Question 1

Clients of a voice-broker quote EUR/GBP at 0.8345-50, 0.8346-51, 0.8348-53 and 0.8349-53. What will be the broker's price?

Accepted Answer

A)  0.8345-53 
B)  0.8345-50 
C)  0.8349-50 
D)  0.8349-53 
A)  0.8345-53 
B)  0.8345-50 
C)  0.8349-50 
D)  0.8349-53

Question 2

Which of the following currencies is quoted on an actual/360 basis?

Accepted Answer

A)  EUR 
B)  JPY 
C)  CHF 
D)  All of the above 
A)  EUR 
B)  JPY 
C)  CHF 
D)  All of the above

Question 3

With regard to operational risk awareness, which of the following best practices is incorrect?

Accepted Answer

A)  A report describing operational risks, the most significant incidents and corrective plans of action should be established on a quarterly basis. 
B)  It is good practice to collect and analyze incidents and near-misses so as to set up preventive action plans for the future. 
C)  Every time a report describing operational risks is produced, it should be provided to senior management. 
D)  Whenever possible action plans should be put in place that mitigate operational risks that have been identified. 
A)  A report describing operational risks, the most significant incidents and corrective plans of action should be established on a quarterly basis. 
B)  It is good practice to collect and analyze incidents and near-misses so as to set up preventive action plans for the future. 
C)  Every time a report describing operational risks is produced, it should be provided to senior management. 
D)  Whenever possible action plans should be put in place that mitigate operational risks that have been identified.

Question 4

What does the Model Code say about netting?

Accepted Answer

A)  Market participants are strongly recommended to net bilateral transactions with counterparties where activity justifies it. 
B)  Market participants should establish payments netting agreements with cross-border counterparties where activity justifies it. 
C)  Market participants should establish legally viable bilateral netting agreements with counterparties where activity justifies it. 
D)  Market participants should establish legally viable multilateral netting agreements where activity justifies it. 
A)  Market participants are strongly recommended to net bilateral transactions with counterparties where activity justifies it. 
B)  Market participants should establish payments netting agreements with cross-border counterparties where activity justifies it. 
C)  Market participants should establish legally viable bilateral netting agreements with counterparties where activity justifies it. 
D)  Market participants should establish legally viable multilateral netting agreements where activity justifies it.

Question 5

What are the primary reasons for taking an initial margin in a classic repo?

Accepted Answer

A)  Counterparty risk and operational risk 
B)  Counterparty risk and legal risk 
C)  Collateral illiquidity and counterparty risk 
D)  Collateral illiquidity and legal risk 
A)  Counterparty risk and operational risk 
B)  Counterparty risk and legal risk 
C)  Collateral illiquidity and counterparty risk 
D)  Collateral illiquidity and legal risk

Question 6

How is an outright forward FX transaction quoted?

Accepted Answer

A)  pared points 
B)  Depends on the term 
C)  Depends on whether it is interbank or to a customer 
D)  Depends on the currency pair 
A)  pared points 
B)  Depends on the term 
C)  Depends on whether it is interbank or to a customer 
D)  Depends on the currency pair

Question 7

A closed position in a particular foreign currency exists:

Accepted Answer

A)  when the net spot position plus the forward position plus the delta equivalent of the foreign currency options book add up to zero 
B)  when the forward purchases of a foreign currency are equivalent to the equity position in that same currency 
C)  when the reverse repurchases of foreign currency are equal to the forward purchases of the functional currency 
D)  when the maturity structure of the assets in one currency is closely matched to the maturity structure of liabilities in another 
A)  when the net spot position plus the forward position plus the delta equivalent of the foreign currency options book add up to zero 
B)  when the forward purchases of a foreign currency are equivalent to the equity position in that same currency 
C)  when the reverse repurchases of foreign currency are equal to the forward purchases of the functional currency 
D)  when the maturity structure of the assets in one currency is closely matched to the maturity structure of liabilities in another

Question 8

Where dealing for personal account is allowed, what safeguards to prevent abuse or insider dealing are stated by the Model Code?

