Currency Rate Derivatives Quiz 4

A currency trader is very bearish on USDINR and she is confident that the pair should trade around 81 in next three months as against current spot of 84.75 She wants the profits to be maximized if the view turns correct. Given this view and objective, what option strategy could she consider?

___had first recommended introduction of exchange traded currency futures in India.

What course of action can an investor follow if he/she is not satisfied with decision of appellate arbitration?

A trigger price is____limit price for a stop loss buy order.

According to SEBI, what is the maximum maturity in months of GBPINR futures that can be traded on any recognized exchange?

Mr. Vikram expects interest rate in India to increase while interest rate in US to decline in next three months. If everything else remains same, what calendar spread position is likely to be profitable if Mr. Vikram’s views comes correct?

Interoperability among Clearing Corporations framework is applicable to all for all the products available in the Indian securities market, except_____.

A person sells USDINR and buys JPYINR for an equivalent amount. What view has he expressed ?

M/s. GVK International has export revenue in USD and it uses part of it to make import payments in EUR and balance is converted in INR. GVK International is concerned about USDINR risk. Which of the following best describes company’s risk and currency futures strategy that it may use to mitigate the risk?

Which of these will be considered as Operational Risk for a broker?

Brokers have to issue contract notes to their clients____

A better than expected GDP growth data from India generally will result in what kind of movement of INR against USD? (Assuming everything else remaining the same)

The last working day for a contract month is 30th and it is Tuesday. The last Monday of that month is a national holiday. What would be the expiry date for that month’s USDINR futures monthly contract?

If the current spot is 83, what would be the moneyness of a long USD call option on USD-INR with a strike price of 84?

Which of these complaints against a trading member can an Exchange take up for redressal?

Ms. Kalpana has invested USD 10,000 in US equities and got an exchange price of 80 from its bank for converting INR into USD. In next one year, her investments in US equities appreciated in value to USD 12000. She sold of her portfolio and repatriated the capital and profits to India. Her effective return after considering currency risk, on the investment turned out to be 18%. What exchange price Ms. Kalpana would have received at the time of converting her profits from USD into INR?

Which of these indicators measure the level of inflation in the economy?

Is it true that the futures contracts differ from the options contracts with respect to the rights and obligations of the parties involved?

When a person sells a CALL option, his potential loss is theoretically unlimited but potential profit is limited. Is this statement True or False?

The one year interest rate in US is 4% and 7% in India. If current USDINR spot rate is 83.1000, which of the following could be the closest to the one year futures rate of USDINR? (Appx)

As per Indian Income Tax rules, which of these transactions is/are considered speculative transactions?

If EURUSD quotes are 1.07/1.0725 and USDINR are 81.64/81.65 then cross EURINR Bid rate will be____

Execution of Power of Attorney by the client in favour of stock broker is

The EURINR futures price is likely to be equal to EURINR spot price on which of these days?

Ms. Reshma buys 20 lots of USDIN 1 month futures when price was 61.80/61.90 and squares off 5 lots after a week when price was 62.65/62.75.
Calculate the amount did she make /lose on the part of the transaction that was squared off?

The value of a currency option can be equated as Option Value = Intrinsic Value – Time Value. State whether True or False?

Subsequent to KYC, broker has to upload the KYC information in which of the following system?

What is the similarity between currency futures and stock index futures?

Once the breakeven point is achieved, which statement describes the relationship between spot price and profitability of long call option?

In case of Exchange traded currency options contracts, the operating range is based on _of the option contract.

Identify the TRUE statement with respect to accounting for derivatives under the current standards?

The premium for buying an At-the-Money option is always higher the buying an In-the-Money option of the same tenor. State whether True or False?

Which of the following is CORRECT for Exchange Traded Derivatives?

If EURUSD quotes are 1.2550/1.2575 and USDINR are 83.74/83.75, then cross EURIN OFFER rate will be.

A currency future position at one maturity is hedged by an offsetting position at a different maturity. This is known as

Who decides the price for market order ?

As per the Indian Income Tax Act, if the taxpayer is opting for the presumptive taxation scheme under section 44AD, he can declare the profit at the rate of of turnover in case of receipts in cheque or any digital modes.

The liquid net worth of clearing member after adjusting for the extreme loss margin and initial margin requirements must be at least points of time.

Mr. Mohit sells 10 lots of GBPINR 1 month futures when price was 99.60/ 99.90 and squares off five lots after a week when price was 98.65/ 98.85.
Calculate the profit or loss on the part of the transaction that was squared off?

