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What type of institution is the typical issuer of bank bills?


A) Credit institution
B) Investment bank
C) Corporate
D) All of the above

E) A) and B)
F) A) and C)

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3-month EUR/USD FX swaps are quoted to you at 15/19. If the "points are in your favour", what have you done?


A) Bought and sold 3-month EUR/USD through the swap
B) Sold and bought 3-month EUR/USD through the swap
C) Made the quote
D) Cannot say

E) B) and D)
F) A) and C)

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A CD with a face value of USD50 million and a coupon of 4.50% was issued at par for 90 days and is now trading at 4.50% with 30 days remaining to maturity. What has been the capital gain or loss since issue?


A) +USD 373,599.00
B) +USD 186,099.00
C) -USD 1,400.99
D) Nil

E) C) and D)
F) All of the above

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Which of the following is not in the Model Code?


A) Banks and brokers should record, by tapes or other
B) There is no need to inform new counterparties and
C) On completion of recordings, tapes should be kept
D) The storage of recorded tapes should be strictly m

E) All of the above
F) C) and D)

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Where repos or securities lending transactions are entered into, the Model Code recommends:


A) Documentation should be in place beforehand.
B) Management should approve all transactions.
C) Copies of the underlying documentation should be l
D) All of the above.

E) A) and D)
F) A) and C)

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3-month USD/CHF is quoted at 112/110. Interest rates in Switzerland are reduced but USD rates (which are higher) are unchanged. What would you expect the 3-month forward USD/CHF rate to be?


A) unchanged
B) 118/116
C) 109/107
D) 106/104

E) B) and D)
F) B) and C)

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The one-month (31-day) GC repo rate for French government bonds is quoted to you at 3.75-80%. As collateral, you are offered EUR25 million nominal of the 5.5% OAT April 2006, which is worth EUR 28,137,500. If you impose an initial margin of 1%, the Repurchase Price is:


A) EUR 27,947,276.43
B) EUR 27,946,077.08
C) EUR 27,950,071.43
D) EUR 27,948,871.97

E) A) and B)
F) A) and C)

Correct Answer

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To curb attempted fraud, banks should:


A) Require greater vigilance by the management and st
B) Take particular care when the beneficiary is a thi
C) Ensure that details of all telephone deals which d
D) All of the above.

E) A) and C)
F) C) and D)

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A broker offers a dealer an incentive in the form of a reduction to the agreed schedule of brokerage between the firms.


A) This is a normal volume discount.
B) The offer requires approval in writing by both sen
C) The offer requires agreement in writing between th
D) This is illegal.

E) B) and C)
F) A) and D)

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Gambling or betting amongst market participants has obvious dangers and:


A) Should be forbidden.
B) Should be strongly discouraged.
C) Should be monitored by management.
D) All of the above.

E) A) and B)
F) B) and C)

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


A) Bought EUR and sold USD spot, and sold EUR and bou
B) Bought EUR/USD spot and sold EUR/USD forward
C) Taken a EUR loan in exchange for making a USD loan
D) All of the above

E) A) and C)
F) A) and B)

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How long does the Model Code recommend that tape recordings of dealers/brokers should be kept?


A) At least 2 months
B) One year
C) Up to one month
D) Until the maturity of the deal

E) All of the above
F) None of the above

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If you sell USD 3-month forward to a client against EUR, what should you do to hedge your position?


A) Buy USD spot, and buy and sell a 3-month EUR/USD F
B) Sell EUR/USD in the spot market, borrow EUR for 3
C) Sell a 3-month EUR/USD outright forward
D) Any of the above

E) A) and D)
F) B) and D)

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You have received a gift from a good friend who also happens to be your USD/YEN broker. Under such circumstances, the Model Code recommends that you should:


A) Always decline gifts.
B) Give the gift to charity.
C) Keep the gift.
D) Report the gift to management.

E) B) and C)
F) B) and D)

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If EUR/USD is quoted to you as 1.1050-53, does this price represent?


A) The number of EUR per USD
B) The number of USD per EUR
C) Depends on whether the price is being quoted in Eu
D) Depends on whether the price is being quoted inter

E) A) and D)
F) B) and C)

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Spot cable is quoted at 1.6048-53 in the brokers and you quote a customer 1.6050-55 in USD 3 million. If they sell USD to you, how much GBP will you be short of?


A) 4,816,500.00
B) 1,868,809.57
C) 1,868,576.77
D) 4,815,900.00

E) A) and B)
F) B) and D)

Correct Answer

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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

E) A) and D)
F) B) and D)

Correct Answer

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What usually happens to the collateral in a tri-party repo?


A) It is put at the disposal of the buyer
B) It is held by the seller in the name of the buyer
C) It is held by the tri-party agent in the name of t
D) It is frozen in the sellers account with the tri-p

E) All of the above
F) A) and C)

Correct Answer

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You are paying 5% per annum paid semi-annually and receiving 6-month LIBOR on a USD 10 million interest rate swap with exactly two years to maturity. 6-month LIBOR for the next payment date is fixed today at 4.95%. How would you hedge the swap using FRAs? How to hedge an IRS with a strip of FRAs?


A) buy a strip of 0x6, 6x12, 12x18 and 18x24 FRAs
B) sell a strip of 0x6, 6x12, 12x18 and 18x24 FRAs
C) buy a strip of 6x12, 12x18 and 18x24 FRAs
D) sell a strip of 6x12, 12x18 and 18x24 FRAs

E) All of the above
F) B) and C)

Correct Answer

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The market is quoting: 1-month (31-day) USD. 1.75% 3-month (91-day) USD. 2.05% What is the 1x3 rate in USD?


A) 4.261%
B) 2.202%
C) 1.900%
D) 1.592%

E) None of the above
F) A) and B)

Correct Answer

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