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ACI 3I0-008 : Practice Test
Topic 0, D
D
Question No : 1 - (Topic 0)
Click on the Exhibit Button to view the Formula Sheet.
How many USD would you have to invest at 3.5% to be repaid USD125 million (principal
plus interest) in 30 days?
www.CertificationKing.com 2
A. USD 124,641,442.43
B. USD 124,636,476.94
C. USD 124,635,416.67
D. USD 123,915,737.30
Answer: B
What is the day count/annual basis convention for euroyen deposits?
A. Actual/365
B. Actual/360
C. Actual/actual
D. 30E/360
Answer: B
Click on the Exhibit Button to view the Formula Sheet. Todays date is Thursday 12th
December. What is the spot value date? Assume no bank holidays.
A. 14th December
B. 15th December
C. 16th December
D. 17th December
Answer: C
Click on the Exhibit Button to view the Formula Sheet. EURIBOR is the:
A. Daily fixing of EUR interbank deposit rates in the European market

B. Daily fixing of EUR interbank deposit rates in the London market
C. Another name for EUR LIBOR
D. The ECBs official repo rate
Answer: A
Click on the Exhibit Button to view the Formula Sheet. Which of the following rates
represents the highest investment yield in the euromarket?
A. Semi-annual bond yield of 3.75 %

B. Annual bond yield of 3.75 %
C. Semi-annual money market yield of 3.75 %
D. Annual money market rate of 3.75 %
Answer: C
Click on the Exhibit Button to view the Formula Sheet. Which of the following are
transferable instruments?
A. Eurocertificate of deposit
B. US Treasury bill
C. CP
D. All of the above
Answer: D
Click on the Exhibit Button to view the Formula Sheet. Which of the following is always a
secured instrument?
A. ECP
B. Repo
C. Interbank deposit
D. CD
Answer: B
Click on the Exhibit Button to view the Formula Sheet. Which of the following is sometimes
called two-name paper?
A. ECP
B. BA or bank bill
C. Treasury bill
D. CD
Answer: B
Click on the Exhibit Button to view the Formula Sheet. What usually happens to the
collateral in a tri-party repo?
A. It is put at the disposal of the buyer

B. It is held by the seller in the name of the buyer
C. It is held by the tri-party agent in the name of the buyer
D. It is frozen in the sellers account with the tri-party agent
Answer: C
Click on the Exhibit Button to view the Formula Sheet. Which type of repo is the least risky
for the buyer?
A. Delivery repo
B. HIC repo
C. Tri-party repo
D. There is no real difference
Answer: A
A customer gives you GBP 25 million at 6.625% same day for 7 days.
Through a broker, you place the funds with a bank for the same period at 6.6875%.
Brokerage is charged at 2 basis points per annum.
What is the net profit or loss on the deal?
A. Profit of GBP 299.66

B. Profit of GBP 203.77
C. Loss of GBP 299.66
D. Loss of GBP 203.77
Answer: B
Click on the Exhibit Button to view the Formula Sheet. 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?
A. EUR 4,997,085.03
B. EUR 5,000,000.00
C. EUR 5,071,086.45
D. EUR 5,072,874.16
Answer: D
Click on the Exhibit Button to view the Formula Sheet. A CD with a face value of USD50
million and a coupon of 4.50% was issued at par for 90 days and is now trading at 4.50%
with 30 days remaining to maturity. What has been the capital gain or loss since issue?
A. +USD 373,599.00
B. +USD 186,099.00
C. -USD 1,400.99
D. Nil
Answer: C
Click on the Exhibit Button to view the Formula Sheet. The tom/next GC repo rate for
German government bonds is quoted to you at 1.75-80%. As collateral, you sell EUR10
million nominal of the 5.25% bund July 2012, which is worth EUR 11,260,000, with no initial
margin. The Repurchase Price is:
A. EUR 10,000,500.00
B. EUR 10,000,486.11
C. EUR 11,260,563.00
D. EUR 11,260,547.36
Answer: C
Click on the Exhibit Button to view the Formula Sheet. The one-month (31-day) GC repo
rate for French government bonds is quoted to you at 3.75-80%. As collateral, you are
offered EUR25 million nominal of the 5.5% OAT April 2006, which is worth EUR
28,137,500. If you impose an initial margin of 1%, the Repurchase Price is:
A. EUR 27,947,276.43
B. EUR 27,946,077.08
C. EUR 27,950,071.43
D. EUR 27,948,871.97
Answer: D
Click on the Exhibit Button to view the Formula Sheet. If EUR/USD is quoted to you as
1.1050-53, does this price represent?
A. The number of EUR per USD

