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ACI 3I0-013 ACI Operations Certificate challenging Exam Practice Test

Demo: 57 questions
Total 386 questions

ACI Operations Certificate challenging Questions and Answers

Question 1

Whose compliance rules, regulations and best practices should be followed in FX electronic trading?

Options:

A.

Solely those of the electronic trading platforms vendors

B.

Exclusively ACI's Model Code Best Practices

C.

ACI's Model Code Best Practices and ICMA's Market Practice & Regulatory Policy

D.

The electronic trading platforms vendors' and the ACI's Model Code Best Practices guidelines

Question 2

Which of the following is characteristic of derivative instruments?

Options:

A.

Trades are executed in nominal amounts

B.

Derivates are bought and sold only over the counter (OTC)

C.

The final settlement of a derivates trade can only be made by physical delivery

D.

The accounting for derivative instruments is off balance sheet

Question 3

Some large losses occurred in the past from derivatives trading because:

Options:

A.

Derivatives brokers significantly over-charged their clients

B.

Institutions did not understand the leverage of their transactions

C.

Money managers engaged in intra-day trading

D.

Money managers embezzled money using derivatives

Question 4

The calculation method of the foreign exchange rates for value today or for value tomorrow outrights:

Options:

A.

Is based on the interest rate differential between the two currencies

B.

Is based on the same calculation method as the forward rate agreements (FRA)

C.

Is based on linear interpolation

D.

Is based on the calculation of compound interest rates

Question 5

The risk associated with the failure of the overall financial system is best described as:

Options:

A.

Operational Risk

B.

Market Risk

C.

Systemic Risk

D.

Credit Risk

Question 6

Your dealers have made the following deals in spot USD/JPY:

Sold USD 5,000,000.00 at 93.60

Bought USD 3,500,000.00 at 93.20

Bought USD 2,000,000.00 at 93.50

Sold USD 2,000,000.00 at 93.55

What is your position?

Options:

A.

Short USD 1,500,000.00 at 94.60

B.

Short USD 1,500,000.00 at 94.5857

C.

Long USD 1,500,000.00 at 94.60

D.

Short USD 1,500,000.00 at 93.55

Question 7

Which one of the following statements about "CLS rescinds" is correct?

Options:

A.

CLS settlement members may rescind instructions unilaterally provided that the rescind messages reach the CLS Bank before the 00:00 CET deadline.

B.

CLS settlement members may rescind instructions unilaterally provided that the rescind messages reach the CLS Bank before the 06:30 CET deadline.

C.

CLS settlement members may rescind instructions bilaterally only if the rescind messages reach the CLS Bank before the 00:00 CET deadline.

D.

CLS settlement members may rescind instructions bilaterally only if the rescind messages reach the CLS Bank after the 06:30 CET deadline.

Question 8

The control failings involving Barings and Daiwa highlight the critical importance of what operational risk management practice?

Options:

A.

The taping of conversations between counterparties

B.

Model signing-off and implementation controls

C.

The separation between front/back office duties

D.

The existence of contingency plans

Question 9

Minimum reserves at the European Central Bank are:

Options:

A.

Never remunerated

B.

Remunerated at the EONIA rate

C.

Remunerated at the rate of the deposit facility

D.

Remunerated at the main refinancing rate

Question 10

Calculation basis for EUR money market transaction is:

Options:

A.

30/360

B.

ACT/365

C.

ACT/ACT

D.

ACT/360

Question 11

Your dealer has sold EUR 5,000,000.00 against USD at 1.3545. How much would you expect to receive in settlement?

Options:

A.

USD 3,691,399.04

B.

USD 3,691,399.00

C.

USD 6,772,500.00

D.

USD 6,773,000.00

Question 12

When a deal is done via a broker:

Options:

A.

It need not be confirmed between the counterparties as the broker confirms it immediately with both counterparties

B.

It should also be confirmed directly between the two counterparties

C.

It is important to note that broker confirmations are bilateral confirmations between the principals of the trade

D.

