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NISM Certifications · NISM-Series-X-A: Investment Adviser (Level 1) · Securities Market Segments

Consider a stock with a base price of Rs 200 for a stock in a segment where the exchange applies a 10% price band for the day. A client wishes to place a limit buy order at Rs 245 at the start of the day. What is the position of this order? Assume the previous closing price is Rs 200 and the band is applied on that price.

The order is rejected. A 10% price band on a previous close of Rs 200 gives a permitted range of Rs 180 to Rs 220. A limit buy at Rs 245 is above the Rs 220 upper limit, so the trading system would not accept it.

  1. AAccepted, because the band is Rs 180 to Rs 220
  2. BRejected, because the upper limit is Rs 220 and Rs 245 is above itCorrect
  3. CAccepted, because the band is Rs 150 to Rs 250
  4. DRejected, because the lower limit is Rs 245

Explanation

A 10% band on Rs 200 gives Rs 20 either way, so the range is Rs 180 to Rs 220. Check: 200 x 1.10 = 220 and 200 x 0.90 = 180. An order at Rs 245 exceeds Rs 220, so the system will not accept it. Rs 150 to Rs 250 would come from wrongly using 25%.

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