Question 1

A person who appears to be a technician asks for your help in accessing treasury systems as he has forgotten his list of access codes. The Model Code recommends:

Accepted Answer

A)  You should provide all reasonable assistance. 
B)  You should report the request immediately to senior management. 
C)  Do not get involved; you may be at risk. 
D)  There is no recommendation in the Model Code. 
A)  You should provide all reasonable assistance. 
B)  You should report the request immediately to senior management. 
C)  Do not get involved; you may be at risk. 
D)  There is no recommendation in the Model Code.

Question 2

What is the purpose of a long strangle option strategy?

Accepted Answer

A)  To anticipate very low volatility in the price of the underlying commodity 
B)  To anticipate moderately high volatility in the price of the underlying commodity 
C)  To anticipate moderate volatility in the price of the underlying commodity 
D)  To anticipate very high volatility in the price of the underlying commodity 
A)  To anticipate very low volatility in the price of the underlying commodity 
B)  To anticipate moderately high volatility in the price of the underlying commodity 
C)  To anticipate moderate volatility in the price of the underlying commodity 
D)  To anticipate very high volatility in the price of the underlying commodity

Question 3

When dealing with customers, financial market professionals are advised by the Model Code to clarify that all transactions are entered into solely at each partys risk by explicitly agreeing in writing that:

Accepted Answer

A)  The customer understands the structure of the transaction. 
B)  The customer has made its own assessment and independent decision to enter into the transaction and is doing so at its own risk and for its own account. 
C)  No fiduciary or advisory relationship exists between the parties, and all the information is has received is not to be construed as investment advice or a recommendation to transact. 
D)  All of the above. 
A)  The customer understands the structure of the transaction. 
B)  The customer has made its own assessment and independent decision to enter into the transaction and is doing so at its own risk and for its own account. 
C)  No fiduciary or advisory relationship exists between the parties, and all the information is has received is not to be construed as investment advice or a recommendation to transact. 
D)  All of the above.

Question 4

What is a 'duration gap'?

Accepted Answer

A)  the average maturity of liabilities on a balance sheet 
B)  the difference between the duration of assets and liabilities 
C)  the difference between the duration of the longest-held and shortest-held liabilities on the balance sheet 
D)  the average maturity of the portfolio on the asset side of a balance sheet 
A)  the average maturity of liabilities on a balance sheet 
B)  the difference between the duration of assets and liabilities 
C)  the difference between the duration of the longest-held and shortest-held liabilities on the balance sheet 
D)  the average maturity of the portfolio on the asset side of a balance sheet

Question 5

Under Basel Securitization rules the highest potential risk weight is:

Accepted Answer

A)  350% 
B)  750% 
C)  1250% 
D)  1500% 
A)  350% 
B)  750% 
C)  1250% 
D)  1500%

Question 6

You have quoted your customer the following CAD deposit rates: 1M 1.00-05% 2M 1.06-11% 3M 1.13-18% The customer says, "I give you CAD 20,000,000.00 in the two's". What have you done?

Accepted Answer

A)  Borrowed CAD 20,000,000.00 at 1.06% 
B)  Lent CAD 20,000,000.00 at 1.11% 
C)  Borrowed CAD 20,000,000.00 at 1.11% 
D)  Lent CAD 20,000,000.00 at 1.06% 
A)  Borrowed CAD 20,000,000.00 at 1.06% 
B)  Lent CAD 20,000,000.00 at 1.11% 
C)  Borrowed CAD 20,000,000.00 at 1.11% 
D)  Lent CAD 20,000,000.00 at 1.06%

Question 7

A dealer has been invited by a broker to go to an exclusive club for the third time in a week. He should:

Accepted Answer

A)  agree, since entertainment is a normal part of business 
B)  refer this to senior management 
C)  agree but insist on paying half the cost 
D)  agree, if the broker pays for the event but does not attend it 
A)  agree, since entertainment is a normal part of business 
B)  refer this to senior management 
C)  agree but insist on paying half the cost 
D)  agree, if the broker pays for the event but does not attend it

Question 8

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

Accepted Answer

A)  EUR 349,806 
B)  EUR 344,632 
C)  EUR 319,315 
D)  EUR 324,110 
A)  EUR 349,806 
B)  EUR 344,632 
C)  EUR 319,315 
D)  EUR 324,110

Question 9

What is a hedge?

Accepted Answer

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 
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

Question 10

You are quoted the following rates: Spot GBP/USD      1.5295-00 Spot USD/CHF       0.9320-23 6M GBP/USD swap     16/12 6M USD/CHF swap      22/18 Where can you buy GBP against CHF 6-month outright?

Accepted Answer

A)  1.4206 
B)  1.4215 
C)  1.4217 
D)  1.4225 
A)  1.4206 
B)  1.4215 
C)  1.4217 
D)  1.4225

Question 11

You want to hedge your deposit against falling interest rates. Which of the alternatives below are appropriate for this purpose?

