Question 1

Which of the following statements about the Liquidity Coverage Ratio is correct?

Accepted Answer

A)  The LCR is a measure to ensure that the reserve of high quality liquid assets is sufficient to cover short term demand for liquidity in a stress situation. 
B)  the ratio (cash outflow in a 30-day stress period divided by high quality liquid assets) has to be greater than 100%. 
C)  Covered bonds are class 1 assets. 
D)  Obligations issued by central banks or government agencies are class 2 assets. 
A)  The LCR is a measure to ensure that the reserve of high quality liquid assets is sufficient to cover short term demand for liquidity in a stress situation. 
B)  the ratio (cash outflow in a 30-day stress period divided by high quality liquid assets) has to be greater than 100%. 
C)  Covered bonds are class 1 assets. 
D)  Obligations issued by central banks or government agencies are class 2 assets.

Question 2

When initially negotiating an interest rate swap, a principal indicated his intention to assign it to a third party. In executing such a transfer:

Accepted Answer

A)  The principal is entitled to provide the name of the original counterparty to the transferee. 
B)  The principal is entitled to provide the name of the transferee to the original counterparty. 
C)  The principal should obtain the consent of the transferee before releasing its name. 
D)  The principal should obtain the consent of the original counterparty before releasing its name to the transferee. 
A)  The principal is entitled to provide the name of the original counterparty to the transferee. 
B)  The principal is entitled to provide the name of the transferee to the original counterparty. 
C)  The principal should obtain the consent of the transferee before releasing its name. 
D)  The principal should obtain the consent of the original counterparty before releasing its name to the transferee.

Question 3

You and a dealer at another bank have an informal bilateral reciprocal arrangement to quote each other two-way prices. During periods of high volatility, the other dealer refuses to quote to you. The Model Code states that

Accepted Answer

A)  The other dealer should act with honour, honesty and integrity. 
B)  It is a purely matter for your two institutions. 
C)  Such arrangements are not in any way enforceable or binding. 
D)  All of the above. 
A)  The other dealer should act with honour, honesty and integrity. 
B)  It is a purely matter for your two institutions. 
C)  Such arrangements are not in any way enforceable or binding. 
D)  All of the above.

Question 4

In a plain vanilla interest rate swap, the "fixed-rate payer":

Accepted Answer

A)  has established the price sensitivities of a longer-term fixed-rate liability and a floating-rate asset 
B)  has established the price sensitivities of a longer-term fixed-rate asset and a floating-rate liability 
C)  receives fixed in the swap 
D)  pays floating in the swap 
A)  has established the price sensitivities of a longer-term fixed-rate liability and a floating-rate asset 
B)  has established the price sensitivities of a longer-term fixed-rate asset and a floating-rate liability 
C)  receives fixed in the swap 
D)  pays floating in the swap

Question 5

Which of the following statements about operational risk awareness is correct?

Accepted Answer

A)  It is good practice to collect and disclose incidents and near-misses for the future benefit of the professional community. 
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)  A report describing operational risks should be made at the request of the front office. 
D)  A report describing operational risks should be made at least once a year and provided to the front office. 
A)  It is good practice to collect and disclose incidents and near-misses for the future benefit of the professional community. 
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)  A report describing operational risks should be made at the request of the front office. 
D)  A report describing operational risks should be made at least once a year and provided to the front office.

Question 6

When banks transact FX swaps, the spot price should be determined:

Accepted Answer

A)  anytime after the swap is transacted 
B)  before the swap is transacted 
C)  immediately after the swap is transacted 
D)  no less than 24 hours after the completion of the swap 
A)  anytime after the swap is transacted 
B)  before the swap is transacted 
C)  immediately after the swap is transacted 
D)  no less than 24 hours after the completion of the swap

Question 7

What is the effect of netting?

Accepted Answer

A)  To reduce the number and size of payments and transfers 
B)  To reduce exposure to credit risk 
C)  To reduce the size of the balance sheet 
D)  All of the above 
A)  To reduce the number and size of payments and transfers 
B)  To reduce exposure to credit risk 
C)  To reduce the size of the balance sheet 
D)  All of the above

Question 8

You borrow GBP 2,500,000.00 at 0.625% for 165 days. How much do you repay including interest?

