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ACI 3I0-012 - ACI Dealing Certificate

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Page: 10 / 15
Total 740 questions

You are the buyer of protection in a credit default swap. All other things being equal your counterparty credit risk is increasing if:

A.

the credit spread is decreasing

B.

the credit spread is decreasing and recovery rate is increasing

C.

the credit spread is increasing

D.

the recovery rate is increasing

Dealers are authorized to deal:

A.

anywhere, even away from their own dealing premises

B.

after-hours, but only if listed as such by management

C.

after-hours, but only from their private residence

D.

away from their broker’s dealing premises

What is the major difference between a CD and a deposit?

A.

The CD yields a higher rate of return

B.

The CD has less credit risk

C.

The CD is a transferable instrument

D.

The CD has a shorter range of maturities

When is interest conventionally due on a 3-year interbank EUR deposit?

A.

At maturity

B.

Annually

C.

Semi-annually

D.

Quarterly

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

When a broker needs to switch a name this should be done:

A.

only after consultation with the local regulator

B.

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

C.

only provided that such transactions are identified as switching transactions

D.

only after approval by the broker’s senior management

Which of the following both provide credit enhancement to a true-sale securitization?

A.

reserve account and third-party insurance

B.

subordinated tranches and creditworthiness of the originator

C.

creditworthiness of the originator and third-party insurance

D.

reserve account and interest rate hedging

What needs to be done in the event that a trade is amended by one or both parties?

A.

A new confirmation should be generated by both parties but there is no need to restart the confirmation cycle.

B.

The amending party should verbally inform the other party.

C.

A new confirmation should be generated and the confirmation cycle should restart and continue until the trade is completely matched by both parties.

D.

A new confirmation need not be generated but the confirmation cycle must restart and continue until the trade is completely matched by both parties.

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

A.

Interbank deposit

B.

Certificate of deposit

C.

Treasury bill

D.

BA

The buyer of a cap:

A.

Receives compensation if a reference interest rate falls below an agreed level

B.

Pays compensation if a reference interest rate falls below an agreed level

C.

Receives compensation if a reference interest rate rises above an agreed level

D.

Pays compensation if a reference interest rate rises above an agreed level

Who typically communicates the bank’s asset and liability management policy internally?

A.

the management board

B.

the chief risk officer

C.

the bank’s ALCO

D.

the Risk and Capital Committee

Which one of the formulae below is correct?

A.

Long a FRN + pay fixed on a swap = long a synthetic straight bond

B.

Long a FRN + receive floating on a swap = long a synthetic straight bond

C.

Long a FRN + pay floating on a swap = short a synthetic straight bond

D.

Long a FRN + pay floating on a swap = long a synthetic straight bond.

You want to hedge your deposit against falling interest rates. Which of the alternatives below are appropriate for this purpose?

A.

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

B.

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

C.

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

D.

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

A transaction that entails market price risks may be entered into in the absence of a market price risk limit...

A.

...only at the discretion of the head of treasury.

B.

...only at the discretion of the head of trading.

C.

...as long a counterparty and issuer limit is in place.

D.

... is not permitted.

In the event that standard settlement instructions are provided by a third party, full authentication and authorization of those SSIs should be independently performed by?

A.

Sales I trading staff

B.

Operations staff

C.

Nostro staff

D.

Front office staff