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NISM Series V-D · Chapter 19: Interest Rate Derivatives

ब्याज दर डेरिवेटिव · NISM-Series-V-D: Mutual Fund – Specialized Investment Fund (SIF) Distributors Certification Examination

2% weightage · ~3 questions 150 questions · 180 minutes · 60% to pass · −0.10 per wrong answer 8 practice questions in our bank

What this chapter covers

A short bridge chapter: what interest-rate derivatives are, why they exist (managing rate risk on bonds and loans), the main products — FRAs, interest-rate swaps, futures and options — and the OTC versus exchange-traded split in India.

ब्याज-दर डेरिवेटिव क्या हैं, FRA, स्वैप, फ्यूचर्स/ऑप्शन, और OTC बनाम एक्सचेंज-ट्रेडेड।

What to master before the exam

Exam tip: Only two marks — do not over-invest. One definitional question and possibly one on who bears which leg of a swap.

Sample questions from this chapter

Five of the 8 questions in our free bank. Open the answer to see the explanation — every question in the mock test has one, in English and Hindi.

Question 1
The primary role of derivatives (including interest rate derivatives) is:
डेरिवेटिव (ब्याज दर डेरिवेटिव सहित) की प्रमुख भूमिका क्या है?
  1. Risk managementजोखिम प्रबंधन
  2. Financingवित्तपोषण
  3. Liquidity managementतरलता प्रबंधन
  4. Tax collectionकर संग्रह
Show answer & explanation
Answer: A — Risk management
Derivatives were created primarily for managing (transferring) risk; hedgers use them to reduce exposure to price/rate movements.
डेरिवेटिव मुख्यतः जोखिम प्रबंधन (हस्तांतरण) हेतु बने; हेजर इनका उपयोग मूल्य/दर चाल के एक्सपोज़र को घटाने हेतु करते हैं।
Question 2
Which category of derivatives has the largest market size globally?
वैश्विक स्तर पर किस श्रेणी के डेरिवेटिव का बाज़ार आकार सबसे बड़ा है?
  1. Interest rate derivativesब्याज दर डेरिवेटिव
  2. Equity derivativesइक्विटी डेरिवेटिव
  3. Currency derivativesकरेंसी डेरिवेटिव
  4. Commodity derivativesकमोडिटी डेरिवेटिव
Show answer & explanation
Answer: A — Interest rate derivatives
Interest rate derivatives are the largest derivatives segment globally by market size.
ब्याज दर डेरिवेटिव बाज़ार आकार के हिसाब से वैश्विक स्तर पर सबसे बड़ा डेरिवेटिव खंड हैं।
Question 3
Which of the following is an interest rate derivative?
निम्नलिखित में से कौन-सा ब्याज दर डेरिवेटिव है?
  1. All of these — forward rate agreement, interest rate swap and interest rate futuresये सभी — फॉरवर्ड रेट एग्रीमेंट, इंटरेस्ट रेट स्वैप और इंटरेस्ट रेट फ्यूचर्स
  2. Only forward rate agreementकेवल फॉरवर्ड रेट एग्रीमेंट
  3. Only interest rate swapकेवल इंटरेस्ट रेट स्वैप
  4. Only interest rate futuresकेवल इंटरेस्ट रेट फ्यूचर्स
Show answer & explanation
Answer: A — All of these — forward rate agreement, interest rate swap and interest rate futures
Forward rate agreements (FRAs), interest rate swaps (IRS) and interest rate futures are all interest rate derivatives.
फॉरवर्ड रेट एग्रीमेंट (FRA), इंटरेस्ट रेट स्वैप (IRS) और इंटरेस्ट रेट फ्यूचर्स — सभी ब्याज दर डेरिवेटिव हैं।
Question 4
Participants who take positions in interest rate derivatives to REDUCE interest rate risk are:
ब्याज दर जोखिम को घटाने हेतु ब्याज दर डेरिवेटिव में स्थिति लेने वाले प्रतिभागी हैं:
  1. Hedgersहेजर
  2. Speculatorsसट्टेबाज़
  3. Arbitrageursआर्बिट्राजर
  4. Regulatorsनियामक
Show answer & explanation
Answer: A — Hedgers
Hedgers have a real exposure to interest rate risk and use IRDs to reduce it; speculators take a view for profit, arbitrageurs exploit mispricing.
हेजरों के पास ब्याज दर जोखिम का वास्तविक एक्सपोज़र होता है और वे उसे घटाने हेतु IRD उपयोग करते हैं; सट्टेबाज़ लाभ हेतु राय लेते हैं, आर्बिट्राजर मिसप्राइसिंग का लाभ लेते हैं।
Question 5
Swaps help market participants manage the risks associated with:
स्वैप बाज़ार प्रतिभागियों को किन जोखिमों को प्रबंधित करने में मदद करते हैं?
  1. Volatile interest rates, currency exchange rates and commodity pricesअस्थिर ब्याज दरें, मुद्रा विनिमय दरें और जिंस कीमतें
  2. Only equity pricesकेवल इक्विटी कीमतें
  3. Only tax ratesकेवल कर दरें
  4. Nothingकुछ नहीं
Show answer & explanation
Answer: A — Volatile interest rates, currency exchange rates and commodity prices
A swap exchanges future cash flows by a formula and helps manage risks from volatile interest rates, currency exchange rates and commodity prices.
स्वैप एक सूत्र से भविष्य के नकदी-प्रवाह का आदान-प्रदान करता है और अस्थिर ब्याज दरों, मुद्रा विनिमय दरों व जिंस कीमतों से जोखिम प्रबंधित करने में मदद करता है।
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All V-D chapters

1. Investment Landscape · 5%2. Concept and Role of a Mutual Fund · 4%3. Legal Structure of Mutual Funds in India · 3%4. Legal and Regulatory Framework · 7%5. Scheme Related Information · 7%6. Fund Distribution and Channel Management · 4%7. NAV, Total Expense Ratio and Pricing of Units · 5%8. Taxation · 3%9. Investor Services · 10%10. Risk, Return and Performance of Funds · 5%11. Mutual Fund Scheme Performance · 5%12. Mutual Fund Scheme Selection · 10%13. Basics of Derivatives · 10%14. Understanding the Index · 5%15. Introduction to Forwards and Futures · 15%16. Introduction to Options · 13%17. Strategies using Equity Futures and Options · 9%18. Interest Rate, Instruments and Fixed Income · 6%19. Interest Rate Derivatives · 2%20. Exchange Traded Interest Rate Futures · 10%21. Exchange Traded Interest Rate Options · 6%22. Strategies using Interest Rate Derivatives · 6%
← Chapter 18: Interest Rate, Instruments and Fixed Income Chapter 20: Exchange Traded Interest Rate Futures →

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