NISM Common Derivatives Quiz – 1

Which of the following example is that of Market Making?

With respect to trading time for world’s major currencies in OTC market – which of the following statement is TRUE?

When a person buys a put option, it means that he is buying a right to buy underlying asset – State True or False?

Mr. Pritam from India invested USD 20000 in US equity markets at an exchange price of 60 for USDINR. After a year these investments grew to USD 23000. Mr. Pritam than sold off the entire investments and repatriated his money to India. He found that his effective return (profit) was 20%. Calculate the exchange price which Mr. Pritam received when he repatriated the money to India.

Mr. Singh executes the following currency futures trade – buys USDINR and sells EURINR for an equivalent amount. What view has Mr. Singh executed?

An Indian company has both imports and exports in GBP of equal amounts. However the export realization comes a week after the payments are made for imports. Which type of currency risk is the company facing?

What is the simultaneous buying and selling of EURINR futures contract across two different maturities called?

A trader sees that 3 month USDINR forward is quoting at 65.5 while futures is quoting at 65.8. So he sells in futures and buys in forward market. Determine the type of market participant would this trader be?

Ms. Mamta buys 10 lots of USDINR 1 month futures when price was 65.00/65.10 and squares off 5 lots after a week when price was 65.15/65.35. What were her profits or losses?

______ is TRUE for Exchange Traded Derivatives.

A trader sells 10 lots of EURINR 1 month futures when price was 82.60/82.80 and squares off 5 lots after a week when price was 83.75/83.85. Calculate the profit or loss on the squared up transaction.

What course of action can be followed by an investor is he / she is not satisfied with decision of Arbitration Tribunal?

Assume that the one year interest rate is 1% in US, 2% in UK and 7% in India. If current GBPINR spot rate 91.60, what would be the one year future rate of GBPINR?

The default mode of settlement in OTC spot market is

What is the initial deposit that is required to initiate a currency futures position called?

Internationally for most of the currency pairs, the base currency is

State True or False – Unlike options, future contracts gives the seller both rights and obligations.

An multinational company has export revenue in JPY and it uses part of it to make import payments in USD and balance is converted in INR. The company is concerned about JPYUSD risk for its import payments. Which of the following best describes company’s risk and currency futures strategy that it may use to mitigate the risk?

Consider a scenario in which USDINR was quoting as 63.40/63.42 and EURUSD as 1.1450/1.1453 in the morning and by the day end USDINR moves to 63.10/63.12 while EURUSD moves to 1.1420/1.1422. What would best describe the movement of currency during the day?

Consider a scenario – In the OTC market, one month GBPUSD is quoting at 1.6120/1.6150. In the currency future market, one month USDINR is 64.10/64.50 and one month GBPINR is 93.40/93.70. A trader does his calculations and feels that he can construct a GBPUSD position using currency future USDINR and GBPINR futures and it will be at a premium to the GBPUSD quote of the OTC market. Which of the following trade strategy can best capture this arbitrage opportunity? (Both OTC and futures have same settlement dates)

Which are the main basic accounting heads to be maintained by any market participant for maintaining currency futures accounts?

A person has invested USD 100,000 in US equities with a view of appreciation of US stock market. In next one year, his investments in US equities appreciated in value to USD120,000. The investor decided to sell off his portfolio and repatriate the capital and profits to India. At the time of investing abroad the exchange rate was 44.5 and at the time of converting USD back into INR, he received an exchange rate of 46. How much is the return on investment in USD and in INR respectively?

Guidelines for accounting of currency futures contracts are issued by

At 11 am the RBI announced the credit policy and a deduction in interest rates. Generally such a step will lead to ____ of rupee.

Which of the following best describes the guidelines with respect to nature of agreement that a sub-broker has to execute with his clients?

Generally, who are the market makers in OTC market for currency options?

Of the following what best describes the guidelines for brokers with respect to execution of client orders?

In case of currency options, the net option value is added for short options and its deducted for long options to the liquid net worth of clearing members – True or False?

Which of the following is true?

The USDINR futures is trading at 60.0025/60.0050. The INR appreciates by one tick. What will be the new trading price? Assume that there is no change in the spread.

At what time does the JPYINR futures contract stops trading on the contract expiry day?