B. The number of USD per EUR
C. Depends on whether the price is being quoted in Europe or the US
D. Depends on whether the price is being quoted interbank or to a customer
Answer: B
Click on the Exhibit Button to view the Formula Sheet. How much is a big figure worth per
million of base currency if EUR/GBP is 0.6990?
A. GBP 10,000
B. EUR 10,000
C. GBP 6,990
D. EUR 6,990
Answer: A
Click on the Exhibit Button to view the Formula Sheet. What is the incentive for market-
making?
A. Bid/offer spread
B. Flow information
C. Relationships
D. All of the above
Answer: D
Click on the Exhibit Button to view the Formula Sheet. The forward points are calculated
from:
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
Answer: C
Click on the Exhibit Button to view the Formula Sheet. If 6-month EUR/AUD is quoted at
29/32, which of the following statements is correct?
A. EUR rates are higher than AUD rates in the 6-month
B. AUD rates are higher than EUR rates in the 6-month
C. There is a positive EUR yield curve
D. There is not enough information to decide
Answer: B
Click on the Exhibit Button to view the Formula Sheet. The Interest Rate Parity Theorem
states that:
A. Interest rates in different currencies will tend to move into line with each other over time
B. Interest rates in different currencies differ due to differences in expectations about
inflation
C. Selling a low interest rate currency to invest a high interest rate currency will only be
profitable if one hedges the currency risk
D. Selling a low interest rate currency to invest in a high interest rate currency should not
be profitable if one hedges the currency risk
Answer: D
Click on the Exhibit Button to view the Formula Sheet. What is an FX swap?
A. An exchange of two streams of interest payments in different currencies and an

exchange of the principal amounts of those currencies at maturity
B. A spot sale (purchase) and a forward purchase (sale) of two currencies agreed
simultaneously between two parties
C. An exchange of currencies on a date beyond spot and at a price fixed today
D. None of the above
Answer: B
Click on the Exhibit Button to view the Formula Sheet. If I say that I have "bought and sold"
EUR/USD in an FX swap, what have I done?
A. Bought EUR and sold USD spot, and sold EUR and bought USD forward
B. Bought EUR/USD spot and sold EUR/USD forward
C. Taken a EUR loan in exchange for making a USD loan with the same counterparty
D. All of the above
Answer: D
Click on the Exhibit Button to view the Formula Sheet. 3-month EUR/USD FX swaps are
quoted to you at 15/19. If the "points are in your favour", what have you done?
A. Bought and sold 3-month EUR/USD through the swap

B. Sold and bought 3-month EUR/USD through the swap
C. Made the quote
D. Cannot say
Answer: A
Click on the Exhibit Button to view the Formula Sheet. What is the Gold Offered Forward
Rate?
A. The price differential between spot and forward gold prices

B. The rate at which dealers will lend gold against US dollars
C. The implied forward price of gold
D. The price of gold for forward delivery
Answer: B
Click on the Exhibit Button to view the Formula Sheet. The mid-rate for USD/CHF is 1.3950
and the mid-rate for AUD/USD is 0.7060. What is the mid-rate for CHF/AUD?
A. 0.9849
B. 1.0154
C. 1.9759
D. 0.5061
Answer: A
Click on the Exhibit Button to view the Formula Sheet. If GBP/USD is 1.5350-53 and
USD/JPY is 106.50-53, what is GBP/JPY ?
A. 163.48-56
B. 163.51-52
C. 69.36-39
D. 69.38-39
Answer: A
Click on the Exhibit Button to view the Formula Sheet. If spot GBP/CHF is quoted 2.3875-
80 and the 3-month forward outright is 2.3660-70, what are the forward points?
A. 21.5/21
B. 210/215
C. 215/210
D. 21/21.5
Answer: C
Your are quoted the following rates:
spot CHF/JPY 80.12-22
3M CHF/JPY 25.5/22.5
At what rate can you buy 3-month outright JPY against CHF?
A. 79.995
B. 79.965
C. 79.895
D. 79.865
Answer: D
You are quoted the following market rates:
spot USD/JPY 123.65
1M (30-day) USD. 2.15%
1M (30-day) JPY 0.10%
What is 1-month USD/JPY?
A. 123.44
B. 123.65
C. 123.86
D. 123.90
Answer: A
Click on the Exhibit Button to view the Formula Sheet. A forward-forward loan creates an
exposure to the risk of:
A. Higher interest rates

