Currency Rate Derivatives Quiz 2

If more than one contract in a series are outstanding at the time of expiry/ squaring off, the contract price of the contract so squared off is determined using____ method for calculating profit loss on squaring-up.

What would be the base price on the first day of launch of USDINR currency futures contract ?

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 so that there is no risk involved of currency fluctuations ?

With respect to exercise of currency options in India, which of the following is TRUE ?

A currency futures trade at one maturity which is hedged by an opposite trade at a different maturity is known as

State True or False – Premium of a put option decreases with increase in spot price.

What is true for OTC ie. Over The Counter traded derivatives?

An active trader in currency options market wants to execute his view on change in volatility over a period of time and wants to be insulated from changes in other factors impacting option pricing. What option strategy is he likely to use ?

Rohan buys GBPINR futures at various price points over two days. He buys 20 lots at 80.00 at 11.30 am and 15 lots at 80.25 at 1.30 pm on Day 1. On Day 2 he buys 25 lots at 80.50 at 11 am and 10 lots at 80.40 at 2 pm. On day 3 he sells 10 lots at 79.90.
Calculate his Profit / loss on the squared off position using FIFO method.

From the below given options, which parameters were used by RBI to decide which banks could run foreign currency INR option book ?

Aditya is going to USA for higher studies and gets a loan sanctioned of Rs 10 lacs. As he has to make the payment to the University after one month, he is worried about foreign exchange fluctuation. To hedge this currency risk, he buys a few lots of call option. Consider the strike rate of 50, calculate how many lots did he buy ?

A trading member, Mr. Gupta buys 100 lots of USDINR one months futures on day 1 at 66.50 and also sells 60 lots of the same contract on the same day at 66.20 in his proprietary book. The settlement price for day 1 was 66.30 and he paid the MTM margin accordingly at the end of day 1. The settlement price for day 2 is 66.80. Calculate his mark to market margin on is position on day 2.

Consider the following data –
* Current USDINR Spot Rate = Rs 66
* Premium for December 2017 maturity Call option of strike price 65.50 is 0.45 / 0.48
* Premium for December 2017 maturity Put option of strike price 66 is 0.36 / 0.38
A trader executes the following trades:
* Buys a Put option of strike price 66
* Sells a Call option of strike price 65.50
The RBI reference rate on expiry for USDINR is Rs 66
Calculate the Profit or Loss which the trader has made.

When are the mark to market margins collected ?

A person sells ten lots of USDINR April futures contract at 66.50 and squared off his position after INR appreciated by 100 ticks. What will be the profit or loss on this trade ?

Who recommended the eligibility norms for existing and new Exchanges for Currency Trading, product design, margin requirements and other risk mitigation measures on an ongoing basis and surveillance mechanism and dissemination of market information?

The current spot is 62, what would be the moneyness of a long USD Call option with a strike price of 63?

As per the guidelines issued with respect to permissions for trading in ‘PRO ACCOUNT by the trading member, which of the below is true?

A trading member buys 13 lots of EURINR one month futures on day 1 and also sells 6 lots of the same contract on the same day in his proprietary books. What would be his open position at the end of the day in EUR ?

What are the main features of a managed loat currency ?

Which of the following acts is mainly responsible for governing the securities trading in India?

Internationally following is the most traded currency pair.

The seller of a Call Option has the obligation to buy the underlying asset – True or False ?

In order to prevent erroneous order entry by members, operating ranges are kept at % of the base price for contracts with tenure upto 6 months and % for contracts with tenure greater than 6 months.

A trading member (TM) buys 20 lots of April USDINR futures and also sells 20 lots of May futures in his proprietary book. On the same day a client of the TM buys 12 lots of April futures and sells 12 lots of May futures. What would be the open position (in USD) of TM and his client at the end of the day?

Which of the following is true ?

A trader is bullish about USD and buys 5 lots of one month USDINR future contracts at Rs.301500. On the expiry, the USDINR future were settled at Rs.60. What will be his profit or loss ?

A person buys a EURINR Call Option at strike price of 71.50 and pays a premium of INR 0.60. What would be is break even point ?

What is the lot size for JPYINR futures contract ?

The main features of a MANAGED FLOAT CURRENCY are___

A expert currency trader feels that EUR should strengthen against JPY in the next few months. Assuming JPYINR remaining same during this period, what currency future trade should be most profitable for him if his calculations come out correct ?

