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JAIIB IE&IFS Unit 36 — Derivatives Market: Free MCQs with Explanations

By Swarnakshi Jha (ex-banker) · Updated 20 September 2026 · Paper 1 of the November 2026 cycle (1 November 2026)

This page is a free slice of our JAIIB IE&IFS question bank for Unit 36 — Derivatives Market (Module D — Financial Products and Services). The Mock Centre holds 69 questions on this unit alone, every one with a why-right / why-wrong explanation; below are the facts examiners keep returning to, five of those questions to try, and the traps that cost marks.

IE&IFS · Module D69 MCQs in the Mock Centre5 free belowPaper on 1 November 2026

Key facts examiners test from this unit

  1. Derivative = value from an underlying (butter from milk); RBI's three features — underlying-linked value, little/no initial investment, future settlement; defined in SCRA 1956 Sec 2(ac).
  2. History ladder: Thales ~600 BC (first oil/olive options) → CBOT 1848 → Indian cotton futures 1875 → 1952 ban → L.C. Gupta Committee → NSE 12-6-2000 (S&P CNX Nifty index futures).
  3. Classification: exchange-traded (futures incl. currency, options — STANDARDISED, margin + clearinghouse guarantee) vs OTC (forwards, IR futures, swaps, exotics like caps/collars — customised); currency futures are NOT OTC; largest global segment = OTC interest-rate.

5 free practice questions — tap an option

Five basic questions from this unit. Answers lock on the first tap, exactly as in the exam, and a short explanation opens underneath. The Mock Centre adds the moderate and tough questions, why every other option is wrong, the concept capsule and the exam tip — with your score and revision dates tracked.

Question 1 of 5
The classic commonplace derivative example:
Why (a): The book's commonplace example: BUTTER — A DERIVATIVE OF MILK — butter's price moves with milk's.
Question 2 of 5
Possible underlying assets:
Why (c): Possible underlyings span COMMODITIES, CURRENCIES, BONDS AND INDEXES — anything with a fluctuating price can anchor a derivative.
Question 3 of 5
Functions of derivatives:
Why (d): Derivatives' functions include ALL three: PRICE DISCOVERY, LOWER TRANSACTION COSTS AND LEVERAGE.
Question 4 of 5
A CALL option gives the buyer the right to:
Why (a): A CALL option gives the buyer the RIGHT TO BUY the underlying at the strike price.
Question 5 of 5
The price the option buyer pays the seller:
Why (b): The price the option buyer pays the seller is the OPTION PREMIUM — the price of the right itself.
0 of 5 answered.

Traps in this unit

Confusable AConfusable BThe difference
ForwardFuturesOTC-customised vs exchange-standardised
StandardisationCustomisationExchange vs OTC key features
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Independent study aid — not affiliated with, endorsed by, or sponsored by the Indian Institute of Banking & Finance (IIBF). Exam pattern, dates, fees and passing criteria are set by IIBF — always confirm the current rules at iibf.org.in. Regulatory figures verified as of September 2026; verify from official sources before relying on them in practice.