Mr. Inderneel has strong bearish view on EURINR and he also expects significant increase in volatility from current levels in the coming days. He wants to execute both these views but would like to stick to a plain vanilla option position. What option position is he likely to execute?

Which of the following best describes the timing for collection of daily mark to market settlement?

An Indian investor has invested Rs 1,66,000 in US securities. At the time of investment, the exchange rate was 83. Three years later she noticed that her investments have gained 20% in USD terms and she sold off all her investments. She then repatriated the money to India at the then existing rate of Rs 81. What would be her real returnsie. holding period returns in INR terms) ?

What is the process known as through which Clearing Corporation becomes a party to every trade that is executed on the Exchange?

Fund created to take care of legitimate investment claims is____

Mr. Mohanlal, a trading member on the currency exchange buys 40 lots of GBPINR one month futures on day 1 at 99.70 and also sells 30 lots of the same contract on the same day at 99.80 in his proprietary book. The settlement price for the day was 99.60. Calculate the mark to market (MTV) settlement only on the open positions.

What are members of an Exchange called?

As per the Indian Income Tax Act, if the taxpayer is opting for the presumptive taxation scheme under section 44AD, he can declare the profit at the rate of of turnover in case of cash receipts.

One year interest rate in USA is 4% and in Japan it is 0.5%. If current USDJPY spot rate is 95.65, then the one year future rate of USDJPY will be

Rohidas is a farmer and he agrees to sell his cotton produce to a ginning factory at a fixed price three months in advance. Which type of contract has Rohidas entered into you with the ginning factory?

____try to predict the future movements in currency rate and take positions in derivative contracts based on that view.

A trader believes that GBPUSD will move from 1.20 to 1.14 in next 3 months. Which of the following would you do to execute this view using currency futures of GBPINR and USDINR in India?

Only European style currency options are traded on exchanges in India – True or False?

The USDINR three months futures is quoting at 81.4 and six month future at 82.1 and you expect the three month to quote at 81.2 and six month at 82.2 in next few trading sessions. How much profit per lot of USDINR could you make if you executed a spread trade and your view goes correct?

Mr. Sameer has a strong bullish view on USDINR and he thinks that its price would easily cross Rs. 84.50 during the next one month. To execute the view, he writes a PUT option with a strike of Rs 84.50 and receives a premium of Rs 0.40 per USD. At the expiry of the contract, the settlement price was declared as Rs. 83.70. How much per USD profit or loss did he make in this whole transaction (in Rs)?

State True or False – Selling a PUT option means having an obligation to sell an underlying asset.

Identify the TRUE statement with respect to ‘Clearing Bank Account’?

A country has managed float currency and its local currency has depreciated a lot in the past few months. What steps could reduce the pace of depreciation of local currency, assuming everything else remaining the same?

An exporter sells 100 lots of one month EURINR futures at 88. At the expiry, the settlement price was announced as 87.70. How much profit/loss did he make on this transaction?

The current USDINR spot as Rs 83.00 and the premium for January 20XX maturity USDINR PUT option at strike of Rs 83.50 as Rs 0.56/0.57 and premium for January 20XX maturity USDINR call option at strike of Rs 83.00 as Rs 0.25/0.26. Mr. Shashank does a trade where in he buys a put at strike of Rs 83.50 and sells a call at strike of Rs 83.00. On expiry the FBIL/RBI USDINR reference rate is Rs 83.75. Calculate the net profit / loss Mr. Shashank make per USD?

An option writer has the obligation to always perform and never gets the rights to demand – State True or False?

Selling an option means selling a right to buy an underlying asset – True or False?

Which option pricing model depend on calculation by Iteration?

Which of the following is the role of derivatives?

In OTC market, one month USDINR is quoting at 81.40/81.50 and futures for same maturity is quoting at 82.00/82.20. Which of the following describes possible arbitrage trade and possible arbitrage profit per USD if the arbitrage trade is carried until maturity?

GBPUSD price as 1.3300 / 1.3325 and USDINR as 75.64 / 75.65, the price for GBPINR Word Out to be___

A Buy or a Sell order(s) which is/ are lying unmatched in the order book are known as___

Margins of all the clients of a member are collected on a netted off basis – State True or False?

State whether this statement is True or False – In exchange traded USDINR currency options in India, the contract size is quoted in USD and the premium is quoted in INR.

If 10 unit of gold was valued at INR 54,000 and the same was valued at USD 675. According to gold standard methodology, what would be the value of one USD in terms of INR?

