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Free ACI 3I0-012 Practice Exam with Questions & Answers | Set: 4

Questions 46

Which of the following is the best description of a “broken trade”?

Options:
A.

when a trade has been agreed to with dates (maturities) different from the standard dates

B.

when one of the parties to the deal unilaterally decides to withdraw from the on-going transaction

C.

when, due to a system break, one or both parties to the deal chooses to withdraw from the ongoing transaction

D.

when, due to a system break, one or both parties to the deal are unclear as to whether the deal has been done

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Questions 47

What is a long strangle option strategy?

Options:
A.

A short call option + short put option with a higher strike price than the call option

B.

A long call option + long put option with a lower strike price than the call option

C.

A short call option + short put option with a lower strike price than the call option

D.

A long call option + short put option with higher strike price than the call option

Questions 48

If you funded your fixed-income investment portfolio with short-term deposits, how would you hedge your interest rate exposure with interest rate swaps?

Options:
A.

Pay fixed and receive floating through swaps for the term of the portfolio

B.

Pay floating and receive fixed through swaps for the term of the portfolio

C.

You cannot: the maturity of the swaps would be longer than that of the deposits

D.

You should not: there would be too much basis risk

Questions 49

The buyer of a USD/ARS NDF could be:

Options:
A.

a buyer of Argentine Pesos

B.

expecting a falling USD/ARS rate

C.

hedging against a weakening of the Argentine Peso

D.

speculating on an appreciation of the Argentine Peso

Questions 50

Principals who enter into an interest rate swap with the intention of shortly afterwards assigning or transferring the swap to a third party:

Options:
A.

should never reveal their future dealing intentions to their counterparties

B.

should make clear their intention to do so when initially negotiating the deal

C.

should agree upon the method of assignment before transacting

D.

should only reveal any such intentions after the confirmations have been exchanged

Questions 51

The 180-day CAD/CHF rate is bid 62 and the 90-day CAD/CHF rate is bid 29. What is the bid rate for 120 days, assuming straight-line interpolation?

Options:
A.

33

B.

42

C.

27

D.

40

Questions 52

Where there are shared management responsibilities or where an investment or shareholding exists in a broker by a counterparty:

Options:
A.

the broker is not obligated to reveal any material connections provided Chinese Walls are in place.

B.

the broker is not required to reveal any connections at all.

C.

the broker is legally obliged to advise his clients of any material connections that exist.

D.

is a matter which is not covered by the Model Code.

Questions 53

What is the purpose of a short straddle option strategy?

Options:
A.

To anticipate lower volatility in the price of the underlying commodity

B.

To anticipate moderately high volatility in the price of the underlying commodity

C.

To anticipate increasing volatility in the price of the underlying commodity

D.

To anticipate very high volatility in the price of the underlying commodity

Questions 54

If I say that I have “bought and sold” EUR/USD in an FX swap, what have I done?

Options:
A.

Bought EUR and sold USD spot, and sold EUR and bought USD forward

B.

Bought USD and sold EUR spot, and sold USD and bought EUR forward

C.

Synthetically taken a USD loan in exchange for making a EUR loan with the same counterparty

D.

Sold EUR/USD spot and bought back EUR/USD forward

Questions 55

Which of the following will tend to have the lowest yield?

Options:
A.

Interbank deposit

B.

Certificate of deposit

C.

Treasury bill

D.

BA

Questions 56

The rho of an option is:

Options:
A.

The sensitivity of the option value to changes in interest rates

B.

The sensitivity of the option value to changes in volatility

C.

The sensitivity of the option value to changes in the time to expiry

D.

The sensitivity of the option value to changes in the price of the underlying

Questions 57

If you sell forward USD to a client against EUR, what is the first thing you should do to cover your exposure to exchange rate movements?

Options:
A.

Sell and buy USD in the FX swap market

B.

Sell USD in the spot market

C.

Buy USD in the spot market

D.

Buy and sell USD in the FX swap market

Questions 58

What is the major difference between a CD and a deposit?

Options:
A.

The CD yields a higher rate of return

B.

The CD has less credit risk

C.

The CD is a transferable instrument

D.

The CD has a shorter range of maturities

Questions 59

Which of the following is a Model Code good practice regarding the passing of names?

Options:
A.

Bank dealers should, wherever possible, give brokers prior indication of counterparties with whom they would be unwilling to do business.

B.

Brokers may divulge the names of principals prematurely to induce a counterparty to transact.

C.

Dealers should never give brokers guidance on the extent of their price differentiation across broad categories of counterparties.

D.

When a principal’s name proves unacceptable to another principal, the broker is bound to divulge who refused it.

Questions 60

You have borrowed at 3-month LIBOR+50. LIBOR for the loan will be re-fixed in exactly one month. The market is quoting:

1x3 USD FRA 0.42-45%

1x4 USD FRA 0.54-58%

1x5 USD FRA 0.57-62%

To hedge the next LIBOR fixing, you should:

Options:
A.

Sell a 1x3 FRA at 0.42%

B.

Buy a 1x3 FRA at 0.45%

C.

Buy a 1x4 FRA at 0.58%

D.

Sell a 1x4 FRA at 0.54%