The dealer should obtain acknowledgement that the deal has been agreed to but may assume agreement to the trade in the absence of such acknowledgement

Question 13

The two main risks to which treasuries are exposed can be grouped into:

Options:

A.

Market and loss

B.

Market and money

C.

Market and credit

D.

Market and unavailability

Question 14

Internal nostro ledger accounts:

Options:

A.

Are commonly used to register off-balance sheet movements

B.

Are used to book internal tax related items

C.

Generally mirror the nostro statements

D.

Are reserved for audit and compliance purposes only

Question 15

The effective Euro overnight reference rate, computed as a weighted average of ail overnight unsecured lending transactions undertaken in the interbank market and computed with the help of the European Central Bank, is called:

Options:

A.

EURIBOR

B.

SONIA

C.

EONIA

D.

EURONIA

Question 16

Which of the following is the primary responsibility of an Operations Department?

Options:

A.

Writing the deal ticket

B.

Arranging the delivery of currency payments

C.

Checking the availability of counterparty limits

D.

Agreeing on the FX rate with the counterparty's middle office

Question 17

Which of the following are considered best practices?

Options:

A.

Front office and back office should have different management reporting lines

B.

Confirmation discrepancies should be investigated within 48 hours

C.

Confirmations need only be exchanged if the amount involved is higher than USD 1,000,000.00 or equivalent

D.

Money market and FX dealers should have different management reporting lines

Question 18

Open position and exchange risk management by currency belongs to which treasury system module?

Options:

A.

The derivatives dealing and processing module

B.

Standard back office features

C.

The FX spot and forward dealing input and processing module

D.

The securities trading and processing module

Question 19

If an overnight EUR/USD FX swap is traded on Tuesday, 19 June, and there are no currency holidays during the week of June 18 - 22, what would be the value dates of the two swap legs?

Options:

A.

18 June against 19 June

B.

19 June against 20 June

C.

20 June against 21 June

D.

21 June against 22 June

Question 20

If today is Wednesday, what are the value days of a spot next money market deal assuming there are no intervening bank holidays?

Options:

A.

Wednesday against Thursday

B.

Thursday against Friday

C.

Friday against Monday

D.

Monday against Tuesday

Question 21

If the EUR/USD is quoted to you as 1.3550-53, what does this price represent?

Options:

A.

EUR per USD

B.

USD per EUR

C.

The interest rate differential between EUR and USD

D.

The fact that one USD is worth more than one EUR

Question 22

Which of the following are products used in bank liquidity management?

Options:

A.

Money market taking and placing, sale and repurchase agreements (repos)

B.

Currency options and currency futures

C.

Spot FX transactions

D.

Caps, floors, collars, and interest rate futures

Question 23

In order to be introduced in a controlled manner, which areas should be involved before a new product or business strategy is launched?

Options:

A.

Product Control, Legal and Compliance, Front Office, Treasury and Operations

B.

Senior management only

C.

Front Office and Treasury Middle Office

D.

All relevant areas

Question 24

Regarding access to production systems, which of the following is incorrect?

Options:

A.

Profiles for functions are encouraged and should be reviewed semi-annually by a manager.

B.

Developers should have unrestricted access to production systems.

C.

Access to production systems should be rigorously controlled.

D.

Users should not have access to change system functionalities.

Question 25

The owner of a convertible bond:

Options:

A.

Has the obligation to convert his bond

B.

Has the right to convert his bond

C.

Must wait for the decision of the issuer if he wants to convert his bond

D.

Has the obligation to convert the coupon into a variable or a fixed rate

Question 26

On the sale of a CD, the seller:

Options:

A.

Receives a lower price than he originally paid

B.

Receives a higher price than he originally paid

C.

Receives a price calculated using the price originally paid

D.

There is not enough information to know how much the seller receives

Question 27

To ensure effective risk management within a large financial institution, the head of risk management should report to:

Options:

A.

The head of trading

B.

The head of IT

C.

The board of directors (top management)

D.

One cannot say, it depends on the financial institution

Question 28

Settlement prices on futures contracts are:

Options:

A.

Official prices calculated by the exchange at the close of trading for the purpose of making margin calculations

B.

