currency derivative exam mock

Que 1. Settlement Price Daily mark to market settlement price will be the closing

price of the futures contracts for the trading day and the final settlement

price shall be the RBI reference rate for last trading date of the contract.

True

False

Both Correct

None of the above

Que 2. The closing price for a futures contract is currently calculated as the last

half an hour weighted average price of the contract.

True

False

Both

None of the above

Que 3. At ________ the gross open position of the client across all contracts should

not exceed 6% of the total open interest or USD 10 million whichever is

higher.

Trading member Level

Client level

Clearing Member level

Delear

Que 4. Clearing Member Level i.e. No separate position limit is prescribed at the

level of clearing member. However,the clearing member shall ensure that

his own trading position and the positions of each trading member clearing

through him are within the limits

True

False

Both

None

Que 5. If you are Bearish on USD you will

Buy USD

Sell USD

Both

None

Que 6. If a trader in the currency futures market expects INR will depreciate

against USD then he will sell USD/INR

True

False

Both

None

Que 7. In an Optimal Hedge, the total value of the futures contracts involved is

the same as the value of the spot market position.

False

True

Both

None

Que 8. The Final Settlement price of a Currency Futures contract is the

____________.

MIBOR rate on the last trading day of the futures cont ract

LIBOR reference rate on the last trading day of the futures contract

RBI reference rate on the last trading day of the futures contract

None of the above

Que 9. Who receives end of day reports from all branches & dealers under same

trading member

corporate manager

branch manager

delear

Trader

Que

10.

________ loss is calculated by marking each transaction in security to the

closing price of the security at the end of trading

Mark to Market M2M

Daily

Net

Total

Que

11.

_______ currencies are usually needed for payments across national

borders

INR

Foreign

Doller

Euro

Que

12.

The Euro has a strong international presence and over the years has

emerged as a premier currency, second only to the _______.

Japanese Yen

USD

GBP

CHF

Que

13. A Forwad contract is a standardized contract

True

False

Both

None

Que

14.

The calendar spread margin is at a value of _______ for all months of

spread

50

100

150

200

Que

15.

For a calendar spread position, the extreme loss margin is charged on one-

third of the mark-to-market value of the far-month contract

True

False

Both

None of the above

Que

16.

Extreme loss margin is computed at 1% on the mark-to-market value of

the Gross Open Position.

True

False

Both

None of the above

Que

17. A derivatives contract cannot exist without an ________

Exchange

Underlying be it equity, interest rate etc.

increase in volatility

increase in arbitrage

Que

18. Hedging is used for removal of Unwanted ________

VAR

Exposure or Risk

Profits

Shares

Que

19. Disclosed Quantity is a ___________ condition

Quality or Volume Condition

Time Condition

Price Condition

None of the above

Que

20.

An ______ Hedge is a hedging strategy which yields the highest level of

utility to the hedger.

Basic

Partial

Optimal

All of the above

Que

21.

An intra-currency pair spread consists of one long futures and one short

futures contract. Both have the same underlying but different maturities

True

False

Both

None

Que _________ means locking in a profit by simultaneously entering into

22. transactions in two or more markets`

Hedging

Trading

Arbitrage

Speculation

Que

23.

_______ Day is Last working day of the month (subject to holiday

calendars)

Expiry

Trading

Buying

Selling

Que

24. If you are Bearish on INR you will

Buy USD

Sell USD

Both of the above

None of the above

http://www.kip-world.com/examination.php?eid=39

Que1 Settlement Price Daily mark to market settlement price will be the closing price of

the futures contracts for the trading day and the final settlement price shall be the RBI

reference rate for last trading date of the contract.

Ans1 True

Que2 The closing price for a futures contract is currently calculated as the last half an

hour weighted average price of the contract.

Ans2 True

Que3 At ________ the gross open position of the client across all contracts should not

exceed 6% of the total open interest or USD 10 million whichever is higher.

Ans3 Clearing Member level

Que4 Clearing Member Level i.e. No separate position limit is prescribed at the level of

clearing member. However,the clearing member shall ensure that his own trading

position and the positions of each trading member clearing through him are within the

limits

Ans4 False

Que5 If you are Bearish on USD you will

Ans5 Sell USD

Que6 If a trader in the currency futures market expects INR will depreciate against USD

then he will sell USD/INR

Ans6 False

Que7 In an Optimal Hedge, the total value of the futures contracts involved is the same as

the value of the spot market position.

Ans7 False

Que8 The Final Settlement price of a Currency Futures contract is the ____________.

Ans8 RBI reference rate on the last trading day of the futures contract

Que9 Who receives end of day reports from all branches & dealers under same trading

member

Ans9 branch manager

Que10 ________ loss is calculated by marking each transaction in security to the closing

price of the security at the end of trading

Ans10 Mark to Market M2M

Que11 _______ currencies are usually needed for payments across national borders

Ans11 Foreign

Que12 The Euro has a strong international presence and over the years has emerged as a

premier currency, second only to the _______.

Ans12 USD

Que13 A Forwad contract is a standardized contract

Ans13 True

Que14 The calendar spread margin is at a value of _______ for all months of spread

Ans14 50

Que15 For a calendar spread position, the extreme loss margin is charged on one-third of

the mark-to-market value of the far-month contract

Ans15 True

Que16 Extreme loss margin is computed at 1% on the mark-to-market value of the Gross

Open Position.

Ans16 True

Que17 A derivatives contract cannot exist without an ________

Ans17 Underlying be it equity, interest rate etc.

Que18 Hedging is used for removal of Unwanted ________ Ans18 Exposure or Risk

Que19 Disclosed Quantity is a ___________ condition

Ans19 Quality or Volume Condition

Que20 An ______ Hedge is a hedging strategy which yields the highest level of utility to

the hedger.

Ans20 Optimal

Que21 An intra-currency pair spread consists of one long futures and one short futures

contract. Both have the same underlying but different maturities

Ans21 True

Que22 _________ means locking in a profit by simultaneously entering into transactions

in two or more markets`

Ans22 Speculation

Que23 _______ Day is Last working day of the month (subject to holiday calendars)

Ans23 Expiry

Que24 If you are Bearish on INR you will

Ans24 Buy USD

Guide for next 24 Questions.

Answer maths questions.

