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A 30-day 4% CD with a face value of GBP 20,000,000.00 is trading in the secondary market with 20 days remaining to maturity at 4.05%. What would be your holding period yield if you bought the CD now and held it to maturity?


A) 4.05%
B) 4.0%
C) 3.891%
D) 3.838%

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

Correct Answer

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Which of the following statements is true? The repo legal agreement between the two parties concerned should:


A) detail the rights of counterparties regarding the substitution of collateral
B) include named securities permitted to be traded
C) be bi-laterally signed by both dealers involved in any transaction
D) need not be in place before any deals are executed or finalized

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

Correct Answer

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Which of the following transactions would have the effect of shortening the average duration of liabilities in the banking book?


A) selling holdings of 30-year German Government bonds
B) replacing retail savings accounts with 3-month borrowings under repo
C) selling futures contracts on 30-year German Government bonds
D) placing a 20-year covered bond in the market

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

Correct Answer

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Which SWIFT message should be used to advise the netting position of a currency resulting from FX, NDF, options and other trades?


A) MTn99
B) MT300
C) MT370
D) MT670/671

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

Correct Answer

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What do you call a combination of a long (short) call option and short (long) put option with same face value, same expiration date, same style, where the strike price is equal to the forward price?


A) a synthetic forward
B) a straddle
C) risk reversal
D) a strangle

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

Correct Answer

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A bank quotes 3-month EUR deposits at 0.45% ¡ª 0.55% to its broker. The broker lifts the bank's offer at 0.55%. Which of the following steps must the broker take?


A) The broker must show the borrower's name to the lender first and disclose the lender's name only if the borrower is acceptable to the lender.
B) The broker must show the lender's name to the borrower first and disclose the borrower's name only if the lender is acceptable to the borrower.
C) The broker must show the borrower's and lender's names to each other at the same time.
D) For marketing reasons, the broker can show the lender's name to the borrower at any time.

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

Correct Answer

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Under Basel rules the risk weight for AM-rated claims on corporates in the standardized approach is:


A) 0%
B) 15%
C) 20%
D) 75%

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

Correct Answer

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Which of the following would not constitute an event of market isruption under the Model Code?


A) The imposition of capital controls.
B) A major terrorist attack on a financial centre.
C) The failure of SWIFT.
D) Concerted cestal bank intervention.

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

Correct Answer

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When a broker makes an error on payment instructions The Model Code recommends that


A) The broker remains liable for the resulting difference for 3 full business days following the date of the transaction.
B) The broker remains liable until the error is discovered.
C) The broker is not liable at all.
D) The broker's liability should be limited as he is not in a position to directly rectify the situation.

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

Correct Answer

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Today's spot value date is Friday 27th February. What is normally the 1-month maturity date? Assume no bank holidays.


A) 28th March
B) 29th March
C) 30th March
D) 31st March

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

Correct Answer

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Which of the following is the best description of a "broken trade"?


A) when a trade has been agreed to with dates (maturities) different from the standard dates
B) when one of the parties to the deal unilaterally decides to withdraw from the on-going transaction
C) when, due to a system break, one or both parties to the deal chooses to withdraw from the ongoing transaction
D) when, due to a system break, one or both parties to the deal are unclear as to whether the deal has been done

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

Correct Answer

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Mark-to-market' in a repo means:


A) Revaluing collateral versus cash
B) Revaluing collateral
C) Calculating net present value
D) Calculating the net replacement cost

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

Correct Answer

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A broker can consider a deal as done if:


A) He is confident that the dealer will not back out of the deal.
B) Both parties have established credit lines for each other.
C) One party acknowledges interest.
D) He receives verbal acknowledgement from the dealer.

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

Correct Answer

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Under what conditions can an FX broker act as a position taker?


A) if a principal refuses to honour the deal
B) no conditions are required; the broker is entitled to take positions
C) only if he can not find another counterparty for a name switching
D) brokers act only as intermediaries or arrangers of deals

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

Correct Answer

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7-day USCP is quoted at a rate of discount of 1.75%. What is its true yield?


A) 1.73%
B) 1.75%
C) 1.77%
D) 1.80%

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

Correct Answer

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The mid-rate for USD/CHF is 1.3950 and the mid-rate for AUD/USD is 0.7060. What is the midrate for CHF/AUD?


A) 0.9849
B) 1.0154
C) 1.9759
D) 0.5061

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

Correct Answer

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You are quoted the following rates: Spot EUR/NOK        7.5250-60 O/N EUR/NOK swap         3.10/3.20 T/N EUR/NOK swap         3.12/3.22 S/N EUR/NOK swap         9.35/9.55 At what rate can you sell EUR against NOK for value tomorrow?


A) 7.525322
B) 7.525312
C) 7.524688
D) 7.524678

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

Correct Answer

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Which position below is NOT a component of common equity Tier 1 capital?


A) innovative hybrid capital instruments with incentives to redeem
B) common shares issued by bank
C) retained earnings
D) stock surplus (share premium)

E) All of the above
F) None of the above

Correct Answer

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How much is a big figure worth per million of base currency it EUR/GBP is 0.6990?


A) GBP 10,000
B) EUR 10,000
C) GBP 6,990
D) EUR 6,990

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

Correct Answer

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What is the meaning of "under reference" in the terminology of trading?


A) a term the quoting dealer uses to caution the receiver of the quote that the price may have to be re-quoted at the receiver's risk
B) the qualification that the rate quoted in the market may no longer be valid and requires confirmation before any trades can be agreed upon
C) the statement that the rates quoted by the broker are for indication only
D) an acknowledgement by the dealer receiving the quote that the rate may have to be re-quoted at the receiver's risk

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

Correct Answer

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