ACI 3I0-012 ACI Dealing Certificate Exam Practice Test

overnight, tom-next and spot-next

maturities up to one week

maturity dates of less than one month

maturity dates of less than 10 days

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

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

There is a positive EUR yield curie

There is not enough information to decide

as a given deposit with a term of one month and a taken deposit with a term of four months

as a taken deposit with a term of one month

as a taken deposit with a term of one month and a given deposit with a term of four months

as a given deposit with a term of four months

USD 124,641,442.43

USD 124,636,476.94

USD 124,635,416.67

USD 123,915,737.30

must be transacted regardless of where the market moved

must be transacted if a broker confirms that the specified rate was reached

cannot be taken as a fixed-price guarantee unless agreed in writing

will always be the stop loss rate, if the order is executed

A nostro account is an account held by a bank in a foreign country in the banks domestic currency.

A nostro account is an account held by a bank in a foreign country for cash collateralising OTC derivative positions with banks in that country.

A nostro account is an account held by a bank in a foreign country in the currency of that country.

A nostro account is an account held by a bank in its home country in a foreign currency.

As quickly as possible.

Within 24 hours of the transaction.

Setore 10:00 am on the value date.

Betore close of business on the transaction date.

Profit of JPY 340.000

Profit of JPY 1.500,000

Loss of JPY 340.000

LossofJPV 500.000

It is put at the disposal of the buyer

It is held by the seller in the name of the buyer

It is held by the tn-party agent in the name of the buyer

It is frozen in the sellers account with the tri-panty agent

Banks should not ask brokers to disclose details of third party transactions unless they are between overseas principals.

Banks should not ask brokers to disclose details of third party transactions unless these transactions are already settled.

Banks should not ask brokers to disclose transactions between third parties in any circumstances.

Banks should not ask brokers for details of third party transactions unless senior management has approved.

0.9849

1.0154

1.9759

0.5061

Gambling and betting between market participants should be strongly discouraged.

Gambling and betting between market participants can be allowed if it is monitored by management.

Gambling and betting between market participants should be forbidden.

All of the above.

163.48-56

163.51-52

69.36-39

69.36-39

the monetary authority in the country where the broker is located

the banking association in the country where the bank is located

the Committee for Professionalism of the ACI

the local foreign exchange market committee

the 6-month bucket

the 2.5-year bucket

the 5-year bucket

It should be weighted and apportioned in each of the time buckets in accord with the periodic coupon payments.

enable the parties to comply with any capital adequacy requirements

provide for the absolute transfer of title to securities

provide for the calculation of initial consideration of the repo transaction

detail the course of action in the case of defaults, for example the rights and obligations of the counterparties and the full set-off of claims between the parties

A forward-forward rate of 0.685%

A forward-forward rate of 0.315%

Current 3-month LIBOR of 0.6850%

Current 3-month LIBOR of 0.3150%

To cover losses incurred between variation margin payments

To exclude retail investors

To pay reserve requirements

To cover fees due to the clearing house

the strategy of holding more interest rate sensitive assets than interest rate sensitive liabilities

the strategy of holding fewer interest rate sensitive assets than interest rate sensitive liabilities

reducing the size of the balance sheet

structuring a bank’s portfolio so that its net interest revenue and/or the market value of its portfolio will not be adversely affected by changes in interest rates

The Model Code emphasizes the importance of clear, concise documentation and on-going lines of communication.

Bank management must guarantee a fixed price execution to the counterparty.

The Model Code recommends that only experienced dealers should be allowed to take such orders.

Bank staff must secure the approval of the counterparty’s management to accept such orders.

Opening a positive gap

Going over-borrowed

Making a forward-forward loan

Taking a forward-forward deposit

You will have to pay USD 312.50

You will receive USD 312.50

You will have to pay USD 3,125.00

You will receive USD 3,125.00

XAU

XAG

XPT

XPD

Display the names of those users along their prices

Offer pre-trade anonymity to users quoting prices

Offer pre and post-trade anonymity to users quoting prices

Offer users the choice of whether to remain anonymous

that all telephone conversations (internal and external) be taped without informing counterparties

that only conversations undertaken by dealers and brokers should be recorded

that all conversations undertaken by dealers and brokers should be recorded, together with back office telephone lines used by those responsible for confirming deals or passing payments to other institutions

that only telephone conversations between dealers and brokers be recorded

The expense of settling an FRA

The reduced counterparty risk on a futures exchange

The reduced basis risk on futures

The superior interest rate risk on FRAs

Higher interest rates

Lower interest rates

Flattening yield curve

Parallel shift downwards in the yield curve

To confirm an FX transaction

To advise the netting position of a currency in NDFS

To advise changes in SSIs

To confirm a MM transaction

Bought EUR at 1.3053

Bought USD at 1.3053

Sold EUR at 1.3050

Sold USDatl.3050

Management should monitor the form, frequency and cost of entertainment and gifts dealers receive, have a clearly articulated policy towards the giving/receipt of gifts and ensure the policy is enforced.