Que 1. Exchange rates are quoted in per unit of the ______ currency.

Term

Base

Basis

Fix

Que 2. TGhGeG GdGiGrGeGcGtGiGoGnGsG GiGsGsGuGeGdG

GuGnGdGeGrG GsGeGcGtGiGoGnG G_G_G_G_G_G_G_G GoGfG

GtGhGeG GRGeGsGeGrGvGeG GBGaGnGkG GoGfG GIGnGdGiGaG

GAGcGtG,G G1G9G3G4G GaGrGeG GtGiGtGlGeGdG GG

CGuGrGrGeGnGcGyG GFGuGtGuGrGeGsG G(GRGeGsGeGrGvGeG

GBGaGnGkG)G GDGiGrGeGcGtGiGoGnGsG,G G2G0G0G8GG

GcGaGmGeG GiGnGtGoG GfGoGrGcGeG GwG.GeG.GfG.G G6GtGhG

GAGuGgGuGsGtG,G G2G0G0G8G.G

45X

45W

45V

45Z

Que 3. Among which of the following is the best sell order

42.0025/42.2500

42.0125/42.0150

42.0000/42.0100

42.0010/42.0125

Que 4. The orders are stored in the Trading System as per the _______ priority.

Time/ Price

Time

Price

Price/ Time

Que 5. A tick is the _____________ at which traders are able to enter bids and

offers.

maximum trading increment

price

minimum trading increment

None of the above

Que 6. Short Hedger will

Long currency futures

Short Currency Futures

Both of the Above

None of the above

Que 7. [G(GTGoGtGaGlG GBGuGyG GQGtGyG GXG GCGlGoGsGeG

GpGrGiGcGeG)G G-GG GTGoGtGaGlG GBGuGyG GVGaGlGuGeG]G

G-G G[GTGoGtGaGlG GSGaGlGeG GVGaGlGuGeG-G

G(GTGoGtGaGlG GSGaGlGeG GQGtGyG GXG GCGlGoGsGeG

GpGrGiGcGeG)G]G=G

MTM loss/profit

Actual loss/profit

Gross Profit

Gross Loss

Que 8. MTM is calculated at the end of the day on all open positions by

comparing transaction price with the closing price of the share for the

_______

Previous Day

Day

Next Day

Last Thursday

Que 9. SPAN Risk is a _______ risk

Portfolio

Position

Both of the Above

None of the above

Que

10. Among which of the following is the best Buy order

42.0025/42.2500

42.0125/42.0150

42.0000/42.0100

42.0010/42.0125

Que

11.

Non-Bank Trading Member Level i.e. The gross open positions of the

trading member across all contracts should not exceed 15% of the total

open interest or USD 50 million whichever is higher. However, the gross

open position of a Trading Member, which is a

True

False

Both of the Above

None of the above

Que

12.

In order to achieve VAR, the price scan range is fixed at 3.5 Standard

Diviation

True

False

Both of the Above

None of the above

Que

13.

The Forward Rate is derived by adjusting the Spot rate for the interest

rate differential of the two currencies for the period between the Future

and the Forward date.

True

False

Both of the Above

None of the above

Que

14.

The last business day of the month will be termed the Value date / Final

Settlement date of each contract.

True

False

Both of the Above

None of the above

Que

15. Price at which an order gets triggered from the stop loss book.

Regular Order

Stop Loss Order

Odd Lot

Normal Order

Que

16. A best buy order is the order with the ______ price.

Lowest

Highest

Middle

Any Order

Que

17.

G _G_G_G_G_G_G_G_G_G_G_GG GrGeGfGeGrGsG GtGoG

GmGoGnGeGyG GdGeGnGoGmGiGnGaGtGeGdG GiGnG GtGhGeG

GcGuGrGrGeGnGcGyG GoGfG GaGnGoGtGhGeGrG

GnGaGtGiGoGnG GoGrG GaG GgGrGoGuGpG GoGfG

GnGaGtGiGoGnGsG

INR

Foreign Exchange

Dollar

Euro

Que

18.

Minimum age for admission as a Trading Member of Currency Futures.

Derivatives Segment is

21Years

18 Years

25 Years

15 years

Que

19. A futures contract is a Customized contract

True

False

Both of the Above

None of the above

Que

20.

The mark to market margin (MTM) is collected from the member before

the start of the trading of the _____ day

Next

Last

T+2

T+3

Que

21.

Almost every nation has its own national currency or monetary unit - used

for making and receiving payments within its own borders

False

True

Both of the Above

None of the above

Que

22.

If a trader in the currency futures market expects INR will appreciate

against USD then he will buy USD/INR

True

False

Both of the Above

None of the above

Que

23.

An optimal hedge is one where the changes in the spot prices are negatively

correlated with the changes in the futures prices and perfectly offset each

other.

True

False

Both of the Above

None of the above

Que

24. The dealer can view previous trades for _______ id only.

Trading Member

Branch Manager

Own user

Corporate Manager

Answers

Que1 Exchange rates are quoted in per unit of the ______ currency.

Ans1 Term

Que2 TJhJeJ JdJiJrJeJcJtJiJoJnJsJ JiJsJsJuJeJdJ

JuJnJdJeJrJ JsJeJcJtJiJoJnJ J_J_J_J_J_J_J_J

JoJfJ JtJhJeJ JRJeJsJeJrJvJeJ JBJaJnJkJ JoJfJ

JIJnJdJiJaJ JAJcJtJ,J J1J9J3J4J JaJrJeJ

JtJiJtJlJeJdJ JJ CJuJrJrJeJnJcJyJ JFJuJtJuJrJeJsJ

J(JRJeJsJeJrJvJeJ JBJaJnJkJ)J

JDJiJrJeJcJtJiJoJnJsJ,J J2J0J0J8JJ JcJaJmJeJ

JiJnJtJoJ JfJoJrJcJeJ JwJ.JeJ.JfJ.J J6JtJhJ

JAJuJgJuJsJtJ,J J2J0J0J8J.J

Ans2 45W

Que3 Among which of the following is the best sell order

Ans3 42.0125/42.0150

Que4 The orders are stored in the Trading System as per the _______ priority.

Ans4 Price/ Time

Que5 A tick is the _____________ at which traders are able to enter bids and

offers.

