NISM Series XIII | Common Derivatives | Mock Test 1.3 | 50 Solved MCQs

NISM Series XIII: Common Derivatives

Mock Test 1.3: Currency Derivatives (Questions 1-50)

📝 FULL MOCK TEST 1.3:

This set covers advanced arbitrage, synthetic pairs, and clearing corporation rules. Click each question to reveal the logic and calculations.

Q 1. The default mode of settlement in OTC spot market is:

A) Net settlement in cash
B) Always delivery based
C) As decided by merchants
D) None of the above

View Answer

Answer: B) Always delivery based

Q 2. The methodology usually used to value European options is:

A) Binomial pricing
B) Black and Scholes
C) London pricing
D) Lloyds Theory

View Answer

Answer: B) Black and Scholes

Q 3. A trader sells EURINR and buys JPYINR for an equivalent amount. What view has he executed?

A) INR weakening against EUR
B) EUR weakening against JPY
C) EUR strengthening against JPY
D) INR strengthening against EUR

View Answer

Answer: B) EUR weakening against JPY

Q 4. OTC 1m USDINR: 65.25/65.50. Futures 1m: 66.00/66.10. Possible arbitrage profit per USD?

A) 40 paise
B) 50 paise
C) 55 paise
D) 75 paise

View Answer

Answer: B) Buy USDINR in OTC and sell in futures, 50 paise

Math: Buy @ 65.50 (OTC Ask), Sell @ 66.00 (Futures Bid). Profit = 0.50.

Q 5. Sells 10 lots USDINR April @ 66.50. INR appreciates by 100 ticks. Profit or Loss?

A) Profit 250
B) Loss 250
C) Profit 2500
D) Loss 2500

View Answer

Answer: C) Profit of Rs. 2500

Explanation: 100 ticks * 0.0025 = 0.25. Since he sold and USD depreciated (INR app), he profited. 0.25 * 10 * 1000 = 2500.

Q 6. Maximum net NPA % allowed for an AD Category 1 bank to be a member?

A) 1%
B) 2%
C) 2.5%
D) 3%

View Answer

Answer: D) 3%

Q 7. Mr. Gopal invested Rs 1L @ 100 GBPINR. Gained 25% in GBP. Repatriated @ 105. Real returns?

A) 27.50%
B) 31.25%
C) 23.65%
D) 42.80%

View Answer

Answer: B) 31.25 %

Math: (1.25 * 105) / 100 = 1.3125. 31.25% return.

Q 8. Company has export revenue in JPY, import payments in USD. Best hedge for JPYUSD risk?

A) Short JPYINR, Long USDINR
B) Short USDINR, Long JPYINR

View Answer

Answer: B) USD appreciating against JPY, Short JPYINR and long USDINR for same maturity

Q 9. When a client defaults in daily settlement, amount not paid is adjusted against:

A) Bank FD
B) PPF balance
C) Initial margin
D) Shares

View Answer

Answer: C) initial margin paid by the client

Q 10. Arbitrage: OTC GBPUSD 1.6120/50. Synthetic from Futures: 1.4481/1.4618. Action?

A) Buy OTC, Sell Futures
B) Sell OTC, Buy Futures

View Answer

Answer: D) Sell GBPUSD on OTC , Buy GBPINR & Sell USDINR in currency futures

Q 11. The lot size of JPYINR futures contract is:

A) 1,00,000 JPY
B) 10,000 JPY
C) 1000 INR
D) 10,000 INR

View Answer

Answer: A) 1,00,000 JPY

Q 12. TM buys 9 April, sells 9 May. Client buys 9 April, sells 9 May. Open position of TM?

A) Zero
B) 18000
C) 36000

View Answer

Answer: C) 36000 and 18000

Explanation: 18 lots (Prop) + 18 lots (Client) = 36000 USD.

Q 13. Sells 10 lots @ 74.50, sq off 5 @ 73.75. Profit or Loss?

A) Profit 3750
B) Profit 2750
C) Loss 2800

View Answer

Answer: A) Profit of Rs 3750

Q 14. Day 1 Short 10 @ 75. Day 2 settlement 75.60. Day 2 MTM?

A) Profit 3000
B) Loss 6000

View Answer

Answer: B) Loss of Rs 6000

Q 15. View: EURUSD 1.18 to 1.30 (EUR strong). Execution?

A) Long EURINR, Short USDINR
B) Short EURINR, Long USDINR

View Answer

Answer: C) Long EURINR, Short USDINR

Q 16. Bearish on USDINR with zero cash outgo?

A) Buy Put
B) Sell Call

View Answer

Answer: C) Sell USDINR Call option

Q 17. TM buys 20 @ 74.50, sells 12 @ 74.80. Settlement 74.40. MTM on OPEN positions?

A) 1200
B) -800
C) 1600

View Answer

Answer: B) -800

Open: 8 lots Buy @ 74.50. MTM = (74.40 - 74.50) * 8 * 1000 = -800.

Q 18. USDINR @ 71.0025/50. INR appreciates by 2 ticks. New price?

A) 70.9975/71.0000
B) 71.0050/75

View Answer

Answer: A) 70.9975/71.0000

Q 19. Exchange traded derivatives have standardized rules and CC risk management. True or False?

