Exchange Traded Currency Futures
15 questions. Each answer is explained.
Question 1 of 10Practice · Series I — Currency Derivatives
0 right · 0 wrong · 10 to go
A–D or 1–4 to answer · Enter or → for the next question · ← to go back
Learn these topics
More units in NISM Series I
- Introduction to Currency Markets16
- Foreign Exchange Derivatives13
- Exchange Traded Currency Options20
- Strategies Using Exchange Traded Currency Derivatives19
- Trading Mechanism in Exchange Traded Currency Derivatives13
- Clearing, Settlement and Risk Management in Exchange Traded Currency Derivatives18
- Regulatory Framework for Exchange Traded Currency Derivatives12
- Accounting and Taxation11
- Codes of Conduct and Investor Protection Measures13
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 |
| Marks for this unit | Not published by NISM |
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 If a rule changes before your exam, treat the linked questions as out of date and check NISM's current workbook.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.
All 15 questions on Exchange Traded Currency Futures, with answers
Q1A USD-INR futures position is bought at F₀ and held to expiry, when the final settlement rate is Sₜ. Ignoring costs, its cumulative profit or loss per USD is:
Option A. F₀ − Sₜ
Why it is wrong: F₀ − Sₜ is the cumulative payoff of a short futures position.
Option B. Sₜ − F₀ — Correct answer
Option C. Maximum of Sₜ − F₀ and zero
Why it is wrong: Flooring the payoff at zero describes a long call’s exercise payoff, not a future. A long future can lose money.
Option D. Sₜ ÷ F₀
Why it is wrong: The ratio is dimensionless. It is neither the price difference nor the rupee profit per USD.
Answer: B. A long future gains the rise in the INR-per-USD rate and bears its fall. Compare the final rate with the rate at which the long position was opened. Cumulative profit or loss per USD = final settlement rate − purchase rate = Sₜ − F₀. Daily mark-to-market cash flows contribute to this cumulative result. It is not an additional profit to add again after summing those cash flows. Multiply by the USD exposure for the whole position. Remember: Long futures profit equals the final rate minus the entry rate, multiplied by the exposure.
Hint, shown before you answer in practice mode: Common mistake: Applying an option’s zero-loss payoff floor to a futures position, or double-counting daily settlement cash flows.
I-009easyconceptual
Q2Under the NSE contract specification, one JPY-INR futures contract has which trading unit and quotation basis?
Option A. JPY 1,000, quoted in INR per JPY 1
Why it is wrong: Both the trading unit and the quotation unit differ from the JPY-INR specification.
Option B. JPY 1,00,000, quoted in INR per JPY 1
Why it is wrong: The contract amount is right, but the quote is for JPY 100 rather than JPY 1.
Option C. JPY 1,00,000, quoted in INR per JPY 100 — Correct answer
Option D. JPY 1,000, quoted in INR per JPY 100
Why it is wrong: The quotation basis is right, but the contract amount is JPY 1,00,000 rather than JPY 1,000.
Answer: C. This answer pairs the specified JPY 1,00,000 trading unit with the INR-per-JPY-100 quotation. NSE specifies a trading unit of JPY 1,00,000 for a JPY-INR futures contract. The price is quoted in rupees per JPY 100, not per single yen. A contract therefore contains 1,00,000 ÷ 100 = 1,000 quotation units. Its rupee notional equals the quoted price multiplied by 1,000. Remember: For JPY-INR, distinguish JPY 1,00,000 per contract from JPY 100 per quotation unit.
Hint, shown before you answer in practice mode: Common mistake: Multiplying an INR-per-100-yen quote by the full number of yen without first dividing by 100.
I-010mediumconceptual
Q3One USD-INR futures contract covers USD 1,000 and is quoted at ₹88.7500 per USD. Its rupee notional value is:
Option A. ₹88,750 — Correct answer
Option B. ₹1,000
Why it is wrong: USD 1,000 is the foreign-currency amount, not the rupee value of the contract.
Option C. ₹88.75
Why it is wrong: This is the rate for one USD, not the notional value of the whole contract.
Option D. ₹8,875
Why it is wrong: This multiplies the quote by 100 instead of the stated USD 1,000 contract size.
