NCFM SURVEILLANCE IN STOCK EXCHANGES MODULE TEST QUESTION PAPERS

SURVEILLANCE IN STOCK EXCHANGES MODULE

Q1
As per the Securities Contracts (Regulation) Rules, 1957, every member of a recognized stock exchange shall maintain and preserve the Members' contract books showing details of all contracts entered into by him or counterfoils or duplicates of memos of confirmation issued to other members for a period of _____ years. [ 2 Marks ]

(a) 1
(b) 5
(c) 2
(d) 7
(e) I am not attempting the question

Q2
Suppose your annual savings are Rs. 30,000. You opt for pension fund that offers compounded interest rate of 10% annually. How much will your PF account have after 25 years if you are contributing your savings to the PF at the end of every year? [ 2 Marks ]

(a) 32,50,412
(b) 29,50,412
(c) 2,95,041
(d) 3,25,041
(e) I am not attempting the question

Q3
SEBI Act, 1992 was enacted to establish SEBI with statutory powers for: [ 2 Marks ]

(a) Protecting the interests of investors in securities.
(b) Promoting the development of the securities market.
(c) Regulating the securities market.
(d) All of the Above.
(e) I am not attempting the question

Q4
What is the purpose of Market Surveillance? [ 1 Mark ]

(a) To ensure Fair and efficient market.
(b) To curb liquidity.
(c) To delist non-compliant companies.
(d) Both (a) and (b).
(e) I am not attempting the question

Q5
The standard deviation of 2 securities A and B are 10% and 25% and their correlation coefficient is 0.2. What is the portfolio risk, if the investment in A is 25% and in B is 75%? [ 2 Marks ]

(a) 3.90%
(b) 19.41%
(c) 7.10%
(d) 1.10%
(e) I am not attempting the question

Q6
The compliance officer shall immediately and independently report to SEBI about __________, under the SEBI (Stock Brokers and Sub-brokers) Regulations, 1992. [ 2 Marks ]

(a) Audit observation
(b) Any non-compliance observed by him
(c) Client details
(d) Investment advice rendered by a broker
(e) I am not attempting the question

Q7
IMSS stands for ________. [ 2 Marks ]

(a) Integrated Market Security System
(b) International Market Security Surveillance
(c) International Market Surveillance System
(d) Integrated Market Surveillance System
(e) I am not attempting the question

Q8
Derivative includes:
(A) A security derived from a debt instrument, share, loan whether secured or unsecured, risk instrument or contract for differences or any other form of security.
(B) A contract which derives its value from the prices, or index or prices, of underlying securities.
[ 2 Marks ]

(a) Only A
(b) Only B
(c) Both A and B
(d) Neither A nor B
(e) I am not attempting the question

Q9
When are the trading members expected to upload the Unique Client code details of F&O Clients? [ 2 Marks ]

(a) Before executing the trade or latest on same day.
(b) Before the 7th working day of the month following the day of trade.
(c) Before the 7th day of the month following the day of trade.
(d) None of the above.
(e) I am not attempting the question

Q10
A trading member has two clients with the following MTM positions.

Client
Security X
Security Y
Security Z

T-1 Day
T Day
T-1 Day
T Day
T-1 Day
T Day

A
-500
-1200
-1500
-800
1000
500

B
-1000
-500
-1800
-1300
500
300


The MTM for the trading member will be _________. [ 3 Marks ]

(a) -6300
(b) -3300
(c) -3000
(d) 300
(e) I am not attempting the question

Q11
Book building is a process of __________. [ 2 Marks ]

(a) A company raising capital without diluting stake of its existing shareholders
(b) Offering securities to public for subscription for the purpose of raising capital or fund.
(c) Offering company's shares to a select set of people
(d) Offering securities in which bids at various prices from investors through syndicate
members are collected
(e) I am not attempting the question

Q12
Which of the following is NOT true about SEBI? [ 2 Marks ]

(a) It can specify the matters to be disclosed and the standards of disclosure required for the protection of investors in respect of issues.
(b) Its regulatory jurisdiction extends over corporate in the issuance of capital and transfer of securities.
(c) It determines the premium/discounts at which securities are to be issued.
(d) Its regulatory jurisdiction extends over all intermediaries and persons associated with the securities market.
(e) I am not attempting the question

Q13
What is the present value of Rs. 6000 receivable after two years at a discount rate of 5% under continuous discounting? [ 2 Marks ]

(a) Rs. 5700
(b) Rs. 5429.02
(c) Rs. 6000
(d) Rs. 6300
(e) I am not attempting the question

Q14
Which of the following is NOT price sensitive information? [ 2 Marks ]

(a) Investors' education and training of intermediaries of securities markets.
(b) Major expansion plans or execution of new projects.
(c) Disposal of the whole or substantial part of the undertaking.
(d) Published periodical financial results of the company.
(e) I am not attempting the question

Q15
A trading member has four clients with the following positions.

