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ACI Dealing Certificate Questions and Answers

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Viewing page 8 out of 15 pages

Viewing questions 106-120 out of questions

Questions # 106:

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?

Options:

163.48-56

163.51-52

69.36-39

Answer

Questions # 107:

Which of following is not true?

Options:

Inter-bank market participants have a duty to make absolutely clear whether the prices they are quoting are firm or merely indicative.

It is the duty of the dealer to periodically confirm with the broker the validity of his price.

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.

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

Questions # 108:

What is the minimum basis on which a BCP should be updated and tested?

Options:

Every 6 months

Yearly

Whenever the BCP procedures are changed

Every 3 months

Answer

Questions # 109:

Which of the following are quoted in terms of a discount rate?

Options:

USTreasury bill

Interbank deposit

ECP

Answer

Questions # 110:

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

Options:

The dealer is entitled to provide the name of the original counterparty to the assignee.

The dealer is entitled to provide the name of the assignee to the original counterparty.

The dealer should seek the permission of the assignee before releasing the name to the original counterparty.

The dealer should seek the permission of the original counterparty before releasing the name to the assignee.

Answer

Questions # 111:

Deliberately inputting incorrect big figures into an electronic dealing platform is:

Options:

Technically impossible on electronic platforms

Not an uncommon practice and something which professional dealers should be able to guard against.

Not good practice.

A criminal offence.

Answer

Questions # 112:

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:

Options:

The name of Banks A and B.

The name of Bank B only.

The amount that was bid but not the name of Bank A.

None of the above

Answer

Questions # 113:

Which of the following cannot produce a capital gain?

Options:

Treasury bill

ECP

Classic repo

Answer

Questions # 114:

The Interest Rate Parity Theorem states that:

Options:

Interest rates in different currencies will tend to move into line with each other over time

Interest rates in different currencies differ due to differences in expectations about inflation

Selling a low interest rate currency to invest a high interest rate currency will only be profitable if one hedges the currency risk

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

Questions # 115:

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

Options:

You must tell the broker, who must qualify your quotes.

For credit reasons, you must tell the broker when he presents a name.

You cannot do this.

The Model Code does not make recommendations on this subject.

Answer

Questions # 116:

Risk capital is intended to ensure that an institution can:

Options:

Survive a liquidity crisis

Absorb credit losses

Absorb any type of unexpected loss

Absorb any type of expected loss

Answer

Questions # 117:

ACI’s Committee for Professionalism will offer expert opinion in disputes between firms if:

Options:

both parties to the dispute are members of the ACI and agree to submit the dispute to the ACI

one of the counterparties requests the assistance of ACI’s Committee for Professionalism

the two counterparties are located in different financial centers

the amount in dispute is more than USD 100,000.00 or equivalent

Answer

Questions # 118:

What is the maximum maturity of a London CD?

Options:

One year

270 days

183 days

5years

Answer

Questions # 119:

Written confirmation is a function that can be done by:

Options:

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

Staff in the back-office.

Staff in the dealing room who are not dealing.

Any staff outside the dealing room.

Answer

Questions # 120:

What does the Model Code recommend regarding the practice of “name switching/substitution”?

Options:

Dealers may seek a compensation payment in favor of the bank or an adjustment to brokerage bills from the broker for switching names.

If requested by a broker to clear a transaction through name switching, a dealer must ensure that such activities have the prior approval of senior management.

The practice of name switching/substitution is neither acceptable nor desirable.

Name switching/substitution transactions should be executed as promptly as possible not considering credit limits and policy guidelines.

Answer

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