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 |