Massive Summer Special Limited Time 65% Discount Offer - Ends in 0d 00h 00m 00s - Coupon code: netdisc

ACI 3I0-012 ACI Dealing Certificate Exam Practice Test

Demo: 111 questions
Total 740 questions

ACI Dealing Certificate Questions and Answers

Question 1

A customer based in the UK exports automotive parts to the US. His main competitor is in France. What type of exposure to currency risk is posed by movements in EUR/USD?

Options:

A.

Transaction exposure

B.

Translation exposure

C.

Economic exposure

D.

None

Question 2

Which of the following statements is correct?

Options:

A.

Hedging a long bond position with payer’s swap involves basis risk

B.

Hedging the credit risk of an asset swap package with a credit default swap has no basis risk

C.

Basis risk is a result only of maturity mismatches

D.

Basis risk is a result only of duration mismatches.

Question 3

Which of the following statements does not explain why banks accept some amount of interest rate risk?

Options:

A.

In their function as intermediaries, banks must necessarily accept some degree of interest rate risk.

B.

Banks incur interest rate risk to increase income

C.

Banks prefer c red it risk to market risk.

D.

If banks failed to take on interest rate risk they would not be able to meet the needs of their deposit and loan customers.

Question 4

For a bank to count funds as regulatory capital:

Options:

A.

There has to be an ultra long term maturity date

B.

The risk taken by the bank must be taken or shared by provider of the capital

C.

The funds must be in the form of pure equity

D.

The funds must be re-invested only in cash

Question 5

Which of following terms is not used as an expression for dates other than regular dates/periods?

Options:

A.

cock dates

B.

broken dates

C.

odd dates

D.

weird dates

Question 6

If a 12-month AUD/NZD swap is quoted 53/47, which of the following statements would you consider to be correct?

Options:

A.

12-month AUD rates are higher than 12-month NZD rates

B.

12-month AUD rates are lower than 12-month NZD rates

C.

Spot AUD/NZD will be higher by approximately 50 points in 12 months

D.

The AUD yield curve is positive, whilst the NZD curve is negative

Question 7

Mark-to-market’ in a repo means:

Options:

A.

Revaluing collateral versus cash

B.

Revaluing collateral

C.

Calculating net present value

D.

Calculating the net replacement cost

Question 8

An FX forward outright has been dealt for a value date which is subsequently declared to be a bank holiday. According to the Model Code, the exchange rate for the deal:

Options:

A.

should be adjusted to take account of the change in value date

B.

cannot be adjusted if one of the counterparties wishes to adjust the rate but the other wishes to keep the original rate

C.

must be adjusted if one of the counterparties wishes to adjust the rate but the other wishes to keep the original rate

D.

should be adjusted if the adjustment is for two days or longer but not if it is for only one day

Question 9

Which of the following statements about the Net Stable Funding Ratio is correct?

Options:

A.

Assets are classified with an available stable funding factor (ASF).

B.

Liabilities are classified with a required stable funding factor (RSF).

C.

The ratio of available funding to required funding has to be higher than 50%n

D.

Equity has an available stable funding factor of 100%.

Question 10

In foreign exchange markets, the first currency in a currency pair is:

Options:

A.

The quoted currency

B.

The base currency

C.

The counter currency

D.

The terms currency

Question 11

If you take an 18-month USD deposit, when is interest payable?

Options:

A.

Quarterly

B.

At maturity

C.

Semi-annually

D.

After one year and at maturity

Question 12

In the deposit broker market, which one of the following is not a valid reason for the proposed borrower to decline the lenders name?

Options:

A.

In the case of short date deposits, if the borrower is not prepared to repay the deposit prior to notice of receipt of the funds from the correspondent bank.

B.

The borrower has no lending line for the placer of the funds and does not wish to be embarrassed by being unable to reciprocate.

C.

If he secures a better rate elsewhere.

D.

The borrower would be in breach of internal or regulatory depositor concentration limitations.

Question 13

What is the purpose of the Liquidity Coverage Ratio?

Options:

A.

to mitigate market replacement risk across markets

B.

to eliminate funding mismatches by establishing a minimum acceptable amount of stable funding

C.

to ensure that banks have enough high-quality liquid assets to survive a 30-day period of acute market stress

D.

to minimize duration risk on a bank’s assets over a one-year horizon

Question 14

What are de minimis claims?