A registered broker buys 30 lots of USDINR at 58.6 and sells 18 lots the same day at 58.80 in his proprietary account. The settlement price for the day was 58.40. What would be his mark to market margin payable?

If one year interest rate is 1% in US and 9% in India. If current USDINR spot rate is 56, which of the following could be closest to the six month future rate of USDINR?

At the start of week, EURUSD is 1.05 and GBPUSD is 1.65. At the end of week, EURUSD is 1.2515 and GBPUSD is 1.55. Which of the following best describes the price movement?

At 11 am, USDINR was quoting at 56.40/56.60. At 3 pm it was quoting at 56.50/56.70. What would best describe currency move during the day?

The lot size for EURINR futures contract is

An multinational company has export revenue in USD and it uses part of it to make import payments in JPY. The company is concerned about JPYUSD risk for its import payments. What should the company do by using currency futures strategy to mitigate the risk?

Mr Khan buys May USDINR contract which cost him Rs 49000. The RBI reference rate for final settlement is fixed at 48.70. How much profit / loss did he make?

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

Mr. Mehta, a trading member and his two clients do the foll trades in EURINR one month futures on a particular day: Proprietary position: Buy 200 lots and sell 170 lots, Client X position: Buy 40 lots and Sell 80 lots, Client Y Position: Buy 120 lots and sell 80 lots. What would be the total open position of the trading member?

Mr A believes that USDJPY will move from 87 to 82 in the next 2-3 months. Since USDJPY contracts are not traded in India, which of the following would Mr A do using future contracts of USDINR and JPYINR?

Mr Sharma invested INR 200,000 in an Indian corporate bond for a year giving a return of 14% in one year. He plans to use the proceeds from the maturity of this bond to fund his son’s education on US. At the time of investing in the corporate bond, USDINR spot rate was 50 and one year premium was 3%. The person decides to hedge currency risk using USDINR one year futures. At the end of one year, how many USD can this person remit to his son?

A trading member buys 20 lots of USDINR of March futures on day 1. On the same day he also sells 10 lots of April USDINR futures. What would be his position in his proprietary book at the end of the day in USD?

If a person who is employed with a broking company gives trading advise on USDINR on TV, what best describes the steps that broking house needs to take to ensure that its employee complies with guidelines?

Assuming everything else remaining same, any development resulting in widening current account deficit of India will result in               .

GBPINR three month future is quoting at 70.50 and six month is quoting at 71.10. Mr. A expects that after a month the three month future should quote at 70.30 and the six month should quote at 70.70. If Mr A executes a spread trade and the view goes right, how much profit will he make ?

An international trading company has export revenue in USD and it uses part of it to make import payments in GBP and balance is converted to INR. The company is concerned about GBPUSD risk for its import payments. Which of the following best describes company’s risk and the currency futures strategy that it may use to mitigate the risk?

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

One of the key difference in OTC and Exchange traded EUR-INR currency option market is related to

With respect to Settlement of OTC forward contract – which of the following is true ?

Which of the following example is that of Market Making?

With respect to trading time for world’s major currencies in OTC market – which of the following statement is TRUE?

When a person buys a put option, it means that he is buying a right to buy underlying asset – State True or False?

Mr. Pritam from India invested USD 20000 in US equity markets at an exchange price of 60 for USDINR. After a year these investments grew to USD 23000. Mr. Pritam than sold off the entire investments and repatriated his money to India. He found that his effective return (profit) was 20%. Calculate the exchange price which Mr. Pritam received when he repatriated the money to India.

Mr. Singh executes the following currency futures trade – buys USDINR and sells EURINR for an equivalent amount. What view has Mr. Singh executed?

An Indian company has both imports and exports in GBP of equal amounts. However the export realization comes a week after the payments are made for imports. Which type of currency risk is the company facing?

What is the simultaneous buying and selling of EURINR futures contract across two different maturities called?

A trader sees that 3 month USDINR forward is quoting at 65.5 while futures is quoting at 65.8. So he sells in futures and buys in forward market. Determine the type of market participant would this trader be?

Ms. Mamta buys 10 lots of USDINR 1 month futures when price was 65.00/65.10 and squares off 5 lots after a week when price was 65.15/65.35. What were her profits or losses?

______ is TRUE for Exchange Traded Derivatives.

A trader sells 10 lots of EURINR 1 month futures when price was 82.60/82.80 and squares off 5 lots after a week when price was 83.75/83.85. Calculate the profit or loss on the squared up transaction.

