Series I
Currency Derivatives
50 questionsPass mark 60%Negative marking 25% / wrong answer
NISM Series I practice questions
150 questions. Each answer is explained.
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Learn these topics
Practise one unit at a time
- Introduction to Currency Markets16 questions
- Foreign Exchange Derivatives13 questions
- Exchange Traded Currency Futures15 questions
- Exchange Traded Currency Options20 questions
- Strategies Using Exchange Traded Currency Derivatives19 questions
- Trading Mechanism in Exchange Traded Currency Derivatives13 questions
- Clearing, Settlement and Risk Management in Exchange Traded Currency Derivatives18 questions
- Regulatory Framework for Exchange Traded Currency Derivatives12 questions
- Accounting and Taxation11 questions
- Codes of Conduct and Investor Protection Measures13 questions
Exam format
| Questions | 100 · 1 mark each |
|---|---|
| Duration | 120 min · 2 hours |
| Pass mark | 60% · 60 of 100 marks |
| Negative marking | 25% · 0.25 marks off per wrong answer |
| Certificate validity | 3 years · from the date of the examination |
NISM Series I Currency Derivatives
Exam rules read on NISM's site on 3 October 2026. Check the current rules on NISM's site (opens in a new tab)
What these answers assume, and when it was last checked
Each question uses the rules listed below. We last checked them on 5 September 2026. A Budget or SEBI circular can change a rate, lot size or expiry day. If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.
- NSE uses Tuesday expiry and BSE uses Thursday expiry. This applies from 1 September 2025.
- The January 2026 index lot sizes are NIFTY 65, BANKNIFTY 30, FINNIFTY 60, MIDCPNIFTY 120 and NIFTYNXT50 25.
- The October 2024 SEBI framework sets a minimum index contract value of Rs 15–20 lakh. Each exchange may list one weekly benchmark index.
- Option buyers pay the premium upfront from 1 February 2025. A short index option has an extra 2% Extreme Loss Margin on expiry day from 20 November 2024.
- Equity short-term capital gains are taxed at 20%. Long-term gains are taxed at 12.5% above Rs 1.25 lakh. Both rates apply from 23 July 2024.
- F&O income is non-speculative business income in ITR-3. NSE equity derivatives trade from 9:15 a.m. to 3:40 p.m.
- The final ten-minute session began on 3 August 2026. It aligns with the cash market Closing Auction Session.
- Most Securities Transaction Tax questions test the base and who pays. On an option sale, it is the premium and the seller pays. On a futures sale, it is the traded value and the seller pays.
- On exercise, Securities Transaction Tax uses intrinsic value: settlement price minus strike price. The buyer pays it.
- Two questions test the current rate. From 1 April 2026, option sales carry 0.15% on the premium and futures sales carry 0.05% on traded price. The earlier rates were 0.10% and 0.02% from 1 October 2024.
- This section uses the T+1 rolling settlement cycle. Obligations are fixed on T+1. A short delivery goes to buy-in auction on T+1 and settles on T+2.
- The trade-for-trade surveillance segment uses direct close-out. Funds pay in by 10:30 a.m. and pay out on or after 1:30 p.m. on settlement day.
- Securities pay in to the settlement pool by 10:30 a.m. They pay out directly to the client’s demat account by 3:30 p.m.
- The 3:30 p.m. deadline replaced 1:30 p.m. under SEBI’s 10 October 2024 circular. Direct client credit was required by SEBI’s 5 June 2024 circular.
- The optional T+0 cycle trades until 1:30 p.m. Obligations are fixed by 2:30 p.m. on the trade day. An early pay-in shortage is closed out directly.
- Cash-market Value at Risk margin is six times exponentially weighted moving-average volatility. It has a 9% floor for Group I, a 21.5% floor for Group II, and a fixed 50% or 75% level for Group III.
- Extreme Loss Margin is 3.5% for a share and 2% for a broad-market-index exchange traded fund. Mark-to-market margin is collected before the next day’s trading. The trade-for-trade segment has 100% upfront margin.
- Close-out uses the higher of the highest price from trade day to auction day and 20% above the auction day’s official close.
- A funds shortage costs 0.07% a day. The trading facility is withdrawn at a shortage of Rs 5 lakh or more.
- SCORES allows 21 calendar days, then two 15-day review levels. Online Dispute Resolution moves from conciliation to arbitration after the market participant and SCORES steps.
- At NSE, the Investor Protection Fund limit is Rs 35 lakh per investor for each defaulting or expelled member. This applies to claims arising after 13 August 2024.
- A Basic Services Demat Account has no annual maintenance charge up to Rs 4 lakh of holdings. It costs up to Rs 100 above that, until the Rs 10 lakh eligibility ceiling. These slabs apply from 1 September 2024.
- The rupee pairs are USD-INR, EUR-INR, GBP-INR and JPY-INR. The cross-currency pairs are EUR-USD, GBP-USD and USD-JPY.
- Each contract covers 1,000 units of the foreign currency, except JPY-INR. JPY-INR covers 100,000 yen and is quoted in rupees per 100 yen.