Options:

A.

claims of less than USD 100.00

B.

claims of less than USD 1,000.00

C.

claims of less than EUR 100.00

D.

claims of less than EUR 1,000.00

Question 15

The seller of a floor:

Options:

A.

Receives compensation if a reference interest rate falls below an agreed level

B.

Pays compensation if a reference interest rate falls below an agreed level

C.

Receives compensation if a reference interest rate rises above an agreed level

D.

Pays compensation if a reference interest rate rises above an agreed level

Question 16

The delta of an ‘at-the-money’ long call option is:

Options:

A.

Between +0.5 and +1

B.

+0.5

C.

Between 0 and +0.5

D.

Zero

Question 17

If you have created a ‘synthetic asset’ by buying and selling a USD/CHF swap, what have you done?

Options:

A.

Created an exposure to the CHF

B.

Created an exposure to the USD

C.

Switched a CI-IF asset temporarily into USD without taking currency risk

D.

Switched a USD asset temporarily into CHF without taking currency risk

Question 18

You want to hedge your deposit against falling interest rates. Which of the alternatives below are appropriate for this purpose?

Options:

A.

Selling a Money Market Future and/or selling a Forward Rate Agreement

B.

Buying a Money Market Future and/or buying a Forward Rate Agreement

C.

Selling a Money Market Future and/or buying a Forward Rate Agreement

D.

Buying a Money Market Future and/or selling a Forward Rate Agreement

Question 19

You are quoted the following market rates:

Spot EUR/USD 1.3097-00

0/N EUR/USD swap 0.08/0.11

TIN EUR/USD swap 0.29/0.34

S/N EUR/USD swap 0.10/0.13

Where can you buy EUR against USD for value tomorrow?

Options:

A.

1.299971

B.

1.309966

C.

1.309971

D.

1.310029

Question 20

If you lend for 3 months and borrow for 6 months, you may be said to:

Options:

A.

Be over-lent

B.

Have a negative gap

C.

Be exposed to higher interest rates

D.

Be over-borrowed

Question 21

Which of the following statements about operational risk awareness is correct?

Options:

A.

It is good practice to collect and disclose incidents and near-misses for the future benefit of the professional community.

B.

It is good practice to collect and analyze incidents and near-misses so as to set up preventive action plans for the future.

C.

A report describing operational risks should be made at the request of the front office.

D.

A report describing operational risks should be made at least once a year and provided to the front office.

Question 22

You are the buyer of protection in a credit default swap. All other things being equal your counterparty credit risk is increasing if:

Options:

A.

the credit spread is decreasing

B.

the credit spread is decreasing and recovery rate is increasing

C.

the credit spread is increasing

D.

the recovery rate is increasing

Question 23

What is the correct interpretation of a EUR 5,000,000.00 one-week VaR figure with a 99% confidence level?

Options:

A.

A loss of at least EUR 5,000,000.00 can be expected in 99 out of the next 100 weeks.

B.

A loss of at most EUR 5,000,000.00 can be expected in 1 out of the next 100 weeks.

C.

A loss of at most EUR 5,000,000.00 can be expected in 1 out of the next 100 days.

D.

A loss of at least EUR 5,000,000.00 can be expected in 1 out of the next 100 weeks.

Question 24

You have borrowed at 3-month LIBOR+50. LIBOR for the loan will be re-fixed in exactly one month. The market is quoting:

1x3 USD FRA 0.42-45%

1x4 USD FRA 0.54-58%

1x5 USD FRA 0.57-62%

To hedge the next LIBOR fixing, you should:

Options:

A.

Sell a 1x3 FRA at 0.42%

B.

Buy a 1x3 FRA at 0.45%

C.

Buy a 1x4 FRA at 0.58%

D.

Sell a 1x4 FRA at 0.54%

Question 25

A transaction that entails market price risks may be entered into in the absence of a market price risk limit...

Options:

A.

...only at the discretion of the head of treasury.

B.

...only at the discretion of the head of trading.

C.

...as long a counterparty and issuer limit is in place.

D.

... is not permitted.

Question 26

What happens when a coupon is paid on bond collateral during the term of a sell/buy-back?

Options:

A.

Nothing

B.

A margin call is triggered on the seller

C.

A manufactured payment is made to the seller

D.

The equivalent value plus reinvestment income is deducted from the repurchase price

Question 27

If EUR/USD is 1.3025-28 and the 6-month swap is 15.50/17, what is the 6-month outright price?