Accepted Answer

A)  GBP 2,507,161.46 
B)  GBP 2,507,063.36 
C)  GBP 2,507,006.85 
D)  GBP 2,507,106.16 
A)  GBP 2,507,161.46 
B)  GBP 2,507,063.36 
C)  GBP 2,507,006.85 
D)  GBP 2,507,106.16

Question 9

Under the Model Code, if a broker shouts "done" or "mine" at the very moment a dealer shouts "off":

Accepted Answer

A)  No deal is done and the broker should inform both counterparties accordingly. 
B)  The deal is done and the broker should inform both counterparties accordingly. 
C)  The matter should be resolved in consultation with senior management of the 3 institutions. 
D)  The ACI's Committee for Professionalism will investigate and advise accordingly. 
A)  No deal is done and the broker should inform both counterparties accordingly. 
B)  The deal is done and the broker should inform both counterparties accordingly. 
C)  The matter should be resolved in consultation with senior management of the 3 institutions. 
D)  The ACI's Committee for Professionalism will investigate and advise accordingly.

Question 10

Which of the following currency risks could only be hedged by a non deliverable forward (NDF)?

Accepted Answer

A)  an exposure in Latvian Lats (LVL) 
B)  an exposure in Russian Rouble (RU
B)  
C)  an exposure in Romanian Leu (RON) 
D)  an exposure in Bulgarian Lev (BGN) 
A)  an exposure in Latvian Lats (LVL) 
B)  an exposure in Russian Rouble (RU
B)  
C)  an exposure in Romanian Leu (RON) 
D)  an exposure in Bulgarian Lev (BGN)

Question 11

The market is quoting: 6-month (182-day) CAD 1.25% 12-month (366-day) CAD 1.55% What is the 6x12 rate in CAD?

Accepted Answer

A)  0.300% 
B)  0.946% 
C)  1.935% 
D)  1.835% 
A)  0.300% 
B)  0.946% 
C)  1.935% 
D)  1.835%

Question 12

What should be done if a broker fails to conclude a transaction at the quoted price and the dealer has to accept a lesser quote to neutralize his risk?

Accepted Answer

A)  'stuff' the broker and insist on a replacement name at the original price 
B)  accept a bank transfer compensation payment in favour of the bank or adjustment to brokerage bills 
C)  refuse any sort of compensation from the broker for the amount concerned 
D)  acknowledge the excuses of the broker and accept his offer of entertainment in compensation for the failed transaction 
A)  'stuff' the broker and insist on a replacement name at the original price 
B)  accept a bank transfer compensation payment in favour of the bank or adjustment to brokerage bills 
C)  refuse any sort of compensation from the broker for the amount concerned 
D)  acknowledge the excuses of the broker and accept his offer of entertainment in compensation for the failed transaction

Question 13

Which of the following is not a negotiable instrument?

Accepted Answer

A)  CD 
B)  FRA 
C)  BA 
D)  ECP 
A)  CD 
B)  FRA 
C)  BA 
D)  ECP

Question 14

You are quoted the following market rates: Spot AUD/CAD   1.0600 12M (360-day)   AUD 3.40% 12M (360-day)   CAD 1.55% What are the 12-month AUD/CAD forward points?

Accepted Answer

A)  +190 
B)  -193 
C)  -192 
D)  -190 
A)  +190 
B)  -193 
C)  -192 
D)  -190

Question 15

In a dispute between the dealer and a broker, the Model Code recommends that this should be referred in the first instance to:

Accepted Answer

A)  Central bank. 
B)  Senior management of the bank and the brokerage firm. 
C)  Head of compliance. 
D)  ACI's Committee for Professionalism (CFP). 
A)  Central bank. 
B)  Senior management of the bank and the brokerage firm. 
C)  Head of compliance. 
D)  ACI's Committee for Professionalism (CFP).

Question 16

You are the buyer of a receiver's swap. All other things being equal your counterparty risk is increasing if

Accepted Answer

A)  the swap curve is shifting downwards 
B)  the swap curve is shifting upwards 
C)  swaption volatilities are decreasing 
D)  time to expiry is becoming shorter 
A)  the swap curve is shifting downwards 
B)  the swap curve is shifting upwards 
C)  swaption volatilities are decreasing 
D)  time to expiry is becoming shorter

Question 17

Brokers should confirm all transactions:

Accepted Answer

A)  Initially by fax or other acceptable electronic means, then in writing. 
B)  Only if the deal is between overseas counterparties and for value today. 
C)  Only if the transaction is not for a marketable amount. 
D)  To both counterparties immediately by fax or other acceptable electronic means. 
A)  Initially by fax or other acceptable electronic means, then in writing. 
B)  Only if the deal is between overseas counterparties and for value today. 
C)  Only if the transaction is not for a marketable amount. 
D)  To both counterparties immediately by fax or other acceptable electronic means.

Question 18

Which of the following methods is a means of credit risk mitigation?

