Currency Derivatives Free Demo Test 2

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1. The commonly employed approach for valuing European options is _____________.

a) Llyods Theory of option pricing

b) Binomial pricing

c) Black and Scholes

d) London – Paris pricing system

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2. Mr. Gopal invested Rs 100,000 in UK securities when the exchange rate was 100. After two years, his investment in GBP terms increased by 25%. Upon liquidating his investment and repatriating the funds to India, he exchanged them at the prevailing exchange rate of 105. What would be his actual returns in terms of INR?

a) 42.80 %

b) 23.65 %

c) 31.25 %

d) 27.50 %

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3. What is the designated settlement date for Exchange Traded Currency futures?

a) Two calendar days after the contract expiry date

b) Last working day of the expiry month

c) Two business days before the contract expiry date

d) Two business days after the contract expiry date

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4. While reconciling the cash position with the clearing house, an accountant for a clearing member discovered that for July 2017, the cumulative volume of short options across all trading members was USD 8000, and the total volume of long options was USD 6000. During that period, the net option value for each short option was INR 0.7, and the value for each long option was INR 0.8. How much cash would be contributed to the liquid net worth of the accountant’s employer by the clearing house?

a) Rs. 1600

b) Rs. 1400

c) Rs. 1200

d) Rs. 1000

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5. What is the required minimum net worth for a company to qualify for applying to be an authorized exchange for currency futures?

a) Rs 100 crore

b) Rs 50 crore

c) Rs 10 crore

d) Rs 75 crore

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6. Who purchases the option, and what type of option is acquired when a car company offers a three-year warranty to its customers for Rs 10,000, covering repairs or replacement of crucial spare parts?

a) Customer is the buyer , Put Option

b) Motor cycle company , Call option

c) Customer is the buyer , Call Option

d) Motor cycle company , Put option

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7. M/s Sun Exporters protects 10,000 USD by acquiring a September 2017 put option at a strike of Rs 63.00 when the price was Rs 0.44/0.46. The company receives USD in its account on September 15th and chooses to terminate the option on the same day when the price for the same contract is Rs 0.27/0.28. If the most recent RBI reference rate is Rs 62.50, what is the loss incurred by the company upon canceling the put option?

a) Loss of 2150

b) Loss of 2600

c) Loss of 3700

d) Loss of 1900

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8. The USDINR three-month future is priced at 65.50, and the six-month future is at 66.10. Mr. Bharat anticipates that in a month, the three-month future will be at 65.20, and the six-month future will be at 66. If Mr. Bharat engages in a spread trade and his projection materializes, what would be his profit?

a) Rs 200

b) Rs 300

c) Rs 380

d) Rs 450

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9. An importer sells 10 lots of one-month USDINR futures at 65. Upon expiry, the settlement price is declared as 65.70. Determine the importer’s profit or loss.

a) Loss of Rs 700

b) Profit of Rs 7000

c) Loss of Rs 7000

d) Profit of Rs 700

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10. What is a fundamental assumption of Technical Analysis?

a) The price movement captures in all the available market information

b) Traders use only technical analysis to decide direction of currency

c) In the currency market the fundamental analysis does not work

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11. In accordance with SEBI’s codes of conduct for brokers, what are the directives regarding brokers promoting their business through public media?

a) A broker who has a trading license for more than 10 years can advertise his business

b) A broker who has a trading license for more than 5 years can advertise his business

c) A broker can give advertisements as long as they are ethical

d) A broker should not advertise his business publicly unless permitted by the exchange.

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12. How is the correlation between the price of a CALL option and changes in the spot price described?

a) No Co-relation

b) Decreasing price with increasing spot price

c) Increase in price with decreasing spot price

d) Increase in price with increasing spot price

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13. How much money (in Rupees) did the trader gain or lose on the portion of the transaction that was squared off after selling 20 lots of USDINR 1-month futures at 65.60/65.90 and closing 10 lots a week later at 64.65/64.85?

a) – 6800

b) + 6800

c) – 7500

d) + 7500

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14. Non Farm payroll indicator measures ________ .

a) Inflation scene

b) Employment scene

c) Currency Fluctuations

d) Wage scene

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15. Which among these initially proposed the introduction of exchange-traded currency futures in India?

a) Ministry of Commerce

b) SEBI internal committee

c) Committee on Fuller Capital Account Convertibility

d) SEBI RBI Technical committee

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16. What methodology is employed when calculating the Mark-to-Market profit/loss for carried-over positions in futures contracts?

a) Multiply the units brought forward with contract size and the difference between days high price and days settlement price

b) Multiply the units brought forward with contract size and the difference between last traded price and day’s settlement price

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

d) Multiply the units brought forward with contract size and the difference between buy price and current settlement price

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17. Anticipating a robust bullish outlook on USDINR and a forthcoming decrease in volatility, which option strategy is the currency trader likely to employ to execute both these views?

a) Short Call option

b) Long Call option

c) Long Put option

d) Short Put option

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18. What is the tick size for USDINR currency futures contracts in India?

a) 0.25 Rupees

b) 0.025 Rupees

c) 2.5 Rupees

d) 0.0025 Rupees

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19. Regarding the OTC market, which statement accurately describes the value date of a forward contract?

a) It can be customized for any period upto 6 month maturity for USDINR and upto 1 year for other currency pairs

b) Value dates are only available for month end date

c) It can be customized for a maximum period of six months

d) It can be customized for a maximum period of one year

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20. What accurately characterizes the guidelines for brokers concerning the issuance of contract notes for the execution of orders among the following options?

a) Broker should issue contract notes to his clients and client of his subbrokers not more than twice every week

b) Broker should ensure that his sub brokers issues contract notes every week to his client

c) Broker should promptly issue contract notes to his clients and client of his subbrokers

d) Brokers should issue contract notes to his clients and client of his subbrokers every week

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Currency Derivatives Free Demo Test 2

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