Accepted Answer

A)  The need to maintain confidentiality with respect to non-public price sensitive information 
B)  The maximum amounts or sizes of trades dealers are allowed to trade for their own account 
C)  The instruments/products dealers can trade for their own account 
D)  The pledge that no action is taken by employees that might adversely affect the interests of clients or counterparties 
A)  The need to maintain confidentiality with respect to non-public price sensitive information 
B)  The maximum amounts or sizes of trades dealers are allowed to trade for their own account 
C)  The instruments/products dealers can trade for their own account 
D)  The pledge that no action is taken by employees that might adversely affect the interests of clients or counterparties

Question 9

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

Accepted Answer

A)  uncertainty of valuation 
B)  high correlation with risky assets 
C)  listed on a developed and recognized exchange 
D)  readily marketable 
A)  uncertainty of valuation 
B)  high correlation with risky assets 
C)  listed on a developed and recognized exchange 
D)  readily marketable

Question 10

The Interest Rate Parity Theorem states that:

Accepted Answer

A)  Interest rates in different currencies will tend to move into line with each other over time 
B)  Interest rates in different currencies differ due to differences in expectations about inflation 
C)  Selling a low interest rate currency to invest a high interest rate currency will only be profitable if one hedges the currency risk 
D)  Selling a low interest rate currency to invest in a high interest rate currency should not be profitable if one hedges the currency risk 
A)  Interest rates in different currencies will tend to move into line with each other over time 
B)  Interest rates in different currencies differ due to differences in expectations about inflation 
C)  Selling a low interest rate currency to invest a high interest rate currency will only be profitable if one hedges the currency risk 
D)  Selling a low interest rate currency to invest in a high interest rate currency should not be profitable if one hedges the currency risk

Question 11

Where the matter of dealing for personal account is concerned, the Model Code recommends that

Accepted Answer

A)  Subject to local legal requirements, this matter is one for bank management to decide. 
B)  Bank management should encourage such activities because it allows banks to monitor the gambling habits of their staff. 
C)  Where this is allowed, bank management should have a clearly defined policy and written procedures. 
D)  Bank management should allow staff to deal for their personal account on a case to case basis. 
A)  Subject to local legal requirements, this matter is one for bank management to decide. 
B)  Bank management should encourage such activities because it allows banks to monitor the gambling habits of their staff. 
C)  Where this is allowed, bank management should have a clearly defined policy and written procedures. 
D)  Bank management should allow staff to deal for their personal account on a case to case basis.

Question 12

How can material divergences between the value of cash and collateral be managed in a documented sell/buy-back?

Accepted Answer

A)  Margin maintenance 
B)  Re-pricing 
C)  Margin maintenance or re-pricing, but usually margin maintenance 
D)  Margin maintenance or re-pricing, but usually re-pricing 
A)  Margin maintenance 
B)  Re-pricing 
C)  Margin maintenance or re-pricing, but usually margin maintenance 
D)  Margin maintenance or re-pricing, but usually re-pricing

Question 13

What is the Gold Offered Forward Rate (GOFO)?

Accepted Answer

A)  the price differential between spot and forward gold prices 
B)  the rate at which dealers will lend gold against US dollars 
C)  the implied forward price of gold 
D)  the price of gold for forward delivery 
A)  the price differential between spot and forward gold prices 
B)  the rate at which dealers will lend gold against US dollars 
C)  the implied forward price of gold 
D)  the price of gold for forward delivery

Question 14

Which of the following risks is best mitigated by CLS?

Accepted Answer

A)  currency risk 
B)  operational risk 
C)  liquidity risk 
D)  settlement risk 
A)  currency risk 
B)  operational risk 
C)  liquidity risk 
D)  settlement risk

Question 15

As far as fineness and weight are concerned, what are the London Bullion Market Association (LBMA) requirements for a "good delivery bar"?

Accepted Answer

A)  at least 995/1000 pure gold; weight between 350 and 430 fine ounces 
B)  minimum 999.9/1000 pure gold; weight between 350 and 430 fine ounces 
C)  at least 995/1000 pure gold; weight of 400 fine ounces 
D)  minimum 995/1000 pure gold; weight of 400 fine ounces 
A)  at least 995/1000 pure gold; weight between 350 and 430 fine ounces 
B)  minimum 999.9/1000 pure gold; weight between 350 and 430 fine ounces 
C)  at least 995/1000 pure gold; weight of 400 fine ounces 
D)  minimum 995/1000 pure gold; weight of 400 fine ounces

Question 16

If USD/JPY is quoted to you as 98.10-15 and USD/CHF as 0.9294-99, what is the rate at which you can buy CHF against JPY?

