Free Sample Question
Q1MCQMediumSignificance of Derivatives
Which of the following is cited as a significance/function of the derivatives market?
AIt eliminates all risk from financial markets
✓It enables the transfer of risk from those with low risk appetite to those with high risk appetite
CIt guarantees a profit to every hedger
DIt removes the need for financial market regulation
💡 The derivatives market helps improve price discovery, enables the transfer of risk from those exposed to risk with low risk appetite (hedgers) to those willing to take it on (traders), and shifts speculative trades from unorganized to organized markets — improving financial stability.
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About this content: These practice questions are based on the
NISM-Series-VD: Mutual Fund - Specialised Investment Fund Distributors Certification Examination Workbook
published by the National Institute of Securities Markets (NISM), Mumbai (March 2026 edition).
NISM is a SEBI-established institution. Questions cover Chapter 13: Basics of Derivatives with verified answers and explanations.
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