Ans5 minimum trading increment

Que6 Short Hedger will

Ans6 Short Currency Futures

Que7 [J(JTJoJtJaJlJ JBJuJyJ JQJtJyJ JXJ JCJlJoJsJeJ

JpJrJiJcJeJ)J J-JJ JTJoJtJaJlJ JBJuJyJ

JVJaJlJuJeJ]J J-J J[JTJoJtJaJlJ JSJaJlJeJ

JVJaJlJuJeJ-J J(JTJoJtJaJlJ JSJaJlJeJ JQJtJyJ

JXJ JCJlJoJsJeJ JpJrJiJcJeJ)J]J=J

Ans7 Actual loss/profit

Que8 MTM is calculated at the end of the day on all open positions by

comparing transaction price with the closing price of the share for the

_______

Ans8 Day

Que9 SPAN Risk is a _______ risk

Ans9 Portfolio

Que10 Among which of the following is the best Buy order

Ans10 42.0000/42.0100

Que11 Non-Bank Trading Member Level i.e. The gross open positions of the

trading member across all contracts should not exceed 15% of the total

open interest or USD 50 million whichever is higher. However, the

gross open position of a Trading Member, which is a

Ans11 True

Que12 In order to achieve VAR, the price scan range is fixed at 3.5 Standard

Diviation

Ans12 True

Que13 The Forward Rate is derived by adjusting the Spot rate for the interest

rate differential of the two currencies for the period between the Future


Ans13 True

Que14 The last business day of the month will be termed the Value date / Final


Ans14 True

Que15 Price at which an order gets triggered from the stop loss book.

Ans15 Stop Loss Order

Que16 A best buy order is the order with the ______ price.

Ans16 Highest

Que17 J _J_J_J_J_J_J_J_J_J_J_JJ JrJeJfJeJrJsJ JtJoJ

JmJoJnJeJyJ JdJeJnJoJmJiJnJaJtJeJdJ JiJnJ

JtJhJeJ JcJuJrJrJeJnJcJyJ JoJfJ JaJnJoJtJhJeJrJ

JnJaJtJiJoJnJ JoJrJ JaJ JgJrJoJuJpJ JoJfJ

JnJaJtJiJoJnJsJ

Ans17 Foreign Exchange

Que18 Minimum age for admission as a Trading Member of Currency Futures.


Ans18 21Years

Que19 A futures contract is a Customized contract

Ans19 False

Que20 The mark to market margin (MTM) is collected from the member

before the start of the trading of the _____ day

Ans20 Next

Que21 Almost every nation has its own national currency or monetary unit -

used for making and receiving payments within its own borders

Ans21 True

Que22 If a trader in the currency futures market expects INR will appreciate


Ans22 False

Que23 An optimal hedge is one where the changes in the spot prices are

negatively correlated with the changes in the futures prices and

perfectly offset each other.

Ans23 True

Que24 The dealer can view previous trades for _______ id only.

Ans24 Own user

Que 1. In foreign exchange markets,in a currency pair, the second currency is

called as the ____ currency.

Term

Base

Cross

Fix

Que 2. The __________ is the third most traded currency in the world.

YEN

US DOLLAR

GBP

EURO

Que 3. The initial margin so computed would be subject to a minimum of 1.75%

on the first day of currency futures trading and 1% thereafter.

True

False

Both of the Above

None of the above

Que 4. TGhGeG GcGlGeGaGrGiGnGgG GmGeGmGbGeGrGG sG

GlGiGqGuGiGdG GnGeGtGwGoGrGtGhG GaGfGtGeGrG

GaGdGjGuGsGtGiGnGgG GfGoGrG GtGhGeG GiGnGiGtGiGaGlG

GmGaGrGgGiGnG GaGnGdG GeGxGtGrGeGmGeG GlGoGsGsG

GmGaGrGgGiGnG GrGeGqGuGiGrGeGmGeGnGtGsG GmGuGsGtG

GbGeG GaGtG GlGeGaGsGtG GRGsG.G G5G0G GlGaGkGhGsG

GaGtG GaGlGlG GpGoGiGnGtGsG GiGnG GtGiGmGeG

True

False

Both of the Above

None of the above

Que 5. The system is normally made available for trading on all days except

Saturday

Sunday

Holidays

All of the above

Que 6. In an Equal Hedge, the total value of the futures contracts involved is the

same as the value of the spot market position.

False

True

Both of the Above

None of the above

Que 7. Currency risks could be hedged mainly through

Forwards

Futures

Swaps and Options

All of the above

Que 8. In foreign exchange markets, in a currency pair, the _____ currency is

called as the terms currency.

First

Second

Third

Forth

Que 9. F(0,T) = S0(1+ r)^T/ (1+p)^T . This is a Spot Forward r& p Formula

True

False

Both of the Above

None of the above

Que

10.

On January 31 2008, the spot USD/INR rate was 43.50. The US interest

rate was 3 percent, while the Indian interest rate was 6 percent. Find out

the fair value of USD/INR Futures. The time to expiration was 90/360 =

0.25.

42.82

43.82

44.82

45.82

Que

11.

The objective of SPAN is to identify _____________ of all futures contracts

for each member.

The Transaction

Client

Portfolio

None of the above

Que

12.

USD/INR Spot rate is 42.0025 and Forward rate 42.2525 and one month

futures are 43.5000, What will an arbitrager do?

Sell Futures, Buy Spot

Sell Futures, Buy Forward

Sell Forward, Buy Futures

Sell Futures, Sell Spot

Que

13.

Trading members are required to keep an Interest Free Security Deposit

with CCL.

True

False

Both of the Above

None of the above

Que

14.

A foreign exchange swap is a simultaneous purchase and sale, or sale and

purchase, of identical amounts of one currency for another with two

different value dates.

True

False

Both of the Above

None of the above

Que

15.

Final Settlement rate would be the _______ Reference rate for the date of

expiry.

Sebi

RBI

FMC

FEDAI

Que

16.

At Client Level the gross open position of the client across all contracts

should not exceed 6% of the total open interest or USD 10 million

whichever is higher.

True

False

Both of the Above

None of the above

Que

17.

The ________ has a strong international presence and over the years has

emerged as a premier currency, second only to the US Dollar

Yen

Euro

GBP

CHF

Que

18. INR means

Indian Rupees

Indain Rates

International Rupees

None of the Above

Que

19.

