Are you looking for BSE Options Quiz On Commodity Derivatives Answers (BSE World Investor Week)? As you know Securities Market Regulator – SEBI, is a member of the International Organization of Securities Commissions (I0SCO).

Every year, the world over, World Investor Week is celebrated under the aegis of I0SCO, in order to give further impetus to the various investor education and awareness initiatives. SEBI has been participating in celebrations along with the exchanges, depositories, investor associations, commodity derivative trainers, resource persons, etc – since 2017.

As a part of this celebration, BSE Investors’ Protection Fund has also planned many activities during this week, and one of them is the quiz. Where participants can win cash prizes just by answering some simple MCQ questions. You can also visit the official page for quiz registration

BSE Quiz On Commodity Derivatives Answers (BSE World Investor Week Solution)

BSE Futures Quiz On Commodity Derivatives Answers

1. Which among the given alternatives, is a correct definition of an Option Contract?

  1. An option is a contract which gives holder right to buy or sell (but not obligation) of underlying asset at a fixed price within a specified period of time
  2. An option is a contract which gives holder right to buy or sell of underlying asset at a market price within a specified period of time
  3. An option is a contract which gives holder right to buy or sell (but not obligation) of underlying asset at a fixed price.
  4. An option is contract which gives holder right to buy or sell of underlying asset at a negotiable price

2. Which is the correct definition of call option?

  1. Call options are financial contracts that give the option holder the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at a specified price within a specific time period.
  2. Call options are financial contracts that give the option buyer the right, to buy a stock, bond, commodity or other asset or instrument at a specified price within a specific time period.
  3. Call options are financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at market price
  4. Call options are financial contracts that give the option buyer the right, but not the obligation, to buy a stock, bond, commodity or other asset or instrument at a negotiated price between buyer and seller within specified time period

3. Which among the given options, defines put option correctly

  1. It is an option contract in which the holder has the right (but not the obligation) to sell a specified quantity at a specified price (strike price) within a fixed period of time (until its expiration).
  2. It is an option contract in which the holder has the right to sell a specified quantity at a specified price (strike price) any day during contract period.
  3. It is an option contract in which the holder has the right (but not the obligation) to sell a specified quantity of underlying asset at a specified price (strike price) within a specific time period
  4. It is an option contract in which the holder has the right to sell a quantity at mutually agreed price

4. How is an option contract strikingly different from forward/futures contract?

  1. In forward/futures, both the parties have a binding commitment, which is not in option
  2. In forward/futures, both the parties have a binding commitment, however in options only option seller has obligation whereas option buyer has choice
  3. In forward/futures, only seller has obligation whereas in option both the parties have a binding commitment
  4. It is pre-decided price at which option contract to be bought or sold

5. Who is writer of the option?

  1. One who sells option by charging premium from option buyers and take obligation to fulfil commitment in case buyer exercises the option
  2. One who takes short open position /seller
  3. Both buyer as well as seller
  4. none of these

6. What do you understand by strike price?

  1. It is price at which call option is entered into
  2. It is pre-decided price at which option buyer is eligible to buy or sell the underlying asset
  3. It is pre-decided price and part of contract specifications, at which option buyer is eligible to buy or sell the underlying asset
  4. It is mutually agreed price at which both put and call options are entered into

7. What is expiration date?

  1. It is last day on which either option contract is exercised or it lapses
  2. It is last day on which futures contract expires
  3. It is last day of the contract on which spot and futures merged into each other
  4. None of these

8. What is exercise date?

  1. The day on which both futures and option contracts are entered into
  2. The day on which forward contracts are entered into
  3. The date on which option is actually exercised by the option holder
  4. A day on which holder can acquire position in the underlying futures contract

9. What is option premium?

  1. It is mutually agreed price at which both put and call options are entered into
  2. It is pre-decided price at which option buyer is eligible to buy or sell the underlying asset
  3. It is the price (cost) paid by option buyer to the option seller to acquire the right to buy the underlying at a specific exercise price
  4. None of these

10. Which among the given options, is not a commodity as underlying for trading in the option?

  1. zinc
  2. crude oil
  3. currency
  4. soybean

11. How does one refer to risk that a commodity futures price will move differently from that of its underlying physical commodity?

