NISM Series I - Currency Derivatives Exam Practice Paper 20

Q 1. The prices of a commodity in the spot market were volatile due to which many traders were going bankrupt. In what way would the introduction of an organized futures market help the spot market of this commodity?
 There will be increased volume in the spot market
 When futures are introduced, it will shift the speculative activities to a controlled environment which will have good risk management systems
 When futures are introduced, it will lead to new entrepreneurial activity
 The risk will be transferred
 
Q2.USDINR three month future is quoting at 65.50 and six months is quoting at 66.10. Mr. Bharat expects that after a month the three-month future should quote at 65.20 and the six-month should quote at 66. If Mr. Bharat executes a spread trade and the view goes right, how much profit will he make?
 Rs 450
 Rs 380
 Rs 300
 Rs 200
 
Q 3.When money moves away from emerging markets like India due to risk aversion by foreign investors, the Indian currency will __. ( Everything else remains the same )
 Appreciate
 Depreciate
 Will have no effect
 None of the above
 
Q4.Mr. Rohit is very bullish on GBPINR and thinks that this pair will trade at 80 in the next few weeks. The current price of GBPINR is 75. Mr. Rohit wants to maximize his profits if this view turns out to be correct. Which of the below strategies should he consider?
 Buy GBPINR Call option
 Sell GBPINR Call option
 Buy GBPINR Put option
 Sell GBPINR Put option
 
Q5.Mr. Sunny invested Rs 100000 in UK Shares when the GBPINR rate was 70. After two years his investments were down by 5%. He sold these shares and repatriated the money back to India at the then-existing rate of GBPINR at 77. What would be his real yearly return in INR.
 Loss of 5.5 %
 Loss of 2.5 %
 Profit of 4.5 %
 Profit of 2.25 %
 
Q6.Which are the basic accounting heads to be maintained by any client for maintaining currency futures accounts?
 Mark-to-margin – Currency futures
 Initial margin – Currency futures and Mark-to-margin – Currency futures
 Initial margin – Currency futures
 Profit and Loss - Currency futures
 
Q 7.A rising and positive number of Nonfarm payrolls in the US will generally lead to the strengthening of the USD against major international currencies - True or False?
  True
  False
 
Q8.A trading member buys September USDINR futures at various price points over two days. He buys 20 lots at 74.70 at 10.30 AM on day 1, 10 lots at 2 PM on day 1, and 20 lots at 74.30 at 11.30 AM on day 2. On day 3, he squares off 20 lots at 74.70. Using the FIFO method, how much profit/loss has he realized on the squared-off transaction ? (Ignore transaction costs)
 Rs 2500
 Rs 4000
 Loss Rs 3000
 Zero
 
Q9.As per the Foreign Exchange Management Act, an 'AD Category 1' bank should have a minimum net worth of Rs500 crore to become a Trading and Clearing Member of currency futures segment at a recognized stock exchange - True or False?
  True
  False
 
Q10.If the one-year interest rate is 2% in the UK and 8 % in India. If the current GBPINR spot rate is 70, which of the following could be closest to the six-month future rate of GBPINR?
 72.9
 71.05
 73.8
 72.06

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