Which of the following best describes TARGET?
A. the inter-linking mechanism that connects national RTGS payments systems in EU member states
B. the system used in Germany for settling high value domestic securities transactions
C. the pan-Europe netting system used for reducing credit risk for derivative transactions
D. the system to be used by the Euro Bankers Association to clear cross border Euro payments
The use of a bilateral netting scheme for FX settlements results in:
A. one net settlement per currency, per counterparty, per day
B. one net settlement per currency, per day
C. one net settlement per day
D. multiple settlements per currency, per counterparty, per day for those netted settlements
What is the inter-linking mechanism that connects the domestic real-time gross settlement (RTGS) payments systems in EU member states?
A. CHAPS
B. TARGET
C. EAF
D. FX-NET
Which of the following best describes the main benefit of the RTGS payment system?
A. final settlement of interbank funds transfers on a continuous, trade by trade basis throughout the day
B. lower costs through fewer payments passing through nostro accounts
C. lower costs through less labour intensive methods
D. reduced market risk due to smaller values of open positions
What is a settlement date?
A. the date by which the interest payment on an operation must be made
B. the last date by which the minimum reserve amount can be paid to the central bank
C. the date, on which settlement must be made on the contracted amount or the differential amount of an operation
D. the date a deal is processed
What is the meaning of "good value" in FX?
A. the funds must be in the nostro account of the beneficiary institution by close of business on the agreed upon value date
B. the funds must be in the nostro account of the beneficiary institution by the beginning of the next business day
C. the value of interest to be received is higher than the value of fees to be paid
D. the funds must be in the internal cash account of the clearing house by close of business on the agreed upon value date
What is the meaning of settlement (Herstatt) risk?
A. the risk a payment order will not be processed due to a power failure in which the disaster recovery back-up system fails
B. any amount that is due to be received under a contract should be regarded as a settlement risk until final confirmation of receipt is confirmed
C. the risk that settlement arrangements will be made with the wrong counterparty
D. the risk of aborting settlement procedures due to the unavailability of back office staff
A message received and accepted by SWIFT will be acknowledged with:
A. NAK
B. ACK
C. PAC
D. BAC
A message received but not accepted by SWIFT will be acknowledged with:
A. BAK
B. ACK
C. PAC
D. NAK
What are the principal functionalities of interbank funds transfer systems?
A. the matching of confirmations
B. the dealing and archiving of payment orders
C. reconciliation and correspondent banking
D. the transfer of information and settlement
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