Answer: A. Multiplying ₹88.7500 per USD by USD 1,000 gives ₹88,750. Notional value = quote in INR per USD × USD amount of the contract. ₹88.7500 × 1,000 = ₹88,750. The amount required as margin is a separate risk-management calculation. No margin percentage is needed to answer this question. Remember: Multiply the exchange-rate quote by the contract’s base-currency amount to obtain its rupee notional.
Hint, shown before you answer in practice mode: Common mistake: Confusing the quoted exchange rate, contract size and margin deposit with notional value.
I-011easynumerical
Q4A USD-INR futures contract covers USD 1,000. Its minimum price movement is 0.25 paise per USD. A one-tick move changes the contract value by:
Option A. ₹250
Why it is wrong: This treats 0.25 paise as ₹0.25 and overstates the tick value by 100 times.
Option B. ₹0.25
Why it is wrong: This is ten times smaller than the correct contract-level change. It can result from using 100 units instead of 1,000.
Option C. ₹25
Why it is wrong: This is ten times larger than the correct answer and corresponds to misreading the tick as ₹0.025.
Option D. ₹2.50 — Correct answer
Answer: D. The calculation converts paise to rupees before multiplying by the USD 1,000 lot. One rupee contains 100 paise. Therefore, 0.25 paise = ₹0.0025 per USD. Tick value = ₹0.0025 per USD × USD 1,000 = ₹2.50. This is the magnitude of the change for one contract. Whether it is a gain or loss depends on the position direction and the direction of the tick. Remember: Convert paise into rupees before multiplying the tick size by the lot size.
Hint, shown before you answer in practice mode: Common mistake: Treating 0.25 paise as 25 paise, or ₹0.25.
I-012easynumerical
Q5USD-INR spot is 88.0000. Annual simple interest rates are 6.4% in INR and 4.4% in USD. For exactly 0.25 year, the no-arbitrage forward rate, rounded to four decimals, is what? Assume equal borrowing and lending rates and ignore transaction costs.
Option A. 88.4400
Why it is wrong: This uses the approximation 88 × [1 + (0.064 − 0.044) × 0.25]. Its 88.4400 result is not the exact simple-interest parity rate at the requested precision.
Option B. 88.4352 — Correct answer
Option C. 87.5669
Why it is wrong: This reverses the currency interest factors and calculates 88 × 1.011 ÷ 1.016.
Option D. 89.4080
Why it is wrong: This is only 88 × 1.016. It omits division by the USD accumulation factor.
Answer: B. This answer uses the INR factor in the numerator and the USD factor in the denominator, then rounds to four decimals. With simple annual interest, F = S × (1 + r_INR × T) ÷ (1 + r_USD × T). The INR factor is 1 + 0.064 × 0.25 = 1.016. The USD factor is 1 + 0.044 × 0.25 = 1.011. F = 88 × 1.016 ÷ 1.011 = 89.408 ÷ 1.011 = 88.43521266… INR per USD. Rounding to four decimals gives 88.4352. Because the INR interest rate is higher, the computed forward quote is above spot. Remember: For INR per USD, multiply spot by the INR accumulation factor and divide by the USD accumulation factor.
Hint, shown before you answer in practice mode: Common mistake: Reversing the interest-rate ratio or using a rate-difference approximation when exact precision is requested.
I-013hardnumerical
Q6A trader shorts 20 USD-INR futures at 88.50. Each contract is USD 1,000. Day 1 settles at 88.65. On Day 2, the trader closes the whole position at 88.40. Ignoring charges, what are the Day 2 settlement gain and total two-day profit respectively?
Option A. ₹2,000 and ₹2,000
Why it is wrong: ₹2,000 is the cumulative profit, but using the original 88.50 price for Day 2 ignores the Day 1 reset.
Option B. ₹5,000 and ₹5,000
Why it is wrong: The Day 2 amount is right, but the total omits the ₹3,000 loss already incurred on Day 1.
Option C. ₹3,000 and ₹2,000
Why it is wrong: ₹3,000 is the magnitude of the Day 1 loss. It is not the gain from the Day 2 move.
Option D. ₹5,000 and ₹2,000 — Correct answer
Answer: D. Day 2 earns ₹5,000 and the earlier ₹3,000 loss reduces the total profit to ₹2,000. Day 1 short-position MTM = (88.50 − 88.65) × 1,000 × 20 = −₹3,000. After Day 1, the settlement reference is 88.65. Day 2 gain = (88.65 − 88.40) × 1,000 × 20 = ₹5,000. Total profit = −₹3,000 + ₹5,000 = ₹2,000. Check directly: (88.50 − 88.40) × 1,000 × 20 = ₹2,000. Remember: Reconcile daily settlement amounts to entry-to-exit profit without counting the same price movement twice.
