Is there negative marking in NISM Series V-D?

Yes — 0.1 mark is deducted for every wrong answer, so leave a question blank when you cannot eliminate options.

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NISM Series V-D · Chapter 22: Strategies using Interest Rate Derivatives

Q: How many questions come from Chapter 22 (Strategies using Interest Rate Derivatives) in the NISM Series V-D exam?

The chapter carries 6% weightage — roughly 9 of the 150 questions.

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

6% weightage · ~9 questions 150 questions · 180 minutes · 60% to pass · −0.10 per wrong answer 25 practice questions in our bank

What this chapter covers

The closing chapter applies the module: hedging a bond portfolio with interest-rate futures (duration-based hedge ratio), locking in borrowing or lending rates, speculating on rate moves, spread and arbitrage strategies, and the limits within which a fund may use them.

ब्याज-दर फ्यूचर्स से बॉन्ड पोर्टफोलियो की हेजिंग (ड्यूरेशन-आधारित हेज रेशियो), दर लॉक करना, स्प्रेड और आर्बिट्राज।

What to master before the exam

Duration-based hedge ratio: contracts = (portfolio value × portfolio duration) ÷ (futures value × futures duration).
Hedging against a rate rise (short futures) versus locking in a future investment rate (long futures).
Speculative positions on the direction of rates and on the shape of the yield curve.
Calendar and inter-instrument spreads; cash-and-carry arbitrage with interest-rate futures.
Portfolio use: how a SIF or debt fund uses these within regulatory exposure limits.

Exam tip: Six marks, numerical: the hedge-ratio sum with durations. Set it up in two lines — portfolio side over futures side — and the units cancel cleanly.

Sample questions from this chapter

Five of the 25 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

Hedging a portfolio of MULTIPLE bonds using interest rate futures is done using a:

इंटरेस्ट रेट फ्यूचर्स से कई बॉन्डों के पोर्टफोलियो को हेज करना किसका उपयोग करके किया जाता है?

Duration-based hedge ratioड्यूरेशन-आधारित हेज अनुपात
Market value ratioबाज़ार मूल्य अनुपात
Year-to-maturity ratioईयर-टू-मैच्योरिटी अनुपात
Credit rating ratioक्रेडिट रेटिंग अनुपात

Show answer & explanation

Answer: A — Duration-based hedge ratio
Since futures may not exist on every bond held, a duration-based hedge ratio (using weighted-average modified duration) sets the futures short needed to hedge the portfolio.
चूँकि हर धारित बॉन्ड पर फ्यूचर्स उपलब्ध नहीं हो सकते, ड्यूरेशन-आधारित हेज अनुपात (भारित औसत मॉडिफाइड ड्यूरेशन से) पोर्टफोलियो हेज हेतु आवश्यक फ्यूचर्स शॉर्ट तय करता है।

Question 2

In a bullish vertical spread using PUTs, the trader:

पुट का उपयोग करते हुए बुलिश वर्टिकल स्प्रेड में, ट्रेडर:

Buys a put with a lower strike and sells a put with a higher strikeकम स्ट्राइक वाला पुट खरीदता है और अधिक स्ट्राइक वाला पुट बेचता है
Buys a put with a higher strike and sells a put with a lower strikeअधिक स्ट्राइक वाला पुट खरीदता है और कम स्ट्राइक वाला पुट बेचता है
Buys a call with a lower strike and sells a putकम स्ट्राइक वाला कॉल खरीदता है और एक पुट बेचता है
Sells both putsदोनों पुट बेचता है

Show answer & explanation

Answer: A — Buys a put with a lower strike and sells a put with a higher strike
A bullish put spread sells the higher-strike put (earning more premium) and buys the lower-strike put (protection) — a net-credit, limited-risk bullish position.
बुलिश पुट स्प्रेड अधिक-स्ट्राइक पुट बेचता है (अधिक प्रीमियम) और कम-स्ट्राइक पुट खरीदता है (सुरक्षा) — एक शुद्ध-क्रेडिट, सीमित-जोखिम तेज़ी की स्थिति।

Question 3

If you expect interest rates to GO UP in future, today you should:

यदि आप भविष्य में ब्याज दरों के बढ़ने की अपेक्षा करते हैं, तो आज आपको क्या करना चाहिए?

Sell GOI bond futuresGOI बॉन्ड फ्यूचर्स बेचना
Buy GOI bond futuresGOI बॉन्ड फ्यूचर्स खरीदना
Buy the underlying bondअंतर्निहित बॉन्ड खरीदना
Do nothingकुछ न करना

Show answer & explanation

Answer: A — Sell GOI bond futures
Rising rates make bond prices fall, so you sell (short) GOI bond futures now to profit as prices decline.
बढ़ती दरें बॉन्ड कीमतें गिराती हैं, इसलिए आप अभी GOI बॉन्ड फ्यूचर्स बेचते (शॉर्ट) हैं ताकि कीमतें गिरने पर लाभ हो।

Question 4

A strategy where a trader buys one month’s contract and sells the same contract of a different month is a:

जिस रणनीति में ट्रेडर एक माह का अनुबंध खरीदता है और उसी अनुबंध का भिन्न माह का बेचता है, वह है:

Calendar spreadकैलेंडर स्प्रेड
Option spreadऑप्शन स्प्रेड
Contract spreadकॉन्ट्रैक्ट स्प्रेड
Butterflyबटरफ्लाई

Show answer & explanation

Answer: A — Calendar spread
Taking opposite positions in the same contract across two different expiry months is a calendar spread — a low-risk, low-return arbitrage on the spread.
एक ही अनुबंध में दो भिन्न एक्सपायरी माह में विपरीत स्थितियाँ लेना कैलेंडर स्प्रेड है — स्प्रेड पर एक कम-जोखिम, कम-प्रतिफल आर्बिट्राज।

Question 5

A key limitation of interest rate derivatives for hedgers arises mainly because they are:

हेजरों हेतु इंटरेस्ट रेट डेरिवेटिव की एक मुख्य सीमा मुख्यतः किस कारण है?

Standardized contracts, and not available on every kind of underlying instrumentमानकीकृत अनुबंध, और हर प्रकार के अंतर्निहित साधन पर उपलब्ध नहीं
Traded only OTCकेवल OTC ट्रेड होते हैं
Free of any basis riskकिसी बेसिस जोखिम से मुक्त
Guaranteed to profitलाभ की गारंटी वाले

Show answer & explanation

Answer: A — Standardized contracts, and not available on every kind of underlying instrument
Being standardized and not available on every bond, exchange-traded IRDs may not perfectly match a hedger’s exposure — leaving basis risk.
मानकीकृत होने और हर बॉन्ड पर उपलब्ध न होने से, एक्सचेंज-ट्रेडेड IRD हेजर के एक्सपोज़र से पूरी तरह मेल नहीं खा सकते — जिससे बेसिस जोखिम बचता 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 21: Exchange Traded Interest Rate Options Start the mock test →

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