  1. Premium risk
  2. Spread risk
  3. margin risk
  4. basis risk

12. Deep in the money commodity call options on exercise gives the option buyer

  1. Long position in the underlying futures
  2. Short position in the underlying commodity futures
  3. Short position in the underlying physical commodity
  4. None of these

13. What option contract buyer acquires?

  1. A right but not an obligation
  2. A right and an obligation
  3. an obligation but not a right
  4. Neither a right nor an obligation

14. Which option gives option buyer zero or close to zero cash flow, if it were exercised immediately?

  1. In the Money (ITM) & Out of the Money (OTM) option
  2. At the Money (ATM) & Close to Money (CTM) option
  3. All exchange traded
  4. Out of the money and At the Money option

15. Maximum potential gain for seller of an option contract is—,till the expiry of the contract

  1. Unlimited
  2. Limited to the spot price of the underlying
  3. limited to the futures price of the same expiry
  4. Limited to the premium received upfront

16. When you are bullish about a commodity you can do a

  1. sell call
  2. buy put
  3. buy call
  4. none of the above

17. When you are bearish about a commodity you can do a

  1. buy call
  2. sell call
  3. buy put
  4. none of the above

18. An index option is a

  1. debt instrument
  2. derivatives product
  3. cash market product
  4. money market instrument

19. The buyer of an option can not lose more than option premium paid

  1. True only for European options
  2. True only for American options
  3. False for all options
  4. True for all options

20. A strangle is a mixed option strategy consisting of

  1. two puts and one call with the same expiry date
  2. two calls and one put with the same expiry date
  3. A call and a put for the same expiry but at different strike prices
  4. A call and a put at a same strike price and expiry date

21. The maximum risk in short put is

  1. Unlimited
  2. Equal to the price of the commodity minus the premium received
  3. Equal to the price of the commodity plus the premium received
  4. None of these

22. Which one of the transaction would be considered a protective strategy?

  1. Sell a call against commodity you sold short
  2. Buy a put on a commodity you own
  3. Buy a call on a commodity you own
  4. sell a put on commodity you own

23. What will be the value of the option if a call option is far out of the money?

  1. Less than the value of a put option with the same exercise price
  2. Greater than the value of a put option with the same exercise price
  3. Zero
  4. Equal to the value of a put option with the same exercise price

24. What is the reason of difference between value of a call option and put option with the same exercise price?

  1. The volatility of price of the underlying commodity
  2. The use of continuous as opposed to discrete discounting
  3. The differential between the current commodity price in present value terms
  4. Both are different contracts with different obligations and risks

25. When price of the underlying asset is expected to increase, then the good option is to

  1. Buy a Call option
  2. sell a call option
  3. buy a put option
  4. sell a put option

26. The type of option that can be exercised only at the date of expiration is classified as

  1. European option
  2. American option
  3. Australian option
  4. Canadian option

27. Please read the given statement and then select the right option as your answer: “An option value can never be less than zero”

  1. True
  2. False
  3. Partially true
  4. Not sure

28. Please read the given statement and then select the right option as your answer: “At expiration a call option will have no value if the commodity price is less than exercise price “

  1. TRUE
  2. False
  3. Partially true
  4. Not sure

29. Which from amongst the given options is true for the owner of a call option?

  1. The loss potential is unlimited
  2. The profit potential is unlimited
  3. The premium exceeds the strike price
  4. There is no expiration date , unless the option is a European call

30. Which of the option trader receives, rather than pays a premium

  1. Option buyer
  2. Option seller
  3. Both option seller and option buyer
  4. Neither buyer nor seller receives premium

31. Please read the given statement and then select the right option as your answer: “Option contracts are not symmetrical with respect to rights and obligations of the parties involved”

  1. FALSE
  2. True
  3. Partially true
  4. Not sure

32. Please read the given statement and then select the right option as your answer: “The term European and American have nothing to do with the location of the option or the exchange”

  1. FALSE
  2. TRUE
  3. Partially true
  4. Not sure

33. What is Bermudan option?

  1. An option that can be exercised on the expiry of the contract
  2. An option that can be exercised on specified dates during its life
  3. An option that can be exercised two days prior to expiry of the contract
  4. None of these

34. What determines the option premium?

  1. The options exercise price
  2. The length of time remaining until expiration
  3. Volatility of underlying futures contract
  4. all the three

35. What is implied from the statement that an option is an eroding asset?

  1. Its time value increases with expiration
  2. Its time value becomes equal with price at the time of expiry
  3. Its time value declines as it approaches expiration
  4. Its time value becomes higher than price at the time of expiry

Wrap Up

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