Professional Documents
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3. Which type of repo gives the biggest (if any) risk of ‘double dipping’?
a) HIC
b) Delivery repo
c) Tri-party repo
d) None of the above
8. A broker gets 4 quotes from his banks on Cable: 1.5025/35, 1.5035/45, 1.5030/40 and
1.5032/37. What two-way price would he now put forward to his customer?
a) 1.5032/37
b) 1.5025/45
c) 1.5035/40
d) 1.5035/37
11. What is the capital gain on a £1m CD with 3% coupon, originally issued for 6 months (182
days), sold after 62 days at 3.10%?
a) GBP 1,014,958.90
b) GBP 1,004,719.02
c) GBP 14,958.90
d) GBP 4,719.02
13. You sell a customer GBP/ USD value tomorrow.. How do you cover your position?
a) Buy a T/N GBP/USD swap
b) Sell a T/N GBP/USD swap
c) Buy GBP spot, then B & S GBP T/N
d) Sell GBP spot, then S & B GBP T/N
16. You have taken a EUR/USD position that you run overnight. What risk do you run?
a) Settlement risk
b) Counterparty risk
c) Delivery risk
d) Market risk
17. You do a deal with a counterparty, who refuses to pay you profit/cash earned on a OTC
derivative transaction. What risk are you open to:
a) Settlement risk
b) Legal risk
c) Market risk
d) All of the above
18. Which scenario (if any) would give you the opportunity to create a covered interest arbitrage:-
a) A parallel drop in the yield curve
b) A differential opening up between interest rates and FX rates
c) A devaluation
d) None of the above
20. The main difference between an Overnight limit and a Daylight limit is that:
a) Daylight limits are for daylight hours in London only
b) Overnight limits are for night time in London only
c) Only a more experienced dealer would normally have Overnight Limits
d) None of the above are correct
21. You are long USD/Yen at Y95.10. You place an Overnight ‘stop loss’ limit. Would this limit be
higher than Y95.10, or lower than Y95.10 and would it be to sell, or to buy?
a) Buy $/Yen at 96.10 on a stop
b) Sell $/Y at 96.10 on a stop
c) Buy $/Y at 94.10 on a stop
d) Sell $/Y at 94.10 on a stop
22. Gold is quoted as $1,400. What is the cost of one fine troy ounce?
a) $140
b) $1,400
c) $45.01
d) $4,501
24. If the UK branch of a US Bank issues a USD-denominated CD in London, what type of CD has
it issued?
a) Euro CD
b) Foreign CD
c) Domestic
d) Yankee CD
27. What is the variation margin due on 10 Euribor futures contracts sold at 97.255 if the closing
rate on the same day is 97.45?
a) You must pay €48.75
b) You will receive €487.50
c) You must pay €4,875.00
d) You will receive €4,875.00
29. The most heavily traded STIR futures contract traded on Euronext/LIFFE is:
a) Short Sterling
b) Euroyen
c) Euroswiss
d) Euribor
30. What is the contract size of the Eurodollar Futures contract and where is it traded?
a) $500,000 on Euronext/LIFFE
b) $1,000,000 on Euronext/LIFFE
c) $1,000,000 on CME
d) $500,000 on NYSE
41. Brokers or principals assigning interest rate swaps to a third party must ensure that:
a) The principals are aware that they are responsible for assessing the credit of a
counterparty and staff are well trained in market practice and aware of the
firm’s business responsibilities
b) The third party is capable of undertaking complex transactions such as assignment
and that prior approval has been secured from senior management and its staff
understand the risks and obligations
c) The assignment is enforceable under local law, that the third party has the legal
capacity to act as assignee and that the broker has conducted due diligence on the
third party
d) The swap has been adequately documented and its assignment is executed under an
appropriately structured and clearly written supplementary annex to the master
agreement
42. What should you do it you want to assign an IRS to an alternative name:
a) This is impossible
b) Ask the other counterparty before revealing their name to the new counterparty
c) Go ahead and assign without referring to the other counterparty
d) None of the above
44. You buy 10 Short Sterling at 99.25 and sell them at 99.08. What is your P & L?
a) €4,250 profit
b) £4,250 loss
c) £2,125 loss
d) £2,125 profit
45. An IRS price is quoted to you as ‘3.25 – 22’ and you ‘give’ the swap
Have you:
a) Dealt at 3.25 as the market maker
b) Dealt at 3.22 as the market maker
c) Dealt at 3.25 as the market user
d) Dealt at 3.22 as the market user
46. You are over-lent in 1 month CHF deposit. You need to square using the USD deposit market
and the $/CHF swap. You are quoted the following USD/CHF swap rates. Which would be the
best rate to use?
a) 22/30
b) 25/35
c) 21/31
d) 24/36
47. What is the ISO code for the South African Rand?
a) SAR
b) ZAR
c) RND
d) SRD