n NISM Certifications
VII NISM Series VII
Medium

For ______ stocks, the VaR margins are based only on the ______ of the stock.

Practice question from NISM Series VII Mock Test 4 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Liquid, impact cost

  2. Liquid, volatility

    Correct answer

  3. C

    Illiquid, impact cost

  4. D

    Illiquid, volatility

Why this is the answer

VaR margins cover potential losses. For liquid stocks, margins are based solely on the stock's volatility, while for illiquid stocks, the market index volatility is also considered.

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NISM Series VII Mock Test 4