3I0-008 Online Practice Questions and Answers

Click on the Detail Button to view the Formula Sheet. In the international market, a FRA in USD is usually settled with reference to:

A. BBA LIBOR

B. Fed funds

C. ISDA LIBOR

D. EURIBOR

Click on the Detail Button to view the Formula Sheet. You are quoting forward FX prices to a broker subject to finding a counterparty for a matching transaction. The Model Code says:

A. You must tell the broker, who must qualify your quotes.

B. For credit reasons, you must tell the broker when he presents a name.

C. You cannot do this.

D. The Model Code does not make recommendations on this subject.

Click on the Detail Button to view the Formula Sheet. Management policy on the use of mobile devices by trading, sales and settlement staff should:

A. Ban them from the dealing room or back office.

B. State whether they are allowed in the dealing room and back office, and can be used.

C. Ban their use in the dealing room or back office.

D. Restrict their use to senior management and authorised out-of-hours trading and sales staff.

Click on the Detail Button to view the Formula Sheet.

You are quoted the following market rates:

spot USD/JPY 123.65

1M (30-day) USD. 2.15%

1M (30-day) JPY0. 10%

What is 1-month USD/JPY?

A. 123.44

B. 123.65

C. 123.86

D. 123.90

Click on the Detail Button to view the Formula Sheet. Basis risk on a futures contract is:

A. The risk of an adverse change in the futures price

B. The risk of an adverse change in the spread between futures and cash prices

C. The progressive illiquidity of a futures contract as it approaches expiry

D. The risk of a divergence between the futures price and the final fixing of the underlying interest rate

Click on the Detail Button to view the Formula Sheet. A CD can usually only be issued by what type of institution?

A. Credit institution

B. Investment bank

C. Discount house

D. All of the above

Click on the Detail Button to view the Formula Sheet.

You are quoted the following market rates:

spot EUR/USD. 1.2250

3M (91-day) EUR 2.55%

3M (91-day) USD. 2.00%

What is 3-month EUR/USD?

A. 1.2232

B. 1.2233

C. 1.2234

D. 1.2267

Click on the Detail Button to view the Formula Sheet. If you bought USD 2,000,000 against CHF at 1.1020, USD 3,000,000 at 1.1040 and USD 5,000,000 at 1.1032, what is the average rate of your position?

A. 1.1030

B. 1.1035

C. 1.1028

D. 1.1032

Click on the Detail Button to view the Formula Sheet. Dealers are allowed to trade for their own account if:

A. The dealers have good track records in their dealing both for the institution and for themselves.

B. There has been no previous conflicts of interest in the dealing room.

C. There is a clearly laid down policy.

D. The dealers see no conflict of interest in such dealing.

Click on the Detail Button to view the Formula Sheet. What does the Model Code say about the responsibility of a broker in handling suspicious transactions?

A. Suspicious transactions should be reported by the principals.

B. Brokers need to make staff aware of the problem and exercise vigilance.

C. A broker should report any suspicions about a transaction to the other counterparty.

D. Brokers should advise clients to reject the name.