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You are quoted the following market rates: spot EUR/CHF 1.1005 6M (180-day) EUR 3.45% 6M (180-day) CHF 1.25% What are the 6-month EUR/CHF forward points?


A) +121
B) +120
C) -116
D) -119

E) B) and C)
F) B) and D)

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In the unforeseen event that a particular maturity date is declared a public holiday, what is normal market practice for spot FX? :


A) Extend the contract to the next business day
B) Shorten the contract to the previous business day
C) A new maturity date has to be agreed by the two pa
D) ACI's Committee for Professionalism decides on a c

E) C) and D)
F) None of the above

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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

E) B) and C)
F) A) and D)

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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 profe
C) Not good practice.
D) A criminal offence.

E) All of the above
F) A) and B)

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C

What is the primary function of GC repo, particularly very short -term transactions?


A) Financing long positions
B) Covering short positions
C) Interest rate positioning
D) Dividend tax arbitrage

E) All of the above
F) C) and D)

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A

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


A) Immediately put the price "under reference" and ch
B) Cancel the order.
C) Continue with the order.
D) None of the above.

E) B) and D)
F) A) and D)

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A

You have quoted your customer the following eurodollar deposit rates: 1M 5.375-25% 2M 5.4375-3125% 3M 5.5-375% The customer says, "I give you USD 20 million in the two's". What have you done?


A) Borrowed USD 20million at 5.3125%
B) Lent USD 20 million at 5.4375%
C) Borrowed USD 20 million at 5.4375%
D) Lent USD 20 million at 5.3125%

E) B) and C)
F) None of the above

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A bond is trading 50 basis points special for 1 week, while the 1-week GC repo rate is 3.25%. If you held GBP 10,500,000 of this bond, what would be the cost of borrowing against it in the repo market?


A) GBP 7,551.37
B) GBP 6,544.52
C) GBP 5,537.67
D) GBP 1,006.85

E) A) and B)
F) B) and C)

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When dealing with customers, financial market professionals are advised by the Model Code to clarify that all transactions are entered into solely at each partys risk by explicitly agreeing in writing that:


A) The customer understands the structure of the tran
B) The customer has made its own assessment and indep
C) No fiduciary or advisory relationship exists betwe
D) All of the above.

E) A) and B)
F) A) and C)

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Which of the following is true?


A) It is the responsibility of the broking firm to co
B) All principals have the responsibility for assessi
C) The principal is obliged to take into account any
D) All of the above.

E) B) and D)
F) A) and D)

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The Committee for Professionalism strongly recommends intra-day oral deal checks to help reduce the number and size of differences, particularly when dealing through voice- brokers, for deals involving foreign counterparties, in faster moving markets such as FX and when dealing in other instruments which have very short settlement periods. This checking should:


A) Be carried out at least three times a day.
B) Be agreed between the parties.
C) Be done at the end of each day.
D) Be decided by the broker.

E) All of the above
F) A) and B)

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Which of the following will tend to have the lowest yield?


A) Interbank deposit
B) Certificate of deposit
C) Treasury bill
D) BA

E) A) and B)
F) A) and C)

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Dealers are allowed to trade for their own account if:


A) The dealers have good track records in their deali
B) There has been no previous conflicts of interest i
C) There is a clearly laid down policy.
D) The dealers see no conflict of interest in such de

E) A) and D)
F) C) and D)

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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.

E) B) and D)
F) B) and C)

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A CD with a face value of EUR10 million and a coupon of 3% was issued at par for 182 days and is now trading at 3.10% with 120 days remaining to maturity. What has been the capital gain or loss since issue?


A) -EUR 52,161.00
B) +EUR 47,839.00
C) -EUR 3,827.67
D) Nil

E) B) and C)
F) All of the above

Correct Answer

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What type of risk would describe the failure of a back office to make adequate margin calls on repo positions?


A) Credit risk
B) Market risk
C) Operational risk
D) Settlement risk

E) A) and B)
F) A) and C)

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If you buy GBP 2,000,000 against USD at 1.6020; GBP 1,000,000 at 1.6035 and GBP 3,000,000 at 1.6028, what is the average rate of your position?


A) 1.6035
B) 1.6027
C) 1.6030
D) 1.6023

E) A) and B)
F) A) and D)

Correct Answer

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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 %

E) A) and D)
F) None of the above

Correct Answer

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Market participants should, where activity justifies it, aim to reduce settlement and related credit risk on currency transactions by:


A) Establishing realistic daylight limits for counter
B) Monitoring all payments to counterparties who are
C) Establishing legally binding bilateral netting ag
D) Seeking pre-payment.

E) None of the above
F) C) and D)

Correct Answer

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The Model Code strongly recommends that intra-day oral deal checks should:


A) Be conducted out at the end of the morning and aft
B) Be only be conducted after the close of business.
C) Be mutually agreed between the bank and the broker
D) Be the responsibility of the broker.

E) A) and B)
F) B) and D)

Correct Answer

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