NISM Series XIII: Common Derivatives

Mock Test 1.4: Currency Derivatives (Questions 1-50)

📝 FULL MOCK TEST 1.4:

This set includes practical calculations on Interest Rate Parity, P&L on various currency pairs (GBPINR, JPYINR), and detailed SEBI/RBI compliance rules. Click each question for the solution.

Q 1. An importer sells 10 lots one month USDINR futures at 65. At expiry, the settlement price is 65.70. Calculate his profit or loss.

A) Profit Rs 7000
B) Loss Rs 7000
C) Profit Rs 700
D) Loss Rs 700

View Answer

Answer: B) Loss of Rs 7000

Math: (65.00 - 65.70) * 10 * 1000 = -7000 Loss.

Q 2. Which of the following is true for brokers regarding contract notes?

A) Issue contract notes every week
B) Promptly issue contract notes to clients and sub-broker clients
C) Issue notes twice every week
D) Sub-brokers should issue them weekly

View Answer

Answer: B) Broker should promptly issue contract notes to his clients and client of his subbrokers

Q 3. US Rate 2%, India 10%, Spot 64. What is approximately the six-month future rate?

A) 65.74
B) 66.51
C) 67.02
D) 67.89

View Answer

Answer: B) 66.51

Q 4. Who recommended eligibility norms and risk mitigation for Currency Trading?

A) Committee on Fuller Capital Account Convertibility
B) SEBI-RBI Standing Technical Committee
C) FEDAI
D) SEBI internal committee

View Answer

Answer: B) SEBI-RBI Standing Technical Committee

Q 5. Buying a put option means buying a right to buy the underlying. True or False?

A) True
B) False

View Answer

Answer: B) False

Explanation: Put option gives the right to SELL.

Q 6. Monitoring of open positions during the day is based on:

A) OI at 12.00 PM
B) Total OI at end of previous day
C) Maximum OI in previous day
D) OI at time of monitoring

View Answer

Answer: B) Total open interest at the end of previous day

Q 7. Margins across various clients of a member are collected on a gross basis. True or False?

A) True
B) False

View Answer

Answer: A) True

Q 8. Who issued guidance notes on accounting for index futures?

A) SEBI
B) RBI
C) ICAI
D) CRISIL

View Answer

Answer: C) ICAI

Q 9. Methodology for MTM of brought forward positions:

A) Buy price vs Settlement price
B) Prev day settlement vs Current day settlement
C) High price vs Settlement price
D) Last traded price vs Settlement price

View Answer

Answer: B) Multiply the units brought forward with contract size and the difference between previous days settlement price and current days settlement price

Q 10. Oil factory agrees to sell oil to McDonalds at fixed price for a year. This is:

A) Swap
B) Future
C) Forward
D) Arbitrage

View Answer

Answer: C) Forward

Q 11. Mayur sells 10 lots GBPINR @ 98.60, sq off 5 @ 99.80. Money lost?

A) Rs 4500
B) Rs 6000
C) Rs 7850

View Answer

Answer: B) Loss of Rs 6000

Math: (98.60 - 99.80) * 5 * 1000 = -6000.

Q 12. Client buys 75.50 Put @ 0.28, sells 75.25 Call @ 0.35. Expiry @ 75.50. Net P&L?

A) Rs 180 loss
B) Rs 280 loss

View Answer

Answer: A) Rs 180 loss

Put loss = 280. Call profit = 100. Net = 180 loss.

Q 13. Settlement in OTC spot market is always:

A) Net Settlement
B) Delivery based settlement

View Answer

Answer: D) Delivery based settlement

Q 14. What is the lot size of an USDINR currency option?

A) 1000 USD
B) 10000 USD

View Answer

Answer: B) 1000 USD

Q 15. Increase in volatility leads to increase in option premium. True or False?

A) Yes
B) No

View Answer

Answer: A) Yes

Q 17. Rs 187500 invested in US @ 75. Gained 10% USD. Repatriated @ 66. Real Return?