What course of action can be followed by an investor is he / she is not satisfied with decision of Arbitration Tribunal?

Assume that the one year interest rate is 1% in US, 2% in UK and 7% in India. If current GBPINR spot rate 91.60, what would be the one year future rate of GBPINR?

The default mode of settlement in OTC spot market is

What is the initial deposit that is required to initiate a currency futures position called?

Internationally for most of the currency pairs, the base currency is

State True or False – Unlike options, future contracts gives the seller both rights and obligations.

An multinational company has export revenue in JPY and it uses part of it to make import payments in USD and balance is converted in INR. The company is concerned about JPYUSD risk for its import payments. Which of the following best describes company’s risk and currency futures strategy that it may use to mitigate the risk?

Consider a scenario in which USDINR was quoting as 63.40/63.42 and EURUSD as 1.1450/1.1453 in the morning and by the day end USDINR moves to 63.10/63.12 while EURUSD moves to 1.1420/1.1422. What would best describe the movement of currency during the day?

Consider a scenario – In the OTC market, one month GBPUSD is quoting at 1.6120/1.6150. In the currency future market, one month USDINR is 64.10/64.50 and one month GBPINR is 93.40/93.70. A trader does his calculations and feels that he can construct a GBPUSD position using currency future USDINR and GBPINR futures and it will be at a premium to the GBPUSD quote of the OTC market. Which of the following trade strategy can best capture this arbitrage opportunity? (Both OTC and futures have same settlement dates)

Which are the main basic accounting heads to be maintained by any market participant for maintaining currency futures accounts?

A person has invested USD 100,000 in US equities with a view of appreciation of US stock market. In next one year, his investments in US equities appreciated in value to USD120,000. The investor decided to sell off his portfolio and repatriate the capital and profits to India. At the time of investing abroad the exchange rate was 44.5 and at the time of converting USD back into INR, he received an exchange rate of 46. How much is the return on investment in USD and in INR respectively?

Guidelines for accounting of currency futures contracts are issued by

At 11 am the RBI announced the credit policy and a deduction in interest rates. Generally such a step will lead to ____ of rupee.

Which of the following best describes the guidelines with respect to nature of agreement that a sub-broker has to execute with his clients?

Generally, who are the market makers in OTC market for currency options?

Of the following what best describes the guidelines for brokers with respect to execution of client orders?

In case of currency options, the net option value is added for short options and its deducted for long options to the liquid net worth of clearing members – True or False?

Which of the following is true?

The USDINR futures is trading at 60.0025/60.0050. The INR appreciates by one tick. What will be the new trading price? Assume that there is no change in the spread.

At what time does the JPYINR futures contract stops trading on the contract expiry day?

A registered broker buys 30 lots of USDINR at 58.6 and sells 18 lots the same day at 58.80 in his proprietary account. The settlement price for the day was 58.40. What would be his mark to market margin payable?

If one year interest rate is 1% in US and 9% in India. If current USDINR spot rate is 56, which of the following could be closest to the six month future rate of USDINR?

At the start of week, EURUSD is 1.05 and GBPUSD is 1.65. At the end of week, EURUSD is 1.2515 and GBPUSD is 1.55. Which of the following best describes the price movement?

At 11 am, USDINR was quoting at 56.40/56.60. At 3 pm it was quoting at 56.50/56.70. What would best describe currency move during the day?

The lot size for EURINR futures contract is

An multinational company has export revenue in USD and it uses part of it to make import payments in JPY. The company is concerned about JPYUSD risk for its import payments. What should the company do by using currency futures strategy to mitigate the risk?

Mr Khan buys May USDINR contract which cost him Rs 49000. The RBI reference rate for final settlement is fixed at 48.70. How much profit / loss did he make?

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

Mr. Mehta, a trading member and his two clients do the foll trades in EURINR one month futures on a particular day: Proprietary position: Buy 200 lots and sell 170 lots, Client X position: Buy 40 lots and Sell 80 lots, Client Y Position: Buy 120 lots and sell 80 lots. What would be the total open position of the trading member?

Mr A believes that USDJPY will move from 87 to 82 in the next 2-3 months. Since USDJPY contracts are not traded in India, which of the following would Mr A do using future contracts of USDINR and JPYINR?

