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Viewing questions 106-120 out of questions

Questions # 106:

Market participants should, where activity justifies it, aim to reduce settlement and related credit risk on currency transactions by:

Options:

Establishing realistic daylight limits for counterparties.

Monitoring all payments to counterparties who are known to be experiencing difficulties.

Establishing legally binding bilateral netting agreements with counterparties or participating in a multilateral netting system.

Seeking pre-payment.

Expert Solution

Questions # 107:

Dealers should not conduct dealing activities outside the bank unless:

Options:

Clear written guidelines issued by management are in place.

They are in an approved brokers office.

There are on holiday.

None of the above.

Expert Solution

Questions # 108:

Using the following rates:

spot GBP/CHF 2.3785-15

spot CHF/SEK 5.5975-85

3M GBP/SEK swap 725/690

What is the price for 3-month outright GBP/SEK?

Options:

13.3860-13.4020

13.2435-13.2615

13.2412-13.2638

13.2445-13.2605

Expert Solution

Questions # 109:

A person who appears to be a technician asks for your help in accessing treasury systems as he has forgotten his list of access codes. The Model Code recommends:

Options:

You should provide all reasonable assistance.

You should report the request immediately to senior management.

Do not get involved; you may be at risk.

There is no recommendation in the Model Code.

Expert Solution

Questions # 110:

Where internet trading facilities are established by a bank for a client, the conditions and controls should be stated in a rulebook produced by:

Options:

The bank.

The local bankers association.

The local regulator.

Negotiation between the bank and client.

Expert Solution

Questions # 111:

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

Options:

Break-even rate

Implied rate

Forward-forward rate

All of the above

Expert Solution

Questions # 112:

In the unforeseen event that a particular maturity date is declared a public holiday, what is normal market practice for spot FX?:

Options:

Extend the contract to the next business day

Shorten the contract to the previous business day

A new maturity date has to be agreed by the two parties involved

ACI’s Committee for Professionalism decides on a case by case basis

Expert Solution

Questions # 113:

What is the buyers primary risk in a repo?

Options:

The credit risk on the collateral

The credit risk on the repo counterparty

The legal risk on the contract

The operational risk on margin maintenance

Expert Solution

Questions # 114:

If you buy GBP 2,000,000 against USD at 1.6020; GSP 1,000,000 at 1.6035 and GBP 3,000,000 at 1.6028, what is the average rate of your position?

Options:

1.6035

1.6027

1.6030

1.6023

Expert Solution

Questions # 115:

What is a long straddle option strategy?

Options:

A long call option + long put option with the same strike prices

A short call option + short put option with the same strike prices

A long call option + short put option with the same strike prices

A short call option + long put option with the same strike prices

Expert Solution

Questions # 116:

What is the risk of dealing through an agent with an unknown principal?

Options:

You may not be able to ensure that your firm can avoid suspicion of trading on non-public information or other allegations of bad or illegal trading practice.

You may not be able to net your exposure in an insolvency.

You may not be able to net your exposure for capital adequacy purposes.

All of the above.

Expert Solution

Questions # 117:

The use of standard settlement instructions (SSI’s) is strongly encouraged because:

Options:

It reduces operational risk.

It splits differences arising from failed settlement between the two counterparties.

It removes the need for sending out SWIFT payment authorisations.

All of the above.

Expert Solution

Questions # 118:

When is a broker allowed to assume a deal is closed:

Options:

When one of the principals confirms the deal.

When the principals give a written undertaking for all deals done at the end of the day.

When an acknowledgement is received from the principal that the deal is done.

When both back offices acknowledge the deal.

Expert Solution

Questions # 119:

3-month USD/CHF is quoted at 112/110. Interest rates in Switzerland are reduced but USD rates (which are higher) are unchanged. What would you expect the 3-month forward USD/CHF rate to be?

Options:

unchanged

118/116

109/107

106/104

Expert Solution

Questions # 120:

You have done the following deals in spot USD/JPY:

Sold USD 5.0 million at 130.60

Bought USD 3.5 million at 130.20

Bought USD 2.0 million at 130.50

Sold USD 2.0 million at 130.55

What is your net position and average rate?

Options:

Short USD 1.5 million at 130.46

Long USD 1.5 million at 130.46

Short USD 1.5 million at 131.60

Long USD 1.5 million at 131.60

Expert Solution

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