- The tick is 0.25 paise, or Rs 0.0025. It equals Rs 2.50 a contract.
- Rupee pairs trade from 9:00 a.m. to 5:00 p.m. A monthly contract stops trading at 12:30 p.m. two working days before the expiry month’s last business day.
- Final settlement is in cash at the FBIL reference rate on expiry day. FBIL, Financial Benchmarks India, has published this rate in place of the Reserve Bank since 2018. Premium-style European options are quoted in rupees. The buyer pays the premium in cash on T+1.
- Daily settlement is on T+1 and final settlement is on T+2.
- NSE Clearing circular 026/2020 sets SPAN margin plus Extreme Loss Margin. The futures margin is 0.50% for USD-INR, 0.15% for EUR-INR, 0.25% for GBP-INR and 0.35% for JPY-INR. A short option has 0.75%. These figures apply from 1 June 2020.
- A USD-INR client may hold 6% of total open interest or USD 20 million, whichever is higher. A trading member may hold 15% or USD 100 million.
- A resident user has one USD 100 million equivalent limit across all rupee pairs and exchanges. No document is needed below that limit, but a valid underlying contracted exposure must still exist. This clarification applies from 3 May 2024.
- The currency segment has no Securities Transaction Tax.
The exam figures (questions, time, pass mark, negative marking and certificate validity) come from NISM's own pages, read on 3 October 2026. Timed practice uses the same figures. Study with the official workbook as well.
The written-out answers on this page are hidden while your timed set runs.
5 sample questions with answers
The other 145 are on the unit pages above, written out the same way.
Q1A hypothetical CPI is 120 in a given month and 126 in the same month of the following year, using the same index series. What is the year-on-year inflation rate?
Option A. 5.00% — Correct answer
Option B. 6.00%
Why it is wrong: This labels the six-index-point increase as a percentage without dividing by 120.
Option C. 4.76%
Why it is wrong: This uses the current index, 126, as the denominator. The required comparison uses the year-earlier level.
Option D. 26.00%
Why it is wrong: This compares 126 with the reference level of 100 rather than with the specified year-earlier level of 120.
Answer: A. The six-point rise is 5% of the starting level of 120. Use inflation = (current CPI − year-earlier CPI) ÷ year-earlier CPI × 100. The rise is 126 − 120 = 6 index points. Dividing by the earlier level gives 6 ÷ 120 × 100 = 5.00%. Index points and percentage changes are different units. Remember: For year-on-year inflation, divide the index change by the comparable index from twelve months earlier.
Hint, shown before you answer in practice mode: Common mistake: Confusing an index-point increase with a percentage increase.
I-053easynumerical
Q2USD-INR spot is 80.00 and the forward rate for exactly 0.5 year is 81.00. The USD interest rate is 4% a year. Using simple interest and covered interest parity, what annual INR interest rate is implied? Assume equal borrowing and lending rates and no transaction costs.
Option A. 6.50%
Why it is wrong: Adding the 2.5% annualised forward premium to 4% gives a useful approximation, but omits the exact accumulation-factor interaction.
Option B. 6.55% — Correct answer
Option C. 2.50%
Why it is wrong: This is only the annualised forward premium, not the full INR interest rate.
Option D. 3.275%
Why it is wrong: This is the six-month percentage return. The question asks for an annual rate.
Answer: B. This answer is the annual simple rate that equates the two stated currency accumulation paths. For an INR-per-USD quote, F/S = (1 + r_INR × T)/(1 + r_USD × T). Rearranging gives r_INR = [(F/S) × (1 + r_USD × T) − 1]/T. The USD accumulation factor is 1 + 0.04 × 0.5 = 1.02. The required INR factor is (81 ÷ 80) × 1.02 = 1.03275. The six-month INR return is 0.03275. Dividing by 0.5 gives 0.0655, or 6.55% a year. A cash-flow cross-check is 80 × 1.03275 = ₹82.62, equal to 1.02 USD × ₹81 per USD. The funding and forward-conversion totals agree. Remember: Solve parity with accumulation factors first, then convert the resulting period return into an annual rate.
Hint, shown before you answer in practice mode: Common mistake: Using a rate-difference approximation or forgetting to annualise the implied period return.
I-057hardnumerical
Q3For an expiry-payoff exercise, a long USD-INR strangle buys a put at strike 87 for ₹0.25 per USD and a call at strike 89 for ₹0.35 per USD. Both cover equal amounts and expire together. Ignoring costs and interest, when is the combined net profit strictly positive?
Option A. Below 86.75 or above 89.35
Why it is wrong: These use each active option’s own premium but omit the premium paid for the other leg.
Option B. Below 86.40 or above 89.60 — Correct answer
Option C. Below 87.60 or above 88.40
Why it is wrong: These move the boundaries inside the strikes. Both purchased options are out of the money between 87 and 89.
Option D. Below 86.40 or above 89.35
Why it is wrong: The lower boundary includes both premiums, but the upper boundary omits the put premium.
