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examout.co

What is the risk of dealing through an agent with an unknown principal?

A.

You may not be able to ensure that your firm can avoid suspicion of trading on non-public information or other allegations of bad or illegal trading practice.

B.

You may not be able to net your exposure in an insolvency.

C.

You may not be able to net your exposure for capital adequacy purposes.

D.

All of the above.

What is a long straddle option strategy?

A.

A long call option + long put option with the same strike prices

B.

A short call option + short put option with the same strike prices

C.

A long call option + short put option with the same strike prices

D.

A short call option + long put option with the same strike prices

Where dealing through an intermediary with an unidentified principal, the Model Code recommends:

A.

It is good practice for compliance, legal or credit functions to identity counterparties before the execution of a deal.

B.

Management should have in place a clearwritten policy and procedures governing such transactions.

C.

Management needs to be aware of the risks involved, particularly with respect to credit exposure and money laundering.

D.

All of the above.

Market participants should, where activity justifies it, aim to reduce settlement and related credit risk on currency transactions by:

A.

Establishing realistic daylight limits for counterparties.

B.

Monitoring all payments to counterparties who are known to be experiencing difficulties.

C.

Establishing legally binding bilateral netting agreements with counterparties or participating in a multilateral netting system.

D.

Seeking pre-payment.

The extension of forward FX contracts at their historic rates is only allowed when:

A.

Prior management approval has been sought.

B.

They are executed within six months.

C.

They are extended for not more than one year.

D.

All of the above.

The spot/next repo rate for the 5% bund 2006 is quoted to you at 1.75-80%. You sell bonds with a market value of EUR 5,798,692 through a sell/buy-back. The Repurchase Price is:

A.

EUR 5,798,982

B.

EUR 5,799,497

C.

EUR 5,746,376

D.

EUR 5,000,694

Dealers are allowed to trade for their own account if:

A.

The dealers have good track records in their dealing both for the institution and for themselves.

B.

There has been no previous conflicts of interest in the dealing room.

C.

There is a clearly laFd down policy.

D.

The dealers see no conflict of Interest in such dealing.

What is the buyers primary risk in a repo?

A.

The credit risk on the collateral

B.

The credit risk on the repo counterparty

C.

The legal risk on the contract

D.

The operational risk on margin maintenance

You have quoted a Swiss customer spot USD/CHF as 1.3710-15, but he asks you to quote it as CHF/USD. What do you quote?

A.

0.7291-94

B.

0.7294-91

C.

1.3710-15

D.

None of these

A 6-month SEK/NOK Swap is quoted 140/150. Spot is 0.9445. Which of the following statements is correct?

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

Half an hour ago you were made a price in USD/CAD of 1.5250-55 and sold USD 10 million. The price is now 1.5232-37 and you square your position. What is your profit or loss?

A.

+CAD 23,000

B.

+CAD 13,000

C.

+CAD 16,000

D.

-CAD 13,000

The two-week repo rate br the 5.25% bund 2007 is quoted to you at 3.33-38%. You agree to reverse in bonds worth EUR 266,125,000 with no initial margin. You would earn repo interest ot

A.

EUR 349,806

B.

EUR 344,632

C.

EUR 319,315

D.

EUR 324,110

Where internet trading facilities are established by a bank for a client, the conditions and controls should be stated in a rulebook produced by:

A.

The bank.

B.

The local bankers association.

C.

The local regulator.

D.

Negotiation between the bank and client.

In the unforeseen event that a particular maturity date is declared a public holiday, what is normal market practice for spot FX?:

A.

Extend the contract to the next business day

B.

Shorten the contract to the previous business day

C.

A new maturity date has to be agreed by the two parties involved

D.

ACI’s Committee for Professionalism decides on a case by case basis

Lending for 3 months and borrowing for 6 months creates a 3x6 forward-forward deposit. The cost of that deposit is called:

A.

Break-even rate

B.

Implied rate

C.

Forward-forward rate

D.

All of the above