Options:

A.

1.3042-1.30435

B.

1.30405-1.3045

C.

1.30095-1.3011

D.

1.4575- 1.4728

Question 28

What is the expression used to describe a genuine error (wrong amount, wrong side, wrong rate) made by a dealer in the execution of an order on an electronic platform?

Options:

A.

mis-stroke

B.

slip-bid

C.

mis-hit

D.

broken trade

Question 29

Which of the following statements about “standard settlement instructions” (SSI) is correct?

Options:

A.

The Head of Operations has the sole responsibility of ensuring the correctness and validity of the SSI set up.

B.

SSIs should be stored and maintained in the bank’s general static data system.

C.

Each institution should have a separate SSI team to prevent I minimise the potential risk of fraud.

D.

SSI staff should be fully integrated within Operations to insure consistent and reliable settlement guidelines.

Question 30

The delta of an ‘at-the-money’ long put option is:

Options:

A.

Between -0.5 and -1

B.

-0.5

C.

Between +0.5 and +1

D.

+0.5

Question 31

All other things being equal the interest rate risk of a fixed coupon bond is:

Options:

A.

greater, the higher the coupon and the longer the term

B.

greater, the lower the coupon and the longer the term

C.

lower, the lower the coupon and the shorter the term

D.

lower, the higher the coupon and the longer the term

Question 32

When a broker needs to switch a name this should be done:

Options:

A.

only after consultation with the local regulator

B.

only if the switching transaction is done at the current market rate

C.

only provided that such transactions are identified as switching transactions

D.

only after approval by the broker’s senior management

Question 33

Which of the following statements about leverage ratios under Basel III is correct?

Options:

A.

The leverage ratio is the ratio of the bank’s Tier 1 Capital to total assets of the bank, excluding its off- balance sheet exposures and derivatives.

B.

The purpose of introducing a leverage ratio is to avoid the build-up of excess leverage that could potentially lead to a “credit crunch” in stressed conditions.

C.

The leverage ratio under Basel III must be higher than 4%.

D.

The leverage ratio is the ratio of the bank’s Tier 1 and Tier 2 Capital to total assets of the bank, including its off-balance sheet exposures and derivatives.

Question 34

What does the Model Code recommend regarding “entertainment and gifts”?

Options:

A.

Management should monitor the form, frequency and cost of entertainment and gifts dealers receive, have a clearly articulated policy towards the giving/receipt of gifts and ensure the policy is enforced.

B.

As gifts and entertainment may be offered in the normal course of business, employees can offer inducements to conduct business and solicit them from the personnel of other institutions.

C.

Although management should not monitor the form, frequency or cost of entertainment/gifts dealers receive, they may have a policy towards the giving/receipt of gifts and ensure the policy is enforced.

D.

Gifts or entertainment should never be offered in the normal course of business, and employees must never offer any inducements to conduct business, nor solicit them from other institutions.

Question 35

What is an FX swap from spot?

Options:

A.

An exchange of two streams of interest payments in different currencies and an exchange of the principal amounts of those currencies at maturity

B.

A spot sale (purchase) and a forward purchase (sale) of two currencies agreed simultaneously between two parties

C.

An exchange of currencies on a date beyond spot and at a price fixed today

D.

An agreement to buy (sell) an amount of base currency value spot and simultaneously resell (buy back) the same amount to the same counterpart value today

Question 36

Repo is said to have “double indemnity” due to the creditworthiness of the counterparty and:

Options:

A.

A written legal agreement between the parties

B.

The oversight of the transaction by the custodian of the collateral

C.

The creditworthiness of the collateral

D.

The right of close-out and set-off in an event of default

Question 37

A 6-month SEK/NOK Swap is quoted 40/50. Spot is 1.1145. Which of the following statements is correct?

Options:

A.

SEK interest rates are higher than NOK interest rates

B.

NOK interest rates are higher than SEK interest rates

C.

NOK interest rates are higher than USD interest rates

D.

SEK interest rates and NOK interest rates are converging

Question 38

You are quoted spot USD/NOK 5.7220-28 and USD/SEK 6.3850-58, at what price can you buy NOK against SEK?

Options:

A.

0.8963

B.

1.1157

C.

1.1159

D.

