Currency Derivatives Free Demo Test 3

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1. An exporter hedges 20000 USD by buying September 2020 USDINR Put option at a strike price of Rs 73.00 when the price was Rs 0.47/0.49 . The exporter received USD in his account on 20th September. He decided to cancel the option on 20th September when the price for the same contract was Rs 0.22/0.24. How much loss did the exporter make on cancelling the Put option if the latest available RBI USDINR reference rate was Rs 72.50?

a) Loss of Rs 5400

b) Loss of Rs 5000

c) Loss of Rs 5200

d) Loss of Rs 5600

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2. Who sets the price for a market order?

a) Order mentions the price

b) Exchange system

c) Clearing member

d) Trader

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3. An Indian investor put Rs 187,500 into US securities when the USD to INR exchange rate was 75. After a year, he saw a 10% gain in USD value and decided to sell his investment. He brought the money back to India when the exchange rate was 66. What would be the actual returns in INR (Indian Rupee) terms?

a) Profit of 4.75%

b) Profit of 5.9%

c) Loss of 5.9%

d) Loss of 3.2%

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4. If a currency market trader anticipates that EURUSD will increase from 1.18 to 1.30 in the next two months, what actions would you take to implement this outlook using currency futures contracts of EURINR and USDINR?

a) Short EURINR

b) Long EURINR

c) Long EURINR, Short USDINR

d) Short EURINR, Long USDINR

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5. When a hedger has a complaint against a trading member and seeks resolution through Arbitration, how long does it typically take for the arbitrator to make a decision from the date of the initial hearing?

a) Within 4 months

b) Within 2 months

c) Within 30 days

d) Within 15 days

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6. By executing a currency futures trade where the trader buys USDINR and sells GBPINR for an equivalent amount, what market view has the trader expressed?

a) INR depreciating against USD

b) GBP appreciating against USD

c) GBP depreciating against USD

d) INR appreciating against USD

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7. Which asset class saw the initiation of derivative trading first in modern times?

a) Metals

b) Currencies

c) Agricultural products

d) Interest rate

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A trading member (TM) purchases 9 lots of April USDINR futures and simultaneously sells 9 lots of May futures in their proprietary book. On the same day, a client of the TM buys 9 lots of April futures and sells 9 lots of May futures. What would be the open position (in USD) for both the TM and the client at the end of the day?

a) 36000 and 18000

b) Zero and Zero

c) 18000 and 18000

d) Zero and 18000

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Sumit buys one lot of USDINR futures and after half an hour of buying, the price of the contract moved by 100 ticks. By how may rupees has the value of contract changed?

a) TM has to identify whether the position is his own or of a client at the time of closing of position

b) TM can chose to identify the position as his own or client’s or leave it also

c) TM has to identify whether the position is his own or of a client at the end of the day

d) TM has to identify whether the position is his own or of a client at the time of initiating the position

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10.

Which statement best describes the rule for reporting the closure of a position by a trading member (TM) of the exchange?

a) 25 Rupees

b) 2.5 Rupees

c) 250 Rupees

d) 0.25 Rupees

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11.

True or False: Selling a call option implies an obligation to buy an underlying asset.

a) True

b) False

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12.

In the OTC spot market, the default mode of settlement is always ____________.

a) Delivery based settlement

b) Net Settlement

c) As decided by the merchant

d) Gross Settlement

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13.

A trading member buys 80 lots of USDINR at 74.50 and sells 90 lots the same day at 74.60. The settlement price for the day was 74.30. What would be their mark-to-market margin (MTM) on the open positions?

a) + 3000

b) – 3000

c) – 6000

d) + 6000

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14. Which statement best describes the guidelines for brokers advertising their business in public media?

a) A broker cannot advertise his business unless approved by SEBI

b) A broker can advertise his business if he is having trading license for more than 5 years

c) A broker can advertise his business as long as it is advertised in a print media

d) A broker cannot advertise his business unless approved by Exchange

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15. If volatility is anticipated to rise, is it generally expected that there will be an increase in option premium?

a) No

b) Yes

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16.

If the GDP growth of a large developed country is higher than expected (assuming everything else remains the same), what type of impact would it likely have on the country’s currency?

a) There will be no impact

b) The currency will depreciate

c) The currency will appreciate

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17.

Mr. Kohli invested Rs 1,00,000 in the US stock markets when the USDINR rate was 60. After one year, his investment appreciated by 18% in USD terms. He sold his investments and repatriated the money to India at the then-existing rate of 62. What are his real returns in INR?

a) 17.66%

b) 20.78%

c) 21.93%

d) 19.42%

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18.

A person needs to buy one unit of USD and simultaneously sell one unit of USD in the OTC spot market, but from different banks. Both banks quoted the same price as 75.31/75.35. In this transaction, how much currency conversion profit or loss has the person made, compared to a situation where they had export and import transactions in the same bank, and the import payment could be made from export receivables?

a) Loss of 4 paisa

b) Profit of 3 paisa

c) Loss of 6 paisa

d) Profit of 7 paisa

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19.

The minimum net worth requirement for a company to be eligible to apply for authorization as an exchange for currency futures is Rs _______.

a) Rs 200 crore

b) Rs 100 crore

c) Rs 300 crore

d) Rs 150 crore

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20. Srinivas, an employee of a broking house, has a strong track record in predicting currency trends. Based on his analysis, he believes that the INR will appreciate against the USD in the next six months. He advised some clients to take a short position by selling USD against INR and guaranteed against losses. However, his supervisor took action against him for violating trading guidelines. What should Srinivas have done to avoid the punishment?

a) Sriniwas should have advised the clients correctly to take short position for 3 months and not 6 months

b) Sriniwas should have advised the clients correctly to take long position

c) Sriniwas should also have clearly stated the risks to his views

d) Srinivas should not have guaranteed against losses

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Currency Derivatives Free Demo Test 3

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