NISM Series I – Currency Derivatives Exam Practice Paper 04

Q 1.Which of the below option is TRUE with respect to Exchange Traded derivatives?
Only the contracting parties are safeguarded by the risk management policies and not all the market participants.
Exchange-traded derivatives are not regulated
The margining system is different for a different set of counterparties
All market participants are safeguarded by the risk management policies

 

Q2.A GDP growth rate higher than expected may mean relative ____ of the currency of that country, assuming everything else remaining the same.
 strengthening
 weakening
 No effect
 None of the above

 

Q3.A significantly better than expected Consumer Price Index from United Kingdom (UK) will result in what type of movement of GBP against other countries?
 GBP depreciating against other currencies
 GBP appreciating against other currencies
 No significant change

 

Q 4.A trading member buys 13 lots of EURINR one-month futures on day 1 and also sells 6 lots of the same contract on the same day in his proprietary books. What would be his open position at the end of the day in EUR?
 19000
 7000
 13000
 6000

 

Q4.Broker Mr. ABC charges a brokerage of Rs 40 per lot of USDINR futures on only one leg of the transaction if it’s squared off the same day. Broker Mr. XYZ charges Rs 25 per a lot of USDINR futures on both legs even if it is squared up on the same day. A client buys20 lots of USDINR futures and sells 10 lots the same day and the balance 10 lots after 10 days. What will be the brokerage charged by brokers Mr. ABC and Mr. XYZ respectively?
 Rs 1000 and 1100
 Rs 1200 and 1000
 Rs 900 and 980
 Rs 950 and 820

 

Q5.Consider a scenario in which USDINR was quoting as 63.40/63.42 and EURUSD as 1.1450 / 1.1453 in the morning and by the day end USDINR moves to 63.10/63.12 while EURUSD moves to 1.1420/1.1422. What would best describe the movement of currency during the day?
 USD has appreciated against INR and also appreciated against EUR
 USD has depreciated against INR and also depreciated against EUR
 USD has appreciated against INR and depreciated against EUR
 USD has depreciated against INR and appreciated against EUR

 

Q6.The minimum net worth requirement for a company to be eligible for applying to become an authorized exchange for currency futures is Rs ____.
 Rs 150 crore
 Rs 300 crore
 Rs 100 crore
 Rs 200 crore

 

Q7.When you buy an Option, does it means you have a right to sell the underlying asset?
 Yes
 No
 Depends on whether its a Call or Put option

 

Q8.With respect to the OTC market, what is TRUE for the value date of a forward contract?
 It can be customized for a maximum period of one year
 It can be customized for a maximum period of six months
Value dates are only available for a month-end date
It can be customized for any period up to 6 months maturity for USDINR and up to 1 year for other currency pairs
Q9.Mr. Gopal has invested Rs 100000 in UK securities. At the time of investment, the exchange rate was 100. After two years his investment gained 25% in GBP terms and he liquidated his investment and repatriated the money to India at the then exchange rate of 105. That would be his real returns (in INR terms)
 27.50 %
 31.25 %
 23.65 %
 42.80 %

 

Q 10. A trader buys the USD Put option at a strike price of 58.50 and pays a premium of 1.00. What will be the break-even point for this transaction?
 57.5
 59.5
 58.5
 60

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