As gifts and entertainment may be offered in the normal course of business, employees can offer inducements to conduct business and solicit them from the personnel of other institutions.

Although management should not monitor the form, frequency or cost of entertainment/gifts dealers receive, they may have a policy towards the giving/receipt of gifts and ensure the policy is enforced.

Gifts or entertainment should never be offered in the normal course of business, and employees must never offer any inducements to conduct business, nor solicit them from other institutions.

SONIA

STINA

STONIA

EONIA

The sensitivity of the option value to changes in volatility

The sensitivity of the option value to changes in the time to expiry

The sensitivity of the delta to changes in the value of the underlying

The sensitivity of the option value to changes in the price of the underlying

The CME eurodollar futures contract has a tick value (for one full basis point equivalent) of USD25 and a face value of USD 1,000,000

The Euronext. LIFFE EURIBOR futures contract has a tick value (for one full basis point equivalent) of EUR25 and a face value of EUR 1,000,000

The Euronext.LIFFE CHF futures contract has a tick value (for one full basis point equivalent) of CHF25 and a face value of CHF 1,000,000

All of the above

An unavailability of credit limit for the counterparty.

The need to reconfirm a transaction.

The unacceptability of the counterparty’s name.

The rate quoted is going to be revised.

You must have prior senior management approval.

You must have the authority to switch names.

You must execute such transactions as promptly as possible within policy guidelines

All of the above.

Clear written guidelines issued by management are in place.

They are in an approved brokers office.

There are on holiday.

None of the above.

The customer understands the structure of the transaction.

The customer has made its own assessment and independent decision to enter into the transaction and is doing so at its own risk and for its own account.

No fiduciary or advisory relationship exists between the parties, and all the information is has received is not to be construed as investment advice or a recommendation to transact.

All of the above.

1.4323-26

1.4320-25

1.4315-20

1.4318-23

Credit risk

Legal risk

Settlement risk

Basis risk

Costs more than an in-the-money call option

Costs less than an out-of-the-money call option

Costs more than an out-of-the-money call option

Costs the same as an at-the-money put option

1.2232

1.2233

1.2234

1.2267

Prior management approval has been sought.

They are executed within six months.

They are extended for not more than one year.

All of the above.

EUR 25,962,011.01

EUR 25,959,714.91

EUR 25,948,878.47

EUR 25,948,648.82

2.60%

2.75%

2.775%

2.813%

The bank.

The local bankers association.

The local regulator.

Negotiation between the bank and client.

Forward points

Full forward exchange rate

Depends on whether is interbank or to a customer

Depends on the currency pair and sometimes the term

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.

The amount of the deal exceeds EUR 5 million.

The local regulator or central bank declines to intervene.

Litigation has already commenced.

At the request of one of the counterparties.

if a principal refuses to honour the deal

no conditions are required; the broker is entitled to take positions

only if he can not find another counterparty for a name switching

brokers act only as intermediaries or arrangers of deals

Transaction exposure

Translation exposure

Economic exposure

None

a synthetic forward

a straddle

risk reversal

a strangle

An increase in forward USD/CHF

Falling CI-IF interest rates

A decrease in forward USD/CHF

Rising CHF interest rates

Assets are classified with an available stable funding factor (ASF).

Liabilities are classified with a required stable funding factor (RSF).

The ratio of available funding to required funding has to be higher than 50%n

Equity has an available stable funding factor of 100%.

EUR 337,874A0

EUR 342,947.58

EUR 337,739.24

EUR 342,810.40

It checks the eligibility and sufficiency of collateral

It can impose an initial margin on behalf of the buyer and manages margin calls

It manages substitution of collateral on behalf of the seller

It participates in the risk of transactions if one of the parties defaults

1.2993

1.3023

1.3141

1.4323

A spot sale (purchase) and a forward purchase (sale)

A spot sale (purchase) and a forward sale (purchase)

An exchange of currencies on a date beyond spot and at a price fixed today

An exchange of currencies on a date beyond spot

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

aFXswap

an in/out swap

a currency swap

a quanto swap

same way”

me too”

“par”, or “parity”

“join at”, or “support at”

one day after the deal is done

within two hours of the trade being booked and as soon as technologically possible

immediately after having received the confirmation of the counterparty

no later than the value date of the first leg of the transaction

A means by which to reduce a risk

An equal and opposite risk

A riskless transaction

A means of cancelling a deal

The expected appreciation or depreciation of the base currency

The expected appreciation or depreciation of the quoted currency

Largely, the interest rate differential between two currencies

Solely, the interest rate differential between two currencies

claims of less than USD 100.00

claims of less than USD 1,000.00

claims of less than EUR 100.00

claims of less than EUR 1,000.00

A loss of at least EUR 2,000,000.00 can be expected in 97 out of the next 100 days.