One year interest rate is 4% in US and 1% in UK. If current GBPUSD spot rate is 1.65, which of the following could be closest to one year future rate of GBPUSD?

Who recommended the eligibility norms for existing and new Exchanges for Currency Trading, product design, margin requirements and other risk mitigation measures on an ongoing basis and surveillance mechanism and dissemination of market information ?

As per the Bretton Woods system all currencies were pegged to one currency and that currency was___

If one year interest rate is 2% in UK and 8% in India. If current GBPINR spot rate is 70, which of the following could be closest to the six month future rate of GBPINR?

A currency futures position at one maturity which is hedged by an offsetting position at a different maturity is called as a Delta Hedging – True or False ?

A member who has a right to trade on its own account as well as on the account of its clients is a___

Which term best describes SWISS FRANCS ?

Any party who is dissatisfied with the Arbitration Award of the arbitration tribunal (Appellate Bench) may challenge the same in _

A trader in currency markets believes that GBPUSD will move from 1.75 to 1.79 in next 1 months. Which of the following would you do to execute this view using currency futures contract of GBPINR and USDINR?

A trading member has clients ‘A’ and ‘B’ in currency futures segment and one client ‘C’ in currency option segment. At the end of a trading day, client A has 5000 USD short position and client ‘B’ has 4000 USD long position both in currency futures segment. Additionally, the currency option client ‘C’ has 2000 USD long position. What is the gross open position for the trading member for the purpose of monitoring open position?

A trader executes following currency futures trade: buys one lot of EUR/INR and sells one lot of JPY/NR. What is the view that he has executed?

___% of the public representatives on the Governing Council of the currency futures segment can be common with the Governing Council of the cash/equity derivatives segments of the Exchange.

Due to some overnight global factors, the INR was supposed to weaken during the day. However INR strengthened during the days trading. On which of the below factor would to contribute to the INR appreciation ?

An ‘Immediate or Cancel’ order is an order which is valid for the day on which it is entered and if the order is not executed during the day, the system cancels the order automatically at the end of the day – True or False ?

On expiry, the time value of an option is always _

A trader sells 20 lots of USDINR September futures at 53.20 and squares off this position after INR depreciates by 60 ticks. What is his profit / loss for this trade ?

Maximum trading volumes happen when__markets are open simultaneously.

As per the guidelines issued with respect to permissions for trading in ‘PRO ACCOUNT by the trading member, which of the below is true?

Which of these statements correctly describes relationship between limit price and trigger price for a stop loss BUY order?

The methodology usually used to value European options is _

Mr. Gopal has invested Rs 100000 in UK securities. At the time of investment the exchange rate was 100. After two years his investment gained 25% in GBP terms and he liquidated his investment and repatriated the money to India at the then exchange rate of 105. What would be his real returns (in INR terms)

The settlement date for Exchange Traded Currency futures is___

An accountant of a clearing member was reconciling the cash position with the clearing house. He found that for July 2017, across all trading members, total volume of short options were USD 8000 and total volume of long options were USD 6000. At that time, the net option value of each short option was INR 0.7 and value of each long option was INR 0.8. How much cash would be added to the liquid net worth of his employer by the clearing house ?

What is the minimum net worth for a company for it to be eligible for applying to become an authorized exchange for currency futures ?

A eare of my spina three stead to is custing bough S 10000 against any repairs or replacement of important spare parts. Who is buyer of the option and what is the type of option being bought?

M/s Sun Exporters hedges 10000 USD by buying September 2017 put option at a strike of Rs 63.00 when price was Rs 0.44/0.46. The company receives USD in its account on 15th September. So the company decided to cancel the option on 15th September when the price for the same contract was Rs 0.27/0.28. How much loss did the company make on cancelling the put option if latest available RBI reference rate was Rs 62.50 ?

USDINR three month future is quoting at 65.50 and six month 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 ?

An importer sells 10 lots one month USDINR futures at 65. At the expiry, the settlement price was announced as 65.70. Calculate his profit or loss.

Which of these is a key assumption of Technical Analysis ?

As per the SEBI codes of conduct for brokers, what are the guidelines with respect to brokers advertising their business in a public media ?

What is the co-relation between price of a CALL option to the changes in spot price ?

A trader sells 20 lots of USDINR 1 month futures when price was 65.60 / 65.90 and squares off 10 lots after a week when price was 64.65/64.85 .
How much money (in Rupees) did he make/ lose on the part of the transaction that was squared off ?

Non Farm payroll indicator measures

Who first recommended introduction of exchange traded currency futures in India ?

