3I0-012 Online Practice Questions and Answers

An option is:

A. The right to buy or sell a commodity at a fixed price

B. The right to buy a commodity at a fixed price

C. The right but not the obligation to buy or sell a commodity at a fixed price

D. The right but not the obligation to buy a commodity at a fixed price

Which of the following is a function of asset and liability management (ALM)?

A. coordinated limit management of a financial institution's credit portfolio

B. running a matched trading book

C. monitoring credit quality of assets and establishing a early warning system

D. managing the financial risk of the bank by protecting it from the adverse effects of changing interest rates

A. The other dealer is bound to reciprocate.

B. This is not in any way an enforceable or binding commitment.

C. The Model Code does not comment on dealing reciprocity.

D. It is common market practice to suspend reciprocity in periods of high volatility.

A bank quotes 3-month EUR deposits at 0.45% ¡ª 0.55% to its broker. The broker lifts the bank's offer at 0.55%. Which of the following steps must the broker take?

A. The broker must show the borrower's name to the lender first and disclose the lender's name only if the borrower is acceptable to the lender.

B. The broker must show the lender's name to the borrower first and disclose the borrower's name only if the lender is acceptable to the borrower.

C. The broker must show the borrower's and lender's names to each other at the same time.

D. For marketing reasons, the broker can show the lender's name to the borrower at any time.

Under Basel Securitization rules the highest potential risk weight is:

A. 350%

B. 750%

C. 1250%

D. 1500%

You are entering into a swap as a fixed rate receiver with Party A and into an offsetting position with party

B. All other things being equal, which of the scenarios below will lead to the greatest increase in the sum of the Credit Value Adjustments for A and B?

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

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

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

D. downward shift of the swap curve only

Which of the following is a characteristic of all liquid assets under Basel III?

A. uncertainty of valuation

B. high correlation with risky assets

C. listed on a developed and recognized exchange

D. readily marketable

Which of the following functions does a to-party repo agent not perform?

A. It checks the eligibility and sufficiency of collateral

B. It can impose an initial margin on behalf of the buyer and manages margin calls

C. It manages substitution of collateral on behalf of the seller

D. It participates in the risk of transactions if one of the parties defaults

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.

Management policy on the use of mobile devices by trading sales and settlement staff should:

A. Ban them from the dealing room or back office.

B. State whether they are allowed in the dealing room and back office, and can be used.

C. Ban their use in the dealing room or back office.

D. Restrict their use to senior management and authorised out-of-hours trading and sales staff.