NISM Series I - Currency Derivatives Exam Practice Paper 14
| Q1.An international trading company has export revenue in USD and it uses part of it to make import payments in GBP and the balance is converted to INR. The company is concerned about GBPUSD's risk for its import payments. Which of the following best describes company'sriskand the currency futures strategy that it may use to mitigate the risk? |
| USD appreciating against GBP; Short GBPINR and long USDINR for the same maturity |
| USD depreciating against GBP; Short GBPINR and long USDINR for same maturity |
| USD depreciating against GBP; Short USDINR and long GBPINR for same maturity |
| USD appreciating against GBP; Short USDINR and long GBPINR for same maturity |
| Q2.Exchange-traded currency options in India can be exercised at any time on or before maturity - True or False? |
| True |
| False |
| Q3.If the one-year interest rate is 2% in the UK and 7 % in India. If the current GBPINR spot rate is 98, which of the following could be closest to the six-month future rate of GBPINR? |
| 99.75 |
| 102.5 |
| 100.4 |
| 98.9 |
| Q4.Which of the following best describes the guidelines for brokers with respect to issuing of contract notes for the execution of orders? |
| The broker should have a separate audit team that inspects the process of issuing contract notes at all his sub-brokers |
| Brokers should promptly issue contract notes to their clients every week on Friday |
| Brokers should promptly issue contract notes to their clients and clients of their sub-brokers. |
| The broker should ensure that his sub-brokers issue contract notes every week to their clients |
| Q5.A Client need not maintain two separate accounting heads for initial margin and mark to market margin and the two can be clubbed into one to avoid extra work. True or False? |
| True |
| False |
| Q6.A person buys a USDINR Call Option at a strike price of 50.00 and pays a premium of INR 0.50. What would be is the break-even point? |
| 49.5 |
| 50 |
| 50.5 |
| 50.1 |
| Q7.In the OTC currency derivative market in India, is it possible for a corporate to write an option and receive a net premium? |
| Possible |
| Not possible |
| Possible, if he can give to the bank a copy of the underlying trade transaction against which option has been written |
| Q8.Maximum trading volumes happen when ___markets are open simultaneously. |
| India, USA |
| Europe, USA |
| Europe, Japan |
| Japan, India |
| Q9.Mr. Patil in India expects international gold prices to rise by 20% from USD 1700 per ounce to USD 1900 in the next six months. To benefit from the view, he buys 300 grams of gold at Rupees 5000 per gram and also sold 10 lots of 6-month USDINR futures at 73. After six months, the trader sold gold at Rs 5200 per gram and unwinds currency futures at 74.5. Assuming 1 ounce is equal to 30 grams, which of the foll best describes the return for the investor and the hedging strategy that Mr. Patil may have used? |
| Positive returns, long USDINR futures |
| Positive returns, short USDINR futures |
| Negative returns, short USDINR futures |
| Negative returns, long USDINR futures |
| Q10.Simultaneous buying and selling of USDINR futures across two different maturities are called _____. |
| Arbitrage Trading |
| Bullish Trading |
| Swap Trading |
| Spread Trading |
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