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In error, your dealer enters a trade whereby he buys GBP 8,000,000.00 against USD at 1.5500, but manages to cover it at the same rate. When the initial mistaken trade is cancelled, however, the rate has since changed to 1.5200. What is the effect on P&L?

A.

Profit GBP 240,000.00

B.

Loss GBP 240,000.00

C.

Profit USD 240,000.00

D.

Loss USD 240,000.00

What does "arrange good value payment" mean?

A.

To cancel an initial payment order and to process a new one with a higher amount

B.

To suspend a payment order until the balance becomes positive again

C.

To adjust the amount of fees to be paid

D.

To change the value date of a payment order

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.

Which of the following statements best describes an asset swap?

A.

A combination of a fixed rate bond and a fixed/floating interest rate swap

B.

An option on fixed/floating interest rate swap

C.

The sale of a bond against cash with a simultaneous agreement to buy the bond at an agreed upon rate and date

D.

The sale of a fixed rate bond against the simultaneous purchase of a floating rate note

The effective Euro overnight reference rate, computed as a weighted average of ail overnight unsecured lending transactions undertaken in the interbank market and computed with the help of the European Central Bank, is called:

A.

EURIBOR

B.

SONIA

C.

EONIA

D.

EURONIA

What are "de minimis" claims?

A.

Claims of less than USD 100.00

B.

Claims of less than USD 1,000.00

C.

Claims of less than EUR 100.00

D.

Claims of less than EUR 1,000.00

Which SWIFT message should be used to advise the netting position of a currency resulting from FX, NDF, options and other trades?

A.

MTn99

B.

MT300

C.

MT370

D.

MT670/671

Which settlement system offers the lowest risks?

A.

EBA

B.

CLS

C.

TARGET2

D.

CHAPS

Under what circumstances would you have to pay overdraft interest?

A.

If the counterparty's fees are higher than yours

B.

If your nostro account balance at the end of the month is less than the amount of fees paid

C.

If your nostro account shows a debit balance you will be charged overdraft interest on the remaining debit amount.

D.

Overdraft interest is charged if your collateral at the central bank is lower than your cash balance

What is the replacement risk of an OTC derivative trade?

A.

The risk that there is no liquid market at the exchange to close a trade

B.

The risk that the present value of a trade will be negative one day prior to value date

C.

The risk that an OTC-derivative product cannot be closed before maturity

D.

The loss incurred if the counterparty defaults