n NISM Certifications
NSM General NISM
Medium

In the OTC market, one-month USDINR is quoted at 47.75/48.00, and futures for the same maturity are quoted at 48.50/48.70. Which of the following describes possible arbitrage trade and profit per USD if carried to maturity?

Practice question from NISM Series I - Mock Test 3 — bank. The correct answer is highlighted below with a full explanation.

Options

  1. A

    Buy USDINR in OTC and sell in futures, 60 paise

  2. B

    Sell USDINR in OTC and buy in futures, 85 paise

  3. Buy USDINR in OTC and sell in futures, 50 paise

    Correct answer

  4. D

    Buy USDINR in OTC and sell in futures, 75 paise

Why this is the answer

Buy at OTC ask price 48.00, sell at futures bid price 48.50; profit = 48.50 - 48.00 = 0.50 (50 paise).

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