The client margins (initial margin, extreme-loss margin,calendar-spread

margin, and mark-to-market settlements) are compulsorily collected and

reported to the Exchange by the members.

True

False

Both of the Above

None of the above

Que

20. When the trading member does Trade in his own A/c it is entered as

PRO

CLI

WHS

FII

Que

21.

CGMGEG GoGfGfGeGrGsG G4G1G GiGnGdGiGvGiGdGuGaGlG

GFGXG GfGuGtGuGrGeGsG GaGnGdG G3G1G GoGpGtGiGoGnGsG

GcGoGnGtGrGaGcGtGsG GoGnG G1G9G

GcGuGrGrGeGnGcGiGeGsG,G GaGlGlG GoGfG GwGhGiGcGhG

GtGrGaGdGeG GeGlGeGcGtGrGoGnGiGcGaGlGlGyG GoGnG

GtGhGeG GeGxGcGhGaGnGgGeGG sG GCGMGEG

GGGlGoGbGeGxG GpGlGaGtGfGoGrGmG.G GIGtG GiGsG GtGhGeG

GlGaGrGgGeGsGtG GrGeGgGuGlGaGtGeGdG

GmGaGrGkGeGtGpGlGaGcGeG GfGoGrG GFGXG

GTGrGaGdGiGnGgG

True

False

Both of the Above

None of the above

Que

22. When the trading member does Trade in his client A/c it is entered as

PRO

CLI

WHS

FII

Que

23.

The Forward Rate is derived by adjusting the Spot rate for the interest

rate differential of the two currencies for the period between the Spot and

the Forward date.

True

False

Both of the Above

None of the above

Que

24.

The Clearing Corporation assists the CM to monitor the intra-day imits set

up by a CM and whenever a TM exceeds the limits, it stops that particular

TM from further trading.

True

False

Both of the Above

None of the above

Answers

Que1 In foreign exchange markets,in a currency pair, the second currency is

called as the ____ currency.

Ans1 Term

Que2 The __________ is the third most traded currency in the world.

Ans2 YEN

Que3 The initial margin so computed would be subject to a minimum of

1.75% on the first day of currency futures trading and 1% thereafter.

Ans3 True

Que4 TJhJeJ JcJlJeJaJrJiJnJgJ JmJeJmJbJeJrJJ sJ

JlJiJqJuJiJdJ JnJeJtJwJoJrJtJhJ JaJfJtJeJrJ

JaJdJjJuJsJtJiJnJgJ JfJoJrJ JtJhJeJ

JiJnJiJtJiJaJlJ JmJaJrJgJiJnJ JaJnJdJ

JeJxJtJrJeJmJeJ JlJoJsJsJ JmJaJrJgJiJnJ

JrJeJqJuJiJrJeJmJeJnJtJsJ JmJuJsJtJ JbJeJ JaJtJ

JlJeJaJsJtJ JRJsJ.J J5J0J JlJaJkJhJsJ JaJtJ

JaJlJlJ JpJoJiJnJtJsJ JiJnJ JtJiJmJeJ

Ans4 True

Que5 The system is normally made available for trading on all days except

Ans5 All of the above

Que6 In an Equal Hedge, the total value of the futures contracts involved is

the same as the value of the spot market position.

Ans6 False

Que7 Currency risks could be hedged mainly through


Que8 In foreign exchange markets, in a currency pair, the _____ currency is

called as the terms currency.

Ans8 Second

Que9 F(0,T) = S0(1+ r)^T/ (1+p)^T . This is a Spot Forward r& p Formula

Ans9 True

Que10 On January 31 2008, the spot USD/INR rate was 43.50. The US interest

rate was 3 percent, while the Indian interest rate was 6 percent. Find out

the fair value of USD/INR Futures. The time to expiration was 90/360 =

0.25.

Ans10 43.82

Que11 The objective of SPAN is to identify _____________ of all futures

contracts for each member.

Ans11 Portfolio

Que12 USD/INR Spot rate is 42.0025 and Forward rate 42.2525 and one month

futures are 43.5000, What will an arbitrager do?

Ans12 Sell Futures, Buy Forward

Que13 Trading members are required to keep an Interest Free Security Deposit

with CCL.

Ans13 True

Que14 A foreign exchange swap is a simultaneous purchase and sale, or sale

and purchase, of identical amounts of one currency for another with two


Ans14 True

Que15 Final Settlement rate would be the _______ Reference rate for the date

of expiry.

Ans15 RBI

Que16 At Client Level the gross open position of the client across all contracts

should not exceed 6% of the total open interest or USD 10 million


Ans16 True

Que17 The ________ has a strong international presence and over the years has

emerged as a premier currency, second only to the US Dollar

Ans17 GBP

Que18 INR means

Ans18 Indian Rupees

Que19 The client margins (initial margin, extreme-loss margin,calendar-spread

margin, and mark-to-market settlements) are compulsorily collected and

reported to the Exchange by the members.

Ans19 True

Que20 When the trading member does Trade in his own A/c it is entered as

Ans20 PRO

Que21 CJMJEJ JoJfJfJeJrJsJ J4J1J JiJnJdJiJvJiJdJuJaJlJ

JFJXJ JfJuJtJuJrJeJsJ JaJnJdJ J3J1J

JoJpJtJiJoJnJsJ JcJoJnJtJrJaJcJtJsJ JoJnJ J1J9J

JcJuJrJrJeJnJcJiJeJsJ,J JaJlJlJ JoJfJ JwJhJiJcJhJ

JtJrJaJdJeJ JeJlJeJcJtJrJoJnJiJcJaJlJlJyJ JoJnJ

JtJhJeJ JeJxJcJhJaJnJgJeJJ sJ JCJMJEJ

JGJlJoJbJeJxJ JpJlJaJtJfJoJrJmJ.J JIJtJ JiJsJ

JtJhJeJ JlJaJrJgJeJsJtJ JrJeJgJuJlJaJtJeJdJ

JmJaJrJkJeJtJpJlJaJcJeJ JfJoJrJ JFJXJ

JTJrJaJdJiJnJgJ

Ans21 True

Que22 When the trading member does Trade in his client A/c it is entered as

Ans22 CLI

Que23 The Forward Rate is derived by adjusting the Spot rate for the interest

rate differential of the two currencies for the period between the Spot


Ans23 True

Que24 The Clearing Corporation assists the CM to monitor the intra-day imits

set up by a CM and whenever a TM exceeds the limits, it stops that

particular TM from further trading.

