Free 3I0-008 Exam Dumps PDF Preview

Question 1

Single choice

Click on the Detail Button to view the Formula Sheet.

What is the purpose of an initial margin on a futures exchange?

A
To cover losses incurred between variation margin payments
B
To exclude retail investors
C
To pay reserve requirements
D
To cover fees due to the clearing house

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Correct answerA

Question 2

Single choice

Click on the Detail Button to view the Formula Sheet.

What is the ISO code for the Lebanon pound?

A
LEP
B
LBD
C
LBP
D
LNP

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Correct answerC

Question 3

Single choice

Click on the Detail Button to view the Formula Sheet. A 3-month (91-day) deposit of EUR25 million is made at 3.25%. At maturity, it is rolled over three times at 3.55% for 90 days, 4.15% for 91 days and 4.19% for 89 days.
At the end of 12 months, how much is repaid (principal plus interest)?

A
EUR 25,962,011.01
B
EUR 25,959,714.91
C
EUR 25,948,878.47
D
EUR 25,948,648.82

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Correct answerA

Question 4

Single choice

Click on the Detail Button to view the Formula Sheet. Dealers should not conduct dealing activities outside the bank unless:

A
Clear written guidelines issued by management are in place.
B
They are in an approved brokers office.
C
There are on holiday.
D
None of the above.

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Correct answerA

Question 5

Single choice

Click on the Detail Button to view the Formula Sheet. A customer based in the UK exports automotive parts to the US. His main competitor is in France?

What type of exposure to currency risk is posed by movements in EUR/USD?

A
Transaction exposure
B
Translation exposure
C
Economic exposure
D
None

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Correct answerC

Question 6

Single choice

Click on the Detail Button to view the Formula Sheet.
If 6-month EUR/AUD is quoted at 29/32, which of the following statements is correct?

A
EUR rates are higher than AUD rates in the 6-month
B
AUD rates are higher than EUR rates in the 6-month
C
There is a positive EUR yield curve
D
There is not enough information to decide

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Correct answerB

Question 7

Single choice

Click on the Detail Button to view the Formula Sheet.
Voice-brokers in spot FX act as:

A
Proprietary traders
B
Market-makers
C
Matched principals
D
Agents

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Correct answerD

Question 8

Single choice

Click on the Detail Button to view the Formula Sheet.

What type of risk would describe the failure of a back office to make adequate margin calls on repo positions?

A
Credit risk
B
Market risk
C
Operational risk
D
Settlement risk

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Correct answerC

Question 9

Single choice

Click on the Detail Button to view the Formula Sheet.
EURIBOR is the:

A
Daily fixing of EUR interbank deposit rates in the European market
B
Daily fixing of EUR interbank deposit rates in the London market
C
Another name for EUR LIBOR
D
The ECBs official repo rate

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Correct answerA

Question 10

Single choice

Click on the Detail Button to view the Formula Sheet. Borrowing USD for 12 months and lending them for 6 months (means that you are making):

A
Forward-forward loan
B
Forward-forward deposit
C
Negative gap
D
An over-lent position

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Correct answerB

Question 11

Single choice

Click on the Detail Button to view the Formula Sheet. Market participants should, where activity justifies it, aim to reduce settlement and related credit risk on currency transactions by:

A
Establishing realistic daylight limits for counterparties.
B
Monitoring all payments to counterparties who are known to be experiencing difficulties.
C
Establishing legally binding bilateral netting agreements with counterparties or participating in a multilateral netting system.
D
Seeking pre-payment.

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Correct answerC

Question 12

Single choice

Click on the Detail Button to view the Formula Sheet.

Which of the following are transferable instruments?

A
Eurocertificate of deposit
B
US Treasury bill
C
CP
D
All of the above

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Correct answerD

Question 13

Single choice

Click on the Detail Button to view the Formula Sheet. Where internet trading facilities are established by a bank for a client, the conditions and controls should be stated in a rulebook produced by:

A
The bank.
B
The local bankers association.
C
The local regulator.
D
Negotiation between the bank and client.

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Correct answerA

Question 14

Single choice

Click on the Detail Button to view the Formula Sheet. You bought USD 5,000,000 against EUR at 1.1037 and 3,000,000 at 1.1052.
If the EUR/USD rate is now quoted 1.1015/17, and if you deal at that rate, what profit would you make?

A
Nil
B
A profit of EUR 16,847.58
C
A loss
D
A profit of EUR 18,166.05

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Correct answerB

Question 15

Single choice

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

A
Credit institution
B
Investment bank
C
Discount house
D
All of the above

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Correct answerA

Question 16

Single choice

Click on the Detail 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.

