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Currency Derivatives Free Demo Test 10

/10

Currency Derivatives Free Demo Test 10

1 / 10

1.

To act on the belief that GBPUSD will rise from 1.75 to 1.79 in the next month using currency futures contracts of GBPINR and USDINR, what would you do?

a) Long GBPINR, Short USDINR

b) Long GBPINR

c) Short GBPINR, Long USDINR

d) Short GBPINR

Explanation:

GBPUSD moving from 1.75 to 1.79 means GBP becoming stronger against USD. So he will buy GBPINR and Sell USDINR.

2 / 10

2. At the close of the trading day, a trading member has clients ‘A’ and ‘B’ with 5000 USD short position and 4000 USD long position, respectively, in the currency futures segment. In the currency option segment, client ‘C’ has a 2000 USD long position. What is the total open position for the trading member when considering all these positions for monitoring?

a) 3000 USD

b) 1000 short for currency futures and 2000 long for currency options

c) 9000 USD

d) 11000 USD

Explanation:

Gross open position for the trading member for the purpose of monitoring open position is the sum of all open positions of all the clients.

In the above example :

Client A has 5000 USD open

Client B has 4000 USD open

Client C has 2000 USD open

So total 11000 USD open

3 / 10

3. A trader makes the following currency futures trade: buys one lot of EUR/INR and sells one lot of JPY/INR. What trading strategy or view has the trader executed?

a) INR strengthening against EUR

b) JPY weakening against EUR

c) INR weakening against JPY

d) JPY strengthening against EUR

Explanation:

Buying EURINR – view is strengthening of EUR against INR

Selling JPYINR – view is weakening of JPY against INR

Taking a collective view – JPY weakening against EUR.

4 / 10

4. A certain percentage of the public representatives on the Governing Council of the currency futures segment can be shared with the Governing Council of the cash/equity derivatives segments of the Exchange.

a) 50%

b) 35%

c) 25%

d) 40%

Explanation:

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.

5 / 10

5.

Despite expectations of INR weakening due to overnight global factors, it strengthened during the day’s trading. What factor below could contribute to the appreciation of INR?

a) Banking holidays for the next two days

b) Weak Indian Stock Markets

c) Huge political unrest in India

d) Central Banks intervention

Explanation:

Central Bank – RBI can buy / sell a lot of currencies in the best interest of the country / economic situation and this can change the normal market movements of currencies.

6 / 10

6. An ‘Immediate or Cancel’ order is an order which is valid for the day on which it is entered and if the order is not executed during the day, the system cancels the order automatically at the end of the day – True or False ?

a) False

b) True

Explanation:

In a Day Order – the system cancels the unexecuted order automatically at the end of the day.

An ‘Immediate or Cancel’ (IOC) order is an order to buy or sell a security immediately – and if that order is not executed immediately it will be cancelled.

For eg – A trader enters an IOC order to buy 1000 shares of XYZ Ltd at Rs 100. If at that time there are sellers of 200 shares only at Rs 100, the trader will get the 200 shares and the balance order of 800 shares will get cancelled immediately.

7 / 10

7. A trader sells 20 lots of USDINR September futures at 83.20 and closes this position after INR depreciates by 60 ticks. What is the resulting profit or loss for this trade?

a) Loss of Rs 3000

b) Loss of Rs 300

c) Profit of Rs 300

d) Profit of Rs 3000

Your answer is Incorrect

Your answer is correct

Explanation:

INR has depreciated which means the price of USDINR will rise. As the trader has sold USDINR he will face losses in this situation.

Tick Size is Rs .0025

60 Ticks X .0025 = 0.15 X 20 lots X 1000 ( Lot size of USDINR)

= Rs 3000 loss.

8 / 10

8. Maximum trading volumes occur when multiple financial markets are open simultaneously.

a) Europe , Japan

b) Europe, USA

c) India , USA

d) Japan , India

Your answer is Incorrect

Your answer is correct

Explanation:

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.

9 / 10

9.

As per the guidelines issued regarding permissions for trading in the ‘PRO ACCOUNT’ by the trading member, which of the following statements is true?

a) Pro Account orders can be entered from any ten locations as approved by the trading member / broker.

b) Pro Account orders can be entered from many locations as approved by the trading member / broker.

c) Pro Account orders can be entered from any five locations as approved by the Exchange

d) Pro Account orders can be entered from more than one locations as approved by the Exchange

Your answer is Incorrect

Your answer is correct

Explanation:

When a Trading Member requires the facility of using ‘Pro-account’ through trading terminals from more than one location, such Trading Member shall request the Exchange stating the reason for using the ‘Pro-account’ at multiple locations.

The Exchange may, on a case to case basis after due diligence, consider extending the facility of allowing use of ‘Pro-account’ from more than one location.

10 / 10

10. Which of these statements accurately describes the relationship between the limit price and trigger price for a stop loss BUY order?

a) Trigger price is less than limit price

b) Trigger price is equal to limit price

c) Trigger price is more than limit price

d) No relationship

Your answer is Incorrect

Your answer is correct

Explanation:

For the stop loss buy order, the trigger price has to be less than the limit price

For e.g. If for stop-loss buy order, the trigger is Rs 64.0025, the limit price is Rs 64.2575, then this order is
released into the system once the market price reaches or exceeds Rs 64.0025. This order is added to the regular lot book with time of triggering as the time stamp, as a limit order of Rs 64.2575.

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