Ans24 True

Que 1. In which of the following types of orders the client does not give any price

or time limit for execution of order?

Limit Order

Limited Discretionary Order

Stop loss Order

Market Rate Order

Que 2. Short hedge means underlying position of short in the foreign currency

and Hedging position of long in currency futures

True

False

Both of Above

None of Above

Que 3. Short Hedger will be

Short in the foreign currency

Long in the foreign currency

Both of the Above

None of the Above

Que 4. The Exchange should have at least ________ members to start currency

derivatives trading

10

25

40

50

Answers

Que1 In which of the following types of orders the client does not give any

price or time limit for execution of order?

Ans1 Market Rate Order

Que2 Short hedge means underlying position of short in the foreign currency

and Hedging position of long in currency futures

Ans2 False

Que3 Short Hedger will be

Ans3 Long in the foreign currency

Que4 The Exchange should have at least ________ members to start currency

derivatives trading

Ans4 50

Que 1. If a trader in the currency futures market expects INR will appreciate


TRUE

FALSE

Both

None of the above

Que 2. The ______ business day of the month will be termed the Value date / Final


Last thursday

Last Friday

Any of above

None of the above

Que 3. In the Currency Derivatives segment, trading membercumclearing

member, clear and settle their own trades as well as trades of other trading

members (TMs).

TRUE

FALSE

Both

None of the above

Que 4. _____________ receives the End of Day reports for all branches of the

trading member

Corporate Manger

Delear

Branch Manager

None of the above

Que 5. The branch manager is a term assigned to a user who is placed under the

______

Dealer

Trader

Corporate Manager

User

Que 6. If a trader in the currency futures market expects INR will depreciate


TRUE

FALSE

Both

None of the above

Que 7. Spread movement is based on following factors:

Interest Rate Differentials

Liquidity in Banking System & Inflation

Monetary Policy Decisions (Repo, Reverse Repo and CRR)

All of the Above

Que 8. A hedger has an Overall Portfolio (OP) composed of (at least) 2 positions.

One is Underlying position & second is

Hedging position with negative correlation with underlying position

Hedging position with positive correlation with underlying position

Both

None of the above

Que 9. Long hedge means Underlying position of long in the foreign currency and

Hedging position of short in currency futures

TRUE

FALSE

Both

None of the above

Que

10.

The relationship between futures prices and spot prices can be

summarized in terms of what is known as the ___________

Profit

Cost of Carry

Fair Value

All of the Above

Que

11.

Expiry date i.e the last trading day will be two business days prior to the

Value date / Final Settlement Date.

TRUE

FALSE

Both

None of the above

Que

12.

If domestic currency appreciates against the foreign currency, the

exposure would result in loss for residents purchasing foreign assets and

gain for non residents purchasing domestic assets.

TRUE

FALSE

Both

None of the above

Que

13. Forward Contracts are __________ contracts

Customised

Biletaral

OTC

All of the Above

Que

14.

An intra currency pair spread is a longshort position in futures on

different underlying currency pairs. Both typically have the same

maturity.

TRUE

FALSE

Both

None of the above

Que

15. Daily _______ settlement will be on a T +1 basis

Mark to Market

Initial margin

Brokerage

None of the above

Que

16. Market Timing is for currency Futures Segment is from 9 am to 5 pm.

TRUE

FALSE

Both

None of the above

Que

17.

Base price of the USD/INR Futures Contracts on the first day shall be the

theoretical futures price.

TRUE

FALSE

Both

None of the above

Que

18. The Japanese Yen is the ______ most traded currency in the world.

First

Second

Third

Fourth

Que

19.

Short hedge means Underlying position of long in the foreign currency and

Hedging position of short in currency futures

TRUE

FALSE

Both

None of the above

Que

20. If you are Bullish on INR you will

Buy USD

Sell USD

Both

None of the above

Que

21.

In the Currency Derivatives segment, all open positions will be multiplied

by

2000 (Contract Size in USD)

1000(Contract size in USD)

3000(Contract size in USD)

None of the above

Que The most commonly used Swaps are

22.

Interest Rate Swap

Currency Swap

Both of the above

None of the above

Que

23. Future Contracts are _____________ Contracts

Standardised

Multi lateral

Exchange Traded

All of the Above

Answers

Que1 If a trader in the currency futures market expects INR will appreciate


Ans1 TRUE

Que2 The ______ business day of the month will be termed the Value date /

Final Settlement date of each contract.

Ans2 None of the above

Que3 In the Currency Derivatives segment, trading membercumclearing

member, clear and settle their own trades as well as trades of other

trading members (TMs).

Ans3 TRUE

Que4 _____________ receives the End of Day reports for all branches of the

trading member

Ans4 Corporate Manger

Que5 The branch manager is a term assigned to a user who is placed under the

______

Ans5 Corporate Manager

Que6 If a trader in the currency futures market expects INR will depreciate


Ans6 TRUE

Que7 Spread movement is based on following factors:

Ans7 All of the Above

Que8 A hedger has an Overall Portfolio (OP) composed of (at least) 2

positions. One is Underlying position & second is

Ans8 Hedging position with negative correlation with underlying position

Que9 Long hedge means Underlying position of long in the foreign currency

and Hedging position of short in currency futures

Ans9 FALSE

Que10 The relationship between futures prices and spot prices can be

summarized in terms of what is known as the ___________

Ans10 Cost of Carry

Que11 Expiry date i.e the last trading day will be two business days prior to the

Value date / Final Settlement Date.

Ans11 TRUE

Que12 If domestic currency appreciates against the foreign currency, the

exposure would result in loss for residents purchasing foreign assets and

gain for non residents purchasing domestic assets.

Ans12 FALSE

Que13 Forward Contracts are __________ contracts


Que14 An intra currency pair spread is a longshort position in futures on


maturity.

Ans14 TRUE

Que15 Daily _______ settlement will be on a T +1 basis

Ans15 Mark to Market

Que16 Market Timing is for currency Futures Segment is from 9 am to 5 pm.