1.1160

Question 39

You are paying 5% per annum paid semi-annually and receiving 6-month LIBOR on a USD 10,000,000.00 interest rate swap with exactly two years to maturity. 6-month LIBOR for the next payment date is fixed today at 4.95%. You expect 6-month LIBOR in 6 months to fix at 5.25%, in 12 months at 5.35% and in 18 months at 5.40%. What do you expect the net settlement amounts to be over the next 2 years? Assume 30-day months.

Options:

A.

Pay 250.00, receive 1,250.00, receive 1,750.00, receive 2,000.00

B.

Receive 250.00, pay 1,250.00, pay 1,750.00, pay 2,000.00

C.

Pay 2,500.00, receive 12,500.00, receive 17,500.00, receive 20,000.00

D.

Receive 2,500.00, pay 12,500.00, pay 17,500.00, pay 20,000.00

Question 40

Which of the following currency risks could only be hedged by a non deliverable forward (NDF)?

Options:

A.

an exposure in Latvian Lats (LVL)

B.

an exposure in Russian Rouble (RUB)

C.

an exposure in Romanian Leu (RON)

D.

an exposure in Bulgarian Lev (BGN)

Question 41

An interest rate swap (IRS) is:

Options:

A.

A contract to exchange one stream of interest payments for another

B.

A temporary exchange of one deposit for another of a longer maturity in the same currency

C.

A forward-forward contract

D.

A contract to exchange an interest rate stream in one currency for another one in a different currency

Question 42

A futures clearing house is:

Options:

A.

The buyer to each seller and the seller to each buyer

B.

A clearing agent only

C.

The self-regulatory organization for the futures exchange

D.

The owner of the futures exchange

Question 43

You are quoted the following rates:

Spot GBP/CHF 1.4535-45

3M GBP/CHF swap 22/19

At what rate can you sell GBP against CHF outright 3-month?

Options:

A.

1.4523

B.

1.4526

C.

1.4513

D.

1.4516

Question 44

3-month EUR/USD FX swaps are quoted to you at 8/12. If the “points are in your favor”, what have you done?

Options:

A.

Bought and sold 3-month EUR/USD through the swap

B.

Sold and bought 3-month EUR/USD through the swap

C.

Made the quote

D.

Cannot say

Question 45

EUR/USD is 1.3080-83 and EUR/CHF is 1.2160-63. What price would you quote to a customer who wishes to sell CHF against USD?

Options:

A.

1.0759

B.

0.9299

C.

1.5909

D.

0.9295

Question 46

Under Basel rules, expected credit loss is a function of which of the following sets of parameters:

Options:

A.

1 minus recovery rate, probability of default and exposure at default

B.

exposure at origination, exposure at default and loss given default

C.

loss given default, 1 minus recovery rate and exposure at default

D.

exposure at origination, recovery rates and probability of default

Question 47

From the following AUD rates:

3M AUD (91-day) deposits 2.35%

3x6 AUD (90-day) FRA 2.55%

Calculate the 6-month implied cash rate.

Options:

A.

2.37%

B.

2.46%

C.

2.55%

D.

4.90%

Question 48

The forward points are calculated using:

Options:

A.

The level of interest rates in the base currency

B.

The level of interest rates in the quoted currency

C.

The interest rates in the two currencies

D.

Your expectations of the future spot rate

Question 49

When performing a gap analysis, into which of the following time buckets should a 5-year floating-rate note with a 6-month LIBOR coupon be slotted?

Options:

A.

the 6-month bucket

B.

the 2.5-year bucket

C.

the 5-year bucket

D.

It should be weighted and apportioned in each of the time buckets in accord with the periodic coupon payments.

Question 50

Click on the Exhibit Button to view the Formula Sheet, If GBP/USD is 1.5350-53 and USD/JPY is 106.50-53, what is GBP/JPY?

Options:

A.

163.48-56

B.

163.51-52

C.

69.36-39

D.

69.36-39

Question 51

You are quoted the following market rates:

Spot USD/JPY 123.65

1M (30-day) USD. 2.15%

1M (30-day)JPY 0.10%

What is 1-month USD/JPY?

Options:

A.

123.44

B.

123.65

C.

123.86

D.

123.90

Question 52

When you are accepting a stop loss order, you must:

Options:

A.

Ensure that your counterparty understands the terms under which your bank accepts the order.

B.

Ensure that your counterpart can be contacted in the event of unusual situations or events or extremely volatile market conditions.

C.

Ensure that your counterparty understands that any guarantee or fixed price execution requires agreement in writing.

D.

All of the above.

