NISM Series I – Currency Derivatives Exam Practice Paper 06

Q 1.A wheat flour manufacturer gets into a contract with a five-star hotel chain to sell a certain quantity of wheat flour at a fixed price for a year. However, after a few months, the price of wheat rises much above the contracted price and the manufacturer refuses to sell to the five-star hotel chain. What is the type of risk highlighted in this contract?
 Operational Risk
 Liquidity Risk
 Basis Risk
 Counter Party Risk


Q2.Assume that price of a USD-INR call option is quoted as INR 0.45 / 0.47 (bid price / ask price). Given this quote, at what price could a company buy the call option?


Q3.Guidelines for accounting of currency futures contracts are issued by _____.


Q4.In the morning trades, GBPINR was trading at 72.50 / 72.75 and GBPUSD was trading at 1.6525 – 1.6550. At 2 pm on the same day, GBPINR moves to 72.00 / 72.25, and GBPUSD moves to 1.5050 / 1.5075. What would best describe these movements?
GBP has appreciated against INR and appreciated USD
GBP has appreciated against INR and depreciated against the USD
 GBP has depreciated against INR and appreciated against USD
GBP has depreciated against INR and depreciated USD


Q5.Mr. Mayur sells 10 lots of GBPINR 1 month futures when the price was 98.60/98.90 and squares off 5 lots after a week when the price was 99.60/99.80. How much money did he make/lose on the part of the transaction that was squared off?
 Loss of Rs 4500
 Loss of Rs 6000
 Loss of Rs 7850
 Profit of Rs 4500


Q6.The seller of a Call Option has the obligation to buy the underlying asset – True or False?


Q 7.____ is the process of computing open positions and determining Mark to Market margins.
 Pay In
 Pay Out


Q8.All 11 am the RBI announced the credit policy and a deduction in interest rates. Generally, such a step will lead to ____ of the rupee.
 No effect


Q9.An Indian exporter wishes to completely hedge the 10,000 GBP he is expecting to receive on the 70th day from today. On the exchange, the contracts available are for 30,60, and 90 maturity days. He does not take any risk. What kind of action is he likely to take?
 Short GBPINR on an Exchange
 Long GBPINR on an Exchange
 Long GBPINR on OTC market
 Short GBPINR on OTC market


Q10.In a system of 10 currencies with no vehicle currencies, potentially there would be __ currency pairs or exchange rates

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