NISM V-D calculation lessons for the SIF distributor exam
Work through NAV, derivatives and fixed-income calculations before attempting practice questions. Each lesson includes a formula, an example and a common mistake to check. Original SIFPrime Academy teaching examples · Updated 9 October 2026.
Call and put payoff, profit and break-even
Long call profit = max(expiry price − strike, 0) − premium. Long put profit = max(strike − expiry price, 0) − premium.
Buy a call at strike ₹500 for ₹20. At expiry price ₹550, payoff is ₹50 and profit is ₹30 per unit. At ₹510, payoff is ₹10 but profit is −₹10. At ₹480, payoff is zero and the ₹20 premium is lost. The break-even expiry price is ₹520.
A call gives its buyer the right to buy; a put gives its buyer the right to sell. Payoff excludes the initial premium; profit includes it. At expiry an in-the-money option can still produce a net loss if its intrinsic value is smaller than the premium paid.
Buy a put at strike ₹500 for ₹15. At expiry price ₹460, payoff is ₹40 and profit is ₹25 per unit. Break-even is ₹485, equal to strike minus premium. With 100 units, the profit is ₹2,500 before costs. These examples describe expiry outcomes; the option's price before expiry can include time value.
Common mistake: Check whether the question asks for payoff or profit, whether the position is long or short, and whether the quantity is units or lots. These examples ignore charges and taxes.
Read the full chapter →Futures profit and hedge direction
Long futures profit = (exit price − entry price) × quantity. Short futures profit = (entry price − exit price) × quantity.
Buy a futures position at ₹1,200 and close at ₹1,170 for 50 units. Profit is (1,170 − 1,200) × 50 = −₹1,500. A short position opened and closed at the same prices earns ₹1,500 before costs.
Margin is collateral, not the full contract value or the maximum loss. Futures create exposure to the full position and daily mark-to-market movements can require additional funds. Never calculate the underlying position's profit by multiplying the price change by the margin deposit.
For a ₹20 lakh diversified equity portfolio with beta 1.2, the approximate market exposure is ₹24 lakh. If an index-futures contract is worth ₹6 lakh, an illustrative full beta hedge is four short contracts: 20 lakh × 1.2 ÷ 6 lakh. Actual hedging also needs contract, expiry, liquidity and basis-risk assessment.
Common mistake: A long equity portfolio typically uses short index futures to reduce broad downside exposure. A hedge reduces a specified risk; it does not guarantee a risk-free result.
Read the full chapter →Bond duration and yield changes
Approximate percentage price change = −modified duration × yield change in decimal form
A bond has modified duration 5 and its yield rises by 0.40 percentage points. Convert the move to 0.004, then calculate −5 × 0.004 = −0.02, or approximately −2%. A ₹1,000 price would become approximately ₹980, ignoring convexity and other changes.
Fixed-rate bond prices generally move inversely to yields. Higher modified duration means greater price sensitivity to the same small yield move. Duration is an approximation; larger moves, convexity, credit-spread changes and embedded options can affect the actual result.
A ₹1,000 face-value bond with an 8% annual coupon pays ₹80 a year. If it trades at ₹960, current yield is 80 ÷ 960 × 100 = 8.33%. Coupon rate uses face value; current yield uses market price. Yield to maturity also considers timing and the gain or loss between purchase price and redemption value.
Common mistake: Do not enter 0.40 as the decimal yield change. A 0.40 percentage-point move is 0.004, or 40 basis points. Also distinguish Macaulay duration from modified duration.
Read the full chapter →Use the lessons in a timed preparation plan
First solve each example on paper without looking at the answer. Then attempt the free V-D exam questions and record whether each error came from the concept, formula, sign or units. Revise the weak chapter before a full mock. These lessons support the syllabus; they do not replace the official workbook.
The exam has 150 questions in 180 minutes: an average of 72 seconds each. With +1 for a correct answer and −0.10 for a wrong answer, 95 correct, 25 wrong and 30 unanswered gives 92.5 marks. Check the official NISM exam page for current requirements.