Hint, shown before you answer in practice mode: Common mistake: Using the original trade price for each day or reporting the final day’s gain as the whole trade’s profit.
I-043hardnumerical
Q7Open interest in one currency futures contract starts at 500 contracts. During the day, 12 matched trades close an existing long and short, 20 create a new long and short, and 15 transfer existing longs to new buyers while the corresponding shorts remain open. Counting each matched contract once, what are closing open interest and daily volume?
Option A. 547 contracts and 47 contracts
Why it is wrong: This adds all 47 trades to open interest, even though some close contracts and others only transfer ownership.
Option B. 516 contracts and 94 contracts
Why it is wrong: This doubles the opening and closing changes and also double-counts both sides of volume.
Option C. 523 contracts and 47 contracts
Why it is wrong: This incorrectly treats the 15 transfers as 15 additional outstanding contracts.
Option D. 508 contracts and 47 contracts — Correct answer
Answer: D. Only both-side openings and closures change open interest. All three categories contribute to volume. Both-side closures reduce open interest by 12. Both-side openings increase it by 20. Replacing an existing long holder with a new long holder leaves the outstanding contract count unchanged. Closing open interest = 500 − 12 + 20 = 508 contracts. Daily volume = 12 + 20 + 15 = 47 contracts. Do not count each buyer and seller separately. Remember: For open interest, identify whether each side opens or closes before changing the outstanding count.
Hint, shown before you answer in practice mode: Common mistake: Assuming every transaction creates a new outstanding contract or counting both sides twice.
I-056hardnumerical
Q8USD-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
Q9USD-INR spot is 88.00 and the forward quote for exactly half a year is 88.88. What is the dollar’s annualised forward premium relative to spot, using simple annualisation?
Option A. 1%
Why it is wrong: This is the half-year premium without annualisation.
Option B. 2% — Correct answer
Option C. −2%
Why it is wrong: The annualisation magnitude is right but the sign is wrong. The forward quote exceeds spot.
Option D. 4%
Why it is wrong: This doubles the correctly annualised 2% again. Half a year requires one factor of two, not two such factors.
Answer: B. The half-year premium is (88.88 − 88.00) ÷ 88.00 = 1%. Dividing by 0.5 year gives 2% per year. Forward points = 88.88 − 88.00 = ₹0.88 per USD. Half-year proportional premium = 0.88 ÷ 88.00 = 0.01, or 1%. Simple annualised premium = [(F − S) ÷ S] ÷ T × 100 = 0.01 ÷ 0.5 × 100 = 2%. This describes the quoted forward relative to spot. It is not a guarantee that the dollar’s future spot price will rise by 2%. Remember: Use spot as the denominator and divide the period premium by the stated year fraction.
Hint, shown before you answer in practice mode: Common mistake: Reporting a period premium as an annual rate or treating forward points as a spot-price forecast.
I-081mediumnumerical
Q10A trader sells 8 JPY-INR futures contracts at 62.50 and closes them at 62.35. Each contract is JPY 1,00,000, quoted in INR per JPY 100. What is the cumulative futures result, ignoring costs?
Option A. A gain of ₹1,200 — Correct answer
Option B. A gain of ₹1,20,000
Why it is wrong: This multiplies the quotation change by every yen without dividing the notional by the JPY 100 quotation unit.
Option C. A gain of ₹150
Why it is wrong: This is the gain on one contract only. The position contains eight contracts.
Option D. A loss of ₹1,200
Why it is wrong: A short futures position benefits from the lower closing price. The magnitude is correct but the direction is reversed.
Answer: A. The short gains ₹0.15 per JPY 100 on 8 × 1,00,000 ÷ 100 = 8,000 quotation units. A short position earns entry price minus closing price: 62.50 − 62.35 = ₹0.15 per JPY 100. Total JPY notional = 8 × 1,00,000 = JPY 8,00,000, equivalent to 8,000 blocks of JPY 100. Cumulative profit = 0.15 × 8,000 = ₹1,200. This is the total trade result, not an additional payment on top of all daily MTM cash flows. Remember: Convert the notional into quotation units before multiplying by the price movement.