A) True
B) False

View Answer

Answer: B) There are standardized formal rules for risk management and burden sharing in Exchange Traded Derivatives

Q 20. Typical market makers in OTC currency options:

A) Exchanges
B) Agents
C) Banks

View Answer

Answer: C) Banks

Q 21. Derivatives for trading/speculation are reported as:

A) Long term loans
B) Current assets/liabilities

View Answer

Answer: C) Current assets and current liabilities

Q 22. TM buys 70, sells 90 @ 88.55. Settlement 88.10. MTM?

A) +9000
B) -8750

View Answer

Answer: A) +9000

Short 20. Price fell. Profit = 0.45 * 20 * 1000 = 9000.

Q 23. For Long Call, once BEP is passed, profit increases with spot. True or False?

A) True
B) False

View Answer

Answer: A) True

Q 24. Trading using automated execution logic is:

A) Swing trading
B) Algorithmic trading

View Answer

Answer: C) Algorithmic trading

Q 25. Membership in currency segment is separate from other segments. True or False?

A) True
B) False

View Answer

Answer: A) Membership in the currency derivatives segment is separate from other segments and require different set of approvals

Q 26. Future at premium to spot (101). Expect spot to stay 101 at expiry. Action?

A) Buy Fut
B) Sell Fut

View Answer

Answer: B) Sell EURINR

Q 27. AD Category I Banks who are TMs can participate on:

A) Own account
B) Clients account
C) Both

View Answer

Answer: C) Both of the above

Q 28. Which market opens around afternoon IST?

A) Brazil
B) Japan
C) Europe (UK)

View Answer

Answer: D) Europe (UK)

Q 29. Limit sell @ 86.50. Best Buy @ 86.60. Price of execution?

A) 86.50
B) 86.60

View Answer

Answer: D) At 86.60

Explanation: In a limit order, you get the best available price in the market if it's better than your limit.

Q 30. Exchange traded derivative income is:

A) Capital Gains
B) PGBP (Business income)

View Answer

Answer: D) Income from profits and gains from business and profession

Q 31. Which model uses an iterative approach?

A) Black & Scholes
B) Binomial

View Answer

Answer: D) Binomial

Q 32. Derivatives should be recognized in balance sheet. True or False?

A) True
B) False

View Answer

Answer: D) All derivatives contract should be recognized in balance sheet

Q 33. Day: Buy 10 April @ 83.60, Sell 10 May @ 83.80. Sett: April 83.70, May 83.90. MTM?

A) Zero
B) +2000

View Answer

Answer: D) Zero

Q 34. Sameer writes Put (Strike 84.50) @ 0.40. Expiry @ 83.70. P&L?

A) Profit 0.40
B) Loss 0.40

View Answer

Answer: C) Loss of 0.40

Math: (83.70 - 84.50) + 0.40 = -0.40.

Q 35. US rate 4%, India 7%. Spot 83.10. 1-year Future rate?

A) 85.49
B) 84.97

View Answer

Answer: A) 85.49

Q 37. Currency options expire at:

A) 5.00 PM
B) 12.30 PM

View Answer

Answer: C) 12.30 PM

Q 38. Selling an option means selling a right to buy. True or False?

A) True
B) False

View Answer

Answer: B) False

Explanation: Selling a call is a right to buy, but selling a put is a right to sell.

Q 39. Derivative loss CANNOT be set off against:

A) Business Income
B) Salary Income

View Answer

Answer: C) Salary income

Q 40. View: GBPUSD 1.20 to 1.14 (GBP weak). Execution?

A) Long GBPINR, Short USDINR
B) Short GBPINR, Long USDINR

View Answer

Answer: A) Short GBPINR, Long USDINR

Q 41. Participants who predict moves to take positions are:

A) Arbitrageurs
B) Speculators

View Answer

Answer: B) Speculators

Q 43. Last trading day for EURINR monthly futures:

A) Last Thursday
B) 2 working days prior to last business day

View Answer

Answer: C) Two working days prior to the last business day of the expiry month

Q 44. Bond return 16%. Spot 70, 1-year premium 4%. Remit amount?

A) 1674
B) 1593

View Answer

Answer: D) 1593

(116,000 / 72.80) = 1593.40.

Q 45. Which body acts as central counterparty?

A) Currency Exchange
B) Clearing Corporation

View Answer

Answer: B) The Clearing Corporation

Q 46. USDINR moves 400 ticks. Value change in Rs?

A) 100
B) 1000

View Answer

Answer: C) 1000 Rupees

Math: 400 * 0.0025 * 1000 = 1000.

Q 48. Gold Standard: 1 unit = 1000 USD or 600 EUR. Value of 1 EUR in USD?

A) 1.66
B) 0.60

View Answer

Answer: B) 1.66

Q 50. Representation of TMs/CMs on Governing Council cannot exceed:

A) 50%
B) 25%

View Answer

Answer: A) False

Note: The representation should not exceed 25%.


Dhaval Visariya

AMFI Registered Distributor (ARN-327925) | Software Developer & Finance Enthusiast

Connect with me:
LinkedIn | Telegram | YouTube | GitHub | Medium

Disclaimer: I am an AMFI Registered Mutual Fund Distributor. Views expressed here are for educational purposes. Mutual Fund investments are subject to market risks, read all scheme related documents carefully.
📧 Contact: info.apollofinancialservices@gmail.com

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