Client
Security
Settlement
Buy Value
Sell Value

Client A
Security W
2005001
1129
1153


Security Z
2005004
977
2014

Client B
Security W
2005001
978
1771


Security X
2005002
2069
3695


Security Y
2005003
1601
2079


Security Z
2005004
5365
1000

Client C
Security X
2005001
1339
2069

Client D
Security W
2005001
1260
3702


Security Y
2005003
1259
3392


Security Z
2005004
2493
470


The Gross open positions for the member in W, X, Y and Z will be ________respectively. [ 3 Marks ]

(a) 3259; 2356; 2611; 7425
(b) -6734; -6816; -5720; -4894
(c) -3259; -2356; -2611; -7425
(d) 9993; 9172; 8331; 12319
(e) I am not attempting the question

Q16
Under which of the following conditions, can SEBI reject issuance of registration certificate to a stock-broker? [ 2 Marks ]

(a) If the stock broker does not have any past experience in the business of buying, selling or dealing in securities.
(b) If the stock broker is not a fit and proper person.
(c) If the stock broker does not have the necessary infrastructure to effectively discharge his activities.
(d) All of the above.
(e) I am not attempting the question

Q17
Security A gives a return of 12% with a dispersion of 4%, while security B gives return of 15% with a dispersion of 5%. Which security is more risky? [ 2 Marks ]

(a) Security B
(b) Both securities are equally risky
(c) Neither of the securities is risky
(d) Security A
(e) I am not attempting the question

Q18
Calculate Beta of security-X, given the Covariance between return on Security-X and the return on Market portfolio as 67 and the Variance of return on the market portfolio as 108.5. [ 1 Mark ]

(a) 0.62
(b) 0.63
(c) 1.62
(d) 0.72
(e) I am not attempting the question

Q19
What is the correct fine structure for delay in uploading UCI details for F&O client? [ 2 Marks ]

(a) Rs.100 per client code subject to a minimum of Rs.1000 per week.
(b) Rs.100 per client code subject to a minimum of Rs.100 per week.
(c) Rs.10 per client code per day subject to Rs.100 per week
(d) Rs.1000 per client code per day of delay
(e) I am not attempting the question

Q20
A trading member has three clients with the following positions.

Client
Security
Settlement
Buy Value
Sell Value

Client A
Security W
2005001
550
250


Security Z
2005004
750
950

Client B
Security X
2005002
875
625


Security Y
2005003
595
335

Client C
Security Y
2005003
100
565


Security Z
2005004
795
20


The Gross open positions for the member in W, X, Y and Z will be________respectively. [ 3 Marks ]

(a) 800; 1500; 1595; 2695
(b) -500; -1250; -870; -1900
(c) 300; 250; 725; 795
(d) -300; -250; -725; -795
(e) I am not attempting the question

Q21
From the following information of a firm, determine earnings per share:
Net profit available to equity holders = Rs.50 lakh
Equity share capital = Rs.10 lakh
Face value of an equity share = Rs. 10 [ 1 Mark ]

(a) Rs.5.00
(b) Rs.50.00
(c) Rs.10.00
(d) Rs.2.00
(e) I am not attempting the question

Q22
China Valley Pvt. Ltd. a Group I security, the scrip-wise daily VaR would be _____ times the volatility of the scrip, subject to a minimum of _____%. [ 2 Marks ]

(a) 3; 7
(b) 7; 3.5
(c) 3.5; 7.5
(d) 7.5; 3.5
(e) I am not attempting the question

Q23
Trade details for a security trading under the band of 10% are as follows, High price=55, Low price=45.45, Previous Close=50, Close price=55. Which of the following type of price band(s) it has touched during the trading day? [ 2 Marks ]

(a) Upper band
(b) Lower Band
(c) Upper band as well as lower band
(d) None of the above
(e) I am not attempting the question

Q24
Price to Earnings Ratio is given by __________. [ 1 Mark ]

