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If you took a short position in USD/JPY, how could the Fed “squeeze” you?

A.

Raise USD interest rates

B.

Lower USD interest rates

C.

Lower reserve requirements

D.

It could not squeeze you

What is a hedge?

A.

A means by which to reduce a risk

B.

An equal and opposite risk

C.

A riskless transaction

D.

A means of cancelling a deal

Under Basel rules, what is the meaning of RWA?

A.

Risk Weighted Assets

B.

Risk Weighted Average

C.

Recovery Weighted Assets

D.

Risk Weighted Adjustments

Which one of the following statements concerning covenants is incorrect?

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.

Convert 8.25% quoted on a semi-annually compounded money market basis for USD to the equivalent annually-compounded bond basis.

A.

8.30%

B.

8.52%

C.

8.54%

D.

8.69%

Today’s date is Thursday 12th December. What is the spot value date? Assume no bank holidays.

A.

14th December

B.

15th December

C.

16th December

D.

17th December

The primary issue for insuring prudent liquidity management in accord with the guidance provided by the Basel Committee (Basel II I Basel III) is:

A.

Tier 3 capital requirements held against liquidity risk.

B.

The nature and amount of high quality liquid assets a bank holds.

C.

Central bank internal management processes regarding open market operations.

D.

The transparent disclosure of illiquid on-balance sheet liabilities.

Which of the following pays a return in the form of a discount to face value?

A.

Treasury bill

B.

CD

C.

Interbank deposit

D.

Classic repo

What is a long strangle option strategy?

A.

A short call option + short put option with a higher strike price than the call option

B.

A long call option + long put option with a lower strike price than the call option

C.

A short call option + short put option with a lower strike price than the call option

D.

A long call option + short put option with higher strike price than the call option

Under Basel Securitization rules the highest potential risk weight is:

A.

350%

B.

750%

C.

1250%

D.

1500%

Which of the following will tend to have the lowest yield?

A.

Interbank deposit

B.

Certificate of deposit

C.

Treasury bill

D.

BA

Which of the following statements about “standard settlement instructions” (SSI) is correct?

A.

The Head of Operations has the sole responsibility of ensuring the correctness and validity of the SSI set up.

B.

SSIs should be stored and maintained in the bank’s general static data system.

C.

Each institution should have a separate SSI team to prevent I minimise the potential risk of fraud.

D.

SSI staff should be fully integrated within Operations to insure consistent and reliable settlement guidelines.

A customer gives you GBP 25,000,000.00 at 0.625% same day for 7 days.

Through a broker, you place the funds with a bank for the same period at 0.6875%.

Brokerage is charged at 2 basis points per annum.

What is the net profit or loss on the deal?

A.

ProfitofGBP 299.66

B.

Profit of GBP 203.77

C.

LossofGBP299.66

D.

Loss ofGBP 203.77

When quoting the exchange rate between the USD and AUDI which is conventionally the base currency?

A.

USD

B.

AUD

C.

Depends on whether the price is being quoted in Australia or the US

D.

Depends on whether the price is being quoted interbank or to a customer

If spot USD/HKD is 7.7600 and USD/SGD is 1.2350, what is SGD/HKD?

A.

9.5836

B.

6.2834

C.

0.1591

D.

0.1043