B. Lower interest rates
C. Steepening yield curve
D. Parallel shift downwards in the yield curve
Answer: A
Click on the Exhibit Button to view the Formula Sheet. Borrowing USD for 12 months and
lending them for 6 months (means that you are making):
A. Forward-forward loan
B. Forward-forward deposit
C. Negative gap
D. An over-lent position
Answer: B
Click on the Exhibit Button to view the Formula Sheet. It is June. You are over-borrowed
from October to January on your deposit book. How would you hedge using FRAs?
A. Sell 3x6
B. Buy 3x6
C. Sell 4x7
D. Buy 4x7
Answer: C
You have a USD loan that is priced at 3-month LIBOR+50. LIBOR for the loan will be re-
fixed in exactly one month. The market is quoting:
1x3 USD FRA. 1.95-98%
1x4 USD FRA. 2.07-10%
1x6 USD FRA. 2.25-28%
To hedge the next LIBOR fixing, you should:
A. Sell a 1x3 FRA at 1.95%

B. Buy a 1x3 FRA at 1.98%
C. Buy a 1x4 FRA at 2.10%
D. Sell a 1x4 FRA at 2.10%
Answer: C
Click on the Exhibit Button to view the Formula Sheet. In the international market, a FRA in
USD is usually settled with reference to:
A. BBA LIBOR
B. Fed funds
C. ISDA LIBOR
D. EURIBOR
Answer: A
Click on the Exhibit Button to view the Formula Sheet. Which of the following statements is
correct?
A. An adjusted settlement amount is paid at the end of the FRA contract period that
includes reinvestment interest for late payment
B. An unadjusted settlement amount is paid at the end of the FRA contract period
C. An adjusted settlement amount is paid at the start of the FRA contract period that is
discounted for early payment
D. An unadjusted settlement amount is paid at the start of the FRA contract period
Answer: C
Click on the Exhibit Button to view the Formula Sheet. 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?
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
Answer: B
Click on the Exhibit Button to view the Formula Sheet. What is the purpose of an initial
margin on a futures exchange?
A. To cover losses incurred between variation margin payments

B. To exclude retail investors
C. To pay reserve requirements
D. To cover fees due to the clearing house
Answer: A
Click on the Exhibit Button to view the Formula Sheet. The major difference between
futures and OTC instruments like FRAs and interest rate swaps is that futures are:
A. Exchange-traded
B. Guaranteed
C. Standardised
D. All of the above
Answer: D
Click on the Exhibit Button to view the Formula Sheet. You are paying 5% per annum paid
semi-annually and receiving 6-month LIBOR on a USD 10 million interest rate swap with
exactly two years to maturity. 6-month LIBOR for the next payment date is fixed today at
4.95%. You expect 6-month LIBOR in 6 months to fix at 5.25%, in 12 months at 5.35% and
in 18 months at 5.40%. What do you expect the net settlement amounts to be over the next
2 years? Assume 30-day months.
A. pay 250, receive 1,250, receive 1,750, receive 2,000

B. receive 250, pay 1,250, pay 1,750, pay 2,000
C. pay 2,500, receive 12,500, receive 17,500, receive 20,000
D. receive 2,500, pay 12,500, pay 17,500, pay 20,000
Answer: C
Click on the Exhibit Button to view the Formula Sheet. An option is:
A. The right to buy or sell a commodity at a fixed price

B. The right to buy a commodity at a fixed price
C. The right but not the obligation to buy or sell a commodity at a fixed price
D. The right but not the obligation to buy commodity at a fixed price
Answer: C
Click on the Exhibit Button to view the Formula Sheet. An option contract that gives the
buyer the right to exercise the option at several distinct points during its life is called:
A. European-style option
B. American-style option
C. Bermudan option
D. Asian option
Answer: C
Click on the Exhibit Button to view the Formula Sheet. The intrinsic value of a long call
option:
A. Falls and rises with the price of the underlying commodity, but is always positive
B. Rises if the price of the underlying commodity falls and vice versa
C. Depends solely on the volatility of the price of the underlying commodity
D. Becomes negative if the market price of the underlying commodity falls below the strike
price of the option
Answer: A
Click on the Exhibit Button to view the Formula Sheet. The theta of an option is:
A. The sensitivity of the option value to changes in interest rates

