Question 1

The buyer of a currency put option has:

Accepted Answer

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 
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 2

Which of the following cannot produce a capital gain?

Accepted Answer

A)  Treasury bill 
B)  CD 
C)  ECP 
D)  Classic repo 
A)  Treasury bill 
B)  CD 
C)  ECP 
D)  Classic repo

Question 3

Which one of the following statements concerning covenants is incorrect?

Accepted Answer

A)  Covenants are clauses in bank credit agreements and bond indentures designed to assure debt holders that the creditworthiness of the borrower(s)/issuer(s) will remain satisfactory 
B)  Covenants must be tailored to reflect the specific needs of the borrower/issuer and the specific risks perceived by the debt holders. 
C)  Covenants require the holder of the debt to refrain from doing certain specific things. 
D)  Three different types of covenants in credit agreements and bond indentures are affirmative, negative and financial. 
A)  Covenants are clauses in bank credit agreements and bond indentures designed to assure debt holders that the creditworthiness of the borrower(s)/issuer(s) will remain satisfactory 
B)  Covenants must be tailored to reflect the specific needs of the borrower/issuer and the specific risks perceived by the debt holders. 
C)  Covenants require the holder of the debt to refrain from doing certain specific things. 
D)  Three different types of covenants in credit agreements and bond indentures are affirmative, negative and financial.

Question 4

Which of the following dealing strategies involves the placing of orders with very short quote lives into a market?

Accepted Answer

A)  frequency trading 
B)  high-incidence trading 
C)  flash trading 
D)  liquidity aggregators 
A)  frequency trading 
B)  high-incidence trading 
C)  flash trading 
D)  liquidity aggregators

Question 5

The Liquidity Coverage Ratio (LCR) in Basel III:

Accepted Answer

A)  is a new rule that compares liquid asset levels in banks to their available equity capital 
B)  spells out a modernized system for calculating the required minimum reserve that banks must hold at the central bank 
C)  compares liquid and reliably liquidating assets to expected cash outflows from specified run-off rates for various liability classes under a short-term stress scenario 
D)  tied directly into the internal ratings-based approach for determining the liquidity of credit-counterparties 
A)  is a new rule that compares liquid asset levels in banks to their available equity capital 
B)  spells out a modernized system for calculating the required minimum reserve that banks must hold at the central bank 
C)  compares liquid and reliably liquidating assets to expected cash outflows from specified run-off rates for various liability classes under a short-term stress scenario 
D)  tied directly into the internal ratings-based approach for determining the liquidity of credit-counterparties

Question 6

Under Basel rules the risk weight for MA-rated claims on corporate in the standardized approach

Accepted Answer

A)  0% 
B)  15% 
C)  20% 
D)  75% 
A)  0% 
B)  15% 
C)  20% 
D)  75%

Question 7

Which of the following CHF/JPY quotes that you have received is the best rate for you to buy CHF?

Accepted Answer

A)  105.80 
B)  105.75 
C)  105.70 
D)  105.85 
A)  105.80 
B)  105.75 
C)  105.70 
D)  105.85

Question 8

Confirmations must be sent out

Accepted Answer

A)  Immediately after the deal is done. 
B)  As quickly as possible after the deal is done. 
C)  By electronic media only, e.g. fax, telex. 
D)  Not later than the value date of the first leg of the transaction. 
A)  Immediately after the deal is done. 
B)  As quickly as possible after the deal is done. 
C)  By electronic media only, e.g. fax, telex. 
D)  Not later than the value date of the first leg of the transaction.

Question 9

The buyer of a USD/ARS NDF could be:

Accepted Answer

A)  a buyer of Argentine Pesos 
B)  expecting a falling USD/ARS rate 
C)  hedging against a weakening of the Argentine Peso 
D)  speculating on an appreciation of the Argentine Peso 
A)  a buyer of Argentine Pesos 
B)  expecting a falling USD/ARS rate 
C)  hedging against a weakening of the Argentine Peso 
D)  speculating on an appreciation of the Argentine Peso

Question 10

Cable is quoted at 1.6075-80 and you say "5 yours!" to the broker. What have you done?

Accepted Answer

A)  Sold USD 5 million at 1.6075 
B)  Sold GBP 5 million at 1.6075 
C)  Bought GBP 5 million at 1.60B0 
D)  Bought USD 5 million at 1.6080 
A)  Sold USD 5 million at 1.6075 
B)  Sold GBP 5 million at 1.6075 
C)  Bought GBP 5 million at 1.60B0 
D)  Bought USD 5 million at 1.6080

Question 11

You are quoted the following market rates: spot USD/SEK 6.3850 1M (30-day) USD 0.40% 1M (30-day) SEK 1.15% What is 1-month USD/SEK?

Accepted Answer

A)  6.4250 
B)  6.3810 
C)  6.7850 
D)  6.3890 
A)  6.4250 
B)  6.3810 
C)  6.7850 
D)  6.3890

Question 12

A purchased 3X6 FRA should be reported in a gap report as

Accepted Answer

A)  a given deposit with a term of six months 
B)  a taken deposit with a term of three months 
C)  a given deposit with a term of three months and a taken deposit with a term of six months 
D)  a taken deposit with a term of three months and a given deposit with a term of six months 
A)  a given deposit with a term of six months 
B)  a taken deposit with a term of three months 
C)  a given deposit with a term of three months and a taken deposit with a term of six months 
D)  a taken deposit with a term of three months and a given deposit with a term of six months

Question 13

If making a claim in respect of "use of funds", payments should be settled within how many days?