(a) Face value of share / Dividend per share.
(b) Face value of share / Earning per share.
(c) Market value of share / Dividend per share.
(d) Market price of a share / Earning per share.
(e) I am not attempting the question

Q25
Suppose the index based circuit breaker was triggered at 2000 points, then its second circuit breaker will reach at ________. (Previous day close of nifty was 1800) [ 2 Marks ]

(a) 2070
(b) 2100
(c) 2200
(d) 2530
(e) I am not attempting the question

Q26
As per the Securities Contracts (Regulation) Rules, 1957, every member of a recognized stock exchange shall maintain and preserve the counterfoils or duplicates of contract notes issued to clients for a period of _____ years. [ 2 Marks ]

(a) 1
(b) 7
(c) 2
(d) 5
(e) I am not attempting the question

Q27
While evaluating a project, a project should be accepted if _______. [ 1 Mark ]

(a) The benefit cost ratio is zero
(b) The net present value of the project is zero
(c) The net present value of the project is positive
(d) The benefit cost ratio is less than one
(e) I am not attempting the question

Q28
Securities which have traded for less than 80% of the days and having Impact Cost more than 1 shall be categorized in VaR Group _____. [ 2 Marks ]

(a) III
(b) I
(c) II
(d) No Group
(e) I am not attempting the question

Q29
Which of the following is not a case of market abuse? [ 2 Marks ]

(a) Trading on the basis of published corporate information.
(b) Dissemination of false or misleading market information through rumors.
(c) Front running.
(d) Trading on the basis of un-published price sensitive information.
(e) I am not attempting the question

Q30
What price band is applicable for scrips trading in the derivatives segment? [ 2 Marks ]

(a) No band
(b) 10%
(c) 20%
(d) 5%
(e) I am not attempting the question

Q31
Register of transactions (Sauda Book) shall be preserved for a period of _____ years by the stock broker as per the Securities Contracts (Regulation) Rules, 1957. [ 2 Marks ]

(a) 6
(b) 5
(c) 7
(d) 10
(e) I am not attempting the question

Q32
Stock price of XYZ Ltd. is trading at Rs.115. The firm is expected to declare dividend of Rs.3.5 per share and is expected to grow at rate of 12.5 per cent per year. What is the cost of equity under dividend growth model? [ 2 Marks ]

(a) 12.50%
(b) 17.50%
(c) 3.20%
(d) 15.50%
(e) I am not attempting the question

Q33
Marketwide circuit breakers are applied _____________. [ 2 Marks ]

(a) To provide for a cooling-off period giving buyers and sellers time to assimilate information
(b) To avoid the prices of securities from falling further
(c) To allow buyers and sellers to take stock of the losses made by them
(d) To avoid the prices of securities from rising further
(e) I am not attempting the question

Q34
For a Client trading in F&O segment, the trading member is compulsorily required to upload which of the following details of the client? [ 2 Marks ]

(a) Ration Card
(b) Voter id
(c) MAPIN
(d) PAN
(e) I am not attempting the question

Q35
Assume security A with a beta of 1.1 is being considered at a time when risk free rate of return is 5% and market return is expected to be 14%. What is the required rate of return according to Capital Asset Pricing Model? [ 2 Marks ]

(a) 14.9
(b) 16.9
(c) 18.9
(d) 21.9
(e) I am not attempting the question

Q36
In case of 75% book building option adopted by an issuer company which of the following holds good? [ 2 Marks ]

(a) Not less than 10% of the net offer to the public should be available for allocation to non
Qualified Institutional Buyers and not more than 50% of net offer to the public should be
available for allocation to Qualified Institutional Buyers.
(b) Not less than 25% of the net offer to the public should be available for allocation to non
Qualified Institutional Buyers and not more than 50% of net offer to the public should be
available for allocation to Qualified Institutional Buyers.
(c) Not less than 25% of the net offer to the public should be available for allocation to Qualified
Institutional Buyers and not more than 50% of net offer to the public should be available for
allocation to non Qualified Institutional Buyers.
(d) Not less than 50% of the net offer to the public should be available for allocation to non
Qualified Institutional Buyers and not more than 75% of net offer to the public should be
available for allocation to Qualified Institutional Buyers.
(e) I am not attempting the question

Q37
'Documents register showing full particulars of shares and securities received and delivered' shall be preserved for a period of _____ years by the stock broker as per the Securities Contracts (Regulation) Rules, 1957. [ 2 Marks ]