Accepted Answer

A)  Selling a Money Market Future and/or selling a Forward Rate Agreement 
B)  Buying a Money Market Future and/or buying a Forward Rate Agreement 
C)  Selling a Money Market Future and/or buying a Forward Rate Agreement 
D)  Buying a Money Market Future and/or selling a Forward Rate Agreement 
A)  Selling a Money Market Future and/or selling a Forward Rate Agreement 
B)  Buying a Money Market Future and/or buying a Forward Rate Agreement 
C)  Selling a Money Market Future and/or buying a Forward Rate Agreement 
D)  Buying a Money Market Future and/or selling a Forward Rate Agreement

Question 12

What is the Repurchase Price of a classic repo?

Accepted Answer

A)  The market value of bond collateral at the end of the repo at the clean price of the bond 
B)  The market value of bond collateral at the end of the repo at the dirty price of the bond 
C)  The amount of cash actually paid for collateral at the start of the repo 
D)  The amount of cash actually paid for collateral at the start of the repo plus repo interest 
A)  The market value of bond collateral at the end of the repo at the clean price of the bond 
B)  The market value of bond collateral at the end of the repo at the dirty price of the bond 
C)  The amount of cash actually paid for collateral at the start of the repo 
D)  The amount of cash actually paid for collateral at the start of the repo plus repo interest

Question 13

What does the Model Code recommend regarding "entertainment and gifts"?

Accepted Answer

A)  Management should monitor the form, frequency and cost of entertainment and gifts dealers receive, have a clearly articulated policy towards the giving/receipt of gifts and ensure the policy is enforced. 
B)  As gifts and entertainment may be offered in the normal course of business, employees can offer inducements to conduct business and solicit them from the personnel of other institutions. 
C)  Although management should not monitor the form, frequency or cost of entertainment/gifts dealers receive, they may have a policy towards the giving/receipt of gifts and ensure the policy is enforced. 
D)  Gifts or entertainment should never be offered in the normal course of business, and employees must never offer any inducements to conduct business, nor solicit them from other institutions. 
A)  Management should monitor the form, frequency and cost of entertainment and gifts dealers receive, have a clearly articulated policy towards the giving/receipt of gifts and ensure the policy is enforced. 
B)  As gifts and entertainment may be offered in the normal course of business, employees can offer inducements to conduct business and solicit them from the personnel of other institutions. 
C)  Although management should not monitor the form, frequency or cost of entertainment/gifts dealers receive, they may have a policy towards the giving/receipt of gifts and ensure the policy is enforced. 
D)  Gifts or entertainment should never be offered in the normal course of business, and employees must never offer any inducements to conduct business, nor solicit them from other institutions.

Question 14

When differences in payment arise because of errors in the payment of funds:

Accepted Answer

A)  claims should be made for the costs incurred by the injured party and include all administration costs 
B)  no party involved can be enforced to contribute to achieve an equitable resolution to the problem 
C)  no market participant should be unjustly enriched or injured by the action/error of another market participant 
D)  claims are calculated on the full principal amount of the failed payment with the interest rate imposed by the injured party 
A)  claims should be made for the costs incurred by the injured party and include all administration costs 
B)  no party involved can be enforced to contribute to achieve an equitable resolution to the problem 
C)  no market participant should be unjustly enriched or injured by the action/error of another market participant 
D)  claims are calculated on the full principal amount of the failed payment with the interest rate imposed by the injured party

Question 15

An FX forward outright has been dealt for a value date which is subsequently declared to be a bank holiday. According to the Model Code, the exchange rate for the deal:

Accepted Answer

A)  should be adjusted to take account of the change in value date 
B)  cannot be adjusted if one of the counterparties wishes to adjust the rate but the other wishes to keep the original rate 
C)  must be adjusted if one of the counterparties wishes to adjust the rate but the other wishes to keep the original rate 
D)  should be adjusted if the adjustment is for two days or longer but not if it is for only one day 
A)  should be adjusted to take account of the change in value date 
B)  cannot be adjusted if one of the counterparties wishes to adjust the rate but the other wishes to keep the original rate 
C)  must be adjusted if one of the counterparties wishes to adjust the rate but the other wishes to keep the original rate 
D)  should be adjusted if the adjustment is for two days or longer but not if it is for only one day

Question 16

If 6-month USD/CAD forward rates are quoted at 40/45, which of the following statements is correct?

Accepted Answer

A)  USD rates are higher than CAD rates in the 6-month 
B)  CAD rates are higher than USD rates in the 6-month 
C)  There is a positive USD yield curve 
D)  There is not enough information to decide 
A)  USD rates are higher than CAD rates in the 6-month 
B)  CAD rates are higher than USD rates in the 6-month 
C)  There is a positive USD yield curve 
D)  There is not enough information to decide

Question 17

How is an outright forward FX transaction quoted?

Accepted Answer

A)  Forward points 
B)  Full forward exchange rate 
C)  Depends on whether is interbank or to a customer 
D)  Depends on the currency pair and sometimes the term 
A)  Forward points 
B)  Full forward exchange rate 
C)  Depends on whether is interbank or to a customer 
D)  Depends on the currency pair and sometimes the term

Question 18

How can options be used to synthesize a short position in the underlying commodity?

