n NISM Certifications
VII NISM Series VII
Medium

Identify the TRUE statements regarding initial margin computation in the equity segment:

Practice question from NISM Series VII Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Initial and Extreme Loss Margins are collected upfront

  2. B

    Securities are classified into 3 groups for margin purposes

  3. C

    The VaR margin covers potential loss on 99.9% of days

  4. Only A and B are true

    Correct answer

  5. E

    Only A and C are true

  6. F

    Only B and C are true

  7. ?

    All A, B and C are true

Why this is the answer

Initial and Extreme Loss Margins (ELM) are collected upfront. VaR margin covers losses on 99.9% of days, and securities are categorized into Liquid, Less Liquid, and Illiquid groups for margin computation.

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NISM Series VII Mock Test 3