Question 53

To establish and maintain a short position in deliverable securities, you must:

Options:

A.

Sell

B.

Sell and subsequently buy back

C.

Sell and borrow

D.

Sell, borrow and buy back simultaneously

Question 54

Your are quoted the following rates:

spot CHF/JPY 60.12-22

3M CHF/JPY 25.5/22.5

At what rate can you buy 3-month outright JPY against CHF?

Options:

A.

79.995

B.

79.965

C.

79.895

D.

79.865

Question 55

If spot GBP/CHF is quoted 2.3875-80 and the 3-month forward outright is 2.3660-70, what are the forward points?

Options:

A.

21.5/21

B.

210/215

C.

215/210

D.

21/21.5

Question 56

You deal over the phone with a counterparty. The subsequent confirmation differs from the terms agreed verbally. What is the result?

Options:

A.

The confirmation takes precedence as it is a written contract.

B.

The matter will have to be submitted to arbitration in order to establish the mutual intent of the parties.

C.

It depends on local law.

D.

The verbal agreement is binding.

Question 57

To curb attempted fraud, banks should:

Options:

A.

Require greater vigilance by the management and staff.

B.

Take particular care when the beneficiary is a third party to the deal.

C.

Ensure that details of all telephone deals which do not include pre-agreed standard settlement instructions are confirmed by telex or similar means without delay.

D.

All of the above.

Question 58

What is the minimum basis on which a BCP should be updated and tested?

Options:

A.

Every 6 months

B.

Yearly

C.

Whenever the BCP procedures are changed

D.

Every 3 months

Question 59

The one-month (31-day) GC repo rate for French government bonds is quoted to you at 3.75-80%. As collateral, you are offered EUR25 million nominal of the 5.5% OAT April 2006, which is worth EUR 28,137,500. If you impose an initial margin of 1%, the Repurchase Price is:

Options:

A.

EUR 27,947,276.43

B.

EUR 27,946,077.08

C.

EUR 27,950,071.43

D.

EUR 27,948,871.97

Question 60

What is a Vostro account?

Options:

A.

Your account at another bank

B.

A foreign bank’s account in your bank in your domestic currency

C.

An account in your bank used for internal transactions

D.

A customer’s account at your bank

Question 61

Deals transacted directly or via a broker prior to 5:00 am Sydney time on Monday morning:

Options:

A.

are invalid

B.

must be approved by senior management before confirmation

C.

cannot be entered into without the approval of the local regulator

D.

are not considered to have been done in normal conditions or normal market hours

Question 62

The mid-rate for USD/CHF is 1.3950 and the mid-rate for AUD/USD is 0.7060. What is the midrate for CHF/AUD?

Options:

A.

0.9849

B.

1.0154

C.

1.9759

D.

0.5061

Question 63

If EUR/USD is quoted to you as 1.1050-53, does this price represent?

Options:

A.

The number of EUP per USD

B.

The number of USD per EUR

C.

Depends on whether the price is being quoted in Europe or the US

D.

Depends on whether the price is being quoted interbank or to a customer

Question 64

Voice-brokers in spot FX are remunerated with:

Options:

A.

Commission paid by both parties at rates agreed beforehand

B.

A fee paid by the seller

C.

Bid/offer spread

D.

A share of the bid/offer spread

Question 65

A USD deposit traded in London between two German banks is cleared:

Options:

A.

Wherever the parties agree

B.

In London

C.

In NewYork

D.

In Frankfurt

Question 66

In trade confirmation, which one of the following statements about “matching” is correct?

Options:

A.

matching should be performed by no later than the day after trading day

B.

matching processes are manual and may not be automated

C.

matching should be performed as soon as possible upon receipt of the confirmation

D.

confirmation matching should be a post-settlement workflow activity

Question 67

Which of the following risks is best mitigated by CLS?

Options:

A.

currency risk

B.

operational risk

C.

liquidity risk

D.

settlement risk

Question 68

All prices quoted by brokers should be taken to be:

Options:

A.

under reference

B.

firm, but not necessarily in marketable amounts

C.

firm, unless otherwise qualified

D.

merely indicative

Question 69

What is the Repurchase Price of a classic repo?

Options:

A.

The market value of bond collateral at the end of the repo at the clean price of the bond

B.

The market value of bond collateral at the end of the repo at the dirty price of the bond

C.

The amount of cash actually paid for collateral at the start of the repo

D.

