Currency Rate Derivatives Quiz 5

If one year interest rate is 2.5% in UK and 9% in India. If current GBPINR spot rate is 78, what would be the one year future rate of GBPINR ?

A trader buys USD Put option at a strike price of 58.50 and pays a premium of 1.00. What will be the break even point for this transaction ?

USDINR three month future is quoting at 60.2 and six month is quoting at 61.10. Mr. Naik expects that after a month the three month future should quote at 59.90 and the six month should quote at 60.50. If Mr Naik executes a spread trade and the view goes right, how much profit will he make ?

Which of the below options best describes the validity of a day order ?

From the below mentioned options, which one is true with respect governing council of Currency future segment and Equity Derivative segment of an exchange ?

Which of the following segments of market participants are allowed to trade in currency futures?

Arbitrage Trading means risk off-setting positions in contracts expiring on different maturities in the same underlying taken simultaneously – State True or False ?

A Bank trading member of a currency exchange has the authority to define its own norms for open position limits for its clients – State True or False ?

One-year interest rates in US and India are say 4% and 8% respectively and the spot rate of USD in India is Rs.56.00. Find the fair value of a 90 day USD/INR futures contract.

Of the below, which describes the frequency of adjusting liquid networth of clearing members with initial margin ?

The sellers of option contracts have the right and the obligation but this is not the case with future contract sellers – True or False ?

Currency futures position at one maturity which is hedged by an offsetting position at a different maturity is called as__

Generally, other things remaining the same – American options value is higher than that of European options – True or False ?

Indo Trading. Ltd has taken a foreign currency loan in GBP and the repayment of this loan has to be done by monthly installments. The MD of this company is of the strong view that the interest rate gap between UK and India will widen in the coming months. So which is the most appropriate step he should take ?

Which of these conditions have to be satisfied for an AD category 1 bank to become a trading and clearing member on any of the recognized currency futures exchange ?

In managed float, countries have controls on flow of capital and central bank intervention is a common tool to contain sharp volatility and direction of currency movement – True or False ?

There is a strong rumour in the currency markets that US Fed is planning to decrease its interest rates. All other things remaining the same, will the USD appreciate or depreciate against other major currencies ?

The Government see that the INR is depreciating against the USD. Which of the following moves can be one of the solutions to reduce this depreciation ?

Broker Mr. ABC charges a brokerage of Rs 40 per lot of USDINR futures on only one leg of the transaction if its squared off the same day. Broker Mr XYZ charges Rs 25 per lot of USDINR futures on both the legs even if its squared up on the same day. A client buys 20 lots of USDINR futures and sells of 10 lots the same day and the balance 10 lots after 10 days. What will be the brokerage charged by broker Mr ABC and Mr XYZ respectively ?

Which of the following best describes the key aspect of discretionary trading done by trading member in account of its client ?

An ‘AD Category 1’ bank should have a minimum networth of Rs _ to become a Trading and Clearing Member of currency futures segment at a recognised stock exchange.

When a client defaults in making payments in respect of a daily settlement mark to market margins, the contract is closed out – True or False?

In the morning trades GBPINR was trading at 72.50 / 72.75 and GBPUSD was trading at 1.6525 – 1.6550. At 2 pm on the same day GBPINR moves to 72.00 / 72.25 and GBPUSD moves to 1.5050 / 1.5075. What would best describe these movements ?

One year interest rate in US is 2% and in India its 10%. Assume current USDINR spot rate is 58 and one year future price is 62. Assuming other things remaining the same, what would be the one year future value of USDINR if the interest rate gap widens between US and India ?

Which of the following is true with respect to sequence of time zone of international markets? ( Assume India as start time )

The maximum maturity of a EURINR contract traded on a recognized currency exchange in India is___Months.

An exporter sells 25 lots of USDINR futures contract at a price of 57. At the expiry, the settlement price is 56.10. How much Profit or Loss did the exporter make ?

The value of call option of a certain strike price will always decrease with a increase in the spot price – True or False ?

The Institute of Chartered Accountants of India (ICAI) has issued guidance notes on accounting of index futures contracts from the view point of parties who enter into such futures contracts as buyers or sellers – True or False ?

A member with a right to trade on its own account as well as on account of its clients and who can clear and settle the trades for self and for others through the Clearing House is called a Clearing Member – True or False ?

