ACI 3I0-012 Exam Success: ACI Dealing Certificate Complete Study and Preparation Tips

Covenants are clauses in bank credit agreements and bond indentures designed to assure debt holders that the creditworthiness of the borrower(s)/issuer(s) will remain satisfactory

Covenants must be tailored to reflect the specific needs of the borrower/issuer and the specific risks perceived by the debt holders.

Covenants require the holder of the debt to refrain from doing certain specific things.

Three different types of covenants in credit agreements and bond indentures are affirmative, negative and financial.

The parking of deals or positions with any counterparty is discouraged B. The parking of deals or positions with any counterparty should be forbidden

The parking of deals or positions should be subject to a clear policy laid down in writing by senior management

In jurisdictions where position parking is allowed, prior approval should be sought from the regulator

1.42%

1.39%

2.01%

4.21%

Hedging a long bond position with payer’s swap involves basis risk

Hedging the credit risk of an asset swap package with a credit default swap has no basis risk

Basis risk is a result only of maturity mismatches

Basis risk is a result only of duration mismatches.

EUR 27,947,276.43

EUR 27,946,077.08

EUR 27,950,071.43

EUR 27,948,871.97

A report describing operational risks, the most significant incidents and corrective plans of action should be established on a quarterly basis.

It is good practice to collect and analyze incidents and near-misses so as to set up preventive action plans for the future.

Every time a report describing operational risks is produced, it should be provided to senior management.

Whenever possible action plans should be put in place that mitigate operational risks that have been identified.

Net interest income would increase slightly.

Net interest income would increase considerably.

Net interest income would decrease.

Net interest income would hardly change at all.

same way”

me too”

“par”, or “parity”

“join at”, or “support at”

6.5825

6.5820

6.5815

6.5830

if a principal refuses to honour the deal

no conditions are required; the broker is entitled to take positions

only if he can not find another counterparty for a name switching

brokers act only as intermediaries or arrangers of deals

aFXswap

an in/out swap

a currency swap

a quanto swap

upward shift of the swap curve and rating downgrade of party A

downward shift of the swap curve and rating downgrade of party A

downward shift of the swap curve and rating downgrade of party B

downward shift of the swap curve only

Gradual positive slope

Steep positive slope

Flat

Inverted

documented and reported to the local regulator

communicated to local staff by a confidential internal circular

investigated immediately according to a properly documented procedure

reported to the ACI’s Committee for Professionalism to investigate and advise accordingly

one day after the deal is done

within two hours of the trade being booked and as soon as technologically possible

immediately after having received the confirmation of the counterparty

no later than the value date of the first leg of the transaction