ACI Operations Certificate challenging (3I0-013) Practice Test

Questions # 1:

Which of the following risks is best mitigated by CLS?

Options:

Currency risk

Operational risk

Liquidity risk

Settlement risk

Questions # 2:

In the bond market, which of the following is true about the settlement amount?

Options:

The settlement amount is the sum of the redemption value plus all coupons paid by the issuer.

If the yield and the coupon are exactly the same, the settlement amount and the face value will be identical.

The settlement amount is always calculated using the redemption price.

On a coupon date, if the bond quotes at par, the settlement amount and the face value will be identical.

Questions # 3:

What criteria should reconciliation escalation be based on?

Options:

It should be based on the days’ past settlement date, value and/or likely compensation

It should be based on the BIC-address and country

It should be based on bilateral limits

It should be based on the relationships of the institutions involved

Questions # 4:

The coupon of this type of bond can be based on a country's CPI (Consumer Price Index);

Options:

"Step up" bonds

Index linked bonds

Premium bonds

Par bonds

Questions # 5:

A "basis point", expressed as a percentage, is:

Options:

0.01%

0.1%

0.0001%

Questions # 6:

A bank responsible for making due payments of principal and interest on a bond is called the

Options:

Purchase agent

Paying agent

Fiscal agent

Market maker

Questions # 7:

In the weekend newspapers you read that one of your FX counterparties has gone into liquidation. You have no netting or close-out agreements in place with this counterparty and remember that you have one forward deal outstanding. What is the main risk affecting your bank?

Options:

The loss of the entire principal amount of the deal

The “replacement risk”, also known as “replacement-cost risk”

The loss of the negative mark-to-market value of the deal

As the deal is in the future, there is no impact on P&L

Questions # 8:

What is the Bank Identifier Code (BIC)?

Options:

A worldwide unique identification code for both financial and non-financial institutions

A unique identification code for European financial institutions

The short form of the IBAN-code

A unique access-code to SWIFT-platforms

Questions # 9:

Inexplicably, the Chief FX trader asks the junior settlements clerk to hold back a deal input until the following morning. Which of the following courses of action should you recommend?

Options:

Refuse, input the deal as normal but keep the request to yourself

Input the deal the following morning as requested by the Chief FX trader

Refuse, input the deal and tell another spot trader

Refuse, input the deal and report the incident to your superior

Questions # 10:

The notional amount in an interest rate swap is:

Options:

The sum of all the fixed and floating rate payments

The net difference between fixed and floating rate payments

The amount on which floating and fixed interest payments are calculated

The amount at which the two counterparties can close-out their transaction

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