The amount of cash actually paid for collateral at the start of the repo plus repo interest

Question 70

Which of the following risks are considered market risks?

Options:

A.

interest rate, currency, equity and commodity risk

B.

interest rate, currency, equity and default risk

C.

interest rate, equity, liquidity and default risk

D.

legal, reputation and regulatory risk

Question 71

By what means should a financial institution preferably submit SSI changes and notifications to its clients?

Options:

A.

e-mail

B.

fax or letter

C.

MTn99 SWIFT message

D.

MT670/671 SWIFT message

Question 72

What is the meaning of CCP within the Basel framework?

Options:

A.

Collateralized Clearing Process

B.

Central Clearing Counterparty

C.

Collateralized Counterparty Protection

D.

Collateralized Credit Protection

Question 73

The Interest Rate Parity Theorem should work because, when one sells a low interest rate currency to invest in a high interest rate currency and hedges the currency risk:

Options:

A.

The cost of hedging is given by the forward points, which are equal to the interest rate differential between the two currencies

B.

The high interest rate currency will depreciate

C.

The profit from the appreciation of the high interest rate currency has been hedged away

D.

Interest rates are mean reverting, which means the low interest rate will tend to rise and the high interest rate will tend to fall

Question 74

Which of the following currencies is quoted on an ACT/365 basis for the calculation of interest on interbank deposits in London?

Options:

A.

EUR

B.

JPY

C.

HKD

D.

AUD

Question 75

What does the Model Code recommend in respect of prices and orders made on electronic trading platforms?

Options:

A.

They must be posted with a clear intent to be tradable.

B.

They must be identified as indicative rates only.

C.

They must be posted subject to later credit line approval.

D.

They need not be posted in an appropriate trading style.

Question 76

Which of the following does not represent an operational risk as defined by Basel rules?

Options:

A.

theft of information

B.

damage to an organization through loss of its reputation or standing

C.

market manipulation

D.

loss incurred from the use of incorrect documentation

Question 77

Under Basel III rules the meaning of RSF is:

Options:

A.

Reviewed Supervisory Factor

B.

Required Stable Funding

C.

Riskless Stable Funding

D.

Riskless Supervised Funding

Question 78

Which of the following statements is correct?

Options:

A.

With liquidity transfer pricing (LTP) banks attribute the costs, benefits and risks of liquidity to respective business units within a bank

B.

With liquidity transfer pricing (LTP) banks are monitoring and diversifying their funding base

C.

With liquidity transfer pricing (LTP) banks are agreeing with external liquidity providers on the fair market price of funds

D.

Liquidity transfer pricing charges providers of funds for the cost of liquidity and users of funds for the benefit of liquidity

Question 79

If GBP/USD is 1.5350-53 and USD/JPY is 97.50-53, what is GBP/JPY?

Options:

A.

149.66-74

B.

149.69-71

C.

63.52-53

D.

63.51-54

Question 80

Which one of the following statements is incorrect under Basel III?

Options:

A.

Instruments qualifying for recognition as Tier 1 or Tier 2 capital will be substantially restricted.

B.

Basel III does not include Tier 3 capital

C.

There is a distinction between upper Tier 2 and lower Tier 2 capital

D.

New non-common equity Tier 1 and Tier 2 instruments are more loss-absorbing than previously

Question 81

The seller of a put option has:

Options:

A.

Substantial opportunity for gain and limited risk of loss

B.

Substantial risk of loss and substantial opportunity for gain

C.

Limited risk of loss and limited opportunity for gain

D.

Substantial risk of loss and limited opportunity for gain

Question 82

What happens when a coupon is paid on bond collateral during the term of a classic repo?

Options:

A.

Nothing

B.

A margin call is triggered on the seller

C.

A manufactured payment is made to the seller

D.

Equivalent value plus reinvestment income is deducted from the repurchase price

Question 83

You have quoted spot USD/CHF at 0.9423-26. Your customer says “I take 5”. What does he mean?

Options:

A.

He buys CHF 5,000,000.00 at 0.9423

B.

He buys CHF 5,000,000.00 at 0.9426

C.

He buys USD 5,000,000.00 at 0.9423

D.

He buys USD 5,000,000.00 at 0.9426

Question 84

Which one of the following statements is true?

Options:

A.

Brokers should only show the names of banks to counterparties who have prime credit ratings.

B.

Brokers should only show the names of banks to counterparties who provide good liquidity to the brokered market.