B. The sensitivity of the option value to changes in volatility
C. The sensitivity of the option value to changes in the time to expiry
D. The sensitivity of the option value to changes in the price of the underlying
Answer: C
Click on the Exhibit Button to view the Formula Sheet. What is the probability of an at-the-
money option being exercised?
A. Less than 50% probability

B. 50% probability
C. More than 50% probability
D. Zero probability
Answer: B
A dealer does the following deals in EUR/USD:
buys EUR 1 m at 1.1020
sells EUR 3 m at 1.1022
buys EUR 2 m at 1.1002
buys EUR 1.5 m at 1.1012
What position does the dealer now have?
A. Long EUR 1.5 m at 1.0984

B. Short EUR 1.5 m at 1.1036
C. Long EUR 1.5 m at 1.1012
D. Short EUR 3.0 m at 1.1025
Answer: A
Click on the Exhibit Button to view the Formula Sheet. Fraud is typically classified as:
A. Credit risk
B. Market risk
C. Legal risk
D. Operational risk
Answer: D
Click on the Exhibit Button to view the Formula Sheet. What is the effect of netting?
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
Answer: D
Click on the Exhibit Button to view the Formula Sheet. What is settlement risk in FX?
A. The risk of failure of a payments or settlement system
B. The risk that only one side of an exchange of currencies will be made
C. The risk of payments gridlock in a real-time gross settlement system
D. The risk that default by a counterparty before the value date means you have to replace
the defaulted deal at a worse rate
Answer: B
Click on the Exhibit Button to view the Formula Sheet. What is a Vostro account?
A. Your account at another bank

B. A foreign bank's account in your bank in your domestic currency
C. An account in your bank used for internal transactions
D. A customer's account at your bank
Answer: B
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.
A. (i), (ii), (iii), & (iv).

B. (i), (ii) & (iii).
C. (i) & (iii).
D. none of the above.
Answer: B
Click on the Exhibit Button to view the Formula Sheet. Confirmations must be sent out:
A. Immediately after the deal is done.

B. As quickly as possible after the deal is done.
C. By electronic media only, e.g. fax, telex.
D. Not later than the value date of the first leg of the transaction.
Answer: B
Click on the Exhibit Button to view the Formula Sheet. Where the matter of dealing for
personal account is concerned, the Model Code recommends that:
A. Subject to local legal requirements, this matter is one for bank management to decide.
B. Bank management should encourage such activities because it allows banks to monitor
the gambling habits of their staff.
C. Where this is allowed, bank management should have a clearly defined policy and
written procedures.
D. Bank management should allow staff to deal for their personal account on a case to
case basis.
Answer: C
Click on the Exhibit Button to view the Formula Sheet. To curb attempted fraud, banks
should:
A. Require greater vigilance by the management and staff.

B. Take particular care when the beneficiary is a third party to the deal.
C. Ensure that details of all telephone deals which do not include pre-agreed standard
settlement instructions are confirmed by telex or similar means without delay.
D. All of the above.
Answer: D
Click on the Exhibit Button to view the Formula Sheet. Written confirmation is a function
that can be done by:
A. Any dealer as long as he/she is not a party to the trade.

B. Staff in the back-office.
C. Staff in the dealing room who are not dealing.
D. Any staff outside the dealing room.
Answer: B
Click on the Exhibit Button to view the Formula Sheet. Which of following is not true?
A. Inter-bank market participants have a duty to make absolutely clear whether the prices
they are quoting are firm or merely indicative.
B. It is the duty of the dealer to periodically confirm with the broker the validity of his price.
C. It is the responsibility of the dealer to ensure that prices given to a broker are taken off if
they have not been hit or were subject to a time limit.
D. No deal is done if one counterparty is unable to conclude a deal due to credit line
problems and a name switch is not found within a reasonable period of time.
Answer: B
Click on the Exhibit Button to view the Formula Sheet. Which of the following statements is
true?
A. Banks should not ask brokers to disclose details of third party transactions unless they
are between overseas principals.
B. Banks should not ask brokers to disclose details of third party transactions unless these
transactions are already settled.
C. Banks should not ask brokers to disclose transactions between third parties in any
circumstances.
D. Banks should not ask brokers for details of third party transactions unless senior
management has approved.
Answer: C
Click on the Exhibit Button to view the Formula Sheet. Bank A pays for EURO 5 m at
1.1592. Bank B offers EURO 10 m at 1.1597. Broker XYZ quotes to the market EURO /
USD 1.1592/97. Bank C takes the offer at 97. The broker is obliged to reveal:
A. The name of Banks A and B.

