Question 1

Confirmations of non-prime brokerage deals using CLS should be exchanged:

Accepted Answer

A)  within 2 hours after deal agreed with counterparty 
B)  before the value date of the trade 
C)  by the end of the trade date 
D)  within 24 hours 
A)  within 2 hours after deal agreed with counterparty 
B)  before the value date of the trade 
C)  by the end of the trade date 
D)  within 24 hours

Question 2

Principals who enter into an interest rate swap with the intention of shortly afterwards assigning or transferring the swap to a third party:

Accepted Answer

A)  should never reveal their future dealing intentions to their counterparties 
B)  should make clear their intention to do so when initially negotiating the deal 
C)  should agree upon the method of assignment before transacting 
D)  should only reveal any such intentions after the confirmations have been exchanged 
A)  should never reveal their future dealing intentions to their counterparties 
B)  should make clear their intention to do so when initially negotiating the deal 
C)  should agree upon the method of assignment before transacting 
D)  should only reveal any such intentions after the confirmations have been exchanged

Question 3

ACI's Committee for Professionalism will offer expert opinion in disputes between firms if:

Accepted Answer

A)  both parties to the dispute are members of the ACI and agree to submit the dispute to the ACI 
B)  one of the counterparties requests the assistance of ACI's Committee for Professionalism 
C)  the two counterparties are located in different financial centers 
D)  the amount in dispute is more than USD 100,000.00 or equivalent 
A)  both parties to the dispute are members of the ACI and agree to submit the dispute to the ACI 
B)  one of the counterparties requests the assistance of ACI's Committee for Professionalism 
C)  the two counterparties are located in different financial centers 
D)  the amount in dispute is more than USD 100,000.00 or equivalent

Question 4

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?

Accepted Answer

A)  Replacement risk 
B)  Settlement risk 
C)  Legal risk 
D)  Basis risk 
A)  Replacement risk 
B)  Settlement risk 
C)  Legal risk 
D)  Basis risk

Question 5

It is now permissible in most markets for brokers to be owned by banks and other principals. Where there is shared management, or a share holding or other investment in a broker by a counterparty:

Accepted Answer

A)  The broker is not obligated to reveal the connection provided Chinese Walls are in place. 
B)  The broker is not obligated to reveal the connection in the professional market. 
C)  The broker should advise the other counterparty of the connection. 
D)  The matter is covered in the Model Code. 
A)  The broker is not obligated to reveal the connection provided Chinese Walls are in place. 
B)  The broker is not obligated to reveal the connection in the professional market. 
C)  The broker should advise the other counterparty of the connection. 
D)  The matter is covered in the Model Code.

Question 6

Where there are shared management responsibilities or where an investment or shareholding exists in a broker by a counterparty:

Accepted Answer

A)  the broker is not obligated to reveal any material connections provided Chinese Walls are in place. 
B)  the broker is not required to reveal any connections at all. 
C)  the broker is legally obliged to advise his clients of any material connections that exist. 
D)  is a matter which is not covered by the Model Code. 
A)  the broker is not obligated to reveal any material connections provided Chinese Walls are in place. 
B)  the broker is not required to reveal any connections at all. 
C)  the broker is legally obliged to advise his clients of any material connections that exist. 
D)  is a matter which is not covered by the Model Code.

Question 7

A dealer has indicated his intention of assigning an interest rate swap to a third party soon after transacting that swap. When about to execute an assignment

Accepted Answer

A)  The dealer is entitled to provide the name of the original counterparty to the assignee. 
B)  The dealer is entitled to provide the name of the assignee to the original counterparty. 
C)  The dealer should seek the permission of the assignee before releasing the name to the original counterparty. 
D)  The dealer should seek the permission of the original counterparty before releasing the name to the assignee. 
A)  The dealer is entitled to provide the name of the original counterparty to the assignee. 
B)  The dealer is entitled to provide the name of the assignee to the original counterparty. 
C)  The dealer should seek the permission of the assignee before releasing the name to the original counterparty. 
D)  The dealer should seek the permission of the original counterparty before releasing the name to the assignee.

Question 8

All other things being equal the interest rate risk of a fixed coupon bond is:

Accepted Answer

A)  greater, the higher the coupon and the longer the term 
B)  greater, the lower the coupon and the longer the term 
C)  lower, the lower the coupon and the shorter the term 
D)  lower, the higher the coupon and the longer the term 
A)  greater, the higher the coupon and the longer the term 
B)  greater, the lower the coupon and the longer the term 
C)  lower, the lower the coupon and the shorter the term 
D)  lower, the higher the coupon and the longer the term

Question 9

If you sell USD 3-month forward to a client against EUR, what should you do to hedge your position?