In the OTC market, one month USDINR is quoting at 76.50 / 76.70 and futures for same maturity is quoting at 77.35 / 77.45. Which of the following describes possible arbitrage trade and possible arbitrage profit per USD if the arbitrage trade is carried until maturity?

A trader is long in GBPINR Put option of strike price of 80. The current spot price of GBPINR is 83. What is the moneyness of this option ?

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?

Due to the Bretton Woods System, EURO became the central currency of the world – True or False ?

Mr. Shastri invested Rs 200000 in US Shares when the USDINR rate was 60 After three years his investments were down by 6%. He sold of these shares and repatriated the money back to India at the then existing rate of USDINR at 63. What would be his real yearly returns in INR.

As per the Foreign Exchange Management Act an ‘AD Category 1’ bank can have a minimum capital adequacy (CAR) ratio _ Clearing Member of currency futures segment at a recognised stock exchange.

Currently American options ie. options which can be exercised by the buyer on or before maturity, are not allowed in currencies in India – True or False ?

At 10.30 am, USDINR was quoting at 49.10/49.30. At 3 pm it was quoting at 49.50/49.70. What would best describe currency move during the day ?

___measures the change in the value of the option with respect to the passage of time.

A trader buys 40 lots of USDINR January futures at 56.50 and squares off this position after INR depreciates by 70 ticks. What is his profit / loss for this trade ?

Clearing means computing open positions and obligations of clearing members in the trading system and settlement means actual pay in or pay out to settle the contract – True or False ?

A____can trade in his own account as well as on account of its client.

The Maximum representation in the currency futures segment of the Exchange Governing Council of Trading /Clearing Members of the currency futures segment is

As a trader you believe EURUSD will move from 1.65 to 1.60 in the next one month. You are a trader based in India where there is no trading in EURUSD.
Therefore which of the following would you do to execute this view using currency future contracts of EURINR and USDINR.

If one year interest rate is 1% in US and 10% in India. If current USDINR spot rate is 45, which of the following could be closest to the six month future rate of USDINR?

You are a refined edible oil manufactures and you agree to sell a certain quantity at a fixed price for a year to a snack manufacturer. This is an example of____contract.

A trading member has two clients Jay and Vijay – in currency futures segment and one client – Veer in currency option segment. During the day, each of the clients in currency futures segment sold 6000 USD and bought 3000 USD. At the end of a trading day, each of the client in currency futures segment have 6000 USD short position and 3000 USD long position. Additionally, the currency option client has 3000 USD long position. What is the gross open position for the trading member for the purpose of monitoring open position

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 ?

An exporter and importer of india does his trade in USD. His imports are about 30% more than the exports. Which of the below risk should he manage ?

A trader feels that the USDINR price will go up and so he buys USDINR 14 contracts at Rs. 48.2525 per unit. If tick size is Re.0025 how much he will gain or loose if there is upward movement of 8 ticks? (1 lot= USD 1000)

A trader buys 20 lots of USDINR at 54.50 and sells 6 lots the same day at 54.60. The settlement price for the day was 54.40. What would be his mark to market margin ?

The Extreme Loss Margin is computed at the end of day – True or False ?

The gold prices in India are influenced the most by___

The EURINR future contract is trading at 72.0050 / 72.0075. What will be the price if this contract falls by 2 ticks ?

The process of actual pay in or pay out to settle the contract is called as Settlement – True or False?

Pro Account orders can be entered only from one location which is usually the Head Office of the broker / trading member – True or False?

A trading member sells 30 lots of USDINR of August futures on day 1. On the same day he also buys 16 lots of September USDINR futures. What would be his position in his proprietary book at the end of the day in USD ?

A trader takes a long position in USDINR futures contract at a price of 58 by buying 10 lots. At the expiry, the settlement price is 57.30. How much Profit or Loss did the trader make ?

Mohit has strong bearish view on EURINR and he also expects an increase in volatility from the current levels in the coming days. Which option strategy should he use if he wants to execute both views ?

Mr Patel takes a short position in GBPINR futures contract at a price of 80.00 and he sells 20 lots of the same. On expiry the settlement price is announced at
80.30. How much profit (+) or loss (-) does he make ?

According to SEBI guidelines, the currency exchanges have to offer some monthly series and some quarterly maturity currency future options contract. How many series have they to offer ?

The Trading system / Exchange system determines the price for Market Orders – True or False ?