C.

Brokers should only show the names of banks to counterparties whom they know well.

D.

Brokers should only show the names of bank counterparties if both sides display a serious intention to transact

Question 85

Which of the following is true?

Options:

A.

The 3-month EURODOLLAR futures contract has a basis point value of USD 50.00 and a face value of USD 1,000,000.00

B.

The 3-month EURIBOR futures contract has a a basis point value of EUR 12.50 and a face value of EUR 500,000.00

C.

The 3-month Sterling (SHORT STERLING) futures contract has a a basis point value of GBP 12.50 and a face value of GBP 500,000.00

D.

The 3-month Euro Swiss Franc (EUROSWISS) futures contract has a a basis point value of CHF 50.00 and a face value of CHF 2,000,000.00

Question 86

You quote a customer a spot cable 1.6050-55 in USD 3,000,000.00. If they sell USD to you, how much GBP will you be short of?

Options:

A.

4,816,500.00

B.

1,869,158.88

C.

1,868,57677

D.

4,815,000.00

Question 87

Which one of the following statements correctly describes the increased capital ratios that will come into effect under Basel III?

Options:

A.

minimum tier 1 capital of 4.5% and minimum total capital plus a conservation buffer of 10.5%

B.

minimum tier 1 capital of 6% and minimum total capital including conservation buffer of 8%

C.

minimum tier 1 capital of 4% and minimum total capital including conservation buffer of 10.5%

D.

minimum tier 1 capital of 6% and minimum total capital including conservation buffer of 10.5%

Question 88

Today’s spot value date is the 30th of June. What is the maturity date of a 2-month EUR deposit deal today? Assume no bank holidays.

Options:

A.

27th August

B.

30th August

C.

31st August

D.

1 September

Question 89

What ought to be done in the event a trade erroneously occurs at an off-market rate?

Options:

A.

By agreement between the two counterparties, the trade must be cancelled as soon as practically possible since a rate amendment is prohibited.

B.

By agreement between the two counterparts, the trade should, as soon as practically possible, either be cancelled or have its rate amended to an appropriate market rate.

C.

The off-market rate should be adjusted as soon as possible to the appropriate current market rate and a new authenticated SWIFT confirmation sent immediately to the counterparty.

D.

Nothing need be done, since once a trade is agreed to by the front office it is a binding agreement for both counterparties.

Question 90

Are the forward points significantly affected by changes in the spot rate?

Options:

A.

Never

B.

For very large movements and longer terms

C.

Always

D.

Spot is the principal influence

Question 91

Which of the following is not a negotiable instrument?

Options:

A.

CD

B.

FRA

C.

BA

D.

ECP

Question 92

Your agent bank accepts your back-valuation request for 1 day on an amount of EUR 50,000,000.00. EONIA is 0.375% and the ECB marginal lending facility rate is 1.50%. Applying conventional administration fees, how much will this be charged?

Options:

A.

EUR 620.83

B.

EUR 868.06

C.

EUR 968.06

D.

EUR 2,183.33

Question 93

Responsibility for the activities of all personnel engaged in dealing (both dealers and support staff) for both principals and brokers lies with:

Options:

A.

the market supervisor

B.

the national ACI association

C.

the management of such organizations

D.

the central bank

Question 94

What is the maximum maturity of an unsecured USCP?

Options:

A.

One year

B.

270 days

C.

183 days

D.

5 years

Question 95

Supervisors would generally consider interest rate risk exposure in the banking book excessive beginning at what level of losses given a +1- 200 bps market rate movement?

Options:

A.

> 2% of 6 months forward earnings

B.

> 20% of regulatory capital

C.

<10% of regulatory capital

D.

< 5% of 12 months forward earnings

Question 96

Which one of the following statements is incorrect? Hedge accounting of an existing position no longer applies when:

Options:

A.

the trader acquires additional exposure in the hedged item.

B.

the hedging instrument is sold, terminated or exercised.

C.

the hedged item is sold or settled.

D.

a hedge fails the effectiveness test.

Question 97

Brokers should confirm all transactions:

Options:

A.

Initially by fax or other acceptable electronic means, then in writing.

B.

Only if the deal is between overseas counterparties and for value today.

C.

Only if the transaction is not for a marketable amount.

D.

To both counterparties immediately by fax or other acceptable electronic means.

Question 98

Using the following rates:

3M (90-day) eurodeposits3.50%

6M (180-day) eurodeposits3.75%

What is the rate for a deposit, which runs from 3 to 6 months?