A loss of at most EUR 2,000,000.00 can be expected in 3 out of the next 100 days.

A loss of at least EUR 2,000,000.00 can be expected in 3 out of the next 100 days.

A loss of at most EUR 2,000,000.00 can be expected in 6 out of the next 100 days.

He buys CHF 5,000,000.00 at 0.9423

He buys CHF 5,000,000.00 at 0.9426

He buys USD 5,000,000.00 at 0.9423

He buys USD 5,000,000.00 at 0.9426

-30

+29

-29

+30

6.4250

6.3810

6.7850

6.3890

Unilateral collateral obligations to sovereign counterparties provide liquidity to banks.

Under Basel III commercial banks are most likely to incur lower costs to service their sovereign clients.

While banks usually do not call for collateral from sovereign counterparties, they must provide collateral for the offsetting hedge transactions which are undertaken with commercial counterparties.

Uncollateralised exposures to sovereign counterparties will not require additional regulatory capital to be set aside against potential credit losses

The buyer

The seller

Neither

Both

CD

FRA

BA

ECP

Brokers should only show the names of banks to counterparties who have prime credit ratings.

Brokers should only show the names of banks to counterparties who provide good liquidity to the brokered market.

Brokers should only show the names of banks to counterparties whom they know well.

Brokers should only show the names of bank counterparties if both sides display a serious intention to transact

ECP

Repo

Interbank deposit

CD

Hybex should become a payer of a fixed rate on a swap against receipt of LIBOR.

Hybex should become a receiver of a floating rate on a swap against payment of a fixed rate

Hybex should become a receiver of a fixed rate on a swap against payment of LIBOR D.

Hybex should become a receiver of a floating rate on a swap against payment of LIBOR

Intrinsic value but no time value

Time value but no intrinsic value

Both time value and intrinsic value

Neither time value nor intrinsic value

prices increase during a systemic crisis

return on investment is relatively high

absence of active market makers

wide bid/offer spreads

The price of the underlying instrument at the time of the transaction

The price at which the transaction on the underlying instrument will be carried out if and when the option is exercised

The price the buyer of the option pays to the seller when entering into the options contract

The price at which the two counterparties can close-out their position

Counterparty risk and operational risk

Counterparty risk and legal risk

Collateral illiquidity and counterparty risk

Collateral illiquidity and legal risk

Implicit nominal rate

Implied forward rate

Funding rate

Effective future rate

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

The right to buy a commodity at a fixed price

The right but not the obligation to buy or sell a commodity at a fixed price

The right but not the obligation to buy a commodity at a fixed price

‘stuff’ the broker and insist on a replacement name at the original price

accept a bank transfer compensation payment in favour of the bank or adjustment to brokerage bills

refuse any sort of compensation from the broker for the amount concerned

acknowledge the excuses of the broker and accept his offer of entertainment in compensation for the failed transaction

A loss of at least EUR 5,000,000.00 can be expected in 99 out of the next 100 weeks.

A loss of at most EUR 5,000,000.00 can be expected in 1 out of the next 100 weeks.

A loss of at most EUR 5,000,000.00 can be expected in 1 out of the next 100 days.

A loss of at least EUR 5,000,000.00 can be expected in 1 out of the next 100 weeks.

A maturity analysis of a bank’s interest-bearing assets and interest-bearing liabilities.

A method used to measure how much each source of funding is contributing to overall profitability.

A calculation of the spread between the duration of the interest-bearing assets and the interestbearing liabilities.

The evaluation and management of the gap between a bank’s volume of loans and deposits.

The risk of failure of a payments or settlement system

The risk that only one side of an exchange of currencies will be made

The risk of payments ‘gridlock’ in a real-time gross settlement system

The risk that default by a counterparty before the value date means you have to replace the defaulted deal at a worse rate

Selling a Money Market Future and/or selling a Forward Rate Agreement

Buying a Money Market Future and/or buying a Forward Rate Agreement

Selling a Money Market Future and/or buying a Forward Rate Agreement

Buying a Money Market Future and/or selling a Forward Rate Agreement

is a contract by which the maturity of a regular FX swap can be extended at an historic (noncurrent) rate

is a swap transaction where the near leg is traded either value today or value tomorrow and the far leg is traded spot

is a swap that does not start spot and where both the near and the far leg are traded forward

is a transaction by which a maturing outright forward FX is prolonged at an historic (non-current) rate

Economic capital is calculated externally and is the amount of capital the firm should have to support its target credit rating

Economic capital is calculated on an expected shortfall basis with a specific time horizon and confidence level.