Hint, shown before you answer in practice mode: Common mistake: Treating a JPY-INR price quoted per JPY 100 as if it were quoted per JPY 1.
I-082mediumnumerical
Q11A client buys 40 USD-INR futures at 88.10, each for USD 1,000. Day 1 settles at 88.30. On Day 2, 15 contracts are sold at 88.50 and the remaining 25 settle at 88.22. Ignoring costs, what are the Day 2 net settlement gain and the cumulative gain through Day 2, respectively?
Option A. ₹1,000 and ₹9,000 — Correct answer
Option B. ₹9,000 and ₹17,000
Why it is wrong: ₹9,000 is the cumulative entry-to-current result. Calling it Day 2 profit and adding ₹8,000 again double-counts Day 1.
Option C. ₹3,000 and ₹11,000
Why it is wrong: It counts the ₹3,000 closed-position gain but omits the ₹2,000 loss on the 25 remaining contracts.
Option D. −₹1,000 and ₹7,000
Why it is wrong: It reverses the sign of the correct Day 2 net gain before adding the Day 1 gain.
Answer: A. This answer includes both Day 2 quantities and adds the earlier ₹8,000 exactly once. Day 1 gain = 40 × 1,000 × (88.30 − 88.10) = ₹8,000. Day 2 gain on the 15 closed contracts = 15 × 1,000 × (88.50 − 88.30) = ₹3,000. Day 2 loss on the 25 open contracts = 25 × 1,000 × (88.22 − 88.30) = −₹2,000. Day 2 net gain is ₹1,000. Cumulative gain = ₹8,000 + ₹1,000 = ₹9,000. Independently, 15 × 1,000 × (88.50 − 88.10) + 25 × 1,000 × (88.22 − 88.10) also equals ₹9,000. Remember: For a partial close-out, settle the closed and open quantities separately from the last reset, then reconcile cumulatively.
Hint, shown before you answer in practice mode: Common mistake: Using the original trade price again for every later day and double-counting previously settled gains.
I-105hardnumerical
Q12A one-year USD-INR forward rate is calculated from spot and the two currencies’ interest rates under covered interest parity. Which interpretation is correct?
Option A. It is a guaranteed forecast of the spot rate one year later.
Why it is wrong: A pricing identity based on borrowing and lending does not fix the outcome of the future spot market.
Option B. It makes the future spot rate irrelevant to every unhedged cash flow.
Why it is wrong: Only specified hedged cash flows are covered. Unhedged conversions still face the spot rate then available.
Option C. It equates covered funding routes, not a guaranteed future spot rate. — Correct answer
Option D. It measures the expected currency return without financing costs.
Why it is wrong: The construction expressly includes the two financing rates, rather than ignoring financing costs or estimating an expected return.
Answer: C. The equality is between covered financing cash flows. A different future spot rate does not contradict that equality. For a frictionless one-year illustration, let S be INR per USD and rINR and rUSD the respective annual accumulation rates. Borrowing S rupees, buying USD 1 and investing the dollar produces USD (1 + rUSD). Selling those dollars forward at F gives INR F × (1 + rUSD). Equating this to the rupee repayment S × (1 + rINR) gives F = S × (1 + rINR) ÷ (1 + rUSD). This funding identity uses contracted cash flows and interest rates. It does not require the spot rate at maturity to equal F. An unhedged receipt or payment still depends on that later spot rate. Remember: Distinguish a no-arbitrage forward price from a prediction of the future spot rate.
Hint, shown before you answer in practice mode: Common mistake: Reading a forward premium as a certain future appreciation of the foreign currency.
I-106mediumconceptual
Q13For this calculation, a EUR-USD future represents EUR 1,000 and one tick is USD 0.0001 per EUR. A long position of 12 contracts gains five ticks. Convert the gain at the supplied rate of ₹80 per USD. What is the INR gain, ignoring costs?
Option A. ₹40
Why it is wrong: This converts the five-tick gain on only one contract and omits the other 11 contracts.
Option B. ₹48
Why it is wrong: This uses a tick of 0.00001 instead of the stated 0.0001, reducing the answer tenfold.
Option C. ₹4,800
Why it is wrong: This uses a tick of 0.001, ten times the supplied tick size.
