Lesson 1: NISM I

In a barter system, goods were exchanged with:

Which is not a problem with Barter system?

Which is the correct order of evolution of exchange trade (from earliest to present)?

In a cross-border trade, the exchange of currency of one country with that of other country is called Foreign Exchange. True or False?

In a Gold standard system, central banks issues equal amount of currency as the amount of gold reserves it has. True or False?

In the Gold standard system, Dollar is used as the benchmark for valuation of currencies. True or False?

If one unit of gold is valued at Rs.15000 and a unit of gold is valued at $300 the Rs/Dollar exchange rate as per the gold standard system is:

The shift from Gold standard to Floating rate system happened because of:

In floating rate mechanism, central banks would either buy or sell local currencies on a frequent basis to manage & maintain the value of currency & trade competitiveness of the country. True or False?

Which is the correct order of evolution of exchange rate mechanism?

In Bretton Woods system, all currencies were pegged to US Dollar and dollar was pegged to Gold. True or False?

Developed countries have adopted _____________ float exchange rate system, emerging countries have adopted __________ float system

Free float system is a market determined exchange rate system and the central bank has a very small role to play. True or False?

America has a _______ exchange rate system, while China has a ________ exchange rate system.

India follows a _________ exchange rate system.

______________ is the most traded currency, while _________ is the most traded currency pair.

US Dollar is the most traded currency as it can be used as:

There is a market practice of trading a pair of currencies (both) with a ‘third currency’, instead of trading the two currencies directly against each other. The ‘third currency’, here is used as a:

Advantages of using a vehicle currency are:

The use of vehicle currency multiplies the number of currency pairs to be maintained & managed by the central bank. True or False?

Which is considered to be one the most stable large currency?

Which amongst the following is the most active time for trading in international currency markets?

At any point of time, the exchange rates of major currencies are different across all active major currency trading centers. True or False?

A good opportunity of arbitrage exists in major currencies thanks to multiple active trading centres. True or False?

Trading in currency is different than trading in other assets as currency is traded in a pair. True or False?

In a currency pair quote, the price of the Base Currency is fixed at one unit. True or False?

1$ = Rs 70.75. Base currency is ______ and Quote currency is _______

EURUSD = 1.1675. ______________  is the base currency & _________ is the quote currency.

_________ is considered to be the universal base currency for most of the currency pairs.

In Interbank market, dealers quote a two way price, for both buying and selling of currency. True or False?

In a two way quote, the price quoted by market maker for buying is _________ and price quoted for selling is ________

In Foreign exchange over the counter trade, _________ is the market maker and _______ is the price taker.

A bank quotes USDINR price 69.95/69.96. Bid price is _______ and Ask price is ______.

A bank quotes USDINR price 71.15/71.16. Bank is willing to sell at _______ and Bank is willing to buy at ________.

The difference between Bid rate & Ask rate is called as:

Identify the incorrect statement:

Identify the correct statement:

If the spread for a currency pair is large, this means the liquidity is:

If the USDINR changed from 70.85/86 to 71.30/32, the rupee has ______________

If the USDINR changed from 71.95/96 to 71.40/41, the Rupee has _____________.

The EUR has appreciated against the INR. EURINR was quoting at 80.90/92, the new quote would be:

The INR has strengthened against the USD. The USDINR was quoted at 71.85/86. The new quote would be:

The merchant market for currency trade is open from 9:00 AM to 4:30 PM and the last half hour is meant only for inter-bank dealings. True or False?

The OTC market for currency trade is open from ____________ and the merchant trade is open from ____________

In OTC forex markets, the benchmark used by banks to price large value merchant transactions is called card rate & the benchmark used by banks to price small value transaction is the Inter Bank Rate. True or False?

After overnight developments in the global markets, the buy and sell forex rates for Indian rupee are discovered in the early morning trade in Indian currency market. True or False?

For arriving at the USDINR RBI reference rate, RBI polls from a list of select banks every day, for a 5-minute window, in between ______________

In OTC currency markets, trade date is:

When the settlement happens one day after the trade date, the date is called:

Ramesh is a resident Indian. He wants to book an OTC Forex forward contract. As per RBI guidelines, Ramesh needs to have an underlying trade contract which establishes his exposure to foreign currency, before he can book a forward contract. True or False?

Small and medium enterprises (SMEs) cannot book Forex OTC forward contracts without an underlying trade contract. True or False?

The rates for USDINR are 71.66/67. The rate for EURUSD is 1.1636/37. What are bid-ask cross rates for EURINR?

The rates for USDINR are 72.54/55. The rate for EURUSD is 1.1535/36. What are bid-ask cross rates for EURINR?

The rates for USDINR are 72.02/03. The rate for GBPUSD is 1.3167/68. What are bid-ask cross rates for GBPINR?

The rates for USDINR are 71.66/67. The rate for GBPUSD is 1.3151/53. What are bid-ask cross rates for GBPINR?

The rates for USDINR are 71.22/23. The rate for USDJPY is 120.60/61. What are bid-ask cross rates for JPYINR?

A currency trader, who trades in USDINR, expects the upcoming CPI (Consumer Price Index) data in India, to show a considerably higher value than previous. What should he do in the currency futures market (USDINR)?

If all other things remain same, what impact would the increase in India’s GDP have on the EURINR rate?

A currency futures trader in India, expects, ‘retail sales data’ in US to show higher retail sales. What would be profitable for him?

The Indian IIP (Index of Industrial Production) data is expected this week. A currency futures trader expects the IIP to be lower. He would bet on:

A rising Non Farm payroll data is considered good for the currency. True or False?

A widening current account deficit will strengthen the domestic currency. True or False?

A currency futures trader in India is keenly watching the US Central banks latest meeting. He expects US central bank to signal an increase in interest rates in US. He would:

A significant increase in international crude prices will likely result in appreciation of Rupee with respect to dollar. True or False?