3I0-012 Online Practice Questions and Answers

What is the probability of an `at-the-money' option being exercised?

A. Less than 50% probability

B. 50% probability

C. More than 50% probability

D. Zero probability

You are quoted the following rates: Spot GBP/USD 1.5295-00 Spot USD/CHF 0.9320-23 6M GBP/USD swap 16/12 6M USD/CHF swap 22/18

Where can you buy GBP against CHF 6-month outright?

A. 1.4206

B. 1.4215

C. 1.4217

D. 1.4225

The primary issue for insuring prudent liquidity management in accord with the guidance provided by the Basel Committee (Basel II I Basel III) is:

A. Tier 3 capital requirements held against liquidity risk.

B. The nature and amount of high quality liquid assets a bank holds.

C. Central bank internal management processes regarding open market operations.

D. The transparent disclosure of illiquid on-balance sheet liabilities.

What is one of the responsibilities of the Middle Office according to the Model Code?

A. Sending settlement instructions

B. Investigating settlement discrepancies

C. Keeping a contact list of all back office staff of the bank's counterparties

D. Exchanging standard settlement instructions (SSIs)

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

In spite of having agreed to a deal, dealers are not bound to its terms if it is "subject to documentation". What position does the Model Code take with regard to this practice?

A. The practice of making a transaction subject to documentation is not regarded as good practice.

B. It urges dealers to be bear in mind that this is a common practice for capital market deals.

C. The Model Code does not comment on the matter.

D. It recommends that national ACI Associations deal with this issue according to their local customs.

What are 1MM dates?

A. the tenth of the following months: March, June, September and December

B. the third Wednesday of January, April, July and October

C. the Monday before the third Wednesday of March, June, September and December

D. the third Wednesday of March, June, September and December

In all dealing conversations, the Model Code strongly recommends:

A. Dealers stick to market terminology in order to avoid the impression that they are offering an advisory or fiduciary role.

B. Dealers clarity what is being proposed rather than using any terminology that could be misinterpreted.

C. Dealers restrict themselves to terminology listed and explained in Chapter 11 of the Model Code.

D. Dealers define complex terminology in the confirmation of a deal.

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

What is a long 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