Option D. ₹480 — Correct answer
Answer: D. Five ticks produce USD 0.50 per contract, USD 6 for the position, and ₹480 after conversion. One contract gains 1,000 EUR × 0.0001 USD/EUR × 5 = USD 0.50. For 12 contracts, the gain is 0.50 × 12 = USD 6. Using the supplied conversion rate, USD 6 × ₹80/USD = ₹480. The EUR units cancel before the USD gain is converted. Remember: Calculate tick value in the quotation currency first, then apply any expressly given conversion rate.
Hint, shown before you answer in practice mode: Common mistake: Treating a USD-quoted tick as already denominated in INR, or misplacing the decimal in the tick size.
I-131mediumnumerical
Q14A trader buys 10 USD-INR futures, each for USD 1,000, at 80.00 and closes at 80.40. Initial margin posted is ₹40,000. Ignoring costs, the profit is what percentage of entry notional and of that initial margin, respectively?
Option A. 10% and 0.5%
Why it is wrong: This reverses the two requested denominators.
Option B. 0.5% and 10% — Correct answer
Option C. 0.5% and 1%
Why it is wrong: The first percentage is right, but 4,000 ÷ 40,000 is 10%, not 1%.
Option D. 5% and 10%
Why it is wrong: Dividing 4,000 by 8,00,000 gives 0.005, which is 0.5%, not 5%.
Answer: B. The gain is 0.5% of entry notional but 10% of the much smaller initial margin. Entry notional = 10 × 1,000 × ₹80 = ₹8,00,000. Profit = 10 × 1,000 × (80.40 − 80.00) = ₹4,000. Profit as a fraction of entry notional = 4,000 ÷ 8,00,000 × 100 = 0.5%. Profit as a fraction of the supplied initial margin = 4,000 ÷ 40,000 × 100 = 10%. This is a denominator comparison, not an annualised investment return. Remember: Always identify the denominator before comparing a futures percentage gain.
Hint, shown before you answer in practice mode: Common mistake: Calling a profit-to-margin ratio the underlying currency’s price return or treating margin as the maximum possible loss.
I-132mediumnumerical
Q15In a frictionless illustration, USD-INR spot is 80.00 and the six-month forward is 80.50. INR deposits earn 6% and USD loans cost 4% per year, both simple for exactly 0.5 year. A dealer borrows USD 10,000, sells it spot, invests the INR, and buys the full USD repayment forward. What INR surplus remains at maturity?
Option A. ₹19,000
Why it is wrong: This hedges only USD 10,000 and omits the USD 200 loan interest. It subtracts ₹8,05,000 instead of ₹8,21,100.
Option B. ₹8,000
Why it is wrong: This converts the USD 10,200 repayment at the original spot rate of 80.00 instead of the contracted forward rate.
Option C. ₹2,900 — Correct answer
Option D. ₹24,000
Why it is wrong: This is the INR deposit interest alone. It ignores the foreign loan’s interest and the forward cost.
Answer: C. This answer includes both INR deposit interest and USD borrowing interest, and uses the forward price for the full USD repayment. Selling the USD 10,000 loan at spot produces ₹8,00,000. The INR deposit grows to 8,00,000 × (1 + 0.06 × 0.5) = ₹8,24,000. The USD loan repayment is 10,000 × (1 + 0.04 × 0.5) = USD 10,200. Buying USD 10,200 forward costs 10,200 × ₹80.50 = ₹8,21,100. Surplus = 8,24,000 − 8,21,100 = ₹2,900. The full foreign repayment is fixed in INR, so a different maturity spot rate does not change this stated ledger. Remember: For covered funding, match the forward quantity to the entire foreign-currency maturity obligation.
Hint, shown before you answer in practice mode: Common mistake: Hedging the borrowed principal but forgetting that the foreign interest must also be repaid.
I-133hardnumerical
Exchange Traded Currency Futures: common questions
How many practice questions are there on Exchange Traded Currency Futures?
15 questions, all written out on this page with the correct answer and why each other option is wrong. This unit is one of the 10 practice topics for NISM Series I, which has 150 questions in total.
Are these real NISM Series I questions on Exchange Traded Currency Futures?
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.
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.
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.
Exchange Traded Currency Options
20 questions on Exchange Traded Currency Options. Its quiz opens on that unit.
Open Exchange Traded Currency Options