Accepted Answer

A)  Buy a 3-month EUR/USD outright forward 
B)  Buy USD spot, and sell and buy a 3-month EUR/USD FX swap 
C)  Sell EUR/USD in the spot market, lend EUR for 3 months and borrow USD for 3 months 
D)  Sell EUR/USD in the spot market, borrow EUR for 3 months and lend USD for 3 months 
A)  Buy a 3-month EUR/USD outright forward 
B)  Buy USD spot, and sell and buy a 3-month EUR/USD FX swap 
C)  Sell EUR/USD in the spot market, lend EUR for 3 months and borrow USD for 3 months 
D)  Sell EUR/USD in the spot market, borrow EUR for 3 months and lend USD for 3 months

Question 10

Which of the following is a measure of a bank's gross exposure to foreign exchange rate risk?

Accepted Answer

A)  The maturity mismatch among assets and liabilities denominated in the home and reporting currencies. 
B)  The gap between variable and fixed rate assets and liabilities across all currencies. 
C)  The sum of all assets in one currency minus the sum of all liabilities in that same currency. 
D)  The sum of all off-balance sheet assets in one foreign currency minus the on-balance sheet equity in another currency. 
A)  The maturity mismatch among assets and liabilities denominated in the home and reporting currencies. 
B)  The gap between variable and fixed rate assets and liabilities across all currencies. 
C)  The sum of all assets in one currency minus the sum of all liabilities in that same currency. 
D)  The sum of all off-balance sheet assets in one foreign currency minus the on-balance sheet equity in another currency.

Question 11

How is a USD Overnight Indexed Swap (OIS) settled?

Accepted Answer

A)  Periodic exchange of fixed and floating payments up to and including maturity 
B)  At maturity by net payment 
C)  After maturity by exchange of fixed and floating payments 
D)  Two days after maturity by net payment 
A)  Periodic exchange of fixed and floating payments up to and including maturity 
B)  At maturity by net payment 
C)  After maturity by exchange of fixed and floating payments 
D)  Two days after maturity by net payment

Question 12

You have a short position of 50 EURODOLLAR futures contracts. You can hedge your position by:

Accepted Answer

A)  Selling a FRA for a similar notional amount 
B)  Buying a FRA for a similar notional amount 
C)  Selling a call option on the contract 
D)  Selling a put option on the contract 
A)  Selling a FRA for a similar notional amount 
B)  Buying a FRA for a similar notional amount 
C)  Selling a call option on the contract 
D)  Selling a put option on the contract

Question 13

Spot cable is quoted at 1.6048-53 in the brokers and you quote a customer 1.6050-55 in USD 3 million, If they sell USD to you, how much GSP will you be short of?

Accepted Answer

A)  4,816,500.00 
B)  1,868,809.57 
C)  1.868,576.77 
D)  4,815,900.00 
A)  4,816,500.00 
B)  1,868,809.57 
C)  1.868,576.77 
D)  4,815,900.00

Question 14

What is an outright forward FX transaction?

Accepted Answer

A)  A spot sale (purchase) and a forward purchase (sale) 
B)  A spot sale (purchase) and a forward sale (purchase) 
C)  An exchange of currencies on a date beyond spot and at a price fixed today 
D)  An exchange of currencies on a date beyond spot 
A)  A spot sale (purchase) and a forward purchase (sale) 
B)  A spot sale (purchase) and a forward sale (purchase) 
C)  An exchange of currencies on a date beyond spot and at a price fixed today 
D)  An exchange of currencies on a date beyond spot

Question 15

What is the major difference between a CD and a deposit?

Accepted Answer

A)  The CD yields a higher rate of return 
B)  The CD has less credit risk 
C)  The CD is a transferable instrument 
D)  The CD has a shorter range of maturities 
A)  The CD yields a higher rate of return 
B)  The CD has less credit risk 
C)  The CD is a transferable instrument 
D)  The CD has a shorter range of maturities

Question 16

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

Accepted Answer

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 
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

Question 17

As to the Charter of ACI - The Financial Markets Association, what do members not pledge?

Accepted Answer

A)  to maintain the professional level of competence and the ethical standards of loyalty 
B)  to develop sound reciprocal dealing relationships between institutions and to render unconditional mutual assistance 
C)  to demonstrate the best ethical behavior in strict accordance with the content and spirit of The Model Code 
D)  to maintain the highest possible standards in their profession by constantly setting an example of propriety in business 
A)  to maintain the professional level of competence and the ethical standards of loyalty 
B)  to develop sound reciprocal dealing relationships between institutions and to render unconditional mutual assistance 
C)  to demonstrate the best ethical behavior in strict accordance with the content and spirit of The Model Code 
D)  to maintain the highest possible standards in their profession by constantly setting an example of propriety in business

Question 18

When is interest conventionally due on a 3-year interbank EUR deposit?

