ACI - Operations Certificate (310-010) Free Practice Test

Question 1

The standard benchmark measure used for the cost of funds in the London Market is:

A. LIBID

B. LIBOR

C. LIMEAN

D. Base Rate

Correct Answer: B

Question 2

Which SWIFT message formats would you use for a foreign exchange confirmation and fixed money market confirmation, respectively?

A. MT 200, MT 100

B. MT 400, MT 950

C. MT 300, MT 320

D. MT 300, MT 950

Correct Answer: C

Question 3

The "value date" is best described as:

A. The date the settlement occurs

B. The date confirmations are exchanged between counterparties

C. The date a trade is undertaken

D. The date the fixing rate is agreed upon

Correct Answer: A

Question 4

What is a loro or vostro bank account?

A. an account that you hold with the Bank of England

B. a suspense account

C. an account that another bank holds with you

D. an account that you hold with another bank

Correct Answer: C

Question 5

The coupon of this type of bond can be based on a country`s CPI (Consumer Price Index):

A. index linked bonds

B. "step up" bonds

C. premium bonds

D. par bonds

Correct Answer: A

Question 6

In using futures contracts there is:

A. market risk, credit risk and delivery risk

B. only credit risk

C. market risk and credit risk

D. only market risk

Correct Answer: D

Question 7

In a scenario where long-term interest rates are higher than short-term interest rates, the yield curve would best be described as:

A. neutral

B. positive

C. negative or inverse

D. flat

Correct Answer: B

Question 8

When is the settlement amount of a FRA normally payable?

A. on the trade date

B. on the maturity (final) date

C. at any time before the contract's maturity date

D. at the beginning of the forward period

Correct Answer: D

Question 9

Why is securities reconciliation necessary?

A. to facilitate the handling of complex security transactions

B. in order to save data capacity in electronic archiving systems

C. to prevent that a failed order results in a failure to settle that day, which in turn would lead to an incompletely-reconciled account

D. to anticipate the fact that clearing houses stop processing in the afternoon, whereas payment orders may still be processed until 6 PM

Correct Answer: C

Question 10

If a GBP/CHF trade is made on the spot foreign exchange market on Tuesday, when will the two currencies be settled if tomorrow (Wednesday) is a bank holiday in the U.K.?

A. both currencies will be settled value date Friday

B. GBP will be settled value today, CHF will be settled value Friday

C. both currencies will be settled value Thursday

D. GBP will be settled value Friday, CHF value Thursday

Correct Answer: A

Question 11

The function of a prospectus can best be described as:

A. establishing a guarantee for the prompt repayment of the issue at maturity

B. formalizing the contract between the issuer and the lead / co-lead manager

C. establishing a guarantee of the issues investment value

D. providing full disclosure about the issue

Correct Answer: D

Question 12

Which of the following is true about interest rate swaps?

A. Payment netting is only allowed through a third party

B. The notional amount of the swap is generally not exchanged between counterparties

C. The fixed rate and the floating rate payers know the cash value of their payments at the outset

D. There is exchange of principal at the start and at the end of the swap

Correct Answer: B

Question 13

Which of the following is an example of a foreign currency nostro account from the perspective of a bank in London?

A. a GBP account that it holds for a bank in New York

B. a CHF account with a bank in Zurich

C. a CHF account that it holds for a customer in London

D. a GBP account with another UK bank

Correct Answer: B

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