| Q 1. | You execute a future currency trade - Buy EURINR and Sell USDINR of same amount. Which of the below options is your view -
INR appreciating against USD
INR appreciating against EUR
EUR appreciating against USD
EUR depreciating against USD
 CORRECT ANSWER  WRONG ANSWER
CORRECT ANSWER:EUR appreciating against USD |
| Q 2. | The maximum maturity of a JPYINR contract traded on a recognized currency exchange in India is _______ months.
1
3
6
12
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:12 Explanation:
All the currency pairs which are traded in India viz - USDINR, EURINR, GBPINR and JPYINR have a maximum of 12 calendar months from current calendar month.
New contract are introduced following the expiry of current month contract. |
| Q 3. | When a currency position of one maturity is hedged by an offsetting position of a different maturity, its called a _____________.
Delta Hedgeing
Calendar Spread
Arbitrage Trading
Swaps
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Calendar Spread Explanation:
Calendar Spread ( also known as intra-currency pair spread ) consists of one long futures and one short futures contract. Both have the same underlying but different maturities. |
| Q 4. | The Institute of Chartered Accountants of India (ICAI) 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 - True or False ?
True
False
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:True |
| Q 5. | The contract size for USDINR futures contract is __________.
USD 100
INR 100
USD 1000
INR 1000
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:USD 1000 Explanation:
The Contract size or lot size in the case of USDINR is USD1000
In case of GBPINR it is GBP 1000; EURINR it is EUR 1000; JPYINR it is JPY 100,000. |
| Q 6. | A rising and positive number of Nonfarm payrolls in the US will generally lead to the strengthening of the USD against major international currencies - True or False ?
True
False
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:True Explanation:
Nonfarm payrolls represent the number of jobs added or lost in the economy over the last month, not including jobs relating to the farming industry etc.
A rising number means that the economy is adding jobs and is good for the currency. A fall means the economy has weakened. |
| Q 7. | A trader sells 10 lots of one month USDINR future at 56. At expiry the settlement price was announced at 56.50. What is his Profit or Loss ?
Profit of 500
Profit of 5000
Loss of 500
Loss of 5000
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:Loss of 5000 Explanation:
The trader had gone short at 56 and the settlement price is 56.50. So there is a loss
56 - 56.50 = - 0.50 Loss
-0.50 x 10 ( Lots ) x 1000 ( Lot size ) = -5000 Loss |
| Q 8. | At 11 am the RBI announced the credit policy and a reduction in interest rates. Generally such a step will lead to __________ of rupee.
No effect
strengthening
weakening
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:weakening Explanation:
When the RBI cuts interest rates, domestic interest rates fall. Lower interest rates make investments in India less attractive to foreign investors seeking higher returns.
This tends to increase demand for foreign currency and reduce demand for the rupee, leading to depreciation (weakening) of the rupee.
So, generally, a rate cut causes the rupee to weaken.
|
| Q 9. | Mr Mehta invested Rs 1.00,000 in UK Stock Markets when the GBPINR rate was 75. After one year his investment appreciated by 20% in GBP terms. He sold of his investments and repatriated the money to India at the then existing rate of 80. What is his real returns in INR ?
He has made a Profit of 20%
He has made a Loss of 20%
He has made a Profit of 28%
He has made a Loss of 28%
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:He has made a Profit of 28% Explanation:
Mr. Mehta invested Rs1,00,000 in UK Stock when the GBPINR rate was 75.
So he had invested 1,00,000 / 75 = 1333.33 pounds in UK Stocks.
His investment grew by 20% : 1333.33 x 20% = 1333.33 + 266.66 = 1600
He is repatriating at GBPINR rate of 80 : 1600 x 80 = 128000
Therefore his investment in INR terms have grown from Rs 1,00,000 to Rs 1,28,000
128000 x 100 / 100000 = 128
This is an increase of 28 % |
| Q 10. | An importer has to make payments in USD while most of its revenue is in INR. The importer is concerned about USDINR risk. Which of the following strategy should it consider to mitigate this risk ?
USD appreciating against INR - Long USDINR futures
USD appreciating against INR - Short USDINR futures
USD depreciating against INR - Long USDINR futures
USD depreciating against INR - Short USDINR futures
CORRECT ANSWER WRONG ANSWER CORRECT ANSWER:USD appreciating against INR - Long USDINR futures Explanation:
The risk which the importer faces is the rise of USDINR as he has to make import payments in USD.
So to hedge this risk, he will go long in USDINR futures. |