Click on the Detail Button to view the Formula Sheet. When dealing with a fund manager, who will allocate shares in a transaction to his unknown clients after the transaction has been executed with you, you should:
A. Agree in writing with the fund manager that the allocation will be confirmed as soon as practicable after the transaction is executed.
B. Insist on the allocation being made and confirmed before the transaction is executed.
C. Agree in writing with the fund manager that he will guarantee the transaction until the allocation is confirmed.
D. Any of the above.
Click on the Detail Button to view the Formula Sheet. If a broker refers to "the payer of 5-year euro at 4.12", what is this party doing?
A. Paying a fixed rate of 4.12% per annum on a 30/360 basis over 5 years in euros through an interest rate swap in exchange for receiving a floating rate of 6-month Euribor on an actual/360 basis reset semi-annually and paid in arrears.
B. Paying a fixed rate of 4.12% per annum on an actual/actual basis over 5 years in euros through an interest rate swap in exchange for receiving a floating rate of 6-month Euribor on an actual/360 basis reset semi-annually and paid in arrears.
C. Paying a 5-year euro deposit and receiving a rate of interest of 4.12% on an actual/360 basis.
D. Taking a 5-year euro deposit and paying a rate of interest of 4.12% on an actual/360 basis.
Click on the Detail Button to view the Formula Sheet. The Model Code strongly recommends that intra-day oral deal checks should:
A. Be conducted out at the end of the morning and afternoon trading sessions.
B. Be only be conducted after the close of business.
C. Be mutually agreed between the bank and the broker or counterparty.
D. Be the responsibility of the broker.
Click on the Detail Button to view the Formula Sheet. When dealing with customers, financial market professionals are advised by the Model Code to clarify that all transactions are entered into solely at each partys risk by explicitly agreeing in writing that:
A. The customer understands the structure of the transaction.
B. The customer has made its own assessment and independent decision to enter into the transaction and is doing so at its own risk and for its own account.
C. No fiduciary or advisory relationship exists between the parties, and all the information is has received is not to be construed as investment advice or a recommendation to transact.
D. All of the above.
Click on the Detail Button to view the Formula Sheet. Which of the following would not constitute an event of market disruption under the Model Code?
A. The imposition of capital controls.
B. A major terrorist attack on a financial centre.
C. The failure of SWIFT.
D. Concerted central bank intervention.
Click on the Detail Button to view the Formula Sheet. One of your brokers asks you to buy and sell EUR/ USD at the same price net of brokerage in order to allow him to clear a transaction.
A. You must have prior senior management approval.
B. You must have the authority to switch names.
C. You must execute such transactions as promptly as possible within policy guidelines .
D. All of the above.
Click on the Detail Button to view the Formula Sheet. You and a dealer at another bank have an informal
bilateral reciprocal arrangement to quote each other two-way prices. During periods of high volatility, the
other dealer refuses to quote to you.
The Model Code states that:
A. The other dealer should act with honour, honesty and integrity.
B. It is a purely matter for your two institutions.
C. Such arrangements are not in any way enforceable or binding.
D. All of the above.
Click on the Detail Button to view the Formula Sheet. If a dealer has any intention of assigning an interest rate swap to a third party soon after transacting that swap:
A. The dealer should not reveal his future dealing intentions to his counterparty.
B. The dealer should make his intention to assign clear before transacting.
C. The dealer should agree the method of assignment before transacting.
D. The counterparty should specify whether or not assignment would be acceptable in negotiations.
Click on the Detail Button to view the Formula Sheet. You have written a EUR/USD knock-in option for a bank counterparty. At 6pm New York time on Friday, the instrike point is breached. This is confirmed on screens. The counterparty contacts you to confirm that the option has been knocked in.
A. The deal is done. You should confirm with your counterparty.
B. If the knock-in is confirmed by a New York price source, the deal is done and you should confirm with your counterparty.
C. The recognised closing time for the currency markets is 6:00pm New York time in Friday, so the deal is done and you should confirm with your counterparty.
D. The recognised closing time for the currency markets is 5:00pm New York time in Friday, so no deal is done.
Click on the Detail Button to view the Formula Sheet. You hear from several counterparties that a major market participant has taken major losses on long USD/JPY positions. You know the reports are untrue, as you have in fact bought large amounts of USD/JPY from that very firm, which means that the impact of the reports on the market would be helpful to your position.
A. As you have heard the reports from other parties, you are entitled to pass them on to market news services.
B. As you have heard the reports from other parties, you are entitled to pass them on to other market participants.
C. You should not pass any information you know to be false.
D. You should contradict the reports.
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