Options:

A.

3.625%

B.

3.285%

C.

3.965%

D.

3.835%

Question 99

At the end of the day you are short EUR 10 million against GBP at 0.6712. You are asked to revalue your position at a EUR/GBP rate of 0.6729. What is the resulting profit or loss?

Options:

A.

Loss of GBP 17000

B.

Profit of GBP 17,000

C.

Loss of EUR 17,000

D.

Profit of EUR of 17,000

Question 100

What type of institution is the typical issuer of bank bills?

Options:

A.

Credit institution

B.

lnvestment bank

C.

Corporate

D.

All of the above

Question 101

The use of standard settlement instructions (SSI’s) is strongly encouraged because:

Options:

A.

It reduces operational risk.

B.

It splits differences arising from failed settlement between the two counterparties.

C.

It removes the need for sending out SWIFT payment authorisations.

D.

All of the above.

Question 102

Click on the Exhibit Button to view the Formula Sheet. If you bought USD 2,000,000 against CHF at 1.1020, USD 3,000,000 at 1.1040 and USD 5,000,000 at 1.1032, what is the average rate of your position?

Options:

A.

1.1030

B.

1.1035

C.

1.1028

D.

1.1032

Question 103

A 3-month (91-day) deposit of EUR25 million is made at 3.25%. At maturity, it is rolled over three times at 3.55% for 90 days, 4.15% for 91 days and 4.19% for 89 days. At the end of 12 months, how much is repaid (principal plus interest)?

Options:

A.

EUR 25,962,011.01

B.

EUR 25,959,714.91

C.

EUR 25,948,878.47

D.

EUR 25,948,648.82

Question 104

One of your brokers asks you to buy and sell EUR/USD at the same price net of brokerage in order to allow him to clear a transaction.

Options:

A.

You must have prior senior management approval.

B.

You must have the authoritq to switch names.

C.

You must execute such transactions as promptly as possible within policy guidelines

D.

All of the above.

Question 105

Spot cable is quoted at 1.6048-53 in the brokers and you quote a customer 1.6050-55 in USD 3 million, If they sell USD to you, how much GSP will you be short of?

Options:

A.

4,816,500.00

B.

1,868,809.57

C.

1.868,576.77

D.

4,815,900.00

Question 106

Banks have a fiduciary responsibility to ensure that clients have all necessary information to understand the transaction because this:

Options:

A.

Will encourage clients to do more business.

B.

Will help prevent potential litigation.

C.

Will help banks sell sophisticated risk management solutions.

D.

Is required by all regulators.

Question 107

You have written a EUR/USD knock-in option for a bank counterparty. At 6pm New York time on Friday, the instrike point is breached. This is confirmed on screens. The counterparty contacts you to confirm that the option has been knocked in.

Options:

A.

The deal is done. You should confirm with your counterparts.

B.

If the knock-in is confirmed by a New York price source, the deal is done and you should confirm with your counterparty.

C.

The recognised closing time for the currency markets is 6:00pm New York time in Friday, so the deal is done and you should confirm with your counterparty.

D.

The recognised closing time for the currency markets is 5:00pm NewYork time in Friday, so no deal is done.

Question 108

Which of the following is issued by auction?

Options:

A.

Treasury bill

B.

CD

C.

BA

D.

USCP

Question 109

A customer asks for a price in 3-month CHF/JPY. You quote 56/54. The customer deals at 54. What have you done?

Options:

A.

Bought CHF against JPY spot and sold JPY against CHF 3-month forward

B.

Sold CHF against JPY spot and bought CHF against JPY 3-month forward

C.

Bought CHF against JPY spot and sold CHF against JPY 3-month forward

D.

Bought JPY against CHF 3-month outright

Question 110

3-month USD/CHF is quoted at 112/110. Interest rates in Switzerland are reduced but USD rates (which are higher) are unchanged. What would you expect the 3-month forward USD/CHF rate to be?

Options:

A.

unchanged

B.

118/116

C.

109/107

D.

106/104

Question 111

You are quoted the following market rates:

spot GBP/USD. 1.6530

9M (272-day) GBP. 3.60%

9M (272-day) USD. 1.95%

What are the 9-month GBP/USD forward points?

Options:

A.

+206

B.

+197

C.

-195

D.

-204

Demo: 111 questions
Total 740 questions