3I0-012 Online Practice Questions and Answers

A bond is trading 50 basis points special for 1 week, while the 1-week GC repo rate is 3.25%. If you held GBP 10,500,000.00 of this bond, what would be the cost of borrowing against it in the repo market?

A. GBP 7,551.37

B. GBP 6,544.52

C. GBP 5,537.67

D. GBP 1,006.85

Which of the following is true?

A. The 3-month EURODOLLAR futures contract has a basis point value of USD 50.00 and a face value of USD 1,000,000.00

B. The 3-month EURIBOR futures contract has a a basis point value of EUR 12.50 and a face value of EUR 500,000.00

C. The 3-month Sterling (SHORT STERLING) futures contract has a a basis point value of GBP 12.50 and a face value of GBP 500,000.00

D. The 3-month Euro Swiss Franc (EUROSWISS) futures contract has a a basis point value of CHF 50.00 and a face value of CHF 2,000,000.00

When differences in payment arise because of errors in the payment of funds:

A. claims should be made for the costs incurred by the injured party and include all administration costs

B. no party involved can be enforced to contribute to achieve an equitable resolution to the problem

C. no market participant should be unjustly enriched or injured by the action/error of another market participant

D. claims are calculated on the full principal amount of the failed payment with the interest rate imposed by the injured party

Which of the following statements is correct?

A. With liquidity transfer pricing (LTP) banks attribute the costs, benefits and risks of liquidity to respective business units within a bank

B. With liquidity transfer pricing (LTP) banks are monitoring and diversifying their funding base

C. With liquidity transfer pricing (LTP) banks are agreeing with external liquidity providers on the fair market price of funds

D. Liquidity transfer pricing charges providers of funds for the cost of liquidity and users of funds for the benefit of liquidity

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

What are financial market professionals not explicitly required by the Model Code to clarify and agree to in writing?

A. that the customer understands he will be charged for advisory services that are provided

B. that the customer understands the terms, conditions and risks of the transaction

C. that the customer understands that any information or explanation should not be interpreted as investment advice or recommendations

D. that the customer understands he is entering into the transaction at his own risk and for his own account.

Which of the following statements about hedge accounting is not correct?

A. A prerequisite for hedge accounting is that a hedging instrument is designated as an offset to changes in the fair value or cash flows of a hedged item.

B. Hedge accounting enables gains and losses on a hedging instrument to be recognised in the income statement in the same period as offsetting losses and gains on the hedged item.

C. If one of the criteria for hedge accounting is no longer met, there is an option to discontinue hedge accounting.

D. Strict criteria must be met at inception and throughout the term of the hedge relationship in order for hedge accounting to be applied.

The Model Code strongly recommends that intra-day oral deal checks should: A. Be conducted out at the end of the morning and afternoon trading sessions.

B. Be only be conducted after the close of business.

C. Be mutually agreed between the bank and the broker or counterparty.

D. Be the responsibility of the broker.

You are quoted the following market rates:

spot GBP/USD. 1.6530

9M (272-day) GBP. 3.60%

9M (272-day) USD. 1.95%

What are the 9-month GBP/USD forward points?

A. +206

B. +197

C. -195

D. -204

You have done the following deals in spot USD/JPY:

Sold USD 5.0 million at 130.60 Bought USD 3.5 million at 130.20 Bought USD 2.0 million at 130.50 Sold USD 2.0 million at 130.55

What is your net position and average rate?

A. Short USD 1.5 million at 130.46

B. Long USD 1.5 million at 130.46

C. Short USD 1.5 million at 131.60

D. Long USD 1.5 million at 131.60