Economic capital is used for measuring and reporting risks across a financial organisation.

Economic capital is always lower than regulatory capital because of the more adequate modelling of correlation effects compared to the regulatory approach.

detail the rights of counterparties regarding the substitution of collateral

include named securities permitted to be traded

be bi-laterally signed by both dealers involved in any transaction

need not be in place before any deals are executed or finalized

reserve account and third-party insurance

subordinated tranches and creditworthiness of the originator

creditworthiness of the originator and third-party insurance

reserve account and interest rate hedging

the broker is not obligated to reveal any material connections provided Chinese Walls are in place.

the broker is not required to reveal any connections at all.

the broker is legally obliged to advise his clients of any material connections that exist.

is a matter which is not covered by the Model Code.

Sell a 1x3 FRA at 0.42%

Buy a 1x3 FRA at 0.45%

Buy a 1x4 FRA at 0.58%

Sell a 1x4 FRA at 0.54%

7.525322

7.525312

7.524688

7.524678

33

42

27

40

USD

AUD

Depends on whether the price is being quoted in Australia or the US

Depends on whether the price is being quoted interbank or to a customer

The need to maintain confidentiality with respect to non-public price sensitive information

The maximum amounts or sizes of trades dealers are allowed to trade for their own account

The instruments/products dealers can trade for their own account

The pledge that no action is taken by employees that might adversely affect the interests of clients or counterparties

only after consultation with the local regulator

only if the switching transaction is done at the current market rate

only provided that such transactions are identified as switching transactions

only after approval by the broker’s senior management

Profit of CHF 29,750.00

Profit of SEK 29,750.00

Loss of SEK 29,750.00

Loss of CHF 29,750.00

the trade is within the specified tenor limits

the trade is within the tenor limits and is of an applicable trade type

the trade is within the tenor limits and credit limits

the trade is within the tenor limits, credit limits and is of an applicable trade type

They must be posted with a clear intent to be tradable.

They must be identified as indicative rates only.

They must be posted subject to later credit line approval.

They need not be posted in an appropriate trading style.

Longer rates are lower than short rates

Forward exchange rates are at a discount

Short term rates are lower than long

Forward exchange rates are a premium

to keep enough highly liquid assets to cover its net liabilities for the next 10 days to guard against severe liquidity stress

to keep enough highly liquid assets to cover its net liabilities for the next 30 days to guard against severe liquidity stress

to keep enough highly liquid assets to cover its net liabilities for the next 60 days to guard against severe liquidity stress

to retain enough liquidity to cover its assets against severe default risk

Gambling and betting amongst market participants should be strongly discouraged.

Gambling and betting amongst market participants may be permitted if management monitors it.

Gambling and betting amongst market participants should be prohibited.

Gambling and betting amongst market participants is only tolerated if it is previously reported to the CFP of the ACI.

matching should be performed by no later than the day after trading day

matching processes are manual and may not be automated

matching should be performed as soon as possible upon receipt of the confirmation

confirmation matching should be a post-settlement workflow activity

The market value of bond collateral at the end of the repo at the clean price of the bond

The market value of bond collateral at the end of the repo at the dirty price of the bond

The amount of cash actually paid for collateral at the start of the repo

The amount of cash actually paid for collateral at the start of the repo plus repo interest

Reviewed Supervisory Factor

Required Stable Funding

Riskless Stable Funding

Riskless Supervised Funding

Product Control, Legal and Compliance, Front Office, Treasury and Operations

Senior management only

Front Office and Treasury Middle Office

All relevant areas

Legal documentation must be put in place as soon as possible after transaction.

All market participants should use the Modified Previous Business Day Convention.

The exact maturity (end) dates for transactions must be agreed as soon as possible after a transaction.

All market participants should use the Modified Following Business Day Convention.

A cash instrument

An exchange traded derivative

An interest rate derivative

A balance sheet instrument

Time stamps on e-trading platforms need to be internally and globally synchronised to ensure appropriate tracking of trades

All records should be archived and appropriate audit trails must be maintained as required by the local Central Bank

Regular tests for loss of access to external liquidity platforms but not loss of service to clients should be undertaken

Testing of the system’s capability to cope with extreme volumes should be carried out annually

Wherever the parties agree

In London

In NewYork

In Frankfurt

unchanged

15/13

10/8

6/4