3I0-012 Online Practice Questions and Answers

Which of the following is not a negotiable instrument?

A. CD

B. FRA

C. BA

D. ECP

What is a short straddle option strategy?

A. A long call option + long put option with the same strike prices

B. A short call option + short put option with the same strike prices

C. A long call option + short put option with the same strike prices

D. A short call option + long put option with the same strike prices

Complete the following sentence. If a bank has an asset repricing in 6 months funded by a liability repriced in 3 months:

A. the bank would benefit from higher interest rates

B. the bank could hedge this interest rate risk with a 3x6 derivative

C. the bank will make mark-to-market losses if rates decrease

D. the bank could hedge this interest rate risk by selling a 6x9 derivative

Under Basel rules the meaning of CCF is:

A. Currency Conversion Factor

B. Credit Conversion Factor

C. Credit Contribution Factor

D. Credit Collateralization Factor

What should be done when a voice broker calls "off" at the very instant the dealer hits the broker's price as "mine" or "yours"?

A. The transaction should be concluded and the broker should inform both counterparties accordingly.

B. The dealer who hits the broker's price may decide whether the deal is done or not; the broker should inform both counterparties accordingly.

C. The deal should not be concluded and the broker should inform both counterparties accordingly.

D. The broker should immediately inform both counterparties that the deal will have to berenegotiated.

A bank expects interest rates to fall with a parallel downward shift in the yield curve. What action should the bank take, if it wants to benefit from this view?

A. increase the maturity of its liabilities

B. reduce the maturity of its asset portfolio

C. runazerogap

D. lengthen the maturity of its asset portfolio

Which of the following is a characteristic of all liquid assets under Basel III?

A. uncertainty of valuation

B. high correlation with risky assets

C. listed on a developed and recognized exchange

D. readily marketable

What is an FX swap?

A. An exchange ot two streams of interest payments in different currencies and an exchange of the principal amounts of those currencies at maturity

B. A spot sale (purchase) and a forward purchase (sale) of two currencies agreed simultaneously between two parties

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

D. None of the above

The organisational structure of market participants should ensure a strict segregation between front and back office of:

A. Duties and reporting lines.

B. Systems.

C. Career paths.

D. All of the above.

A customer sells a LIFFE Euro Swiss futures contract. Which of the following risks could he be trying to hedge?

A. An increase in forward USD/CHF

B. Falling CHF interest rates

C. A decrease in forward USD/CHF

D. Rising CHF interest rates