Question 1

In all dealing conversations, the Model Code strongly recommends:

Accepted Answer

A)  Dealers stick to market terminology in order to av 
B)  Dealers clarify what is being proposed rather than 
C)  Dealers restrict themselves to terminology listed 
D)  Dealers define complex terminology in the confirma

Question 2

You are short of 6 Dec eurodollar futures contracts at 98.10. Yesterday, the closing price was 98.15. Todays closing price is 97.905. What variation margin will be due?

Accepted Answer

A)  You will have to pay USD 612.50 
B)  You will receive USD 612.50 
C)  You will have to pay USD 3,675.00 
D)  You will receive USD 3,675.00

Question 3

What is the value date of a 6-month outright forward FX transaction dealt today, if todays spot date is Monday, 30 th June? Assume there are no bank holidays.

Accepted Answer

A)  27th December 
B)  30th December 
C)  31st December 
D)  1st January

Question 4

Which of the following would not constitute an event of market disruption under the Model Code?

Accepted Answer

A)  The imposition of capital controls. 
B)  A major terrorist attack on a financial centre. 
C)  The failure of SWIFT. 
D)  Concerted central bank intervention.

Question 5

How much is a big figure worth per million of base currency if EUR/GBP is 0.6990?

Accepted Answer

A)  GBP 10,000 
B)  EUR 10,000 
C)  GBP 6,990 
D)  EUR 6,990

Question 6

What is the probability of an at-the- money option being exercised?

Accepted Answer

A)  Less than 50% probability 
B)  50% probability 
C)  More than 50% probability 
D)  Zero probability

Question 7

Brokers should confirm all transactions:

Accepted Answer

A)  Initially by fax or other acceptable electronic me 
B)  Only if the deal is between overseas counterpartie 
C)  Only if the transaction is not for a marketable am 
D)  To both counterparties immediately by fax or other

Question 8

The forward points are calculated from:

Accepted Answer

A)  The level of interest rates in the base currency 
B)  The level of interest rates in the quoted currency 
C)  The interest rates in the two currencies 
D)  Your expectations of the future spot rate

Question 9

You bought a USD 4,000,000 6x9 FRA at 6.75%. The settlement rate is 3-month (90-day) BBA LIBOR, which is fixed at 5.50%. What is the settlement amount at maturity?

Accepted Answer

A)  You receive USD 12,330.46 
B)  You pay USD 12,330.46 
C)  You pay USD 12,163.81 
D)  You receive USD 12,163.81

Question 10

The Model Code recommends that when banks accept a stop-loss order:

Accepted Answer

A)  Management must ensure ongoing lines of communicat 
B)  Management must report to the central bank. 
C)  Management allows only experienced dealers to take 
D)  Bank staff must secure the approval of the counter

Question 11

The term "under reference" refers to:

Accepted Answer

A)  An unavailability of credit limit for the counterp 
B)  The need to reconfirm a transaction. 
C)  The unacceptability of the counterparty's name. 
D)  The rate quoted is going to be revised.

Question 12

Where answerphone equipment is used for reporting and recording of off-premises transactions, it should be:

Accepted Answer

A)  On an special number known only to the chief deale 
B)  On a number located in the office of the internal 
C)  Secured so that reported transactions cannot be er 
D)  Secured by recordings that are stored for a suitab

Question 13

A CD with a face value of USD 250 million was issued at par with a coupon of 5% for 91 days. You buy it in the secondary market when it has 30 days remaining to maturity and is trading at 5.25%. How much do you pay?

Accepted Answer

A)  USD 252,056,972.97 
B)  USD 252,028,916.32 
C)  USD 250,000,000.00 
D)  USD 248,911,014.31

Question 14

Todays date is Thursday 12th December. What is the spot value date? Assume no bank holidays.

Accepted Answer

A)  14th December 
B)  15th December 
C)  16th December 
D)  17th December

Question 15

Automatic trading systems for interbank spot FX display the best prices entered into the systems by users and:

Accepted Answer

A)  Display the names of those users along their price 
B)  Offer pre-trade anonymity to users quoting prices 
C)  Offer pre and post-trade anonymity to users quotin 
D)  Offer users the choice of whether to remain anonym

Question 16

How are Overnight Indexed Swaps settled?

Accepted Answer

A)  periodic exchange of fixed and floating payments u 
B)  at maturity by net payment 
C)  after maturity by exchange of fixed and floating p 
D)  after maturity by net payment

Question 17

You deal over the phone with a counterparty. The subsequent confirmation differs from the terms agreed verbally. What is the result?

Accepted Answer

A)  The confirmation takes precedence as it is a writt 
B)  The matter will have to be submitted to arbitratio 
C)  It depends on local law. 
D)  The verbal agreement is binding.

Question 18

What is the Overnight Index for GBP?

Accepted Answer

A)  SONIA 
B)  STINA 
C)  LIBOR 
D)  EONIA

Question 19

A 3-month (90-day) USD deposit is 5.5625% and 6-month (180-day) USD deposit is 5.75%. What is the 3x6 USD deposit rate?

Accepted Answer

A)  5.8342% 
B)  5.8561% 
C)  5.8425% 
D)  5.75%

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

Exam 1: ACI Dealing Certificate-Part A