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A long collar is:

A.

A purchase of a cap and a sale of a floor

B.

A purchase of a floor and a sale of a cap

C.

A purchase of a cap and a purchase of a floor

D.

A sale of a cap and a sale of a floor

Today, you sell GBP 5,000,000.00 to a customer against JPY for spot value. Tomorrow, the customer defaults. What is your exposure called?

A.

Replacement risk

B.

Settlement risk

C.

Legal risk

D.

Basis risk

When may a broker assume a deal is closed?

A.

When one of the principals confirms the deal

B.

When the principals give a written undertaking for all deals done at the end of the day

C.

When acknowledgement is received from the principals that the deal is done

D.

When both back offices acknowledge the deal

In FX trading a “third party beneficiary” is best described as:

A.

the issuer of a payment for the relevant trade distinct from the counterparty

B.

the issuer of a payment for the relevant trade identical to the counterparty

C.

the recipient of a payment for the relevant trade distinct from the counterparty

D.

the recipient of a payment for the relevant trade identical to the counterparty

What is the name of a swap in which the counterparties sell currencies to each other with a concomitant agreement to reverse the exchange of currencies at a fixed date in the future at the same price, and where the interest rates for the two currencies are reflected in the two exchanges but paid separately?

A.

aFXswap

B.

an in/out swap

C.

a currency swap

D.

a quanto swap

Which of the following statements about hedge accounting is not correct?

A.

A prerequisite for hedge accounting is that a hedging instrument is designated as an offset to changes in the fair value or cash flows of a hedged item.

B.

Hedge accounting enables gains and losses on a hedging instrument to be recognised in the income statement in the same period as offsetting losses and gains on the hedged item.

C.

If one of the criteria for hedge accounting is no longer met, there is an option to discontinue hedge accounting.

D.

Strict criteria must be met at inception and throughout the term of the hedge relationship in order for hedge accounting to be applied.

You are quoted the following rates:

Spot USD/JPY97.10-15

3M USD/JPY swap 9/6

Spot USD/CHF 0.9320-23

3M USD/CHF swap 11/8

Where can you sell CHF against JPY 3-month outright?

A.

104.14

B.

104.21

C.

104.23

D.

104.30

A bank wants to use STIR futures for establishing a macro hedge for the asset portfolio. Which of the following statements is correct?

A.

It is reasonable for the bank to purchase futures contracts if they expect interest rates to rise.

B.

It is reasonable for the bank to take a long position in anticipation of rising rates.

C.

Losses (or gains) in the value of the cash position can be largely offset by gains (or losses) in the value of the futures position

D.

It is reasonable for the bank to sell futures contracts if it expects interest rates to fall

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

A.

Quarterly

B.

At maturity

C.

Semi-annually

D.

After one year and at maturity

Is gambling or betting between market participants allowed?

A.

Yes, it is allowed for sporting events.

B.

Yes, it is allowed if no money is involved.

C.

Although not prohibited, it is strongly discouraged.

D.

It is allowed for purposes of charity.

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

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%.

Which of the following is a characteristic of all liquid assets under Basel III?

A.

uncertainty of valuation

B.

high correlation with risky assets

C.

listed on a developed and recognized exchange

D.

readily marketable

Assume the following scenario:

Bank A bids for EUR 5,000,000.00 at 1.3592.

Bank B offers EUR 10,000,000.00 at 1.3597.

Broker XYZ quotes to the market EUR/USD 1.3592/97.

Bank C takes the offer at 1.3597.

What information is the broker obliged to reveal?

A.

the name of Bank A and Bank B

B.

the names of Bank B and Bank C

C.

the amount that was bid but not the name of Bank A

D.

the amount taken by Bank C as well as the amount that was bid

Which one of the following best describes expected shortfall/conditional value-at-risk at the 95% level?

A.

the expected loss on the portfolio in the worst 95% of cases

B.

the expected loss in those cases where the loss exceeds the VaR at the 95% level

C.

the maximum loss in those cases where the loss exceeds the VaR at the 95% level

D.

the expected loss in those cases where the loss exceeds the VaR at the 5% level

What is the London Gold Price Fix (London Gold Fixing)?

A.

the gold price fixed twice a day to balance supply and demand in the London bullion market

B.

the gold price fixed at the end of the day in the London bullion market

C.

the gold price fixed at 11:00 am. local time in the London bullion market from a panel of gold traders

D.

the gold price fixed at 11:00 a.m. to settle gold contracts in the London bullion market