Participant who take position in Currency Derivatives to reduce currency risk are known as___

Mr. Alok, a currency trader, is of the view that interest rate in India can rise while interest rate in USA can remain flat. If everything else remaining as same, what currency futures trade strategy would be beneficial to him if his view comes correct?

Loss on derivative transactions which are carried out in a “recognized stock exchange” can be set off against any other income during the year except___

___issues guidelines for accounting of Exchange traded derivatives contracts?

Investors can have grievances against___

Mr. Rohan creates a long position in JPYINR futures at a price of 63 by buying 30 lots. At expiry of contract, the settlement price was 63.30. Calculate the profit/loss (in Rs) did Mr. Rohan make in this transaction?

State whether True or False – When you sell a CALL option, it means giving a right to someone else to buy an underlying asset from you.

Assume you are an exporter, and you want to sell USD that you have received as export remittance. The bank quotes a price of 83.10 / 83.12 for USDINR. At what price can you sell one unit of USD?

A currency research analyst is of the view that USD should depreciate against INR in next few months. She decides to execute this view using currency futures.
Given this scenario, what type of market participant would this analyst be?

In an active OTC market, a market maker (Bank) quotes 83.05/83.06 for a USD 1mn transaction with one paise as bid/offer spread. If the transaction is a large value transaction like USD 100 mn, the same market maker is likely to quote a price with____

Loss on derivative transactions which are carried out in a “recognized stock exchange” can be carried forward for period___Assessment years

Regarding the settlement in OTC Foreign Exchange market, value date of T+2 is also called as _ (T – Date of transaction).

Which of these best describes the total open interest which is used for the purpose of monitoring position limits during the day?

A trader sold USDINR one month future at Rs 85.10. The interest rate gap between US and India was app 10% per anum with the Indian rates being higher than US rates. What was the USDINR spot rate at the time of selling futures.

Which fund is maintained by the exchanges for protecting the interest of the clients of the trading members of the exchange, who may have been declared defaulters or who may have been expelled?

____acts as a central counterparty to EURINR futures trades?

Assume USDINR was quoting as 81.02/81.04 in the morning and by the day end it moved to 81.22/81.24. What would best describe the movement of currency during the day?

Which of these are the important reason(s) for the growth in usage of derivatives?
A) Increased volatility in asset prices in financial markets
B) Technological breakthrough
C) Its easier to make profits in derivatives as compared to spot markets
D) Development of more sophisticated risk management tools

An import company in India will have to pay 50000 USD after three months. It wants to hedge the same to protect it self from USDINR fluctuations. It approaches various banks but they are giving different prices for the three month contract. The company wants transparent pricing – so what type of contract it should use?

A trading member has two clients “P” and “Q” and he also does proprietary trading in currency futures. On day 1, the trading member buys 20 lots of USDINR one month futures and also sells 5 lots of the same contract on the same day in his proprietary book. On the same day, client “P” buys 15 lots of USDINR one month futures and also sells 3 lots of the same contract while client “Q” buys 12 lots and sells 2 lots of USDINR one month futures. What would be the open position (in USD) of the trading member, client “P” and client “Q” respectively at the end of day 1?

Arbitration is a____judicial process.

Mr. Praveen buys 10 lots of USDINR December futures contract at 81.10 and squared off his position after INR depreciated by 100 ticks. What is his profit/loss in this transaction?

Why does BASIS RISK arise?

In the interbank market, when GBP and EUR is traded against USD then which is the quotation currency?

The current USDINR spot is 82. The current future price of USD is at a premium to INR. A trader believes that on expiry of one month USDINR futures, the spot may remain at 80. What currency futures trade strategy would be profitable to the trader if his views comes correct?

Hi-Fashion Garments Ltd. has taken foreign currency loan for which it has monthly loan payments in USD. The treasury head of this company is of the strong view that the interest rate gap between USA and India will widen in the coming months. What would describe as the appropriate hedging solution for the company?

What is the minimum amount by which bid or offer can be changed during trading called ?

On a particular day, a trading member buys 10 lots of April USDINR futures at 83.60 and also sells 10 lots of May futures at 83.80 in his proprietary book. For that day, daily settlement price for April contract was 83.70 and for May contract was 83.90. What would be mark to market (MTM) settlement for the trading member on the open positions?

Is it true that RBI can intervene in Exchange Traded Currency Derivatives as and when required?

Ms. Vijaya wants to sell USDINR one month futures at 83.40 and enter a limit price order for 83.40 in the order book. On the buy side, the best order is available at
83.50. At what price is her order likely to get executed?

On the last trading day, the currency option contract expire at _