(a) 7
(b) 6
(c) 10
(d) 5
(e) I am not attempting the question

Q38
Every recognized stock exchange furnishes a copy of the annual report, as per the Securities Contracts (Regulation) Act, 1956 to ______________. [ 2 Marks ]

(a) Securities and Exchange Board of India
(b) Registrar of Companies
(c) Securities Appellate Tribunal
(d) Company Law Board
(e) I am not attempting the question

Q39
Which of the following is NOT included in the code of conduct for stock-broker holding a certificate? [ 2 Marks ]

(a) Exercise of Due Skill and Care.
(b) Integrity in conduct of business.
(c) Manipulative transactions.
(d) Advertisement and Publicity.
(e) I am not attempting the question

Q40
MS Pvt. Ltd. Group III scrip has a scrip VaR of 9 and the Index VaR is 7. The VaR rate applicable for the scrip would be____%. [ 2 Marks ]

(a) 67.66
(b) 60.62
(c) 54.56
(d) 77.65
(e) I am not attempting the question

Q41
A trading member has two clients with the following positions.

Client
Security
Settlement
Buy Value
Sell Value

Client A
Security W
2005001
9883
9683


Security X
2005002
9319
1169


Security Y
2005003
1117
1078


Security Z
2005004
1082
1528

Client B
Security W
2005001
1528
1406


Security X
2005002
1410
1380


Security Y
2005003
1471
1473


Security Z
2005004
1395
1271


The Gross open positions for the member in W, X, Y and Z will be ________ respectively. [ 3 Marks ]

(a) 22500; 13278; 5139; 5276
(b) -22178; -5098; 5098; -4706
(c) 322; 8180; 41; 570
(d) -322; -8180; -41; -570
(e) I am not attempting the question

Q42
Following is accepted towards cash component of members additional capital: [ 2 Marks ]

(a) NSC certificates
(b) Equity mutual funds
(c) Government securities
(d) Gold
(e) I am not attempting the question

Q43
A trading member has two clients with the following positions.

Client
Security
Settlement
Buy Value
Sell Value

Client A
Security W
2005001
1000
1100


Security X
2005002
3000
2550

Client B
Security W
2005001
900
1100


Security X
2005002
6000
6500


The Gross open positions for the member in W and X will be ________respectively. [ 3 Marks ]

(a) 300; 950
(b) -300; -950
(c) 4100; 18050
(d) -3800; -18000
(e) I am not attempting the question

Q44
What is the average cost of capital of XYZ Ltd.? If the cost of capital from each source such as debt, preferred stock and equity is 8%, 18% and 30% respectively and being financed with 30% from debt, 30% from preferred stock and 40% from the equity. [ 2 Marks ]

(a) 17%
(b) 18.40%
(c) 19.80%
(d) 22%
(e) I am not attempting the question

Q45
Which of the following is NOT the function of Securities Appellate Tribunal? [ 2 Marks ]

(a) Receiving evidence on affidavits.
(b) Calling for information from intermediaries and self-regulatory organizations in the
securities market.
(c) Summoning and enforcing the attendance of any person and examining him on oath.
(d) Dismissing an application for default.
(e) I am not attempting the question

Q46
The stock returns of the Company ABC Ltd. for past 5 years are 5%, 10%, 25%, 45%, and 40%. What is the standard Deviation of the returns for the Company ABC Ltd.? [ 2 Marks ]

(a) Insufficient data to calculate Std Deviation
(b) 250
(c) 35.36
(d) 15.81
(e) I am not attempting the question

Q47
A security in Trade for Trade segment must be settled on ________. [ 2 Marks ]

(a) At the discretion of the clearing corporation
(b) Net Basis
(c) Gross basis
(d) At the discretion of the clearing member
(e) I am not attempting the question

Q48
The index based circuit filters are applicable at the following stages of index movement: [ 2 Marks ]

(a) 5%, 10%, 20%
(b) 10%, 20%, 30%
(c) 10%, 15%, 20%
(d) 2%,5%,10%
(e) I am not attempting the question

Q49
Alerts for the Preliminary analysis and Investigation process are received from _________.
[ 2 Marks ]

(a) The surveillance group.
(b) Regulatory bodies.
(c) Investors/members.
(d) All of the above.
(e) I am not attempting the question

Q50
Which VaR group securities are accepted as collaterals by NSCCL? [ 2 Marks ]

(a) Group I
(b) Group II
(c) Group III
(d) All Group
(e) I am not attempting the question