NISM Certifications · NISM-Series-VII: Securities Operations and Risk Management · Risk Management
A client buys 500 shares at Rs 200 and the broker applies a VaR margin of 12% and an extreme loss margin of 3.5% on the traded value. What total margin should be collected under these two components?
The total margin is Rs 15,500. Traded value is Rs 1,00,000, and adding the VaR margin of 12% to the extreme loss margin of 3.5% gives 15.5%, which equals Rs 15,500 on that value.
- ARs 12,000
- BRs 15,500Correct
- CRs 3,500
- DRs 18,500
Explanation
Traded value is 500 x 200 = Rs 1,00,000. The combined margin is 12% + 3.5% = 15.5%, giving Rs 15,500. Rs 12,000 omits the extreme loss margin, and Rs 3,500 omits VaR.
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