Accepted Answer

A)  15 
B)  20 
C)  35 
D)  40 
A)  15 
B)  20 
C)  35 
D)  40

Question 14

What does the Model Code recommend regarding the practice of "name switching/substitution"?

Accepted Answer

A)  Dealers may seek a compensation payment in favor of the bank or an adjustment to brokerage bills from the broker for switching names. 
B)  If requested by a broker to clear a transaction through name switching, a dealer must ensure that such activities have the prior approval of senior management. 
C)  The practice of name switching/substitution is neither acceptable nor desirable. 
D)  Name switching/substitution transactions should be executed as promptly as possible not considering credit limits and policy guidelines. 
A)  Dealers may seek a compensation payment in favor of the bank or an adjustment to brokerage bills from the broker for switching names. 
B)  If requested by a broker to clear a transaction through name switching, a dealer must ensure that such activities have the prior approval of senior management. 
C)  The practice of name switching/substitution is neither acceptable nor desirable. 
D)  Name switching/substitution transactions should be executed as promptly as possible not considering credit limits and policy guidelines.

Question 15

The major risk to the effectiveness of netting is:

Accepted Answer

A)  Credit risk 
B)  Settlement risk 
C)  Liquidity risk 
D)  Legal risk 
A)  Credit risk 
B)  Settlement risk 
C)  Liquidity risk 
D)  Legal risk

Question 16

A corporate wishing to hedge the interest rate risk on its floating-rate borrowing would:

Accepted Answer

A)  Sell interest rate caps 
B)  Sell futures 
C)  Sell FRAs 
D)  Buy futures 
A)  Sell interest rate caps 
B)  Sell futures 
C)  Sell FRAs 
D)  Buy futures

Question 17

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.

Accepted Answer

A)  2.37% 
B)  2.46% 
C)  2.55% 
D)  4.90% 
A)  2.37% 
B)  2.46% 
C)  2.55% 
D)  4.90%

Question 18

Who typically communicates the bank's asset and liability management policy internally?

Accepted Answer

A)  the management board 
B)  the chief risk officer 
C)  the bank's ALCO 
D)  the Risk and Capital Committee 
A)  the management board 
B)  the chief risk officer 
C)  the bank's ALCO 
D)  the Risk and Capital Committee

Question 19

An option premium is normally a positive function of:

Accepted Answer

A)  the traded volume 
B)  the historical volatility of the price of the underlying commodity 
C)  the style (European or American) of the option 
D)  the implied volatility of the price of the underlying 
A)  the traded volume 
B)  the historical volatility of the price of the underlying commodity 
C)  the style (European or American) of the option 
D)  the implied volatility of the price of the underlying

Question 20

Under Basel Rules, the Basic Indicator Approach is a regulatory framework for:

Accepted Answer

A)  liquidity risk 
B)  business risk 
C)  operational risk 
D)  funding risk 
A)  liquidity risk 
B)  business risk 
C)  operational risk 
D)  funding risk

The buyer of a currency put option has:

Which of the following cannot produce a capital gain?

Which one of the following statements concerning covenants is incorrect?

Which of the following dealing strategies involves the placing of orders with very short quote lives into a market?

The Liquidity Coverage Ratio (LCR) in Basel III:

Under Basel rules the risk weight for MA-rated claims on corporate in the standardized approach

Which of the following CHF/JPY quotes that you have received is the best rate for you to buy CHF?

Confirmations must be sent out

The buyer of a USD/ARS NDF could be:

Cable is quoted at 1.6075-80 and you say "5 yours!" to the broker. What have you done?

You are quoted the following market rates: spot USD/SEK 6.3850 1M (30-day) USD 0.40% 1M (30-day) SEK 1.15% What is 1-month USD/SEK?

A purchased 3X6 FRA should be reported in a gap report as

If making a claim in respect of "use of funds", payments should be settled within how many days?

What does the Model Code recommend regarding the practice of "name switching/substitution"?

The major risk to the effectiveness of netting is:

A corporate wishing to hedge the interest rate risk on its floating-rate borrowing would:

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.

Who typically communicates the bank's asset and liability management policy internally?

An option premium is normally a positive function of:

Under Basel Rules, the Basic Indicator Approach is a regulatory framework for:

ACI Dealing Certificate-Part A

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Exam 2: ACI Dealing Certificate-Part B

The buyer of a currency put option has:

Which of the following cannot produce a capital gain?

Which one of the following statements concerning covenants is incorrect?

Which of the following dealing strategies involves the placing of orders with very short quote lives into a market?

The Liquidity Coverage Ratio (LCR) in Basel III:

Under Basel rules the risk weight for MA-rated claims on corporate in the standardized approach

Which of the following CHF/JPY quotes that you have received is the best rate for you to buy CHF?

Confirmations must be sent out

The buyer of a USD/ARS NDF could be:

Cable is quoted at 1.6075-80 and you say "5 yours!" to the broker. What have you done?

You are quoted the following market rates: spot USD/SEK 6.3850 1M (30-day) USD 0.40% 1M (30-day) SEK 1.15% What is 1-month USD/SEK?

A purchased 3X6 FRA should be reported in a gap report as

If making a claim in respect of "use of funds", payments should be settled within how many days?

What does the Model Code recommend regarding the practice of "name switching/substitution"?

The major risk to the effectiveness of netting is:

A corporate wishing to hedge the interest rate risk on its floating-rate borrowing would:

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.

Who typically communicates the bank's asset and liability management policy internally?

An option premium is normally a positive function of:

Under Basel Rules, the Basic Indicator Approach is a regulatory framework for:

ACI Dealing Certificate-Part A

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