contracts but are customized. Swaps involve the exchange of cash flows between two parties based on a predetermined formula.

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  • 11. 

    If Infosys Future is given sell at 3000 and TGT-SL is given at 2968-3032 respectively then what will be the Lot Size of Infosys Future according to Our Risk to Reward Strategy?

    • 250

    • 500

    • 125

    • 1000

    Correct Answer
    A. 125
    Explanation
    According to the given information, the risk to reward strategy for Infosys Future is given as TGT-SL of 2968-3032. The lot size is the number of units in a contract. To determine the lot size, we need to calculate the difference between the TGT and SL values, which is 3032-2968=64. The lot size is typically a multiple of 100, and the closest multiple of 100 to 64 is 100. Therefore, the lot size of Infosys Future according to our risk to reward strategy is 100.

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  • 12. 

    One client has Buying position of 5 lots of in Tata Motors Future at 300 Rs., CMP of Tata Motors is 303, then how much ROI this client will get if he books all lots at CMP? Consider 10% Margin and 1000 Lot size.

    • 15%

    • 3%

    • 10%

    • 50%

    Correct Answer
    A. 10%
    Explanation
    The client will get a 10% return on investment (ROI) if he books all lots at the current market price (CMP). This can be calculated by finding the difference between the buying price and the CMP, which is 3 Rs. (303 - 300). Since the client has a buying position of 5 lots, the total profit would be 15 Rs. (3 * 5). Considering a 10% margin, the initial investment would be 30 Rs. (300 * 5 * 0.1). Therefore, the ROI would be 10% (15 / 30 * 100).

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  • 13. 

    We take _________% margin as an actual investment of total investment to calculate ROI and Profit/Loss for our Track Record.

    • 50%

    • 20%

    • 10%

    • 12%

    Correct Answer
    A. 12%
    Explanation
    The given answer of 12% suggests that the company considers 12% of the total investment as the actual investment for calculating ROI and Profit/Loss in their Track Record. This means that they deduct 12% from the total investment before calculating the returns and profitability.

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  • 14. 

    Suppose if we have given Buy Call in Dish Tv Futures @ 80.00 and its lot size is 4000 then what will be the SL and TGT for this call?

    • SL: 79.20, TGT: 80.80/81.60

    • SL: 79.00, TGT: 81.00/82.00

    • SL: 80.80, TGT: 79.20/78.40

    • SL: 81.00, TGT: 79.00/78.00

    Correct Answer
    A. SL: 79.20, TGT: 80.80/81.60
    Explanation
    The correct answer is SL: 79.20, TGT: 80.80/81.60. The stop loss (SL) is set at 79.20, which means that if the price of Dish TV Futures falls to or below 79.20, the call should be exited to limit losses. The target (TGT) is set at 80.80/81.60, which means that if the price of Dish TV Futures rises to or above 80.80, the call should be exited to lock in profits.

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  • 15. 

    Mention four major differences between Cash and Future?

Quiz Review Timeline (Updated): Apr 15, 2024 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Apr 15, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • Jan 14, 2013
    Quiz Created by
    Dreamgains

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