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Series VIII · Exam Focus

NISM Series VIII: Equity Derivatives Certification — Exam Focus Practice Questions

Exam-specific finance and market-practice questions for NISM Series VIII: Equity Derivatives Certification. Every question below shows the correct answer and a full explanation, so you can read through this set as a study page or attempt it as a timed mock test.

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Practice questions

All 25 questions in Exam Focus

Read each question, think through your answer, then expand it to check the correct option and explanation.

Futures

Q1. A trader buys a futures contract. What is the main obligation?

  1. A. To take or settle the position as per contract terms
  2. B. To pay only option premium
  3. C. To avoid mark-to-market losses
  4. D. To receive guaranteed profit
Show correct answer & explanation

Correct answer: A. To take or settle the position as per contract terms

Futures create obligations for both buyer and seller and are marked to market.
Options

Q2. A call option gives the buyer the right to:

  1. A. Buy the underlying at the strike price
  2. B. Sell the underlying at the strike price
  3. C. Receive dividend guarantee
  4. D. Avoid paying premium
Show correct answer & explanation

Correct answer: A. Buy the underlying at the strike price

A call gives the right, not obligation, to buy the underlying at the strike price.
Option Greeks

Q3. Which Greek measures sensitivity of option price to change in the underlying price?

  1. A. Delta
  2. B. Theta
  3. C. Vega
  4. D. Rho
Show correct answer & explanation

Correct answer: A. Delta

Delta measures how much the option price may change for a change in the underlying.
Margins

Q4. Initial margin in derivatives is collected primarily to:

  1. A. Reduce counterparty and market risk
  2. B. Increase brokerage income only
  3. C. Avoid contract notes
  4. D. Guarantee profit
Show correct answer & explanation

Correct answer: A. Reduce counterparty and market risk

Margins protect the clearing system against adverse price movement and default risk.
Theta

Q5. For an option buyer, Theta generally represents:

  1. A. Loss of time value as expiry approaches
  2. B. Increase in lot size
  3. C. Change in interest rate
  4. D. Dividend payout
Show correct answer & explanation

Correct answer: A. Loss of time value as expiry approaches

Theta captures time decay, which generally hurts long option positions.
Hedging

Q6. An investor holding a stock portfolio can hedge market downside using:

  1. A. Index futures or put options
  2. B. Only delivery buy orders
  3. C. Higher brokerage plan
  4. D. Ignoring volatility
Show correct answer & explanation

Correct answer: A. Index futures or put options

Index derivatives can be used to reduce downside exposure in a portfolio.
Moneyness

Q7. A call option is in-the-money when:

  1. A. Spot price is above strike price
  2. B. Spot price is below strike price
  3. C. Premium is zero
  4. D. Expiry is far away
Show correct answer & explanation

Correct answer: A. Spot price is above strike price

A call has intrinsic value when the underlying price is above the strike price.
Settlement

Q8. Mark-to-market settlement in futures means:

  1. A. Daily profit or loss is settled based on price movement
  2. B. Only final expiry day is considered
  3. C. No margin is needed
  4. D. Premium is refunded
Show correct answer & explanation

Correct answer: A. Daily profit or loss is settled based on price movement

Futures positions are marked to market daily based on settlement prices.
Vega

Q9. Which option Greek is most directly linked to volatility changes?

  1. A. Vega
  2. B. Rho
  3. C. Delta
  4. D. Gamma only
Show correct answer & explanation

Correct answer: A. Vega

Vega measures sensitivity of option value to implied volatility changes.
Spread Strategy

Q10. A bull call spread is generally used when the trader expects:

  1. A. Moderate upside
  2. B. Unlimited downside
  3. C. No movement at all
  4. D. Interest-rate fall only
Show correct answer & explanation

Correct answer: A. Moderate upside

A bull call spread is a limited-risk, limited-reward strategy for moderate bullish views.
Risk management

Q11. In Series VIII Exam Focus, a learner wants to improve accuracy in Risk management. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Options

Q12. In Series VIII Exam Focus, a learner wants to improve accuracy in Options. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Clearing and settlement

Q13. In Series VIII Exam Focus, a learner wants to improve accuracy in Clearing and settlement. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Risk management

Q14. In Series VIII Exam Focus, a learner wants to improve accuracy in Risk management. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Options

Q15. In Series VIII Exam Focus, a learner wants to improve accuracy in Options. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Clearing and settlement

Q16. In Series VIII Exam Focus, a learner wants to improve accuracy in Clearing and settlement. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Risk management

Q17. In Series VIII Exam Focus, a learner wants to improve accuracy in Risk management. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Options

Q18. In Series VIII Exam Focus, a learner wants to improve accuracy in Options. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Clearing and settlement

Q19. In Series VIII Exam Focus, a learner wants to improve accuracy in Clearing and settlement. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Risk management

Q20. In Series VIII Exam Focus, a learner wants to improve accuracy in Risk management. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Options

Q21. In Series VIII Exam Focus, a learner wants to improve accuracy in Options. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Clearing and settlement

Q22. In Series VIII Exam Focus, a learner wants to improve accuracy in Clearing and settlement. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Risk management

Q23. In Series VIII Exam Focus, a learner wants to improve accuracy in Risk management. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Options

Q24. In Series VIII Exam Focus, a learner wants to improve accuracy in Options. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.
Clearing and settlement

Q25. In Series VIII Exam Focus, a learner wants to improve accuracy in Clearing and settlement. Which study action is most useful?

  1. A. Review the concept, read explanations, and practise similar questions
  2. B. Memorise only the previous option letter
  3. C. Skip the topic because it appeared difficult
  4. D. Attempt faster without checking why answers were wrong
Show correct answer & explanation

Correct answer: A. Review the concept, read explanations, and practise similar questions

Accuracy improves when the learner connects the concept, the explanation, and repeated practice on the same weak area.

How to use this set

Work through the questions in order without expanding the answers first, exactly as you would in the real Series VIII exam. Once you have picked an option, expand the answer to confirm whether you were right and read the explanation, even for questions you answered correctly, since the reasoning behind each option is where most of the learning happens.

If you get a question wrong, note the topic tag above the question and revisit that topic in the Series VIII exam page before your next attempt. When you are ready for exam-condition practice, use the timed mock test above; it shuffles these questions, applies the negative marking rule, and gives you a scored review at the end.