NISM Common Derivatives Quiz – 9

An exporter hedges 20,000 USD by buying a September 2020 USDINR Put option at a strike price of ₹73.00 when the price was 0.47/0.49. The exporter received USD in his account on 20th September and decided to cancel the option on 20th September when the price for the same contract was 0.22/0.24. How much loss did the exporter make on cancelling the Put option if the latest RBI USDINR reference rate was ₹72.50?

Who decides the price for market order?

An Indian investor has invested 187,500 in US securities at a USDINR exchange rate of 75. One year later, his investment gains 10% in USD terms and he repatriates the money at an exchange rate of 66. What is the real return in INR?

A trader in currency markets believes EURUSD will move from 1.18 to 1.30 in two months. Which strategy using EURINR and USDINR futures supports this view?

A hedger has a grievance against a trading member and opts for arbitration. Within how many months is the decision expected from the arbitrator?

A trader executes: Buys USDINR, sells GBPINR (same notional). What view has the trader expressed?

In modern times, which asset class saw derivatives trading first?

A TM buys 9 lots of April USDINR futures and sells 9 lots of May. A client does the same. What are the open positions of the TM and the client?

When must a trading member identify if a position is proprietary or client-based?

Sumit buys 1 lot USDINR futures. Price moves by 100 ticks. What is the change in value?

Selling a call option means having an obligation to buy the underlying asset. True or False?

In OTC spot markets, what is the default settlement mode?

TM buys 80 lots USDINR @ 74.50, sells 90 lots @ 74.60. Settlement = 74.30. What is MTM on open positions?

What governs brokers advertising in public media?

If volatility increases, will option premiums rise?

Higher-than-expected GDP growth in a developed country will:

Mr. Kohli invests ₹100,000 @ USDINR 60. Gains 18% in USD. Repatriates @ 62. What is real INR return?

Buys 1 USD from Bank A and sells to Bank B. Quote = ₹75.31/75.35. What is the currency loss?

Minimum net worth required for an entity to apply as an authorized exchange for currency futures?

Sriniwas guarantees no losses to clients for shorting USD. What should he have done to avoid punishment?

Banks are typically the market makers in OTC currency options.

The settlement date for exchange-traded currency futures is:

Mr. Mayur sells 10 GBPINR lots @ 98.60, squares off 5 lots @ 99.80. What is the result?

What parameters does RBI consider for allowing banks to run USDINR option books?

For AD Category I bank to be a trading & clearing member on a currency futures exchange, it must satisfy:

A trading member (TM) has two clients “X” and “Y” and he also does proprietary trading in currency futures. On day 1, TM buys 20 lots of USDINR one month futures and also sells 2 lots of the same contract on the same day in his proprietary book. On the same day, client “X” buys 12 lots of USDINR one month futures and also sells 2 lots of the same contract while client “Y” 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 “X” and client “Y” respectively at the end of day 1?

If 10 units of gold was valued at INR 45,000 and the same was valued at USD 600. As per the gold standard methodology, what would be the value of one USD in terms of INR?

Of the below options, which one is true for Exchange Traded Derivatives?

Which term best describes JPY currency?

Which of these best describes the timing for collection of Mark to Market margins?

A medium sized exporter of India is concerned about currency volatility. He enters a derivative contract with a bank willing to take on that risk for a fee. What economic function is being performed?

The currency futures price of USD is at a premium to INR. If the USDINR spot is 75 and a trader expects the spot to remain at 75 on expiry, what strategy is profitable?

How can the trading member recover the mark-to-market margin of a client if the client defaults?

The lot size of JPYINR futures contract is

Suresh sells GBPINR and buys EURINR for equivalent value. What view has he executed?

Mr. Balbir Singh invests USD 8000 at Rs 73 = Rs 584,000. After two years, portfolio value = USD 9000. If return =12%, what exchange rate did he get when converting back to INR?

Start of week: EURUSD =1.75 GBPUSD =1.90; End: EURUSD =1.7810 GBPUSD =1.88. What best describes the change?

USDINR expected to stay at 73. One-month futures premium =40 paise. What trade and profit per USD?

1 month USDINR futures =75.25/75.50, OTC=76.00/76.′. Arbitrage profit?

A policy boosting foreign capital inflows in India would result in:

Max Net NPA % allowed for AD Cat-1 Bank to be a trading/clearing member in currency futures?

Current spot =75, strike =75 What is the moneyness of a long USD call option?

What is the process of computing open positions and MTM margin payment/receipt called?

One of the main reasons for growth of financial derivatives is:

Morning: USDINR =75.02/75.04; EURUSD =1.1888/1.1893 Evening: USDINR =75.22/75.24; EURUSD = 1.1808/1.1810 Currency movement?

At what time does GBPINR futures contract stop trading on expiry day?

1-year rate: UK=2%, India =7%. Spot GBPINR =98 Closest 6-month forward rate?

Mr. Patil buys gold and shorts USDINR to hedge. Gold profit = Rs 60,000, FX loss = Rs 15,000. His return and hedge type?

