NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Risk Management
A broker's client buys shares worth Rs 10,00,000 in the cash segment under a VaR plus ELM margin of 15% in total. Assuming no other margins apply, what margin amount must be collected upfront?
The margin to be collected is Rs 1,50,000, because 15 percent of the Rs 10,00,000 trade value equals Rs 1,50,000. Other figures come from using the wrong percentage or by subtracting the margin from the trade value instead of computing it.
- ARs 1,00,000
- BRs 1,50,000Correct
- CRs 15,000
- DRs 8,50,000
Explanation
Margin = 15% x Rs 10,00,000 = Rs 1,50,000. Rs 1,00,000 would be 10%, Rs 15,000 is 1.5%, and Rs 8,50,000 wrongly equals the amount left after subtracting the margin from the value.
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