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NISM Certifications Equity and Currency Derivatives Flashcards
51 question-and-answer cards covering Equity and Currency Derivatives as it is examined in NISM Certifications. 24 of them are printed below, taken from across the deck — no signup, no paywall on the preview.
24 sample cards from the Equity and Currency Derivatives deck
Sampled from the end of the deck, so these are different cards from the ones shown on the syllabus page.
What does the option Greek 'Gamma' measure?
Gamma measures the rate of change of delta with respect to a change in the underlying price (i.e., the curvature/second-order sensitivity).
What does the option Greek 'Theta' measure?
Theta measures the rate of decline in an option's value due to the passage of time (time decay).
What does the option Greek 'Vega' measure?
Vega measures the sensitivity of an option's price to changes in the volatility of the underlying.
What does the option Greek 'Rho' measure?
Rho measures the sensitivity of an option's price to changes in the risk-free interest rate.
What is a 'covered call' strategy?
Holding (being long) the underlying asset while selling (writing) a call option on it to earn premium income, capping the upside.
What is a 'protective put' strategy?
Holding the underlying asset and buying a put option to limit downside risk, acting like insurance on the position.
Describe a 'long straddle' option strategy.
Buying a call and a put at the same strike and expiry; it profits from large price moves in either direction (high volatility).
Describe a 'bull call spread'.
Buying a lower-strike call and selling a higher-strike call (same expiry) to bet on a moderate rise with limited cost, profit, and loss.
What is put-call parity for European options?
C + PV(K) = P + S, i.e. Call price + present value of strike = Put price + Spot price.
What is an exchange (currency) rate?
The price of one currency expressed in terms of another currency (e.g., USD/INR = number of rupees per US dollar).
What is the difference between a direct and an indirect currency quote?
A direct quote expresses the domestic currency price of one unit of foreign currency (e.g., INR per USD); an indirect quote expresses foreign currency per one unit of domestic currency.
What is the bid-ask spread in currency quotes?
The difference between the bid (price dealer buys at) and the ask/offer (price dealer sells at); it represents the dealer's margin.
What is interest rate parity (IRP) in currency forward pricing?
The forward exchange rate differs from the spot rate by the interest rate differential between the two currencies: Forward = Spot × (1 + domestic rate)/(1 + foreign rate).
Which currency pairs are permitted for currency futures trading on Indian exchanges?
USD/INR, EUR/INR, GBP/INR, and JPY/INR (the four INR pairs), plus certain cross-currency pairs like EUR/USD, GBP/USD, and USD/JPY.
What is the lot size of a USD/INR currency futures contract in India?
USD 1,000 per contract.
How are currency futures on Indian exchanges settled?
USD/INR (and other INR pairs) futures are cash-settled in Indian Rupees at the RBI reference rate; they are not physically delivered.
Which regulators jointly oversee the currency derivatives market in India?
SEBI (Securities and Exchange Board of India) and the RBI (Reserve Bank of India).
What is the purpose of the margining system in derivatives?
To cover potential losses and ensure performance of contracts, protecting the clearing corporation and counterparties from default risk.
What is 'initial margin' in derivatives trading?
The upfront margin collected when a position is opened, based on the worst expected one-day loss (computed via SPAN), to cover potential adverse price moves.
What is 'mark-to-market' (MTM) margin?
Daily settlement of gains and losses based on the day's closing/settlement price, credited to or debited from members' accounts.
What is SPAN in the context of margining?
Standard Portfolio Analysis of Risk — a system used to compute initial margin on a portfolio basis by assessing risk across various price and volatility scenarios.
What is the role of the Clearing Corporation in derivatives markets?
It acts as the central counterparty (CCP) to every trade, guaranteeing settlement, novating trades, managing margins, and eliminating counterparty default risk.
What does 'novation' mean in clearing?
The process by which the clearing corporation interposes itself as buyer to every seller and seller to every buyer, becoming the counterparty to each side of a trade.
State two key compliance obligations of a trading member in derivatives.
Adhering to client position limits and reporting requirements, and ensuring proper KYC, client agreements, risk disclosure, margin collection, and maintenance of records as required by SEBI and the exchange.
What this deck covers
The Equity and Currency Derivatives deck follows the NISM Certifications Equity and Currency Derivatives syllabus — 5 chapters and 15 topics — so questions land on material that is genuinely examinable rather than trivia around it. That works out to roughly 10.2 cards per chapter.
Answers are written to be recallable, not just readable — averaging about 129 characters, which is long enough to carry the reasoning and short enough to say out loud.
A deck like this earns its keep on the second and third pass. Read the syllabus first so you know the shape of the subject, then use the cards to find the specific facts that have not stuck.
Equity and Currency Derivatives flashcards FAQ
How many Equity and Currency Derivatives flashcards are in this NISM Certifications deck?
51 cards. This page previews 24 of them, sampled evenly across the deck so you can judge the difficulty before installing anything.
Are these NISM Certifications flashcards free?
Yes. The preview here is free to read with no signup, and the full 51-card deck is free inside the Examius app.
What do the Equity and Currency Derivatives cards cover?
They follow the NISM Certifications Equity and Currency Derivatives syllabus — 5 chapters and 15 topics — so the questions track what is actually examinable.
How should I use these flashcards?
Read the syllabus first so you know the shape of the subject, then drill the deck. Examius schedules each card with spaced repetition, so cards you keep missing come back sooner and ones you know drift further apart.