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ACI 3I0-012 - ACI Dealing Certificate

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Page: 13 / 15
Total 740 questions

What is the incentive for market-making?

A.

Bid/offer spread

B.

Flow information

C.

Relationships

D.

All of the above

If there is a need for assistance to help resolve a dispute over differences between a broker and a bank, the Model Code suggests turning to:

A.

the monetary authority in the country where the broker is located

B.

the banking association in the country where the bank is located

C.

the Committee for Professionalism of the ACI

D.

the local foreign exchange market committee

Which of following is not true?

A.

Inter-bank market participants have a duty to make absolutely clear whether the prices they are quoting are firm or merely indicative.

B.

It is the duty of the dealer to periodically confirm with the broker the validity of his price.

C.

It is the responsibility of the dealer to ensure that prices given to a broker are taken off if they have not been hit or were subject to a time limit.

D.

No deal is done if one counterparty is unable to conclude a deal due to credit line problems and a name switch is not found within a reasonable period of time.

Which type of repo is the least risky for the buyer?

A.

Delivery repo

B.

HlC repo

C.

Tri-party repo

D.

There is no real difference

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

A.

enable the parties to comply with any capital adequacy requirements

B.

provide for the absolute transfer of title to securities

C.

provide for the calculation of initial consideration of the repo transaction

D.

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

When initially negotiating an interest rate swap, a principal indicated his intention to assign it to a third party. In executing such a transfer:

A.

The principal is entitled to provide the name of the original counterparty to the transferee.

B.

The principal is entitled to provide the name of the transferee to the original counterparty.

C.

The principal should obtain the consent of the transferee before releasing its name.

D.

The principal should obtain the consent of the original counterparty before releasing its name to the transferee.

What recommendation does the Model Code make in cases of market disruption?

A.

Market participants should strictly adhere to the rules issued by local regulators, supervisors or central banks in order to maintain efficiency and avoid disputes.

B.

Even if local provisions are in place, market participants should only adhere to the ACI best practices of the Model Code in order to maintain efficiency and avoid disputes.

C.

Participants must at all times adhere to the rules issued by local regulators, supervisors or central banks even if these rules or procedures conflict with any provision of an existing written agreement.

D.

Parties may unilaterally decide whether they wish to adhere to the terms of the agreement or to amend the terms of the transaction to follow the relevant procedure.

Which of the following are transferable instruments?

A.

Eurocertificate of deposit

B.

US Treasury bill

C.

CP

D.

All of the above

You bought a USD 4,000000 6x9 FRA at 6.75%. The settlement rate is 3-month (90-day) BBA LIBOR, which is fixed at 5.50%. What is the settlement amount at maturity?

A.

You receive USD 12,330.46

B.

You pay USD 12,330.46

C.

You pay USD 12,163.81

D.

You receive USD 12,163.81

The major difference between futures and OTC instruments like FRAs and interest rate swaps is that futures are:

A.

Exchange-traded

B.

Guaranteed

C.

Standardised

D.

All of the above

Deals transacted directly or via a broker prior to 5:00 am Sydney time on Monday morning:

A.

are invalid

B.

must be approved by senior management before confirmation

C.

cannot be entered into without the approval of the local regulator

D.

are not considered to have been done in normal conditions or normal market hours

When an employee executes a personal trade in advance of a client’s or institution’s order to benefit from the anticipated movement in the market price following the execution of a large trade, it is called:

A.

front running

B.

ex ante trading

C.

insider dealing

D.

forward-facing

What is the purpose of an initial margin on a futures exchange?

A.

To cover losses incurred between variation margin payments

B.

To exclude retail investors

C.

To pay reserve requirements

D.

To cover fees due to the clearing house

Clients of a voice-broker quote EUR/GBP at 0.8345-50, 0.8346-51, 0.8348-53 and 0.8349-53. What will be the broker’s price?

A.

0.8345-53

B.

0.8345-50

C.

0.8349-50

D.

0.8349-53

Which of the following statements about leverage ratios under Basel III is correct?

A.

The leverage ratio is the ratio of the bank’s Tier 1 Capital to total assets of the bank, excluding its off- balance sheet exposures and derivatives.

B.

The purpose of introducing a leverage ratio is to avoid the build-up of excess leverage that could potentially lead to a “credit crunch” in stressed conditions.

C.

The leverage ratio under Basel III must be higher than 4%.

D.

The leverage ratio is the ratio of the bank’s Tier 1 and Tier 2 Capital to total assets of the bank, including its off-balance sheet exposures and derivatives.