Mr Sharma invested INR 200,000 in an Indian corporate bond for a year giving a return of 14% in one year. He plans to use the proceeds from the maturity of this bond to fund his son’s education on US. At the time of investing in the corporate bond, USDINR spot rate was 50 and one year premium was 3%. The person decides to hedge currency risk using USDINR one year futures. At the end of one year, how many USD can this person remit to his son?

A trading member buys 20 lots of USDINR of March futures on day 1. On the same day he also sells 10 lots of April USDINR futures. What would be his position in his proprietary book at the end of the day in USD?

If a person who is employed with a broking company gives trading advise on USDINR on TV, what best describes the steps that broking house needs to take to ensure that its employee complies with guidelines?

Assuming everything else remaining same, any development resulting in widening current account deficit of India will result in               .

GBPINR three month future is quoting at 70.50 and six month is quoting at 71.10. Mr. A expects that after a month the three month future should quote at 70.30 and the six month should quote at 70.70. If Mr A executes a spread trade and the view goes right, how much profit will he make ?

An international trading company has export revenue in USD and it uses part of it to make import payments in GBP and balance is converted to INR. The company is concerned about GBPUSD risk for its import payments. Which of the following best describes company’s risk and the currency futures strategy that it may use to mitigate the risk?

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

One of the key difference in OTC and Exchange traded EUR-INR currency option market is related to

With respect to Settlement of OTC forward contract – which of the following is true ?

Which of the following example is that of Market Making?

With respect to trading time for world’s major currencies in OTC market – which of the following statement is TRUE?

When a person buys a put option, it means that he is buying a right to buy underlying asset – State True or False?

Mr. Pritam from India invested USD 20000 in US equity markets at an exchange price of 60 for USDINR. After a year these investments grew to USD 23000. Mr. Pritam than sold off the entire investments and repatriated his money to India. He found that his effective return (profit) was 20%. Calculate the exchange price which Mr. Pritam received when he repatriated the money to India.

Mr. Singh executes the following currency futures trade – buys USDINR and sells EURINR for an equivalent amount. What view has Mr. Singh executed?

An Indian company has both imports and exports in GBP of equal amounts. However the export realization comes a week after the payments are made for imports. Which type of currency risk is the company facing?

What is the simultaneous buying and selling of EURINR futures contract across two different maturities called?

A trader sees that 3 month USDINR forward is quoting at 65.5 while futures is quoting at 65.8. So he sells in futures and buys in forward market. Determine the type of market participant would this trader be?

Ms. Mamta buys 10 lots of USDINR 1 month futures when price was 65.00/65.10 and squares off 5 lots after a week when price was 65.15/65.35. What were her profits or losses?

______ is TRUE for Exchange Traded Derivatives.

A trader sells 10 lots of EURINR 1 month futures when price was 82.60/82.80 and squares off 5 lots after a week when price was 83.75/83.85. Calculate the profit or loss on the squared up transaction.

What course of action can be followed by an investor is he / she is not satisfied with decision of Arbitration Tribunal?

Assume that the one year interest rate is 1% in US, 2% in UK and 7% in India. If current GBPINR spot rate 91.60, what would be the one year future rate of GBPINR?

The default mode of settlement in OTC spot market is

What is the initial deposit that is required to initiate a currency futures position called?

Internationally for most of the currency pairs, the base currency is

State True or False – Unlike options, future contracts gives the seller both rights and obligations.

An multinational company has export revenue in JPY and it uses part of it to make import payments in USD and balance is converted in INR. The company is concerned about JPYUSD risk for its import payments. Which of the following best describes company’s risk and currency futures strategy that it may use to mitigate the risk?

Consider a scenario in which USDINR was quoting as 63.40/63.42 and EURUSD as 1.1450/1.1453 in the morning and by the day end USDINR moves to 63.10/63.12 while EURUSD moves to 1.1420/1.1422. What would best describe the movement of currency during the day?

Consider a scenario – In the OTC market, one month GBPUSD is quoting at 1.6120/1.6150. In the currency future market, one month USDINR is 64.10/64.50 and one month GBPINR is 93.40/93.70. A trader does his calculations and feels that he can construct a GBPUSD position using currency future USDINR and GBPINR futures and it will be at a premium to the GBPUSD quote of the OTC market. Which of the following trade strategy can best capture this arbitrage opportunity? (Both OTC and futures have same settlement dates)

Which are the main basic accounting heads to be maintained by any market participant for maintaining currency futures accounts?