B. The name of Bank B only.
C. The amount that was bid but not the name of Bank A.
D. None of the above
Answer: B
Click on the Exhibit Button to view the Formula Sheet. When you are accepting a stop loss
order, you must:
A. Ensure that your counterparty understands the terms under which your bank accepts the
order.
B. Ensure that your counterparty can be contacted in the event of unusual situations or
events or extremely volatile market conditions.
C. Ensure that your counterparty understands that any guarantee of fixed price execution
requires agreement in writing.
Answer: C
Click on the Exhibit Button to view the Formula Sheet. Brokers shall not reveal the identity
of a counterparty unless:
A. They are forced to do so.

B. Explicitly authorised to do so by the counterparty.
C. They know the counterparty very well.
D. They are asked by their senior management to do so.
Answer: B
Click on the Exhibit Button to view the Formula Sheet. The Model Code is unequivocal on "
position parking". What does it say?
A. The parking of deals or positions with any counterparty is discouraged.

B. The parking of deals or positions with any counterparty should be forbidden.
C. The parking of deals or positions should be subject to a clear policy laid down in writing
by senior management.
D. In jurisdictions where position parking is allowed, prior approval should be sought from
the regulator.
Answer: B
Click on the Exhibit Button to view the Formula Sheet. Which of the following statements
reflects the Model Code on gambling or betting amongst market participants?
A. Gambling and betting between market participants should be strongly discouraged.

B. Gambling and betting between market participants can be allowed if it is monitored by
management.
C. Gambling and betting between market participants should be forbidden.
Answer: A
Click on the Exhibit Button to view the Formula Sheet. Where answerphone equipment is
used for reporting and recording of off-premises transactions, it should be:
A. On an special number known only to the chief dealer.

B. On a number located in the office of the internal auditor.
C. Secured so that reported transactions cannot be erased without senior management
approval.
D. Secured by recordings that are stored for a suitable period.
Answer: C
Click on the Exhibit Button to view the Formula Sheet. Gambling or betting amongst market
participants has obvious dangers and:
A. Should be forbidden.
B. Should be strongly discouraged.
C. Should be monitored by management.
Answer: B
Click on the Exhibit Button to view the Formula Sheet. Confirmations should be sent out by
both counterparties through an efficient and secure means of communication, preferably
electronic:
A. Within 24 hours of the deal.

B. Within two business days of the deal.
C. Before the value date.
D. As soon as possible.
Answer: D
Click on the Exhibit Button to view the Formula Sheet. Payment and settlement instructions
should be passed:
A. As quickly as possible.
B. Within 24 hours of the transaction.
C. Before 10:00am on the value date.
D. Before close of business on the transaction date.
Answer: A
Click on the Exhibit Button to view the Formula Sheet. The Model Code rules that deals at
non-current rates:
A. Are forbidden.
B. Require prior regulatory approval.
C. Require the prior express permission of the senior management of both counterparties.
D. Should be marked to market daily.
Answer: C
Click on the Exhibit Button to view the Formula Sheet. You quote a price to a broker on
EUR 100 million. Your price is hit for EUR 50 million. What does the Model Code say
about this situation?
A. You have a right to qualify your quotes in terms of amounts, if you do so when you make
the price.
B. You have a right to qualify your quotes in terms of amounts, provided the amounts are
marketable.
C. You have a right to qualify your quotes in terms of amounts, once you have discovered
the name of the counterparty for credit reasons.
D. You have a right to qualify your quotes in terms of amounts.
Answer: A
Click on the Exhibit Button to view the Formula Sheet. You are quoting forward FX prices to
a broker subject to finding a counterparty for a matching transaction. The Model Code
says:
A. You must tell the broker, who must qualify your quotes.
B. For credit reasons, you must tell the broker when he presents a name.
C. You cannot do this.
D. The Model Code does not make recommendations on this subject.
Answer: A
Click on the Exhibit Button to view the Formula Sheet. Deliberately inputting incorrect big
figures into an electronic dealing platform is:
A. Technically impossible on electronic platforms

B. Not an uncommon practice and something which professional dealers should be able to
guard against.
C. Not good practice.
D. A criminal offence.
Answer: C
Click on the Exhibit Button to view the Formula Sheet. You deal over the phone with a
counterparty. The subsequent confirmation differs from the terms agreed verbally. What is
the result?
A. The confirmation takes precedence as it is a written contract.

