ACI ACI-Financial Markets Association 3I0-010 Questions & Answers

• Question 21:

  Which of the following is true about interest rate swaps?

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

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

  C. Payment netting is only allowed through a third party

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

  Correct Answer: D

• Question 22:

  A 3-month Eurodollar futures price of 90.25 implies a forward rate of:

  A. 9.25%

  B. 9.75%

  C. 8.75%

  D. 8.25%

  Correct Answer: B

• Question 23:

  The clearing house of a financial futures exchange:

  A. acts as counterparty to each buyer and seller

  B. is responsible for market making

  C. requires members to cover their commitments on a week-to-week basis

  D. does not regulate trader's activities

  Correct Answer: A

• Question 24:

  A plain vanilla interest rate swap is:

  A. an agreement to exchange one stream of interest payments for another (fixed against floating)

  B. a fixed rate leg in one currency and a fixed rate leg in another currency

  C. two floating rate legs on different indexes

  D. an agreement to borrow and lend one currency for another at two different value dates

  Correct Answer: A

• Question 25:

  The premium for a EUR/USD vanilla FX option is paid:

  A. when the option is exercised

  B. two business days after the trade

  C. when the option transaction takes place, and it is repaid to the buyer when he exercises the option

  D. in monthly installments until the option is exercised

  Correct Answer: B

• Question 26:

  EURIBOR is a:

  A. daily fixing of EUR interest rates within the EMU zone

  B. daily fixing of EUR interest rates in London

  C. a rate used for the settlement of USD FRAs between European counterparties

  D. the official successor to LIBOR rates

  Correct Answer: A

• Question 27:

  The exercise price (strike price) of an option contract is:

  A. the price of the underlying instrument at the time of the transaction

  B. the price at which the transaction on the underlying instrument will be carried out if the option is exercised

  C. the price the buyer of the option pays to the seller when entering into the options trade

  D. the price at which the two counterparties can close out their position

  Correct Answer: B

• Question 28:

  A forward rate agreement (FRA) is: A. a future rate agreement involving two different currencies

  B. an interest rate agreement where buyer and seller will exchange an interest rate differential at a given date in the future

  C. an interest rate to be applied to a loan or deposit that begins and matures in the future

  D. an agreement to exchange cash flows starting on a specific date in the future

  Correct Answer: B

• Question 29:

  Today is Monday, 8 December. You sell a 9x12 FRA in EUR. When will the settlement amount be paid or received, assuming that there are no bank holidays?

  A. 8 September

  B. 10 September

  C. 8 December

  D. 10 December

  Correct Answer: B

• Question 30:

  You bought a 6x9 EUR 8,000,000.00 FRA at 4.50%. Settlement is now due and 3 months (90 days) EURIBOR is 3.50%. What amount do you pay or receive?

  A. pay EUR 20,000.00

  B. receive EUR 20,000.00

  C. pay EUR 19,826.52

  D. receive EUR 19,826.52

  Correct Answer: C