A) Profit 5.9%
B) Loss 3.2%

View Answer

Answer: C) Loss of 3.2%

Q 18. Trader has strong BEARISH view on JPYINR and expects increased volatility. Strategy?

A) Short Call
B) Long Put

View Answer

Answer: B) Long Put

Q 20. Base price on launch day of JPYINR future is:

A) Daily settlement price
B) Theoretical price (Interest Rate Parity)

View Answer

Answer: C) The theoretical price for that contract derived using interest rate parity principle

Q 21. Long 30 lots @ 81. Expiry @ 80.80. P&L?

A) Loss 12000
B) Loss 6000

View Answer

Answer: D) The trader made a loss of Rs 6000

Math: (80.80 - 81) * 30 * 1000 = -6000.

Q 23. Position limits are typically based on OI at the end of the previous day. True or False?

A) End of previous day
B) Time of monitoring

View Answer

Answer: B) The total open interest at the end of previous day

Q 25. Clients who indulge in speculative transactions beyond known income sources are:

A) High risk
B) Medium risk

View Answer

Answer: C) Medium risk

Q 26. Selling Call grants buyer right to purchase from you at strike price. True or False?

A) True
B) False

View Answer

Answer: A) True

Q 28. Day 1: Buy 8 June, Sell 2 July USDINR. Total open position in USD?

A) 10000
B) 6000

View Answer

Answer: A) 10000

Explanantion: Diff months = diff contracts. Total = 8000 + 2000 = 10000 USD.

Q 29. Currency with relatively HIGHER interest rate trades at:

A) Par
B) Discount
C) Premium

View Answer

Answer: B) At Discount

Q 32. Last working day 30th (Tue). Last Mon holiday. Expiry date?

A) 25th
B) 26th

View Answer

Answer: A) 25th

Explanation: 30th(Last), 26th(1st prior), 25th(2nd prior).

Q 33. Vijaya sells @ 83.40 (limit). Best buy @ 83.50. Execution price?

A) 83.40
B) At or above 83.40

View Answer

Answer: C) At or above 83.40

Execution will happen at the best price available, which is 83.50.

Q 36. Maximum maturity of GBPINR futures allowed in India?

A) 6 months
B) 12 months

View Answer

Answer: C) 12

Q 37. Kalpana invested USD 10k @ 80. Value grew to 12k. Return 18%. Repat rate?

A) 79.22
B) 78.66

View Answer

Answer: D) 78.66

Math: 8L * 1.18 = 9.44L. 9.44L / 12k USD = 78.66.

Q 38. Aggrieved by appellate arbitration? Next step:

A) Appeal to SEBI
B) Challenge in court of competent jurisdiction

View Answer

Answer: D) The investor can challenge the decision in the court of competent jurisdiction

Q 39. Sells USDINR, buys JPYINR. Combined view?

A) JPY strengthening against USD
B) USD weakening against JPY

View Answer

Answer: C) JPY strengthening against USD

Q 41. Option buyer risk is ________, seller risk is ________.

A) Limited, Unlimited
B) Unlimited, Limited

View Answer

Answer: B) Limited, Unlimited

Q 42. Base rate GBPINR @ 100. Operating range (1m)?

A) 103 & 97
B) 105 & 95

View Answer

Answer: D) 103 & 97

Range is +/- 3% for tenures up to 6 months.

Q 46. Price risk for gold coin purchase?

A) USD GOLD only
B) USD / GOLD and USDINR

View Answer

Answer: C) USD / GOLD and USDINR

Q 47. Interest rate gap between UK (1%) and India (9%) decreases. 1-yr future price (currently 73) will be:

A) 73
B) Lower than 73

View Answer

Answer: C) Lower than 73

Q 49. USDINR 52.50 to 52.25. GBPUSD 1.6525 to 1.5050. Move?

A) USD app against INR and GBP
C) USD dep against INR and app against GBP

View Answer

Answer: C) USD depreciating against INR and appreciating against GBP

Dhaval Visariya

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

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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.
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Dhaval Visariya