Accepted Answer

A)  entering into a plain vanilla IRS 
B)  entering into collateral agreements 
C)  hedging a portfolio's USD exposure 
D)  investing only in sizeable and liquid markets 
A)  entering into a plain vanilla IRS 
B)  entering into collateral agreements 
C)  hedging a portfolio's USD exposure 
D)  investing only in sizeable and liquid markets

Question 19

An interest rate swap (IRS) is:

Accepted Answer

A)  A contract to exchange one stream of interest payments for another 
B)  A temporary exchange of one deposit for another of a longer maturity in the same currency 
C)  A forward-forward contract 
D)  A contract to exchange an interest rate stream in one currency for another one in a different currency 
A)  A contract to exchange one stream of interest payments for another 
B)  A temporary exchange of one deposit for another of a longer maturity in the same currency 
C)  A forward-forward contract 
D)  A contract to exchange an interest rate stream in one currency for another one in a different currency

Question 20

When a broker calls "off" at the very instant a dealer "hits" the broker's price:

Accepted Answer

A)  The transaction should be concluded. 
B)  The broker decides whether or not the deal is done. 
C)  ACI's Committee for Professionalism will decide whether the transaction should be concluded. 
D)  The transaction should not be concluded. 
A)  The transaction should be concluded. 
B)  The broker decides whether or not the deal is done. 
C)  ACI's Committee for Professionalism will decide whether the transaction should be concluded. 
D)  The transaction should not be concluded.

Which of the following statements about the Liquidity Coverage Ratio is correct?

When initially negotiating an interest rate swap, a principal indicated his intention to assign it to a third party. In executing such a transfer:

You and a dealer at another bank have an informal bilateral reciprocal arrangement to quote each other two-way prices. During periods of high volatility, the other dealer refuses to quote to you. The Model Code states that

In a plain vanilla interest rate swap, the "fixed-rate payer":

Which of the following statements about operational risk awareness is correct?

When banks transact FX swaps, the spot price should be determined:

What is the effect of netting?

You borrow GBP 2,500,000.00 at 0.625% for 165 days. How much do you repay including interest?

Under the Model Code, if a broker shouts "done" or "mine" at the very moment a dealer shouts "off":

Which of the following currency risks could only be hedged by a non deliverable forward (NDF)?

The market is quoting: 6-month (182-day) CAD 1.25% 12-month (366-day) CAD 1.55% What is the 6x12 rate in CAD?

What should be done if a broker fails to conclude a transaction at the quoted price and the dealer has to accept a lesser quote to neutralize his risk?

Which of the following is not a negotiable instrument?

You are quoted the following market rates: Spot AUD/CAD 1.0600 12M (360-day) AUD 3.40% 12M (360-day) CAD 1.55% What are the 12-month AUD/CAD forward points?

In a dispute between the dealer and a broker, the Model Code recommends that this should be referred in the first instance to:

You are the buyer of a receiver's swap. All other things being equal your counterparty risk is increasing if

Brokers should confirm all transactions:

Which of the following methods is a means of credit risk mitigation?

An interest rate swap (IRS) is:

When a broker calls "off" at the very instant a dealer "hits" the broker's price:

ACI Dealing Certificate-Part A

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Exam 2: ACI Dealing Certificate-Part B

Which of the following statements about the Liquidity Coverage Ratio is correct?

When initially negotiating an interest rate swap, a principal indicated his intention to assign it to a third party. In executing such a transfer:

You and a dealer at another bank have an informal bilateral reciprocal arrangement to quote each other two-way prices. During periods of high volatility, the other dealer refuses to quote to you. The Model Code states that

In a plain vanilla interest rate swap, the "fixed-rate payer":

Which of the following statements about operational risk awareness is correct?

When banks transact FX swaps, the spot price should be determined:

What is the effect of netting?

You borrow GBP 2,500,000.00 at 0.625% for 165 days. How much do you repay including interest?

Under the Model Code, if a broker shouts "done" or "mine" at the very moment a dealer shouts "off":

Which of the following currency risks could only be hedged by a non deliverable forward (NDF)?

The market is quoting: 6-month (182-day) CAD 1.25% 12-month (366-day) CAD 1.55% What is the 6x12 rate in CAD?

What should be done if a broker fails to conclude a transaction at the quoted price and the dealer has to accept a lesser quote to neutralize his risk?

Which of the following is not a negotiable instrument?

You are quoted the following market rates: Spot AUD/CAD 1.0600 12M (360-day) AUD 3.40% 12M (360-day) CAD 1.55% What are the 12-month AUD/CAD forward points?

In a dispute between the dealer and a broker, the Model Code recommends that this should be referred in the first instance to:

You are the buyer of a receiver's swap. All other things being equal your counterparty risk is increasing if

Brokers should confirm all transactions:

Which of the following methods is a means of credit risk mitigation?

An interest rate swap (IRS) is:

When a broker calls "off" at the very instant a dealer "hits" the broker's price:

ACI Dealing Certificate-Part A

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