Skip to content

NISM Certifications · NISM-Series-VIII: Equity Derivatives · Trading Mechanism

Which statement about the price band or operating range in the Indian equity derivatives segment is most accurate?

The trading system rejects orders that are placed outside the price range set for the contract. Exchanges apply dynamic price bands to derivative contracts, and such orders are not accepted, which helps prevent erroneous orders and excessive price swings.

  1. AIndex options contracts have no operating range, since dynamic price bands apply to them
  2. BOrders outside the dynamic price band are accepted and kept pending for later release
  3. CStock futures have a fixed one-time price band set for the whole life of the contract
  4. DThe trading system rejects orders placed beyond the price range set for the contractCorrect

Explanation

Exchanges set dynamic price bands for derivative contracts, and orders that fall outside the permitted range are rejected by the trading system rather than being accepted. The band is not fixed for the life of the contract, and bands are applied to index and stock contracts alike.

Did you get it right without looking?

One question tells you little. A timed set on Trading Mechanism shows your real accuracy, how long you take and where you lose marks.

Practise Trading MechanismFree diagnostic mock

More Trading Mechanism questions