B. The matter will have to be submitted to arbitration in order to establish the mutual intent
of the parties.
C. It depends on local law.
D. The verbal agreement is binding.
Answer: D
Click on the Exhibit Button to view the Formula Sheet. A broker offers a dealer an incentive
in the form of a reduction to the agreed schedule of brokerage between the firms.
A. This is a normal volume discount.

B. The offer requires approval in writing by both senior managements.
C. The offer requires agreement in writing between the broker and the dealer.
D. This is illegal.
Answer: B
Click on the Exhibit Button to view the Formula Sheet. It is now permissible in most
markets for brokers to be owned by banks and other principals. Where there is shared
management, or a shareholding or other investment in a broker by a counterparty:
A. The broker is not obligated to reveal the connection provided Chinese Walls are in
place.
B. The broker is not obligated to reveal the connection in the professional market.
C. The broker should advise the other counterparty of the connection.
D. The matter is covered in the Model Code.
Answer: C
Click on the Exhibit Button to view the Formula Sheet. If a dealer has any intention of
assigning an interest rate swap to a third party soon after transacting that swap:
A. The dealer should not reveal his future dealing intentions to his counterparty.
B. The dealer should make his intention to assign clear before transacting.
C. The dealer should agree the method of assignment before transacting.
D. The counterparty should specify whether or not assignment would be acceptable in
negotiations.
Answer: B
Click on the Exhibit Button to view the Formula Sheet. A dealer has indicated his intention
of assigning an interest rate swap to a third party soon after transacting that swap. When
about to execute an assignment:
A. The dealer is entitled to provide the name of the original counterparty to the assignee.
B. The dealer is entitled to provide the name of the assignee to the original counterparty.
C. The dealer should seek the permission of the assignee before releasing the name to the
original counterparty.
D. The dealer should seek the permission of the original counterparty before releasing the
name to the assignee.
Answer: C
Click on the Exhibit Button to view the Formula Sheet. What does the Model Code say
about netting?
A. Market participants are strongly recommended to net bilateral transactions with

counterparties where activity justifies it.
B. Market participants should establish payments netting agreements with cross-border
C. Market participants should establish legally viable bilateral netting agreements with
D. Market participants should establish legally viable multilateral netting agreements where
activity justifies it.
Answer: C
Click on the Exhibit Button to view the Formula Sheet. The Model Code recommends that,
in the case of complaints about transactions, management should:
A. Ensure complaints are investigated by the senior management of a firm not involved in
the disputed transaction.
B. Ensure complaints are fairly and independently investigated, in the first instance, by the
ACIs Committee for Professionalism.
C. Ensure complaints are investigated by representatives of a broking firm not directly
involved in the disputed transaction and selected by both parties to the dispute.
D. Ensure complaints are fairly and independently investigated, whenever practicable, by
staff not directly involved in the disputed transaction.
Answer: D
Click on the Exhibit Button to view the Formula Sheet. If a broker refers to "the payer of 5-
year euro at 4.12", what is this party doing?
A. Paying a fixed rate of 4.12% per annum on a 30/360 basis over 5 years in euros through
an interest rate swap in exchange for receiving a floating rate of 6-month Euribor on an
actual/360 basis reset semi-annually and paid in arrears.
B. Paying a fixed rate of 4.12% per annum on an actual/actual basis over 5 years in euros
through an interest rate swap in exchange for receiving a floating rate of 6-month Euribor
on an actual/360 basis reset semi-annually and paid in arrears.
C. Paying a 5-year euro deposit and receiving a rate of interest of 4.12% on an actual/360
basis.
D. Taking a 5-year euro deposit and paying a rate of interest of 4.12% on an actual/360
basis.
Answer: A
Click on the Exhibit Button to view the Formula Sheet. What is meant by "short dates"?
A. Maturities of less than one week.