While computing the Mark To Market profit/loss of brought forward positions of futures contracts, which methodology is used ?

A currency trader has strong bullish view on USDINR. He also expects a decrease in volatility from the current levels in the coming days. He wants to execute both these views and therefore what option strategy is he likely to use ?

The tick size for USDIN currency futures contract in India is

With respect to OTC market, what is TRUE for value date of a forward contract ?

Which of the following best describes the guidelines for brokers with respect to issuing of contract notes for execution of orders ?

If one year interest rate in US is 1% and 4% in Great Britain and the current GBPUSD spot rate is 1.74. What would be the one year futures of GBPUSD ?

What is the tick size for currency futures contract in India ?

A trader wants to SELL GBPINR one month future at 70.60 when the current price is 70.50. When he is entering the limit order, the price is fluctuating between 70.40 to 70.80. At what price is the order likely to get executed ?

In a system of 10 currencies with no vehicle currencies, potentially there would be currency pairs or exchange rates

In OTC market, one month USDINR is quoting at 47.75/48.00 and futures for same maturity is quoting at 48.50/48.70. Which of the following describes possible arbitrage trade and possible arbitrage profit per USD if the arbitrage trade is carried until maturity?

An exporter receives USD as export remittance and wants to sell the same. The bank quotes a price of 54.20/ 54.30 for USDINR. At what price can you sell one unit of USD?

Which of the below options best describe the total open interest which is used for the purpose of monitoring of open position during the day?

Mr Sunny executes following currency futures trade: buys one lot of USD/INR, sells one lot of JPY/INR. What view has he executed?

Of the below options, which best describes the timing for collection of Mark to Market margins ?

Volatility is the measure of uncertainty in prices of the underlying asset – True or False ?

World over regulators and governments are now trying to move more and more derivative contracts to be exchange traded with _

An exporter buys a house for INR 500,000 for which payment has to be made after three months. As he is expecting to receive USD 10,000 in three months, he executes 10 USDINR futures contracts to hedge currency risk at a price of 50. When he received the payment, he converted USD into INR with his bank at a price of 51 for making the payment for the house and also settles the contract at a price of 49. Given this situation, would he have sold/ bought USDINR futures and would the effective price for house be lower than or higher than USD 10,000?

A trader is very bearish on EURINR and feels it will reach to 70 from the current levels of 75. He wants to maximise his profits from this view. Which of the below options strategies should he consider ?

A pharma company has imported some chemicals from USA and has to make payments after three months. To hedge the risk the company buys a USDINR call option at a strike price of Rs 52 and pays a premium of Rs 2.30. When the option matures, the settlement price was Rs 55.10. How much profit did the company make per USD on this option strategy in Rs. ?

The Profit or Loss for an Option Writer is unlimited – True or False ?

___recommended introduction of exchange traded currency futures in India.

___measures sensitivity of option value to the risk free interest rate.

The price for MARKET ORDERS is decided by _

One month EURINR is quoting at 68.75/68.90 in the OTC market and futures for same maturity is quoting at 69.30/69.60. Which of the following describes possible arbitrage trade and possible arbitrage profit per EUR if the arbitrage trade is carried until maturity?

How is the closing price for EURINR calculated ?

A person who has studied economics and international finance believes that EUR should appreciate against INR in the next 1 month. Using this view he executes a trade on currency futures. Given this situation, what type of market participant would this person be ?

A trader in currency markets sells 20 lots of EURINR 1 month future when the price was 62.60/62.70 and squares off 12 lots when the price was 63.20/63.40.
How much profit or loss does he make on the trades that were squared off ?

One-year interest rates in US and India are 2% and 9% respectively and the spot rate of USD in India is Rs.60.00. Find the fair value of a 60 day USD/INR futures Contract.

The lot size for GBPINR futures contract is___

A person executes following currency futures trade: sells one lot of USD/INR, buys one lot of JPY/INR. What is the view that he has executed?

A trader takes a long position in USDINR futures contract at a price of 49 by buying 40 lots. At the expiry, the settlement price is 49.60. How much Profit or Loss did the trader make ?

Exchange traded currency options in India can be exercised at any time on or before maturity – True or False ?

When two currencies are traded against a common third currency instead of trading directly against themselves, the common third currency is called___

Mr Raunak believes that there is a very strong bullish trend in USDINR. He also believes that there will be a decrease in volatility. So which option strategy is he most likely to use ?

___not be permitted to participate in currency futures market.