Question 1

Dealers should not conduct dealing activities outside the bank unless:

Accepted Answer

A)  Clear written guidelines issued by management are 
B)  They are in an approved brokers office. 
C)  There are on holiday. 
D)  None of the above.

Question 2

If GBP/USD is 1.5350-53 and USD/JPY is 106.50-53, what is GBP/JPY ?

Accepted Answer

A)  163.48-56 
B)  163.51-52 
C)  69.36-39 
D)  69.38-39

Question 3

Management policy on the use of mobile devices by trading, sales and settlement staff should:

Accepted Answer

A)  Ban them from the dealing room or back office. 
B)  State whether they are allowed in the dealing room 
C)  Ban their use in the dealing room or back office. 
D)  Restrict their use to senior management and author

Question 4

Lending for 3 months and borrowing for 6 months creates a 3x6 forward-forward deposit. The cost of that deposit is called:

Accepted Answer

A)  Break-even rate 
B)  Implied rate 
C)  Forward-forward rate 
D)  All of the above

Question 5

Convert 8.25% quoted on a semi- annually compounded money market basis for USD to the equivalent annually- compounded bond basis.

Accepted Answer

A)  8.30% 
B)  8.52% 
C)  8.54% 
D)  8.69%

Question 6

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

Accepted Answer

A)  Agree. Entertainment is a normal part of business. 
B)  Refuse. This entertainment is excessive in value a 
C)  Agree but insist on paying half the cost. 
D)  Refuse. Going back to the same club is clearly exc

Question 7

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

Accepted Answer

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

Question 8

The use of mobile phones within the dealing room is not considered good practice except:

Accepted Answer

A)  In volatile markets. 
B)  When dealing with emerging markets. 
C)  In an emergency. 
D)  When quoting for information only.

Question 9

The two-week repo rate for 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 of:

Accepted Answer

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

Question 10

For which of the following reasons is the extension of forward contracts at non-current rates is discouraged: i.These could be used to conceal profit or losses. ii.These could be used to perpetrate fraud. iii.These could result in an unauthorised extension of credit. iv.These could result in confusing settlement instructions.

Accepted Answer

A)  (i), (ii), (iii), & (iv). 
B)  (i), (ii) & (iii). 
C)  (i) & (iii). 
D)  none of the above.

Question 11

Which of the following is sometimes called two-name paper?

Accepted Answer

A)  ECP 
B)  BA or bank bill 
C)  Treasury bill 
D)  CD

Question 12

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. 
B)  The deal is done. 
C)  It should be resolved in consultation with senior 
D)  The central bank should be consulted.

Question 13

At the end of the day you are short EUR 10 million against GBP at 0.6712. You are asked to revalue your position at a EUR/GBP rate of 0.6729. What is the resulting profit or loss?

Accepted Answer

A)  Loss of GBP 17,000 
B)  Profit of GBP 17,000 
C)  Loss of EUR 17,000 
D)  Profit of EUR of 17,000

Question 14

When using legal documentation, proposed modifications:

Accepted Answer

A)  Should be documented as soon as possible after a d 
B)  Should be clearly stated before a deal. 
C)  Can be agreed verbally. 
D)  Are not permissible.

Question 15

Bank participants have a duty to make it clear that their prices are firm or merely indicative:

Accepted Answer

A)  Only if they are dealing with brokers. 
B)  Only if they are dealing in a fast moving market. 
C)  Only if the amount is not marketable. 
D)  At all times.

Question 16

Which of the following is true?

Accepted Answer

A)  The Euronext.LIFFE short sterling futures contract 
B)  The Euronext.LIFFE JPY futures contract has a tick 
C)  The CME eurodollar futures contract has a minimum 
D)  All of the above

Question 17

The extension of forward FX contracts at their historic rates is only allowed when:

Accepted Answer

A)  Prior management approval has been sought. 
B)  They are executed within six months. 
C)  They are extended for not more than one year. 
D)  All of the above.

Question 18

What is the Overnight Index for EUR?

Accepted Answer

A)  EURIBOR 
B)  EONIA 
C)  Eurepo 
D)  TMP

Question 19

You are quoted spot NZD/USD 0.6821-28 and USD/CHF 1.4652-56, at what price can you buy CHF against NZD?

Accepted Answer

A)  0.9993 
B)  1.0006 
C)  1.0007 
D)  0.9994

Question 20

An at-the-money call option:

Accepted Answer

A)  Costs more than an in-the-money call option 
B)  Costs less than an out-of-the-money call option 
C)  Costs more than an out-of-the-money call option 
D)  Costs the same as an at-the-money put option

Exam 1: ACI Dealing Certificate-Part A