Currency Derivatives Free Demo Test 6

1 / 10

1. Margins across the various clients of a member are collected on a gross basis – True or False?

a) True

b) False

2 / 10

2. When a client defaults in making payments in respect of a daily settlement, the contract is closed out. The amount not paid by the client is adjusted against the margin.

a) Bank fixed deposits of the client

b) PPF balance of the client

c) Initial margin paid by the client

d) Shares deposited by the client with the trading member

3 / 10

3. A person aims to purchase GBPINR one-month futures at 80.50 when the current price is 80.80 and places a limit order at 80.50. If the market fluctuates within the range of 80.40 and 81 after entering the limit order, the execution price is likely to be 80.50.

a) At or below 80.50

b) Any price above 80.50

c) Any price between 80.40 and 81

d) 80.50

4 / 10

4. What is the term for an order that, if not executed during the day, the system automatically cancels at the end of the day?

a) Day Order

b) Good Till Cancelled order

c) Stop Loss Order

d) Immediate or Cancel Order (IOC)

5 / 10

5. If the one-year interest rate is 2% in the US and 10% in India, and the current USDINR spot rate is 64, which of the following could be approximately closest to the six-month futures rate of USDINR?

a) 67.02

b) 65.74

c) 66.51

d) 67.89

6 / 10

6. Mr. Satish in India anticipates a 10% appreciation in international gold prices from USD 1200 per ounce to USD 1320 in the next six months. To capitalize on this view, he buys 30 grams of gold at Rs. 25000 per gram and simultaneously sells 15 lots of 6-month USDINR futures at 60. After six months, Mr. Satish sells the gold at Rs 28000 per gram and unwinds the currency futures at Rs 63. Assuming 1 ounce is equal to 3 grams, which of the following best describes the return for Mr. Satish and the hedging strategy that he has used?

a) Negative returns, Short USDINR futures

b) Negative returns, Long USDINR futures

c) Positive returns, Long USDINR futures

d) Positive returns, Short USDINR futures

7 / 10

7. Specify the lot size for EURINR futures contract.

a) 1000 INR

b) 1000 EUR

c) 10000 EUR

d) 100000 INR

8 / 10

8. The prices of a commodity in the spot market were volatile due to which many traders were going bankrupt. In what way would the introduction of an organised futures market help the spot market of this commodity?

a) When futures are introduced, it will lead to new entrepreneurial activity

b) There will be increased volume in the spot market

c) The risk will be transferred

d) When futures are introduced, it will shift the speculative activities to a controlled environment which will have good risk management systems

9 / 10

9. What perspective has been conveyed by an individual who sells GBPINR and simultaneously purchases EURINR in equal amounts?

a) INR depreciation against GBP

b) EUR depreciation against GBP

c) EUR appreciation against GBP

d) INR appreciation against GBP

10 / 10

10. How would a trader likely act on the belief that GBPINR will remain steady around 80.00 levels in the next month, considering a one-month GBPINR premium of 50 paise? Also, what could be the potential profit per GBP if this view materializes?

a) Sell one month GBPINR futures, 50 paisa

b) Buy one month GBPINR futures, 50 paisa

c) Sell 3 month GBPINR futures, 150 paisa

d) Buy 3 month GBPINR futures, 150 paisa

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Currency Derivatives Free Demo Test 6

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