B. Maturities of less than one month.
C. Maturities of less than one year.
D. Maturities in the same calendar month.
Answer: B
Click on the Exhibit Button to view the Formula Sheet. In all dealing conversations, the
Model Code strongly recommends:
A. Dealers stick to market terminology in order to avoid the impression that they are
offering an advisory or fiduciary role.
B. Dealers clarify what is being proposed rather than using any terminology that could be
misinterpreted.
C. Dealers restrict themselves to terminology listed and explained in Chapter 11 of the
Model Code.
D. Dealers define complex terminology in the confirmation of a deal.
Answer: B
Topic 1, A
A
Click on the Exhibit Button to view the Formula Sheet. A 3-month (91-day) deposit of
EUR25 million is made at 3.25%. At maturity, it is rolled over three times at 3.55% for 90
days, 4.15% for 91 days and 4.19% for 89 days. At the end of 12 months, how much is
repaid (principal plus interest)?
A. EUR 25,962,011.01
B. EUR 25,959,714.91
C. EUR 25,948,878.47
D. EUR 25,948,648.82
Answer: A
Click on the Exhibit Button to view the Formula Sheet. A 6-month (182-day) investment of
CHF15.5 million yields a return of CHF100,000. What is the rate of return?
A. 1.32%
B. 1.29%
C. 1.28%
D. 0.65%
Answer: C
Click on the Exhibit Button to view the Formula Sheet. What is EONIA?
A. Volume-weighted average overnight EUR deposit rate

B. Volume-weighted average overnight EUR LIBOR
C. Arithmetic average overnight EUR deposit rate
D. ECB overnight lending rate
Answer: A
Click on the Exhibit Button to view the Formula Sheet. Convert 8.25% quoted on a semi-
annually compounded money market basis for USD to the equivalent annually-

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Looking for Real Exam Questions for IT Certification Exams!

For pricing and placing order, please visit http://certificationking.com/order.html

Click on the Exhibit Button to view the Formula Sheet.

Click on the Exhibit Button to view the Formula Sheet.

What is the day count/annual basis convention for euroyen deposits?

A. Daily fixing of EUR interbank deposit rates in the European market

A. Semi-annual bond yield of 3.75 %

A. It is put at the disposal of the buyer

Click on the Exhibit Button to view the Formula Sheet.

Brokerage is charged at 2 basis points per annum.

What is the net profit or loss on the deal?

A. Profit of GBP 299.66

A. The number of EUR per USD

A. The level of interest rates in the base currency

A. EUR rates are higher than AUD rates in the 6-month

A. An exchange of two streams of interest payments in different currencies and an

A. Bought and sold 3-month EUR/USD through the swap

A. The price differential between spot and forward gold prices

Click on the Exhibit Button to view the Formula Sheet.

Your are quoted the following rates:

spot CHF/JPY 80.12-22

Click on the Exhibit Button to view the Formula Sheet.

You are quoted the following market rates:

spot USD/JPY 123.65

1M (30-day) USD. 2.15%

1M (30-day) JPY 0.10%

What is 1-month USD/JPY?

A. Higher interest rates

Click on the Exhibit Button to view the Formula Sheet.

1x3 USD FRA. 1.95-98%

1x4 USD FRA. 2.07-10%

1x6 USD FRA. 2.25-28%

A. Sell a 1x3 FRA at 1.95%

A. You receive USD 12,330.46

A. To cover losses incurred between variation margin payments

A. pay 250, receive 1,250, receive 1,750, receive 2,000

A. The right to buy or sell a commodity at a fixed price

A. The sensitivity of the option value to changes in interest rates

A. Less than 50% probability

Click on the Exhibit Button to view the Formula Sheet.

A dealer does the following deals in EUR/USD:

buys EUR 1 m at 1.1020

sells EUR 3 m at 1.1022

buys EUR 1.5 m at 1.1012

What position does the dealer now have?

A. Long EUR 1.5 m at 1.0984

A. To reduce the number and size of payments and transfers

A. Your account at another bank

Click on the Exhibit Button to view the Formula Sheet.

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.

A. (i), (ii), (iii), & (iv).

A. Immediately after the deal is done.

A. Require greater vigilance by the management and staff.

A. Any dealer as long as he/she is not a party to the trade.

A. The name of Banks A and B.

A. They are forced to do so.