Ans16 TRUE

Que17 Base price of the USD/INR Futures Contracts on the first day shall be the

theoretical futures price.

Ans17 TRUE

Que18 The Japanese Yen is the ______ most traded currency in the world.

Ans18 Third

Que19 Short hedge means Underlying position of long in the foreign currency

and Hedging position of short in currency futures

Ans19 TRUE

Que20 If you are Bullish on INR you will

Ans20 Sell USD

Que21 In the Currency Derivatives segment, all open positions will be

multiplied by

Ans21 1000(Contract size in USD)

Que22 The most commonly used Swaps are

Ans22 Both of the above

Que23 Future Contracts are _____________ Contracts


Que 1. The proper size of the Hedging position in Modern Approach is

Equal hedge

Optimal hedge

Partial Hedge

None of the Above

Que 2. Whenever the base currency buys more of the terms currency, the terms

currency has ____________

Weakened

Depreciated

Both

None of the Above

Que 3. Whenever the base currency buys more of the terms currency, the terms

currency has weakened / depreciated

TRUE

FALSE

Both

None of the Above

Que 4. The largest and the most liquid financial market in the world is the

___________.

Equity Market

Foreign Exchange Market

Bond Market

None of the Above

Que 5. All futures contracts for each member are markedtomarket(MTM) to the

daily settlement price of the relevant futures contract at the end of each

day. The profits/losses are computed as the difference between

The trade price and the day's settlement price for contracts executed during

the day but not squared up

The previous day's settlement price and the current day's settlement price

for brought forward contracts

The buy price and the sell price for contracts executed during the day and

squared up.

All of the above

Que 6. Maximum age for admission as a Trading Member of Currency Futures


21 years

18 years

25 years

60 years

Que 7. An applicant must be in a position to pay the membership and other fees,

deposits etc, as applicable at the time of admission within three months of

intimation to him of admission as a Trading Member or as per the time

schedule specified by the Exchange

TRUE

FALSE

Both

None of the Above

Que 8. At present, __________ are not permitted to participate in currency

futures market.

FII

NRI

Both

None of the Above

Que 9. _______________ has issued guidance notes on accounting of index futures

contracts from the view point of parties who enter into such futures

contracts as buyers or sellers

ICFAI

ICWA

FPSB

ICAI

Que

10.

An inter currency pair spread is a longshort position in futures on


maturity.

TRUE

FALSE

Both

None of the Above

Que

11. Margins are paid on a ______ basis

T+1

Upfront

T+2

T+3

Que

12.

Final Settlement rate would be the Reserve Bank (RBI) Reference rate for

the date of expiry.

TRUE

FALSE

Both

None of the Above

Que

13.

Whenever the base currency buys more of the terms currency, the base

currency has __________.

Apriciated

Depreciated

Volatile

None of the Above

Que

14.

A Buy order in a Stop Loss book gets triggered when the last traded price

in the Normal Market.

Reaches or falls below the Trigger price

Reaches or exceeds the Trigger price

Gets immediate Triggered what ever is the rate

There is no such Stop Loss Order

Que

15.

In foreign exchange markets, the base currency is the _____ currency in a

currency pair.

First

Second

Third

Fourth

Que

16.

A foreign exchange swap is NOT a simultaneous purchase and sale, or sale



TRUE

FALSE

Both

None of the Above

Que

17.

Liquidity in one currency is converted into another currency for a period

of time.

TRUE

FALSE

Both

None of the Above

Que

18. Final settlement will be cash settled on ______ basis.

T+1

T+2

T+3

T+4

Que

19.

A Basic hedge is one where the changes in the spot prices are negatively


other.

TRUE

FALSE

Both

None of the Above

Que

20.

At Client Level the gross open position of the client across all contracts

should not exceed _____ of the total open interest or USD 10 million


0.04%

0.05%

0.06%

0.07%

Que

21. Hedging essentially helps transfer of _______.

Funds

Goods

Risk

None of the Above

Que

22. DQ (Disclose Quantity) Order is a type of

Time Condition

Quantity Condition

Price Condition

No Condition

Que

23.

An Arbitrager Buys 5 lots of USD/INR January Futures @44.5000 and

sells March Futures @45.8500. After 25 days he squares up March

position @43.3000 and January Futures at 42.8000. Find out the Arbitrage

Profit / Loss ?

4250

-4520

4520

-4250

Answers

Que1 The proper size of the Hedging position in Modern Approach is

Ans1 Optimal hedge

Que2 Whenever the base currency buys more of the terms currency, the terms

currency has ____________

Ans2 BOTH

Que3 Whenever the base currency buys more of the terms currency, the terms

currency has weakened / depreciated

Ans3 TRUE

Que4 The largest and the most liquid financial market in the world is the

___________.

Ans4 Foreign Exchange Market

Que5 All futures contracts for each member are markedtomarket(MTM) to the

daily settlement price of the relevant futures contract at the end of each

day. The profits/losses are computed as the difference between

Ans5 The trade price and the day's settlement price for contracts executed during

the day but not squared up

Que6 Maximum age for admission as a Trading Member of Currency Futures


Ans6 60 years

Que7 An applicant must be in a position to pay the membership and other fees,

deposits etc, as applicable at the time of admission within three months of

intimation to him of admission as a Trading Member or as per the time

schedule specified by the Exchange

Ans7 TRUE

Que8 At present, __________ are not permitted to participate in currency futures

market.

Ans8 Both

Que9 _______________ has issued guidance notes on accounting of index

futures contracts from the view point of parties who enter into such futures

contracts as buyers or sellers

Ans9 ICAI

Que10 An inter currency pair spread is a longshort position in futures on different

underlying currency pairs. Both typically have the same maturity.

Ans10 TRUE

Que11 Margins are paid on a ______ basis

Ans11 Upfront

Que12 Final Settlement rate would be the Reserve Bank (RBI) Reference rate for

the date of expiry.

Ans12 TRUE

Que13 Whenever the base currency buys more of the terms currency, the base

currency has __________.

Ans13 Apriciated

Que14 A Buy order in a Stop Loss book gets triggered when the last traded price

in the Normal Market.

Ans14 Reaches or exceeds the Trigger price

Que15 In foreign exchange markets, the base currency is the _____ currency in a

currency pair.