Official prices calculated by a panel of central banks

C.

Official prices calculated by the central bank where the stock exchange is located

D.

Never used

Question 29

Where is the bank with the BIC-address "BOJPJPJT" located?

Options:

A.

Jamaica

B.

Jordan

C.

Bosnia

D.

Japan

Question 30

How could you close out a futures contract?

Options:

A.

Reverse and cash trade

B.

Cash and carry

C.

Reverse cash and carry

D.

Offset

Question 31

Which of the following are considered money market, cash or derivative instruments?

Options:

A.

Currency futures

B.

Forward FXs

C.

Currency options

D.

Forward rate agreements (FRA)

Question 32

Which of the following is a fundamental element or module in the “securities dealing and processing” part of a treasury system?

Options:

A.

The financial reporting standard

B.

Brokerage accounting

C.

The custodian account reconciliation function

D.

The country limit overview

Question 33

What does “modified following business day convention” mean?

Options:

A.

A convention whereby a transaction is dated the following business day, unless that day extends into the next month, in which case it is dated the preceding business day

B.

A convention whereby a transaction is dated the following business day

C.

A convention whereby a transaction is dated the preceding business day

D.

A convention whereby a transaction is dated the next business day that corresponds to the same numerical day of the month as the preceding payment

Question 34

Which of the following best describes the main benefit of the RTGS payment system?

Options:

A.

Final settlement of interbank funds transfers on a continuous, trade by trade basis throughout the day

B.

Lower costs through fewer payments passing through nostro accounts

C.

Lower costs through less labor intensive methods

D.

Reduced market risk due to smaller values of open positions

Question 35

What is a junk bond?

Options:

A.

An AAA-rated security in payment default

B.

A sub-investment grade instrument

C.

An OECD Government bond

D.

A bond typically paying lower yields than an investment grade instrument

Question 36

You have five outstanding amounts with five different values. Which of the following should be investigated first?

Options:

A.

The most recently processed deal

B.

The counterparties in your own country

C.

The counterparty which claims first

D.

Those positions with the highest loss potential

Question 37

According to ISDA definitions, if an USD IRS payment is due value Saturday, 31 May and the documentation states that the “modified following business day convention” will be used, what value date should be applied to the payment?

Options:

A.

Saturday, 31 May

B.

Tuesday, 3 June

C.

Monday, 2 June

D.

Friday, 30 May

Question 38

Which interest rates are used to calculate the exchange rate of an outright transaction value tomorrow (over tom)?

Options:

A.

The overnight interest rates of both currencies

B.

The spot next interest rates of both currencies

C.

The one week interest rates of both currencies

D.

The torn next interest rates of both currencies

Question 39

A EUR based bank has a USD-convertible bond. What market risks are present?

Options:

A.

Interest rate and currency risks

B.

Interest rate, stock price and currency risks

C.

Stock price and currency risks

D.

Stock price risk

Question 40

What is the primary role of the position-keeper in a dealing room?

Options:

A.

To keep the multilateral limits updated

B.

To invest funds at the highest available interest rate

C.

To keep the balance or position of the accounts or nostros in each currency representing the accounts held by the bank’s agents

D.

To keep the management informed about interest rate developments

Question 41

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

Options:

A.

A dealer does not need to confirm payment details by phone

B.

It splits differences arising from failed settlements between the two counterparties

C.

It eliminates the need to send out SWIFT payment authorizations on a case-by-case basis

D.

It avoids having to confirm each deal separately

Question 42

What is the most important feature of a brokerage reconciliation?

Options:

A.

It must be processed once a year

B.

Brokers’ bills should be reconciled during the night when no other system is running

C.

Brokers’ bills must be reconciled promptly at month-end prior to payment

D.

The existence of a single reference currency for all the brokers with whom your institution is dealing

Question 43

Which of the following processes are offered by the CLS settlement system?

Options:

A.

The close-out process

B.

The customer matching process

C.

The settlement process

D.

The securities lending process

Question 44

What is the most frequently used settlement process for securities?