A person has invested USD 100,000 in US equities with a view of appreciation of US stock market. In next one year, his investments in US equities appreciated in value to USD120,000. The investor decided to sell off his portfolio and repatriate the capital and profits to India. At the time of investing abroad the exchange rate was 44.5 and at the time of converting USD back into INR, he received an exchange rate of 46. How much is the return on investment in USD and in INR respectively?

Guidelines for accounting of currency futures contracts are issued by

At 11 am the RBI announced the credit policy and a deduction in interest rates. Generally such a step will lead to ____ of rupee.

Which of the following best describes the guidelines with respect to nature of agreement that a sub-broker has to execute with his clients?

Generally, who are the market makers in OTC market for currency options?

Of the following what best describes the guidelines for brokers with respect to execution of client orders?

In case of currency options, the net option value is added for short options and its deducted for long options to the liquid net worth of clearing members – True or False?

Which of the following is true?

The USDINR futures is trading at 60.0025/60.0050. The INR appreciates by one tick. What will be the new trading price? Assume that there is no change in the spread.

At what time does the JPYINR futures contract stops trading on the contract expiry day?

A registered broker buys 30 lots of USDINR at 58.6 and sells 18 lots the same day at 58.80 in his proprietary account. The settlement price for the day was 58.40. What would be his mark to market margin payable?

If one year interest rate is 1% in US and 9% in India. If current USDINR spot rate is 56, which of the following could be closest to the six month future rate of USDINR?

At the start of week, EURUSD is 1.05 and GBPUSD is 1.65. At the end of week, EURUSD is 1.2515 and GBPUSD is 1.55. Which of the following best describes the price movement?

At 11 am, USDINR was quoting at 56.40/56.60. At 3 pm it was quoting at 56.50/56.70. What would best describe currency move during the day?

The lot size for EURINR futures contract is

An multinational company has export revenue in USD and it uses part of it to make import payments in JPY. The company is concerned about JPYUSD risk for its import payments. What should the company do by using currency futures strategy to mitigate the risk?

Mr Khan buys May USDINR contract which cost him Rs 49000. The RBI reference rate for final settlement is fixed at 48.70. How much profit / loss did he make?

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

Mr. Mehta, a trading member and his two clients do the foll trades in EURINR one month futures on a particular day: Proprietary position: Buy 200 lots and sell 170 lots, Client X position: Buy 40 lots and Sell 80 lots, Client Y Position: Buy 120 lots and sell 80 lots. What would be the total open position of the trading member?

Mr A believes that USDJPY will move from 87 to 82 in the next 2-3 months. Since USDJPY contracts are not traded in India, which of the following would Mr A do using future contracts of USDINR and JPYINR?

Mr Sharma invested INR 200,000 in an Indian corporate bond for a year giving a return of 14% in one year. He plans to use the proceeds from the maturity of this bond to fund his son’s education on US. At the time of investing in the corporate bond, USDINR spot rate was 50 and one year premium was 3%. The person decides to hedge currency risk using USDINR one year futures. At the end of one year, how many USD can this person remit to his son?

A trading member buys 20 lots of USDINR of March futures on day 1. On the same day he also sells 10 lots of April USDINR futures. What would be his position in his proprietary book at the end of the day in USD?

If a person who is employed with a broking company gives trading advise on USDINR on TV, what best describes the steps that broking house needs to take to ensure that its employee complies with guidelines?

Assuming everything else remaining same, any development resulting in widening current account deficit of India will result in               .

GBPINR three month future is quoting at 70.50 and six month is quoting at 71.10. Mr. A expects that after a month the three month future should quote at 70.30 and the six month should quote at 70.70. If Mr A executes a spread trade and the view goes right, how much profit will he make ?

An international trading company has export revenue in USD and it uses part of it to make import payments in GBP and balance is converted to INR. The company is concerned about GBPUSD risk for its import payments. Which of the following best describes company’s risk and the currency futures strategy that it may use to mitigate the risk?

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

One of the key difference in OTC and Exchange traded EUR-INR currency option market is related to

With respect to Settlement of OTC forward contract – which of the following is true ?