Accepted Answer

A)  At maturity 
B)  Annually 
C)  Semi-annually 
D)  Quarterly 
A)  At maturity 
B)  Annually 
C)  Semi-annually 
D)  Quarterly

Question 19

An 'at-the-money' option has:

Accepted Answer

A)  Intrinsic value but no time value 
B)  Time value but no intrinsic value 
C)  Both time value and intrinsic value 
D)  Neither time value nor intrinsic value 
A)  Intrinsic value but no time value 
B)  Time value but no intrinsic value 
C)  Both time value and intrinsic value 
D)  Neither time value nor intrinsic value

Question 20

A customer asks for a price in 3-month CHF/JPY. You quote 56/54. The customer deals at 54. What have you done?

Accepted Answer

A)  Bought CHF against JPY spot and sold JPY against CHF 3-month forward 
B)  Sold CHF against JPY spot and bought CHF against JPY 3-month forward 
C)  Bought CHF against JPY spot and sold CHF against JPY 3-month forward 
D)  Bought JPY against CHF 3-month outright 
A)  Bought CHF against JPY spot and sold JPY against CHF 3-month forward 
B)  Sold CHF against JPY spot and bought CHF against JPY 3-month forward 
C)  Bought CHF against JPY spot and sold CHF against JPY 3-month forward 
D)  Bought JPY against CHF 3-month outright

Confirmations of non-prime brokerage deals using CLS should be exchanged:

Principals who enter into an interest rate swap with the intention of shortly afterwards assigning or transferring the swap to a third party:

ACI's Committee for Professionalism will offer expert opinion in disputes between firms if:

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?

It is now permissible in most markets for brokers to be owned by banks and other principals. Where there is shared management, or a share holding or other investment in a broker by a counterparty:

Where there are shared management responsibilities or where an investment or shareholding exists in a broker by a counterparty:

A dealer has indicated his intention of assigning an interest rate swap to a third party soon after transacting that swap. When about to execute an assignment

All other things being equal the interest rate risk of a fixed coupon bond is:

If you sell USD 3-month forward to a client against EUR, what should you do to hedge your position?

Which of the following is a measure of a bank's gross exposure to foreign exchange rate risk?

How is a USD Overnight Indexed Swap (OIS) settled?

You have a short position of 50 EURODOLLAR futures contracts. You can hedge your position by:

Spot cable is quoted at 1.6048-53 in the brokers and you quote a customer 1.6050-55 in USD 3 million, If they sell USD to you, how much GSP will you be short of?

What is an outright forward FX transaction?

What is the major difference between a CD and a deposit?

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

As to the Charter of ACI - The Financial Markets Association, what do members not pledge?

When is interest conventionally due on a 3-year interbank EUR deposit?

An 'at-the-money' option has:

A customer asks for a price in 3-month CHF/JPY. You quote 56/54. The customer deals at 54. What have you done?

ACI Dealing Certificate-Part A

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Exam 2: ACI Dealing Certificate-Part B

Confirmations of non-prime brokerage deals using CLS should be exchanged:

Principals who enter into an interest rate swap with the intention of shortly afterwards assigning or transferring the swap to a third party:

ACI's Committee for Professionalism will offer expert opinion in disputes between firms if:

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?

It is now permissible in most markets for brokers to be owned by banks and other principals. Where there is shared management, or a share holding or other investment in a broker by a counterparty:

Where there are shared management responsibilities or where an investment or shareholding exists in a broker by a counterparty:

A dealer has indicated his intention of assigning an interest rate swap to a third party soon after transacting that swap. When about to execute an assignment

All other things being equal the interest rate risk of a fixed coupon bond is:

If you sell USD 3-month forward to a client against EUR, what should you do to hedge your position?

Which of the following is a measure of a bank's gross exposure to foreign exchange rate risk?

How is a USD Overnight Indexed Swap (OIS) settled?

You have a short position of 50 EURODOLLAR futures contracts. You can hedge your position by:

Spot cable is quoted at 1.6048-53 in the brokers and you quote a customer 1.6050-55 in USD 3 million, If they sell USD to you, how much GSP will you be short of?

What is an outright forward FX transaction?

What is the major difference between a CD and a deposit?

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

As to the Charter of ACI - The Financial Markets Association, what do members not pledge?

When is interest conventionally due on a 3-year interbank EUR deposit?

An 'at-the-money' option has:

A customer asks for a price in 3-month CHF/JPY. You quote 56/54. The customer deals at 54. What have you done?

ACI Dealing Certificate-Part A

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