Accepted Answer

A)  A short put option + long call option at the same strike price 
B)  A long put option + short call option at the same strike price 
C)  A short put option + short call option at the same strike price 
D)  A long put option + long call option at the same strike price 
A)  A short put option + long call option at the same strike price 
B)  A long put option + short call option at the same strike price 
C)  A short put option + short call option at the same strike price 
D)  A long put option + long call option at the same strike price

Question 19

You are entering into a swap as a fixed rate receiver with Party A and into an offsetting position with party B. All other things being equal, which of the scenarios below will lead to the greatest increase in the sum of the Credit Value Adjustments for A and B?

Accepted Answer

A)  upward shift of the swap curve and rating downgrade of party A 
B)  downward shift of the swap curve and rating downgrade of party A 
C)  downward shift of the swap curve and rating downgrade of party B 
D)  downward shift of the swap curve only 
A)  upward shift of the swap curve and rating downgrade of party A 
B)  downward shift of the swap curve and rating downgrade of party A 
C)  downward shift of the swap curve and rating downgrade of party B 
D)  downward shift of the swap curve only

Question 20

Under Basel rules, what is the meaning of IRB?

Accepted Answer

A)  Internal Risk Based 
B)  Internal Ratings Based 
C)  Intrinsic Risk Based 
D)  Internal Rule Based 
A)  Internal Risk Based 
B)  Internal Ratings Based 
C)  Intrinsic Risk Based 
D)  Internal Rule Based

A person who appears to be a technician asks for your help in accessing treasury systems as he has forgotten his list of access codes. The Model Code recommends:

What is the purpose of a long strangle option strategy?

When dealing with customers, financial market professionals are advised by the Model Code to clarify that all transactions are entered into solely at each partys risk by explicitly agreeing in writing that:

What is a 'duration gap'?

Under Basel Securitization rules the highest potential risk weight is:

You have quoted your customer the following CAD deposit rates: 1M 1.00-05% 2M 1.06-11% 3M 1.13-18% The customer says, "I give you CAD 20,000,000.00 in the two's". What have you done?

A dealer has been invited by a broker to go to an exclusive club for the third time in a week. He should:

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

What is a hedge?

You are quoted the following rates: Spot GBP/USD 1.5295-00 Spot USD/CHF 0.9320-23 6M GBP/USD swap 16/12 6M USD/CHF swap 22/18 Where can you buy GBP against CHF 6-month outright?

You want to hedge your deposit against falling interest rates. Which of the alternatives below are appropriate for this purpose?

What is the Repurchase Price of a classic repo?

What does the Model Code recommend regarding "entertainment and gifts"?

When differences in payment arise because of errors in the payment of funds:

An FX forward outright has been dealt for a value date which is subsequently declared to be a bank holiday. According to the Model Code, the exchange rate for the deal:

If 6-month USD/CAD forward rates are quoted at 40/45, which of the following statements is correct?

How is an outright forward FX transaction quoted?

How can options be used to synthesize a short position in the underlying commodity?

You are entering into a swap as a fixed rate receiver with Party A and into an offsetting position with party B. All other things being equal, which of the scenarios below will lead to the greatest increase in the sum of the Credit Value Adjustments for A and B?

Under Basel rules, what is the meaning of IRB?

ACI Dealing Certificate-Part A

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Exam 2: ACI Dealing Certificate-Part B

A person who appears to be a technician asks for your help in accessing treasury systems as he has forgotten his list of access codes. The Model Code recommends:

What is the purpose of a long strangle option strategy?

When dealing with customers, financial market professionals are advised by the Model Code to clarify that all transactions are entered into solely at each partys risk by explicitly agreeing in writing that:

What is a 'duration gap'?

Under Basel Securitization rules the highest potential risk weight is:

You have quoted your customer the following CAD deposit rates: 1M 1.00-05% 2M 1.06-11% 3M 1.13-18% The customer says, "I give you CAD 20,000,000.00 in the two's". What have you done?

A dealer has been invited by a broker to go to an exclusive club for the third time in a week. He should:

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

What is a hedge?

You are quoted the following rates: Spot GBP/USD 1.5295-00 Spot USD/CHF 0.9320-23 6M GBP/USD swap 16/12 6M USD/CHF swap 22/18 Where can you buy GBP against CHF 6-month outright?

You want to hedge your deposit against falling interest rates. Which of the alternatives below are appropriate for this purpose?

What is the Repurchase Price of a classic repo?

What does the Model Code recommend regarding "entertainment and gifts"?

When differences in payment arise because of errors in the payment of funds:

An FX forward outright has been dealt for a value date which is subsequently declared to be a bank holiday. According to the Model Code, the exchange rate for the deal:

If 6-month USD/CAD forward rates are quoted at 40/45, which of the following statements is correct?

How is an outright forward FX transaction quoted?

How can options be used to synthesize a short position in the underlying commodity?

You are entering into a swap as a fixed rate receiver with Party A and into an offsetting position with party B. All other things being equal, which of the scenarios below will lead to the greatest increase in the sum of the Credit Value Adjustments for A and B?

Under Basel rules, what is the meaning of IRB?

ACI Dealing Certificate-Part A

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