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Correct answerB

Question 17

Single choice

Click on the Detail Button to view the Formula Sheet. 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.

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Correct answerD

Question 18

Single choice

Click on the Detail Button to view the Formula Sheet. An option contract that gives the buyer the right to exercise the option at several distinct points during its life is called:

A
European-style option
B
American-style option
C
Bermudan option
D
Asian option

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Correct answerC

Question 19

Single choice

Click on the Detail Button to view the Formula Sheet.

Which of the following statements is true?

A
Banks should not ask brokers to disclose details of third party transactions unless they are between overseas principals.
B
Banks should not ask brokers to disclose details of third party transactions unless these transactions are already settled.
C
Banks should not ask brokers to disclose transactions between third parties in any circumstances.
D
Banks should not ask brokers for details of third party transactions unless senior management has approved.

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Correct answerC

Question 20

Single choice

Click on the Detail Button to view the Formula Sheet.
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

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Correct answerC

Question 21

Single choice

Click on the Detail Button to view the Formula Sheet. You buy a 181-day 2.75% CD with a face value of USD 1,500,000 at par when it is issued. You sell it in the secondary market after 150 days at 2.60%.

What is your holding period yield?

A
2.60%
B
2.75%
C
2.775%
D
2.813%

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Correct answerC

Question 22

Single choice

Click on the Detail Button to view the Formula Sheet.

What is the Gold Offered Forward Rate?

A
The price differential between spot and forward gold prices
B
The rate at which dealers will lend gold against US dollars
C
The implied forward price of gold
D
The price of gold for forward delivery

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Correct answerB

Question 23

Single choice

Click on the Detail Button to view the Formula Sheet.
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%

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Correct answerB

Question 24

Single choice

Click on the Detail Button to view the Formula Sheet.
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 commodity at a fixed price

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Correct answerC

Question 25

Single choice

Click on the Detail Button to view the Formula Sheet. You are quoting forward FX prices to a broker subject to finding a counterparty for a matching transaction. The Model Code says:

A
You must tell the broker, who must qualify your quotes.
B
For credit reasons, you must tell the broker when he presents a name.
C
You cannot do this.
D
The Model Code does not make recommendations on this subject.

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Correct answerA

Question 26

Single choice

Click on the Detail Button to view the Formula Sheet. The use of mobile phones from within the dealing room for transacting business:

A
Is not considered good practice.
B
Is accepted in case of direct deal input into the bank's system.
C
Is accepted for senior dealers.
D
Is accepted for hedging transactions.

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Correct answerA

Question 27

Single choice

Click on the Detail Button to view the Formula Sheet.

What is an outright forward FX transaction?

A
A spot sale (purchase) and a forward purchase (sale)
B
A spot sale (purchase) and a forward sale (purchase)
C
An exchange of currencies on a date beyond spot and at a price fixed today
D
An exchange of currencies on a date beyond spot

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Correct answerC

Question 28

Single choice

Click on the Detail Button to view the Formula Sheet. If a dealer has interest on one side, and the other side is dealt away, the broker should:

A
Immediately put the price "under reference" and check with the dealer to ascertain his original intention.
B
Cancel the order.
C
Continue with the order.
D
None of the above.

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Correct answerA

Question 29

Single choice

Click on the Detail Button to view the Formula Sheet.

Which of following is not true?

A
Inter-bank market participants have a duty to make absolutely clear whether the prices they are quoting are firm or merely indicative.
B
It is the duty of the dealer to periodically confirm with the broker the validity of his price.
C
It is the responsibility of the dealer to ensure that prices given to a broker are taken off if they have not been hit or were subject to a time limit.
D
No deal is done if one counterparty is unable to conclude a deal due to credit line problems and a name switch is not found within a reasonable period of time.

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Correct answerB

Question 30

Single choice

Click on the Detail Button to view the Formula Sheet. When a stop-loss/profit order is taken, the rate specified in the order:

A
Must be transacted regardless of where the market moved.
B
Must be transacted if a broker confirms that the rate specified was reached
C
Cannot be taken as a fixed-price guarantee.
D
None of the above.

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Correct answerC

Question 31

Single choice

Click on the Detail Button to view the Formula Sheet.

Which of the following is true?

A
It is the responsibility of the broking firm to conduct due diligence before transacting a deal.
B
All principals have the responsibility for assessing the creditworthiness of their counterparties or
potential counterparties whether dealing direct or through a broking firm.
C
The principal is obliged to take into account any information provided by a broker as they are bound by a professional relationship.
D
All of the above.

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Correct answerB

Question 32

Single choice

Click on the Detail Button to view the Formula Sheet.

What is the buyers primary risk in a repo?