Answer: B. Both premiums total ₹0.60 per USD. The put must earn more than 0.60 below 87, or the call more than 0.60 above 89. Total premium = 0.25 + 0.35 = ₹0.60 per USD. Net expiry profit per USD = max(87 − S, 0) + max(S − 89, 0) − 0.60. Below 87, only the put pays. Positive profit requires 87 − S > 0.60, so S < 86.40. Above 89, only the call pays. Positive profit requires S − 89 > 0.60, so S > 89.60. At 86.40 and 89.60 the position breaks even. Between the two strikes, both options expire without intrinsic value and the loss equals the total premium. Remember: Use the total premium of both purchased options to find either break-even boundary.
Hint, shown before you answer in practice mode: Common mistake: Subtracting only the put premium for the lower boundary and adding only the call premium for the upper boundary.
I-086hardnumerical
Q4Which event is the Core Settlement Guarantee Fund designed to address within the applicable default waterfall?
Option A. A hedger receives less than an unhedged competitor.
Why it is wrong: Relative performance of hedged and unhedged businesses is not a clearing-member settlement default.
Option B. A clearing member fails to honour settlement commitments. — Correct answer
Option C. A correctly executed client trade loses money.
Why it is wrong: A normal market loss is a trading outcome, not by itself a failure in the clearing settlement process.
Option D. A member wishes to finance routine initial margin.
Why it is wrong: The fund is not a standing loan facility that members may use instead of posting required margin.
Answer: B. Failure to meet settlement commitments is the fund’s stated default-management purpose. The official policy identifies a clearing member’s failure to meet settlement commitments as the event for using the Core SGF to help complete settlement. Use is governed by the applicable default framework and resource sequence. The question does not imply that the fund is the first resource used or that it guarantees every investor’s economic return. Remember: Associate Core SGF with settlement completion after member default, not with protecting trading profits.
Hint, shown before you answer in practice mode: Common mistake: Confusing settlement protection with compensation for ordinary market losses or with free margin funding.
I-069easyconceptual
Q5An entity applying Ind AS has INR as its functional currency. An unhedged short-term USD 30,000 trade payable was initially recorded at ₹82 per USD and remains unpaid at year-end, when the closing rate is ₹83.20. With no applicable exception, what exchange difference is recognised in profit or loss?
Option A. A gain of ₹36,000
Why it is wrong: An increase in the INR amount owed on a payable is a loss, not a gain.
Option B. A loss of ₹36,000 — Correct answer
Option C. A loss of ₹18,000
Why it is wrong: This uses the average of the transaction and closing rates rather than the required closing rate for the monetary payable.
Option D. No exchange difference until payment
Why it is wrong: An unpaid monetary item is retranslated at the reporting date. Payment is not required before the stated exchange difference is recognised.
Answer: B. The INR liability rises by (83.20 − 82.00) × 30,000 = ₹36,000. Initial INR carrying amount = 30,000 × 82.00 = ₹24,60,000. Closing INR carrying amount = 30,000 × 83.20 = ₹24,96,000. The liability increases by 24,96,000 − 24,60,000 = ₹36,000. The entry increases the payable and recognises an exchange loss in profit or loss. The question specifies an unhedged short-term trade payable and excludes exceptions. The absence of payment does not postpone reporting-date translation. Remember: A rise in INR per foreign-currency unit increases an unhedged foreign-currency payable’s INR amount.
Hint, shown before you answer in practice mode: Common mistake: Waiting for cash settlement to recognise the reporting-date exchange difference or treating the liability increase as a gain.
I-096mediumnumerical
NISM Series I practice: common questions
Are these the real NISM Series I exam questions?
No. LearnNifty wrote every question from NISM's public syllabus. NISM does not publish its question bank, so nobody can offer you the real paper. Use these questions to check that an idea has gone in. Use the official NISM workbook to see what is examined.
How many practice questions are there for NISM Series I?
150 at the moment, across 10 practice topics, with one page per unit. It is a practice set, not a copy of the paper: the real NISM-Series-I: Currency Derivatives Certification Examination has 100 questions.
Where are all the questions and answers?
On the 10 practice topics listed above. There are 5 in full. Each unit's page has the rest, with all four options, the correct answer and why each other option is wrong.
Does negative marking apply to NISM Series I?
Yes. NISM takes off 25% of a question's marks for a wrong answer. On a 1-mark question that is 0.25 marks off. A blank question earns nothing and loses nothing, so a wrong guess costs marks on this paper. Timed practice here uses the same rule.
How do I book the NISM Series I exam?
You register and pay on NISM's own website, nism.ac.in. The steps and the fee change from time to time, so read them there on the day you book.
Are these practice questions kept up to date?
Each question is written against the rules printed on this page, last checked on 5 September 2026. A Budget or a SEBI circular can change a rate, a lot size or an expiry day. If one of those rules changes before your exam, treat the questions that use it as out of date. Then check NISM's current workbook.
See the exam these questions follow
The Currency Derivatives exam page shows the question count, the time, the pass mark and the marking rule.
Open the NISM Series I exam page