Question 1

An option is:

Accepted Answer

A)  The right to buy or sell a commodity at a fixed pr 
B)  The right to buy a commodity at a fixed price 
C)  The right but not the obligation to buy or sell a 
D)  The right but not the obligation to buy commodity

Question 2

Using the following rates: 3M (90-day) eurodeposits3.50% 6M (180-day) eurodeposits3.75% What is the rate for a deposit, which runs from 3 to 6 months?

Accepted Answer

A)  3.625% 
B)  3.285% 
C)  3.965% 
D)  3.835%

Question 3

Purchasing a USD/JPY call option is equivalent to:

Accepted Answer

A)  Selling an JPY/USD put option 
B)  Selling a JPY/USD call option 
C)  Purchasing an JPY/USD put option 
D)  None of the above

Question 4

One of your brokers asks you to buy and sell EUR/USD at the same price net of brokerage in order to allow him to clear a transaction.

Accepted Answer

A)  You must have prior senior management approval. 
B)  You must have the authority to switch names. 
C)  You must execute such transactions as promptly as 
D)  All of the above.

Question 5

In the international market, a FRA in USD is usually settled with reference to:

Accepted Answer

A)  BBA LIBOR 
B)  Fed funds 
C)  ISDA LIBOR 
D)  EURIBOR

Question 6

You are quoted the following market rates: spot EUR/GBP 0.6670 6M (182-day) EUR 2.35% 6M (182-day) GBP 3.75% What is 6-month EUR/GBP?

Accepted Answer

A)  0.6675 
B)  0.6715 
C)  0.6717 
D)  0.6718

Question 7

Selling a FRA is the same as:

Accepted Answer

A)  Making a forward-forward loan 
B)  Going over-borrowed 
C)  Opening a positive gap 
D)  All of the above

Question 8

A customer sells a LIFFE Euro Swiss futures contract. Which of the following risks could he be trying to hedge?

Accepted Answer

A)  An increase in forward USD/CHF 
B)  Falling CHF interest rates 
C)  A decrease in forward USD/CHF 
D)  Rising CHF interest rates

Question 9

A 6-month SEK/NOK Swap is quoted 140/150. Spot is 0.9445. Which of the following statements is correct?

Accepted Answer

A)  SEK interest rates are higher than NOK interest ra 
B)  NOK interest rates are higher than SEK interest ra 
C)  NOK interest rates are higher than USD interest ra 
D)  SEK interest rates and NOK interest rates are conv

Question 10

You are quoting forward FX prices to a broker subject to finding a counterparty for a matching transaction. The Model Code says:

Accepted Answer

A)  You must tell the broker, who must qualify your qu 
B)  For credit reasons, you must tell the broker when 
C)  You cannot do this. 
D)  The Model Code does not make recommendations on th

Question 11

You need to buy USD 5,000,000 against GBP and are quoted the following rates concurrently by two separate banks: 1.6045-50 and 1.6047-52. At which rate do you trade?

Accepted Answer

A)  1.6045 
B)  1.6047 
C)  1.6050 
D)  1.6052

Question 12

A 1-month (30-day) USCP with a face value of USD 5 million is quoted at a rate of discount of 2.31%. How much is the paper worth?

Accepted Answer

A)  USD 4,884,500.00 
B)  USD 4,990,375.00 
C)  USD 4,990.506.85 
D)  USD 4,990,393.49

Question 13

What are IMM dates?

Accepted Answer

A)  The 10th of March, June, September and December. 
B)  The third Wednesdays of January, April, July and O 
C)  The Mondays before the third Wednesdays of March, 
D)  The third Wednesdays of March, June, September and

Question 14

What is Model Codes recommendation on the settlement of differences by "points"?

Accepted Answer

A)  It is not favoured. 
B)  It may be permitted when allowed by the local mark 
C)  It is unconditionally accepted by the Code. 
D)  It is allowed only if senior management approval i

Question 15

When you are accepting a stop loss order, you must:

Accepted Answer

A)  Ensure that your counterparty understands the term 
B)  Ensure that your counterparty can be contacted in 
C)  Ensure that your counterparty understands that any 
D)  All of the above.

Question 16

You bought a EUR 8,000,000 6x9 FRA at 4.50%. The settlement rate is 3-month (90-day) EURIBOR, which is fixed at 3.50%. What is the settlement amount at maturity?

Accepted Answer

A)  You pay EUR 20,000.00 
B)  You receive EUR 20,000.00 
C)  You pay EUR 19,826.52 
D)  You receive EUR 19,826.52

Question 17

What are the secondary market proceeds of a CD with a face value of EUR 5 million and a coupon of 3% that was issued at par for 182 days and is now trading at 3% but with only 7 days remaining to maturity?

Accepted Answer

A)  EUR 4,997,085.03 
B)  EUR 5,000,000.00 
C)  EUR 5,071,086.45 
D)  EUR 5,072,874.16

Question 18

What is the ISO code for the Lebanon pound?

Accepted Answer

A)  LEP 
B)  LBD 
C)  LBP 
D)  LNP

Question 19

A 7% CD was issued recently, at par, which you now purchase at 6.75%. You would expect to pay:

Accepted Answer

A)  The face value of the CD 
B)  More than the face value 
C)  Less than the face value 
D)  Too little information to decide

Question 20

You wish to sell a customer GBP/USD for value tomorrow. How can you hedge yourself?

Accepted Answer

A)  Sell and buy GBP/USD T/N 
B)  Buy and sell GBP/USD T/N 
C)  Sell GBP/USD spot, and sell and buy GBP/USD T/N 
D)  Buy GBP/USD spot, and buy and sell GBP/USD T/N

Exam 1: ACI Dealing Certificate-Part A