NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Risk Management
A client buys 1,000 shares at Rs 500 on day T, and the shares are held without delivery. The VaR margin is 12% and extreme loss margin is 3% of the trade value. The client has Rs 60,000 available as margin. What is the shortfall or excess against the combined VaR and extreme loss margin requirement (ignoring any other margin)?
The trade value is Rs 5,00,000 and combined VaR plus extreme loss margin at 15% is Rs 75,000. With Rs 60,000 available, the client has a shortfall of Rs 15,000. Rs 75,000 would be the total requirement, not the shortfall.
- AShortfall of Rs 15,000Correct
- BExcess of Rs 15,000
- CShortfall of Rs 75,000
- DExact match, no shortfall
Explanation
Trade value is 1,000 x 500 = Rs 5,00,000. Combined margin is 15% of this, which is Rs 75,000. Available margin of Rs 60,000 gives a shortfall of Rs 15,000. Rs 75,000 is the total requirement, not the shortfall.
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