NISM Series I – Currency Derivatives Exam Practice Paper 08

Q1.Which term best describes JPY currency?
 Free Floating
 Pegged to USD
 Pegged to INR
 Pegged to Gold


Q2.A person wants to buy GBPINR one-month futures at 80.50 when the current price is 80.80 and enter a limit order for 80.50. Assume market moves in the range of 80.40 and 81 after you have entered the limit order, at what price is your order likely to get executed?
 At or below 80.50
 Any price above 80.50
 Any price between 80.40 and 81


Q 3.An Indian investor has invested Rs 187500 in US securities at a USDINR exchange rate was 75. One year late, he noticed that his investment had gained 10% in USD terms and liquidated his investment. He repatriated the money to India at the existing exchange rateof66. What would be the real returns (returns in INR terms)?
 Profit of 5.9%
 Loss of 5.9%
 Loss of 3.2%
 Profit of 4.75%


Q4.Mahindra Exim Traders has taken a currency loan and has to make the loan repayments in USD by equal monthly installments. It also has exports remittances (in USD) every month which are slightly above the monthly loan repayment amount. How should the company hedge that there is no risk involved in currency fluctuations?
 Hedge part of loan payments which is over and above exports
 Hedge part of exports which is over and above loan dues
 Hedge exports, leave loan payments unhedged
Hedge loan payments, leave exports unhedged


Q5.Mr. Amit sells a USD put option at a strike of 66 and receives a premium of INR 0.4. What would be the break-even point for the two transactions?


Q6.Of the below-mentioned options, which one describes a ‘derivative product’?
Derivative products can be from Equity / Currency or Commodity markets and are traded on a recognized stock exchange.
 Derivatives are complex financial products and are traded mostly by Banks and Financial Institutions.
Derivatives are an understanding between two parties on to one basis.
A derivative is a product whose value is derived from the value of one or more underlying variables.


Q7.The settlement date for Exchange Traded Currency futures is ___.
 Two business days before the contract expiry date
 Two business days after the contract expiry date
 Two calendar days after the contract expiry date
 Last working day of the expiry month


Q8.USDINR three month future is quoting at 60.2 and six months is quoting at 61.10. Mr. Naik expects that after a month the three-month future should quote at 59.90 and the six-month should quote at 60.50. If Mr. Naik executes a spread trade and the view goes right, how much profit will he make?
 Rs 400
 Rs 350
 Rs 300
 Rs 100


Q9.When a person buys a put option, it means that he is buying a right to buy an underlying asset – State True or False?


Q10.A client sells a USD call option at a strike of 53.8 and receives a premium of INR 0.3. What would be the breakeven point for the transaction?

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