ACI ACI Certifications 3I0-012 Questions & Answers

• Question 301:

  The process of confirming trades is a function that can be performed by:

  A. any dealer as long as he/she is not a party to the trade

  B. staff in the back-office/operations who are independent of the trade

  C. staff in the dealing room who are not dealing

  D. any staff outside the dealing room

  Correct Answer: B

• Question 302:

  The seller of a floor:

  A. Receives compensation if a reference interest rate falls below an agreed level

  B. Pays compensation if a reference interest rate falls below an agreed level

  C. Receives compensation if a reference interest rate rises above an agreed level

  D. Pays compensation if a reference interest rate rises above an agreed level

  Correct Answer: B

• Question 303:

  Which of the following statements about the Net Stable Funding Ratio is correct?

  A. Assets are classified with an available stable funding factor (ASF).

  B. Liabilities are classified with a required stable funding factor (RSF).

  C. The ratio of available funding to required funding has to be higher than 50%n

  D. Equity has an available stable funding factor of 100%.

  Correct Answer: D

• Question 304:

  A bank expects interest rates to fall with a parallel downward shift in the yield curve. What action should the bank take, if it wants to benefit from this view?

  A. increase the maturity of its liabilities

  B. reduce the maturity of its asset portfolio

  C. runazerogap

  D. lengthen the maturity of its asset portfolio

  Correct Answer: D

• Question 305:

  Which of the following statements is correct?

  A. Hedging a long bond position with payer's swap involves basis risk

  B. Hedging the credit risk of an asset swap package with a credit default swap has no basis risk

  C. Basis risk is a result only of maturity mismatches

  D. Basis risk is a result only of duration mismatches.

  Correct Answer: A

• Question 306:

  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

  Correct Answer: C

• Question 307:

  Which one of the following statements concerning covenants is incorrect?

  A. Covenants are clauses in bank credit agreements and bond indentures designed to assure debt holders that the creditworthiness of the borrower(s)/issuer(s) will remain satisfactory

  B. Covenants must be tailored to reflect the specific needs of the borrower/issuer and the specific risks perceived by the debt holders.

  C. Covenants require the holder of the debt to refrain from doing certain specific things.

  D. Three different types of covenants in credit agreements and bond indentures are affirmative, negative and financial.

  Correct Answer: C

• Question 308:

  Under Basel rules, what is the meaning of LGD?

  A. Loss Given Default

  B. Liquidity Given Distress

  C. Limit Given Default

  D. Loss Given Distress

  Correct Answer: A

• Question 309:

  What do you call a combination of a long (short) call option and short (long) put option with same face value, same expiration date, same style, where the strike price is equal to the forward price?

  A. a synthetic forward

  B. a straddle

  C. risk reversal

  D. a strangle

  Correct Answer: A

• Question 310:

  Which one of the following is a major objective of ACI-The Financial Markets Association?

  A. to promote globalization and deregulation of the financial markets

  B. to maintain the professional level of competence and to disseminate a high level of ethical and professional behavior

  C. to act as the official international market regulator in the absence of government regulation

  D. to become the sole global corporation of wholesale financial market professionals

  Correct Answer: B