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You have taken 3-month (92 days) deposits of CAD 12,000,000.00 at 1.10% and CAD 6,000,000.00 at 1.04%. Minutes later, you quote 3-month CAD 1.09-14% to another bank. The other dealer takes the CAD 18,000,000.00 at your quoted price. What is your profit or loss on this deal?

A.

CAD 2,722.19

B.

CAD 460.00

C.

CAD 3,220.00

D.

CAD 2,760.00

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?

A.

> 2% of 6 months forward earnings

B.

> 20% of regulatory capital

C.

<10% of regulatory capital

D.

< 5% of 12 months forward earnings

Which of the following transactions would have the effect of lengthening the average duration of assets in the banking book?

A.

buying futures contracts on 30-year German Government bonds

B.

selling futures contracts on 30-year German Government bonds

C.

buying put options on 30-year German Government bonds

D.

buying a 3x6 forward rate agreement

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

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%

Which of the following rates represents the highest investment yield in the Euromarket?

A.

Semi-annual bond yield of 3.75%

B.

Annual bond yield of 3.75%

C.

Semi-annual money market yield of 3.75%

D.

Annual money market rate of 3.75%

The tom/next GC repo rate for German government bonds is quoted to you at 1.75-80%. As collateral, you sell EUR 10,000,000.00 nominal of the 5.25% Bund July 2012, which is worth EUR 11,260,000.00, with no initial margin. The Repurchase Price is:

A.

EUR 10,000,500.00

B.

EUR 10,000,486.11

C.

EUR 11,260,563.00

D.

EUR 11,260,547.36

If a dealer has a 6-month USD asset and a 3-month USD liability, how could he hedge his balance sheet exposure in the FRA market?

A.

Buy 3x6

B.

Sell 3x6

C.

Buy 0x6

D.

Sell 6x9

The seller of a EUR/RUB NDF could be:

A.

a potential buyer of EUR against RUB

B.

speculating on an appreciation of the Russian Rouble

C.

expecting rising EUR/RUB exchange rates

D.

a seller of Russian Rouble

A 7% CD was issued at par, which you now purchase at 6.75%. You would expect to pay:

A.

The face value of the CD

B.

More than the face value

C.

Less than the face value

D.

Too little information to decide

The seller of a put option has:

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

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

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.

How many GBP would you have to invest at 0.55% to be repaid GBP 2,000,000.00 (principal plus interest) in 90 days?

A.

GBP 1,997,253.78

B.

GBP 1,997,291.34

C.

GBP 1,997,287.67

D.

GBP 1,997,250.00

What is the probability of an ‘at-the-money’ option being exercised?

A.

Less than 50% probability

B.

50% probability

C.

More than 50% probability

D.

Zero probability

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

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 ACIs Model Code Best Practices guidelines

If you are trading spot on an ATS (Automated Trading System) and see a price for EUR/USD of

1.3050-53. If you hit the button marked “YOURS”, what have you done?

A.

Bought EUR at 1.3053

B.

Bought USD at 1.3053

C.

Sold EUR at 1.3050

D.

Sold USDatl.3050