Mr. Mehta charges Rs 40 per lot (1 leg intraday), Mr. Shah charges Rs 25 per lot (both legs). Client buys 20 lots, sells 10 same day, 10 later. Brokerage?

What is the frequency of adjusting liquid net worth of clearing members with initial margin?

Which style of options are only traded on Indian exchanges?

The important market which opens around afternoon of India time is / are

Who acts as the central counterparty to GBPINR future trades in India?

World over the financial regulators and Government are encouraging what kind of change in dealing with financial derivatives?

Mr. Dinesh, an exporter sells 200 lots of one-month USDINR futures at 73. At expiry, the settlement price is 72.70. How much profit/loss (in Rs) did he make?

A trader sells 8 lots of EURINR futures at 72.60/72.70 and squares off 7 lots at 71.50/71.70. What is the profit/loss?

An Immediate Or Cancel (IOC) order

A trader buys USDINR and sells JPYINR for equivalent amount. What view has he executed?

When multiple contracts are squared off, the accounting method used to calculate price is:

State True or False – Margins across clients of a member are collected on a netted-off basis.

A trading member buys 20 lots and sells 12 lots of USDINR at 74.50/74.80. Settlement is at 74.40. MTM on open positions?

Buying gold coin in INR – what best describes price risk?

Identify the Act which mainly governs trading of securities in India.

A broker should issue contract note in the form specified by

Mr. Vaibhav writes a call and receives 65p premium. Next day premium is 30p. Spot unchanged. Reason?

Mrs. Soni invests Rs 1 lakh at 9%, hedges at 5% USD premium. USDINR spot = 73. How many USD can she remit after 1 year?

What best describes ‘Pro-Account’ trading guideline?

Trader sells 10 lots USDINR at 74.50/74.70, squares off 5 at 73.55/73.75. Profit/Loss?

What is the lot size of USDINR currency option?

Best strategy for bearish USDINR with zero cash outgo?

Risk aversion rises; money exits emerging markets like India. INR is likely to:

Export > import; import payment after 7 days. Currency risk?

Export in USD, part used for imports, rest converted to INR. Risk? Strategy?

Buys USDINR 75 Call, pays 1.60 premium. Settlement at 77.10. Net profit per USD?

USDINR trades at 71.0025/71.0050. INR appreciates by 2 ticks. New price?

Which organisation issues guidelines for accounting of currency futures contracts?

After the breakeven point is achieved, which of these statements describes the relationship between spot price and profitability of long put option?

A trader has a view that GBP should weaken against USD in next few months. Assuming USDINR remains the same during the period, what currency futures trade would be profitable to him if his view comes correct?

Seema, a student of economics, believes that GBP should appreciate against INR in the next few months. She decides to execute this view using currency futures. What type of market participant is she?

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

A trading member buys September USDINR futures at various price points. He buys 20 lots at 74.70, then 10 lots later, and 20 lots at 74.30 the next day. On Day 3, he squares off 20 lots at 74.70. Using FIFO, what is the profit/loss?

If 1-year interest rate is 2% in the UK and 8% in India, and GBPINR spot is 70, what is the approximate 6-month future rate?

A client buys a Put at 75.50 (premium 0.28) and sells a Call at 75.25 (premium 0.35). On expiry, the USDINR is 75.50. What is the net P/L?

For a calendar spread position, the extreme loss margin is charged on One-third of the mark-to-market value of the far month contract.

A trader is bearish on JPYINR and expects increased volatility. What option strategy should he use?

The base price on the first day of launch of a JPYINR currency future contract will be

Examine the statement: “The profit and loss for an option writer is unlimited.”

A trader buys USDINR futures at 72 for 30 lots. At expiry, settlement price is 71.70. What is the P/L?

A member buys 20 lots at 74.50 and sells 30 lots at 74.80 on Day 1. Day 1 settlement is 75. Day 2 settlement is 75.60. What is Day 2 MTM P/L?

The intrinsic value of ‘In the Money’ and ‘At the Money’ options is always ≥ 0 – True or False?

An investor invested Rs 3.4 lakh when USDINR was 74. Two years later, he gains 20% in USD, repatriates at 72. What is INR return?

What is the relationship between limit and trigger price in a stop-loss SELL order?

A person buys a USD call at strike 72 and premium 0.65. What is breakeven point?

Position limits in the currency futures market are monitored during the day based on OI of the previous day. This monitoring is for:

What is the relationship between limit and trigger price for a stop-loss BUY order?

Mr. Bharat, an exporter with USD 5M export order payable in 6 months. What is his forward booking eligibility?

USDINR OTC 1M=73.75/74.00, futures =74.50/74.60. What is the arbitrage and profit per USD?

GBPINR 3M=70.50, 6M=71.10. Kapil expects 3M=70.30 6M=70.70 in a month. What profit on spread trade?

The currency market is most active when US and European markets is/are open.

The amount of asset that has to be delivered under one contract is the