Accepted Answer

A)  105.50 
B)  105.61 
C)  10555 
D)  0.009474 
A)  105.50 
B)  105.61 
C)  10555 
D)  0.009474

Question 17

Which party usually takes an initial margin in a classic repo?

Accepted Answer

A)  The buyer 
B)  The seller 
C)  Neither 
D)  Both 
A)  The buyer 
B)  The seller 
C)  Neither 
D)  Both

Question 18

A long collar is:

Accepted Answer

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 
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

Question 19

For a bank to count funds as regulatory capital:

Accepted Answer

A)  There has to be an ultra long term maturity date 
B)  The risk taken by the bank must be taken or shared by provider of the capital 
C)  The funds must be in the form of pure equity 
D)  The funds must be re-invested only in cash 
A)  There has to be an ultra long term maturity date 
B)  The risk taken by the bank must be taken or shared by provider of the capital 
C)  The funds must be in the form of pure equity 
D)  The funds must be re-invested only in cash

Question 20

If a dealer has a 6-month USD asset and a 3-month USD liability, how could he hedge his balance sheet exposure in the FRA market?

Accepted Answer

A)  Buy 3x6 
B)  Sell 3x6 
C)  Buy 0x6 
D)  Sell 6x9 
A)  Buy 3x6 
B)  Sell 3x6 
C)  Buy 0x6 
D)  Sell 6x9

Clients of a voice-broker quote EUR/GBP at 0.8345-50, 0.8346-51, 0.8348-53 and 0.8349-53. What will be the broker's price?

Which of the following currencies is quoted on an actual/360 basis?

With regard to operational risk awareness, which of the following best practices is incorrect?

What does the Model Code say about netting?

What are the primary reasons for taking an initial margin in a classic repo?

How is an outright forward FX transaction quoted?

A closed position in a particular foreign currency exists:

Where dealing for personal account is allowed, what safeguards to prevent abuse or insider dealing are stated by the Model Code?

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

The Interest Rate Parity Theorem states that:

Where the matter of dealing for personal account is concerned, the Model Code recommends that

How can material divergences between the value of cash and collateral be managed in a documented sell/buy-back?

What is the Gold Offered Forward Rate (GOFO)?

Which of the following risks is best mitigated by CLS?

As far as fineness and weight are concerned, what are the London Bullion Market Association (LBMA) requirements for a "good delivery bar"?

If USD/JPY is quoted to you as 98.10-15 and USD/CHF as 0.9294-99, what is the rate at which you can buy CHF against JPY?

Which party usually takes an initial margin in a classic repo?

A long collar is:

For a bank to count funds as regulatory capital:

If a dealer has a 6-month USD asset and a 3-month USD liability, how could he hedge his balance sheet exposure in the FRA market?

ACI Dealing Certificate-Part A

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Exam 2: ACI Dealing Certificate-Part B

Clients of a voice-broker quote EUR/GBP at 0.8345-50, 0.8346-51, 0.8348-53 and 0.8349-53. What will be the broker's price?

Which of the following currencies is quoted on an actual/360 basis?

With regard to operational risk awareness, which of the following best practices is incorrect?

What does the Model Code say about netting?

What are the primary reasons for taking an initial margin in a classic repo?

How is an outright forward FX transaction quoted?

A closed position in a particular foreign currency exists:

Where dealing for personal account is allowed, what safeguards to prevent abuse or insider dealing are stated by the Model Code?

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

The Interest Rate Parity Theorem states that:

Where the matter of dealing for personal account is concerned, the Model Code recommends that

How can material divergences between the value of cash and collateral be managed in a documented sell/buy-back?

What is the Gold Offered Forward Rate (GOFO)?

Which of the following risks is best mitigated by CLS?

As far as fineness and weight are concerned, what are the London Bullion Market Association (LBMA) requirements for a "good delivery bar"?

If USD/JPY is quoted to you as 98.10-15 and USD/CHF as 0.9294-99, what is the rate at which you can buy CHF against JPY?

Which party usually takes an initial margin in a classic repo?

A long collar is:

For a bank to count funds as regulatory capital:

If a dealer has a 6-month USD asset and a 3-month USD liability, how could he hedge his balance sheet exposure in the FRA market?

ACI Dealing Certificate-Part A

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