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3I0-012
ACI Dealing Certificate Questions and Answers

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Viewing page 13 out of 15 pages

Viewing questions 181-195 out of questions

Questions # 181:

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.

Answer

Questions # 182:

If a dealer has interest on one side, and the other side is dealt away, the broker should:

Options:

Immediately put the price “under reference” and check with the dealer to ascertain his original intention.

Cancel the order.

Continue with the order.

None of the above.

Answer

Questions # 183:

When dealing with a fund manager, who will allocate shares in a transaction to his unknown clients after the transaction has been executed with you, you should:

Options:

Agree in writing with the fund manager that the allocation will be confirmed as soon as practicable after the transaction is executed.

Insist on the allocation being made and confirmed before the transaction is executed.

Agree in writing with the fund manager that he will guarantee the transaction until the allocation is confirmed.

Any of the above.

Answer

Questions # 184:

You quote the following rates to a customer spot GBP/CHF 2.2005-10

3M GBP/CHF swap 120/115

At what rate do you sell GBP to a customer 3-month outright?

Options:

2.1890

2.2125

2.1895

2.1885

Answer

Questions # 185:

Making interest rate swap transactions subject to agreement on documentation:

Options:

Is recommended where the complications of the transaction warrant the practice.

Is strictly forbidden.

Is considered bad practice.

Must have senior management approval.

Answer

Questions # 186:

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%. How would you hedge the swap using FRAs? How to hedge an IRS with a strip of FRAs?

Options:

buy a strip of 0x6, 6x12, 12x18 and 18x24 FRAs

sell a strip of 0x6, 6x12, 12x18 and 18x24 FRAs

buy a strip of 6x12, 12x10 and 16x24 FRAs

sell a strip of 6x12, 12x18 and 18x24 FRAs

Answer

Questions # 187:

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

Answer

Questions # 188:

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

Answer

Questions # 189:

Which of the following is true?

Options:

The Euronext.LIFFE short sterling futures contract has a tick value of GBP 12.50 and a face value of GBP 1,000,000

The Euronext.LIFFE JPY futures contract has a tick value of JPY 2,500 and a face value of JPY 1,000,000,000

The CME eurodollar futures contract has a minimum price interval of one-quarter tick

(0.0025) for the nearest contract

All of the above

Answer

Questions # 190:

A CD with a face value of USD 50 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?

Options:

+USD 373,599.00

÷USD 186,099.00

-USD 1,400.99

Nil

Answer

Questions # 191:

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

Options:

Management must ensure ongoing lines of communication are in place between the parties.

Management must report to the central bank.

Management allows only experienced dealers to take such orders.

Bank staff must secure the approval of the counterpartqs management to accept such orders.

Answer

Questions # 192:

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?

Options:

Loss of GBP 17000

Profit of GBP 17,000

Loss of EUR 17,000

Profit of EUR of 17,000

Answer

Questions # 193:

When differences in payment arise because of errors in the payment of funds:

Options:

claims should be made for the costs incurred by the injured party and include all administration costs

no party involved can be enforced to contribute to achieve an equitable resolution to the problem

no market participant should be unjustly enriched or injured by the action/error of another market participant

claims are calculated on the full principal amount of the failed payment with the interest rate imposed by the injured party

Answer

Questions # 194:

Using the following rates:

Spot GBP/CHF1.4235-55

Spot CHF/SEK6.8815-45

3M GBP/SEK swap 140/150

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

Options:

9.8141-9.8246

9.8108-9.8279

9.8098-9.8289

9.8151-9.8236

Answer

Questions # 195:

The columns below list short-term cash rates on 3rd April and 3rd F1ay 3rd April 3rd May

Question # 195

Describe the shape of the short-term segment of the yield curve on 3’ April using market terminology. In addition, describe the change in the shape of the curve between 3rd April and 3rd May.