A trader is very bullish on GBPINR and feels it will reach to 83 from the current levels of 78. He wants his profit to be maximum from this view. Which of the below options strategies should he consider ?

A person has invested INR 100,000 in an Indian corporate bond for a year giving a return of 12% in one year. The person plans to use the proceeds from the maturity of corporate bond to fund his son’s education on UK. At the time of investing in the corporate bond, GBPINR spot rate was 70 and one year premium was 5%. The person decides to hedge currency risk using GBPINR one year futures. At the end of one year, how many GBP can this person remit to his son?

The tick size of currency futures contract in India is 25 paise – True or False ?

A trader sells USDINR call option at premium of 40 paise per contract. What is the maximum profit he may gain ?

An intra-currency pair arbitrage consists of one long futures and one short futures contract, both having the same underlying but different maturities – True or False ?

With the introduction of derivatives, the underlying market witnesses___trading volumes

A trading member sells 13 lots of USDINR one month future on day 1 and buys 16 lots of the same contract the same day. What would be his open position at the end of day in USD ?

OTC contracts are standardized, more transparent, the counterparty risk is borne by a centralized corporation with stringent margining systems – True or False ?

A trader wants to buy EURINR one month future at 66.70 when the current price is 66.80. When he is entering the limit order, the price is fluctuating between 66.50 to 66.90. At what price is the order likely to get executed ?

A trader sells 8 lots of EURINR 1 month future when the price was 72.60/72.70 and squares off 7 lots when the price was 71.50/71.70.
How much profit or loss does he make on the trades that were squared off ?

In the first few minutes when the currency markets open, the EURINR bid-offer spread is quiet high and later on it narrows down. What does the high bid-offer spread indicate ?

The maximum maturity of a JPYINR contract traded on a recognized currency exchange in India is _Months.

Base price of the futures contracts on the first day of its life shall be the _

Mr Mehta invested Rs 1.00,000 in UK Stock Markets when the GBPINR rate was 75. After one year his investment appreciated by 20% in GBP terms. He sold of his investments and repatriated the money to India at the then existing rate of 80. What is his real returns in INR?

An importer has to make payments in USD while most of its revenue is in INR. The importer is concerned about USDINR risk. Which of the following strategy should it consider to mitigate this risk?

At what time does the GBPINR and USDINR futures contract stops trading on the contract expiry day ?

Future contracts give the seller both the right and obligation which is not the case in Options – True or False ?

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 ?

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 ?

When forecasting the movements of a currency pair, which of the below options is most valid ?

The main factor driving the growth of financial derivatives is

At 11 am IST – USDINR was trading at 52.50 / 52.75 and GBPUSD was trading at 1.6525 – 1.6550. At 3 pm on the same day USDINR moves to 52.25 / 52.50 and
GBPUSD moves to 1.5050 / 1.5075. What would best describe these movements ?

What is the market timing for Exchange Traded Currency Derivatives in India ?

The USDINR future contract is trading at 52.0050 / 52.0075. What will be the price if this contract rises by 2 ticks ?

Which options command more premium – American or European ?

Mr A – an old and trusted client has defaulted in paying Mark to Market Margin. Which of the following step has to be followed ?

A trading member buys 5 lots of two month USDINR future in his proprietary account. What is his open position at the end of that day in USD ?

Computation of Open positions of clearing members and finalising the mark to market margins is called as___

Brokers should promptly issue contract notes to his clients and clients of his sub brokers – True or False ?

What will be the Settlement Date for EURINR currency future contracts for the month of May if 31st May falls on a Tuesday ?

Can we say that when the USDINR increase one way, this means there is a increase in volatility ?

The currency futures segment of the Exchange has a separate Governing Council on which the representation of Trading /Clearing Members of the currency futures segment does not exceed 50% – True or False ?

If one unit of gold was valued at USD 1000 and one unit of gold was valued at EUR 600, then as per the gold standard system what is the value of EUR in terms of USD

The SEBI Act – 1992 is the act mainly responsible for governing the trading of securities in India – True or False ?

A person buys a gold coin from a bank. Of the below options which best describes the price risk for this investment ?

State True or False – An option seller or writer shall always be obliged to perform but never gets the right to demand ?

A person buys one lot of USDINR futures and after half an hour of buying, the price of the contract moved by 400 ticks. By how may rupees has the value of contract changed?

If the spot price of EURINR is 70, what will be the moneyness of a short EURINR put option on a strike price of 68 ?