NISM Series I - Currency Derivatives Exam Practice Paper 19

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Q1.Any deviation in the reading of the key economic indicator from the expected number can cause large price and volume movements in the currency market - True or False?
Q2.Rising Star Ltd. company in India does exports and imports in USD. The number of exports is 70% more than the number of imports and import payment has to be made seven days after realization of export receivables. Which of the following best describes the currencyrisk involved?
 Absolutely zero currency risk
 INR appreciation against USD
 INR depreciating against USD
 Risk of reducing forward premia
Q3.A person has a requirement to buy one unit USD and also to sell one unit of USD in the OTC spot market at the same time but in different banks. Both the banks quoted the same price as 71.20/71.25. In this transaction, how much currency conversion profit/loss hs the person made as compared to a situation where he had export and import transaction in the same bank and import payment could be made from export receivables?
 Loss of 5 paisa
 Loss of 4 paisa
 Profit of 4 paisa
 Profit of 5 paisa
Q 4 . An international trading company has export revenue in USD and it uses part of it to make import payments in EUR and the balance is converted to INR. The company is concerned about USDINR risk. Which of the following best describes the company's risk and the currency futures strategy that it may use to mitigate the risk?
 USD depreciating against INR, Long USDINR
 USD depreciating against INR, Short USDINR
 USD appreciating against INR, Long USDINR
 USD appreciating against INR, Short USDINR
Q 5. In the first few minutes when the currency markets open, the EURINR bid-offer spread is quite high, and later on it narrows down. What does the high bid-offer spread indicate?
 EUR is appreciating
 EUR is depreciating
 Market is directionless
 Market is illiquid
Q6.A garment company has imported machinery from the USA. The payment of the same has to be made after three months. To hedge the risk, the company buys a USDINR call option at a strike price of Rs 75.00 and pays a premium of Rs 1.60. On maturity of the contract, the settlement price was declared as Rs. 77.10. How much net profit per USD did the company make on the cash settlement of the option contract?
 Rs. 2.10
 Rs. 1.60
 Rs. 1.10
 Rs. 0.50
Q7.The maximum maturity of a JPYINR contract traded on recognized currency exchange in India is ____ months.
Q 8. When a currency position of one maturity is hedged by an offsetting position of different maturity, it's called a ____.
Delta Hedging
 Calendar Spread
 Arbitrage Trading
Q 9.Base price of the futures contracts on the first day of its life shall be the ____.
 Settlement Price
 Theoretical futures price
 Price arrived using interest rate parity principle
 The first price entered by any trader
Q10.If USDINR futures was trading at 71.0025/71.0050 and the INR appreciates by two ticks. What will be the new trading price assuming no change in the bid-ask spread?

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