ACI ACI Certifications 3I0-012 Questions & Answers

• Question 251:

  A customer sells a 3-month Euro Swiss Franc (EUROSWISS) futures contract. Which of the following risks could he be trying to hedge?

  A. An increase in forward USD/CHF

  B. Falling CI-IF interest rates

  C. A decrease in forward USD/CHF

  D. Rising CHF interest rates

  Correct Answer: D

• Question 252:

  A bank wants to use STIR futures for establishing a macro hedge for the asset portfolio. Which of the following statements is correct?

  A. It is reasonable for the bank to purchase futures contracts if they expect interest rates to rise.

  B. It is reasonable for the bank to take a long position in anticipation of rising rates.

  C. Losses (or gains) in the value of the cash position can be largely offset by gains (or losses) in the value of the futures position

  D. It is reasonable for the bank to sell futures contracts if it expects interest rates to fall

  Correct Answer: C

• Question 253:

  Which of the following statements about hedge accounting is not correct?

  A. A prerequisite for hedge accounting is that a hedging instrument is designated as an offset to changes in the fair value or cash flows of a hedged item.

  B. Hedge accounting enables gains and losses on a hedging instrument to be recognised in the income statement in the same period as offsetting losses and gains on the hedged item.

  C. If one of the criteria for hedge accounting is no longer met, there is an option to discontinue hedge accounting.

  D. Strict criteria must be met at inception and throughout the term of the hedge relationship in order for hedge accounting to be applied.

  Correct Answer: C

• Question 254:

  Which of the following statements does not explain why banks accept some amount of interest rate risk?

  A. In their function as intermediaries, banks must necessarily accept some degree of interest rate risk.

  B. Banks incur interest rate risk to increase income

  C. Banks prefer c red it risk to market risk.

  D. If banks failed to take on interest rate risk they would not be able to meet the needs of their deposit and loan customers.

  Correct Answer: C

• Question 255:

  Under Basel rules the risk weight for AM-rated claims on corporates in the standardized approach is:

  A. 0%

  B. 15%

  C. 20%

  D. 75%

  Correct Answer: C

• Question 256:

  What are financial market professionals not explicitly required by the Model Code to clarify and agree to in writing?

  A. that the customer understands he will be charged for advisory services that are provided

  B. that the customer understands the terms, conditions and risks of the transaction

  C. that the customer understands that any information or explanation should not be interpreted as investment advice or recommendations

  D. that the customer understands he is entering into the transaction at his own risk and for his own account.

  Correct Answer: A

• Question 257:

  When should confirmations be sent out?

  A. one day after the deal is done

  B. within two hours of the trade being booked and as soon as technologically possible

  C. immediately after having received the confirmation of the counterparty

  D. no later than the value date of the first leg of the transaction

  Correct Answer: B

• Question 258:

  In the unforeseen event that a particular maturity date is declared a public holiday, what is standard market practice for spot FX?

  A. to extend the contract to the next business day

  B. to shorten the contract to the previous business day

  C. The two parties involved agree to a new maturity date.

  D. There is no standard market practice. ACIs Committee for Professionalism decides the issue on a case-by-case basis.

  Correct Answer: A

• Question 259:

  What should a dealer say to express his commitment to putting an additional bid or offer at a current bid or offer price already quoted by his broker?

  A. same way"

  B. me too"

  C. "par", or "parity"

  D. "join at", or "support at"

  Correct Answer: D

• Question 260:

  If making a claim in respect of "use of funds", payments should be settled within how many days?

  A. 15

  B. 20

  C. 35

  D. 40

  Correct Answer: C