Options:

A.

Free of settlement payment

B.

Cash settlement

C.

Same day value settlement

D.

Delivery-versus-payment

Question 45

Which SWIFT message type family is used for securities transactions?

Options:

A.

MT 3XX

B.

MT 2XX

C.

MT 5XX

D.

MT 1XX

Question 46

Why is securities reconciliation necessary?

Options:

A.

To prevent that a failed order results in a failure to settle that day, which in turn would lead to an incompletely-reconciled account.

B.

To facilitate the handling of complex security transactions.

C.

In order to save data capacity in electronic archiving systems.

D.

To anticipate the fact that clearing houses stop processing in the afternoon, whereas payment orders may still be processed until 6 p.m.

Question 47

Which of the following risks is best mitigated by CLS?

Options:

A.

Currency risk

B.

Operational risk

C.

Liquidity risk

D.

Settlement risk

Question 48

Which SWIFT message type is a nostro cash reconciliation software package based on?

Options:

A.

SWIFT MT 300

B.

SWIFT MT 292

C.

SWIFT MT 571 (i.e. a statement of holdings)

D.

SWIFT MT 940 and MT 950 (i.e. a statement of account)

Question 49

In FX swaps, the rate of the spot leg:

Options:

A.

May be freely chosen by the quoting party as long as both parties agree on it

B.

Must always be fixed immediately at the current mid rate, to reflect the rate at the time the deal was made

C.

Should be fixed immediately within the current spread, to reflect current rates at the time the transaction was made

D.

Should always be fixed off the current spread in order not to be mistaken for a spot FX transaction

Question 50

If a bank incurs interest charges from having overdrawn an account due to a late payment from a counterparty:

Options:

A.

The bank is entitled to seek reimbursement from the party responsible for the late payment.

B.

Nothing can be done to compensate the bank for the interest charges it incurs.

C.

The bank should file a complaint with ACI’s Committee for Professionalism.

D.

The bank will automatically be reimbursed by the party responsible for the late payment.

Question 51

Which one of the following statements about claims is true?

Options:

A.

Claims are not expected to be submitted after 15 days from the actual settlement date.

B.

Claims of less than USD 5,000.00 are not expected to be submitted.

C.

Claims are calculated on the full principal amount of the failed transaction. Interest rates are imposed by the agent banks, unless a higher negotiated rate is to be applied.

D.

Acknowledgement of receipt of a claim should be confirmed within 48 hours by email or SWIFT.

Question 52

A bond selling at a discount will be selling for:

Options:

A.

Less than 100%

B.

100%

C.

More than 100%

D.

More than a bond selling at a premium

Question 53

What is the advantage of instantaneous matching?

Options:

A.

It gives the counterparty more time to cancel a deal

B.

It reduces errors and costs

C.

It gives front-office staff more time to process the payment orders

D.

It reduces the number of trades

Question 54

Why should the maturity profile of unreconciled items be frequently reviewed?

Options:

A.

It allows the compliance officer to see how often the reconciliation staff has claimed for an outstanding item

B.

It allows management to see what items are pending by value and counterparty, but also how long items have been outstanding and whether there is an improvement in the pace of reconciliations.

C.

It allows reconciliation staff to check the bilateral limits with counterparties and to adjust these limits as necessary

D.

Because the most recent figures have to be published in the balance report

Question 55

The writer of an options contract:

Options:

A.

Bears a risk limited to the premium paid

B.

Bears a substantial risk

C.

Bears a risk limited to the premium received

D.

Bears no risk

Question 56

When completing a nostro reconciliation, what does an outstanding statement credit possibly signify?

Options:

A.

The non-receipt of funds from a counterparty

B.

The non-payment of funds to a counterparty

C.

The duplicate payment of funds by a counterparty

D.

The duplicate receipt of funds from a counterparty

Question 57

Physical securities reconciliation software packages are based on:

Options:

A.

SWIFT MT 5XX

B.

SWIFT MT 2XX

C.

SWIFT MT 320

D.

SWIFT MT 400

Demo: 57 questions
Total 386 questions