Ans15 First

Que16 A foreign exchange swap is NOT a simultaneous purchase and sale, or sale



Ans16 FALSE

Que17 Liquidity in one currency is converted into another currency for a period

of time.

Ans17 FALSE

Que18 Final settlement will be cash settled on ______ basis.

Ans18 T+2

Que19 A Basic hedge is one where the changes in the spot prices are negatively


other.

Ans19 FALSE

Que20 At Client Level the gross open position of the client across all contracts

should not exceed _____ of the total open interest or USD 10 million


Ans20 0.06%

Que21 Hedging essentially helps transfer of _______.

Ans21 Risk

Que22 DQ (Disclose Quantity) Order is a type of

Ans22 Quantity Condition

Que23 An Arbitrager Buys 5 lots of USD/INR January Futures @44.5000 and

sells March Futures @45.8500. After 25 days he squares up March

position @43.3000 and January Futures at 42.8000. Find out the Arbitrage

Profit / Loss ?

Ans23 4250

Que 1. On 15th Decmber Mr.Anil bought a April USDINR futures contract which

cost him Rs.44000. Each USDINR futures contract is for delivery of

USD1000. The RBI reference rate for final settlement was fixed as 44.10.

How much profit/loss did he make?

Profit 6000

Loss 300

Loss 4500

Profit 100

Que 2. When the Price Changes showing Improvement in the rate what color does

it appear.

Yellow

Orange

Red

Blue

Que 3. In the case of USD/INR, spot value is

Same Day

T+2

T+4

T+3

Que 4. When any order enters the trading system, it is a/an _____ order

Active

Passive

Useless

Best

Que 5. A dealer for Currency Derivatives market segment has to clear

NISMSeriesI _______________

Currency Derivatives Cerifification Exams

Capital Market Dealers Module exams

AMFI Module Exams

Depository Module Exams

Que 6. _________ form a key part of the risk management system

Trading

Broking

inquiry

Margins

Que 7. Each order has a distinctive order number and a unique ______ on it.

ID

Time stamp

Vaule

Time

Que 8. In the case of the USDINR currency futures contract the tick size shall be

0.25 paise or 0.0025 Rupee.

True

False

Que 9. In India, currency futures can be cash settled or settled by delivering the

respective obligation of the seller and buyer.

True

False

Que

10. A GTC order is a ___________ condition order

Price

No Condition

Time

Quantity

Que

11. Currency futures are a _________ product

Linear

Non-Linear

Both of the above

None of the Above

Que

12.

The unique client code is assigned with the use of Income Tax Permanent

Account Number (PAN) number.

True

False

Que

13.

The Exchange imposes stringent penalty on members who do not collect

margins from their clients.

True

False

Que

14.

Internationally, currency futures can be cash settled or settled by

delivering the respective obligation of the seller and buyer.

True

False

Que

15. The Standardized currency futures shall have the following features:

Only USD-INR contracts are allowed to be traded.& The size of each

contract shall be USD 1000.

The contracts shall be quoted and settled in Indian Rupees.

The maturity of the contracts shall not exceed 12 months.

All of the Above

Que

16.

If domestic currency depreciates against the foreign currency, the

exposure would result in gain for residents purchasing foreign assets and

loss for non residents purchasing domestic assets.

True

False

Que

17. __________ can be defined as the futures price minus the spot price

Basis

Term

Currency

None of the Above

Que

18.

The relationship between futures prices and spot prices can be

summarized in terms of what is known as the cost of carry.

True

False

Que

19.

The Exchange will disseminate alerts whenever the gross open position of

the client exceeds _______ of the total open interest at the end of the

previous day s trade.

0%

0%

0%

0%

Que

20. CME FX Futures are traded by _________________.

commercial banks

investment banks

hedge funds

All of the above

Que

21. Clearing Member sets limits for ________

Corporate manager

Trading Member

SEBI

RBI

Que

22. First major currency is _________

Eur

GBP

INR

USD

Que

23.

The membership of the currency futures market of a recognised stock

exchange shall be separate from the membership of the equity derivative

segment or the commodity exchange.

True

False

Que

24.

A dealer can view and perform order and trade related activities only for

________

Trading Member

Himself

Exchange

Branch

Answers

Que1 On 15th Decmber Mr.Anil bought a April USDINR futures contract

which cost him Rs.44000. Each USDINR futures contract is for

delivery of USD1000. The RBI reference rate for final settlement was

fixed as 44.10. How much profit/loss did he make?

Ans1 Profit 100

Que2 When the Price Changes showing Improvement in the rate what color

does it appear.

Ans2 Blue

Que3 In the case of USD/INR, spot value is

Ans3 T+2

Que4 When any order enters the trading system, it is a/an _____ order

Ans4 Active

Que5 A dealer for Currency Derivatives market segment has to clear

NISMSeriesI _______________

Ans5 Currency Derivatives Cerifification Exams

Que6 _________ form a key part of the risk management system

Ans6 Margins

Que7 Each order has a distinctive order number and a unique ______ on it.

Ans7 ID

Que8 In the case of the USDINR currency futures contract the tick size shall

be 0.25 paise or 0.0025 Rupee.

Ans8 True

Que9 In India, currency futures can be cash settled or settled by delivering the

respective obligation of the seller and buyer.

Ans9 False

Que10 A GTC order is a ___________ condition order

Ans10 Time

Que11 Currency futures are a _________ product

Ans11

Que12 The unique client code is assigned with the use of Income Tax

Permanent Account Number (PAN) number.

Ans12 True

Que13 The Exchange imposes stringent penalty on members who do not

collect margins from their clients.

Ans13 True

Que14 Internationally, currency futures can be cash settled or settled by

delivering the respective obligation of the seller and buyer.

Ans14 True

Que15 The Standardized currency futures shall have the following features:


Que16 If domestic currency depreciates against the foreign currency, the

exposure would result in gain for residents purchasing foreign assets

and loss for non residents purchasing domestic assets.

Ans16 False

Que17 __________ can be defined as the futures price minus the spot price

Ans17 Basis

Que18 The relationship between futures prices and spot prices can be

summarized in terms of what is known as the cost of carry.

Ans18 True

Que19 The Exchange will disseminate alerts whenever the gross open position

of the client exceeds _______ of the total open interest at the end of the

previous day s trade.

