ACI DEALING CERTIFICATE (3I0-008) Free Practice Test

Question 1

Click on the Exhibit Button to view the Formula Sheet. A CD can usually only be issued by what type of institution?

A. Discount house

B. All of the above

C. Investment bank

D. Credit institution

Correct Answer: D

Question 2

Click on the Exhibit Button to view the Formula Sheet.
Your are quoted the following rates:
spot CHF/JPY 80.12-22
3M CHF/JPY 25.5/22.5
At what rate can you buy 3-month outright JPY against CHF?

A. 79.965

B. 79.895

C. 79.865

D. 79.995

Correct Answer: C

Question 3

Click on the Exhibit Button to view the Formula Sheet.
You have done the following deals in spot USD/JPY:
Sold USD 5.0 million at 111.60
Bought USD 3.5 million at 111.20
Bought USD 2.0 million at 111.50
Sold USD 2.0 million at 111.55
What position do you now have?

A. Short USD 3.50 million at 111.75

B. Short USD 1.50 million at 112.60

C. Long USD 3.50 million at 111.55

D. Long USD 1.50 million at 111.10

Correct Answer: B

Question 4

Click on the Exhibit Button to view the Formula Sheet. What does the Model Code say about the responsibility of a broker in handling suspicious transactions?

A. Suspicious transactions should be reported by the principals.

B. Brokers need to make staff aware of the problem and exercise vigilance.

C. A broker should report any suspicions about a transaction to the other counterparty.

D. Brokers should advise clients to reject the name.

Correct Answer: B

Question 5

Click on the Exhibit Button to view the Formula Sheet. Basis risk on a futures contract is:

A. The risk of a divergence between the futures price and the final fixing of the underlying interest rate

B. The progressive illiquidity of a futures contract as it approaches expiry

C. The risk of an adverse change in the spread between futures and cash prices

D. The risk of an adverse change in the futures price

Correct Answer: C

Question 6

Click on the Exhibit Button to view the Formula Sheet.
You have quoted your customer the following eurodollar deposit rates:
1M 5.375-25%
2M 5.4375-3125%
3M 5.5-375%
The customer says, "I give you USD 20 million in the two's".
What have you done?

A. Borrowed USD 20 million at 5.4375%

B. Lent USD 20 million at 5.4375%

C. Lent USD 20 million at 5.3125%

D. Borrowed USD 20million at 5.3125%

Correct Answer: D

Question 7

Click on the Exhibit Button to view the Formula Sheet.
Extended trading hours and off-premises dealing can involve additional hazards, the avoidance of which requires clear controls. The Model Code prescribes best market practice. Which of the following is true?

A. After-hours trading should be forbidden.

B. Off-premises dealing should be forbidden.

C. Deals transacted after normal business hours or off-premises should only be undertaken on mobile phones approved by management.

D. Deals transacted after normal business hours or off-premises either by mobile phones or any other equipment should only be undertaken with the approval of management.

Correct Answer: D

Question 8

Click on the Exhibit Button to view the Formula Sheet. What is the purpose of a long strangle option strategy?

A. To anticipate moderate volatility in the price of the underlying commodity

B. To anticipate very low volatility in the price of the underlying commodity

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

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

Correct Answer: D

Question 9

Click on the Exhibit Button to view the Formula Sheet. What is the ISO code for the currency of Hungary?

A. HKD

B. HRN

C. HUG

D. HUF

Correct Answer: D

Question 10

Click on the Exhibit Button to view the Formula Sheet. What are the secondary market proceeds of a CD with a face value of EUR 5 million and a coupon of 3% that was issued at par for 182 days and is now trading at 3% but with only 7 days remaining to maturity?

A. EUR 4,997,085.03

B. EUR 5,072,874.16

C. EUR 5,071,086.45

D. EUR 5,000,000.00

Correct Answer: B

Question 11

Click on the Exhibit Button to view the Formula Sheet. You deal over the phone with a counterparty. The subsequent confirmation differs from the terms agreed verbally. What is the result?

A. The matter will have to be submitted to arbitration in order to establish the mutual intent of the parties.

B. The confirmation takes precedence as it is a written contract.

C. It depends on local law.

D. The verbal agreement is binding.

Correct Answer: D

Question 12

Click on the Exhibit Button to view the Formula Sheet.
You are quoted the following market rates:
spot USD/JPY 123.65
1M (30-day) USD. 2.15%
1M (30-day) JPY0. 10%
What is 1-month USD/JPY?

A. 123.86

B. 123.90

C. 123.44

D. 123.65

Correct Answer: C

Question 13

Click on the Exhibit Button to view the Formula Sheet. A CD with a face value of EUR10 million and a coupon of 3% was issued at par for 182 days and is now trading at 3.10% with 120 days remaining to maturity. What has been the capital gain or loss since issue?

A. -EUR 52,161.00

B. Nil

C. -EUR 3,827.67

D. +EUR 47,839.00

Correct Answer: C

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ACI DEALING CERTIFICATE (3I0-008) Free Practice Test