A
The credit risk on the collateral
B
The credit risk on the repo counterparty
C
The legal risk on the contract
D
The operational risk on margin maintenance

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Correct answerB

Question 33

Single choice

Click on the Detail 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 5,000,000.00
C
EUR 5,071,086.45
D
EUR 5,072,874.16

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Correct answerD

Question 34

Single choice

Click on the Detail Button to view the Formula Sheet. 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

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Correct answerA

Question 35

Single choice

Click on the Detail Button to view the Formula Sheet.
In case of a default on a repo by the seller:

A
The buyer can liquidate the collateral
B
The buyer has to liquidate the collateral
C
The buyer cannot liquidate the collateral until the seller is declared insolvent
D
A court is appointed to decide what happens to the collateral

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Correct answerA

Question 36

Single choice

Click on the Detail Button to view the Formula Sheet. You bought a USD 4,000,000 6x9 FRA at 6.75%.
The settlement rate is 3-month (90-day) BBA LIBOR, which is fixed at 5.50%.

What is the settlement amount at maturity?

A
You receive USD 12,330.46
B
You pay USD 12,330.46
C
You pay USD 12,163.81
D
You receive USD 12,163.81

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Correct answerB

Question 37

Single choice

Click on the Detail 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
123.44
B
123.65
C
123.86
D
123.90

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Correct answerA

Question 38

Single choice

Click on the Detail Button to view the Formula Sheet.

What is a Vostro account?

A
Your account at another bank
B
A foreign bank's account in your bank in your domestic currency
C
An account in your bank used for internal transactions
D
A customer's account at your bank

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Correct answerB

Question 39

Single choice

Click on the Detail Button to view the Formula Sheet. A dealer needs to buy USD against SGD.
Of the following rates quoted to him, which is the best rate for him?

A
1.4323-28
B
1.4320-25
C
1.4315-20
D
1.4318-23

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Correct answerC

Question 40

Single choice

Click on the Detail Button to view the Formula Sheet. Todays date is Thursday 12th December. What is the spot value date? Assume no bank holidays.

A
14th December
B
15th December
C
16th December
D
17th December

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Correct answerC

Question 41

Single choice

Click on the Detail Button to view the Formula Sheet. If the value date of forward USD/JPY transactions is declared a holiday in either New York or Tokyo, the correct value date will be:

A
The value date of the centre which is open.
B
The next business day of the centre which is closed.
C
The next business day when both New York and Tokyo are open.
D
None of the above.

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Correct answerC

Question 42

Single choice

Click on the Detail Button to view the Formula Sheet.

When quoting the exchange rate between the EUR and AUD, which is conventionally the base currency?

A
EUR
B
AUD
C
Depends on whether the price is being quoted in Europe or Australia
D
Depends on whether the price is being quoted interbank or to a customer

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Correct answerA

Question 43

Single choice

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

A
The risk of an adverse change in the futures price
B
The risk of an adverse change in the spread between futures and cash prices
C
The progressive illiquidity of a futures contract as it approaches expiry
D
The risk of a divergence between the futures price and the final fixing of the underlying interest rate

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Correct answerB

Question 44

Single choice

Click on the Detail Button to view the Formula Sheet. Deals transacted direct or via a broker prior to 5:00am Sydney time on Monday morning:

A
Are invalid.
B
Must be approved by senior management before confirmation.
C
Cannot be entered into without the approval of the local regulator.
D
Are not considered to have been done in normal conditions or normal market hours.

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Correct answerD

Question 45

Single choice

Click on the Detail Button to view the Formula Sheet. 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

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Correct answerD

Question 46

Single choice

Click on the Detail Button to view the Formula Sheet. Where answerphone equipment is used for reporting and recording of off-premises transactions, it should be:

A
On an special number known only to the chief dealer.
B
On a number located in the office of the internal auditor.
C
Secured so that reported transactions cannot be erased without senior management approval.
D
Secured by recordings that are stored for a suitable period.

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Correct answerC

Question 47

Single choice

Click on the Detail Button to view the Formula Sheet.
Using the following rates:
3M (90-day) eurodeposits3.50%
6M (180-day) eurodeposits3.75%

What is the rate for a deposit, which runs from 3 to 6 months?

A
3.625%
B
3.285%
C
3.965%
D
3.835%

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Correct answerC

Question 48

Single choice

Click on the Detail Button to view the Formula Sheet. Deliberately inputting incorrect big figures into an electronic dealing platform is:

A
Technically impossible on electronic platforms
B
Not an uncommon practice and something which professional dealers should be able to guard against.
C
Not good practice.
D
A criminal offence.

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Correct answerC