Ans19 Skipped

Que20 CME FX Futures are traded by _________________.


Que21 Clearing Member sets limits for ________

Ans21 Trading Member

Que22 First major currency is _________

Ans22 USD

Que23 The membership of the currency futures market of a recognised stock

exchange shall be separate from the membership of the equity

derivative segment or the commodity exchange.

Ans23 True

Que24 A dealer can view and perform order and trade related activities only

for ________

Ans24 Branch

Que 1. The amount that must be deposited in the margin account at the time a

futures contract is first entered into is known as

Cost of Carry

Initial Margin

MTM

Basis

Que 2. If you are Bullish on USD you will

Buy USD

Sell USD

Buy INR

None of the Above

Que 3. When the underlying is an exchange rate, the contract is termed a

Commodities futures contract

Equities futures contract

Currency futures contract

Index futures contract

Que 4. The Committee on Fuller Capital Account Convertibility had

recommended that currency futures may be introduced subject to risks

being contained through proper trading mechanism, structure of contracts

and regulatory environment.

True

False

Que 5. The Clearing Corporation of the Exchange, on an ongoing basis and at

least once in every _____ months, conducts backtesting of the margins

collected visvis the actual price changes

6

3

9

12

Que 6. Contract size, In the case of USD/INR it is USD _______

100

10

1000

10000

Que 7. The open positions of the members are marked to market based on

contract settlement price for each contract. The difference is settled in cash

on a T+1 basis

True

False

Que 8. The _______ business day would be taken for Final Settlement date of each

contract for Interbank Settlements in Mumbai.

Last Thursday

Last

First day

Either of the above

Que 9. BID rate is

Buyers price

Sellers Price

Auction price

Future price

Que

10.

In the Currency Derivatives segment, tradingcumclearing member, clear

and settle their own trades as well as trades of other trading members

(TMs).

True

False

Que

11.

The final settlement price is the RBI reference rate for the last trading day

of the futures contract.

True

False

Que

12. A futures contract is a standardized contract

Yes

No

Que

13.

The last business day would be taken for Final Settlement date of each

contract for Interbank Settlements in ________

Mumbai

Agra

Kolkatta

Delhi

Que

14.

A buy position '20000@ 40.0000"means ______ contracts bought at the

rate of Rs. 40.0000

40

20

325

2000

Que

15. Who sets limit for Trading member

Corporate manager

Clearing Member

SEBI

FMC

Que

16.

The Swiss Franc is the only currency of a major European country that

belongs neither to the European Monetary Union nor to the G7 countries

No

Yes

Que

17.

All open positions will be multiplied by _____(contract size in USD) to

arrive at the open position in USD terms

10

100

1000

10000

Que

18. A Forwad contract is a customised contract

True

False

Que

19. Clients have to pay _______ types of Margin

1

2

4

5

Que

20.

Futures markets are designed to solve the problems that exist in the

____________.

spot markets

forward markets

options markets

All of the above

Que

21.

The currency futures contracts on the SEBI recognized exchanges have

onemonth, twomonth, and threemonth up to twelvemonth expiry cycles.

Hence, these exchanges will have 12 contracts outstanding at any given

point in time.

True

False

Que

22. ASK or OFFER is

Buyers price

Sellers Price

Auction price

Future price

Que

23.

Rs.42.2500. One tick move on this contract will translate to _______ or

_______ depending on the direction of market movement.

Rs.42.2475

Rs.42.2525

Rs 42.3500

Rs 42.1500

Que

24. Currency futures are used to hedge import/export risks.

True

False

http://www.kip-world.com/examination.php

Answers

Que1 The amount that must be deposited in the margin account at the time a

futures contract is first entered into is known as

Ans1 Initial Margin

Que2 If you are Bullish on USD you will

Ans2 Buy USD

Que3 When the underlying is an exchange rate, the contract is termed a

Ans3 Currency futures contract

Que4 The Committee on Fuller Capital Account Convertibility had

recommended that currency futures may be introduced subject to risks

being contained through proper trading mechanism, structure of

contracts and regulatory environment.

Ans4 True

Que5 The Clearing Corporation of the Exchange, on an ongoing basis and at

least once in every _____ months, conducts backtesting of the margins

collected visvis the actual price changes

Ans5 3

Que6 Contract size, In the case of USD/INR it is USD _______

Ans6 1000

Que7 The open positions of the members are marked to market based on

contract settlement price for each contract. The difference is settled in

cash on a T+1 basis

Ans7 True

Que8 The _______ business day would be taken for Final Settlement date of

each contract for Interbank Settlements in Mumbai.

Ans8 Last

Que9 BID rate is

Ans9 Buyers price

Que10 In the Currency Derivatives segment, tradingcumclearing member,

clear and settle their own trades as well as trades of other trading

members (TMs).

Ans10 True

Que11 The final settlement price is the RBI reference rate for the last trading

day of the futures contract.

Ans11 True

Que12 A futures contract is a standardized contract

Ans12 Yes

Que13 The last business day would be taken for Final Settlement date of each

contract for Interbank Settlements in ________

Ans13 Mumbai

Que14 A buy position '20000@ 40.0000"means ______ contracts bought at the

rate of Rs. 40.0000

Ans14 Skipped

Que15 Who sets limit for Trading member

Ans15 Clearing Member

Que16 The Swiss Franc is the only currency of a major European country that

belongs neither to the European Monetary Union nor to the G7

countries

Ans16 Yes

Que17 All open positions will be multiplied by _____(contract size in USD) to

arrive at the open position in USD terms

Ans17 1000

Que18 A Forwad contract is a customised contract

Ans18 True

Que19 Clients have to pay _______ types of Margin

Ans19 1

Que20 Futures markets are designed to solve the problems that exist in the

____________.


Que21 The currency futures contracts on the SEBI recognized exchanges have

onemonth, twomonth, and threemonth up to twelvemonth expiry cycles.

Hence, these exchanges will have 12 contracts outstanding at any given

point in time.

Ans21 True

Que22 ASK or OFFER is

Ans22 Sellers Price

Que23 Rs.42.2500. One tick move on this contract will translate to _______ or

_______ depending on the direction of market movement.

Ans23 Rs.42.2525

Que24 Currency futures are used to hedge import/export risks.

Ans24 True

currency derivative exam mock

Documents