ACI ACI Certifications 3I0-012 Questions & Answers

• Question 371:

  Once a prime-broker has matched and accepted a trade, separate confirmations must be exchanged between:

  A. the prime-broker and the executing dealer only

  B. the prime-broker and the executing dealer, and between the executing dealer and the client

  C. the prime-broker and the executing dealer, and between the prime-broker and the client

  D. the prime-broker and the client, and between the executing dealer and the client

  Correct Answer: C

• Question 372:

  You are the fixed-rate payer in a plain vanilla interest rate swap. If your counterparty defaults, your exposure at default is:

  A. greater, the higher the market swap rate and the shorter the term

  B. lower, the lower the market swap rate and the shorter the term

  C. lower, the lower the market swap rate and the longer the term

  D. greater, the higher the market swap rate and the longer the term

  Correct Answer: D

• Question 373:

  Extended trading hours and off-premises dealing can involve additional hazards, the avoidance of which requires clear controls. The Model Code prescribes best market practice. Which of thefollowing is true?

  A. Off-premises dealing should be strictly prohibited.

  B. After-hours trading should be prohibited.

  C. Deals transacted after normal business hours or off-premises should only be undertaken on mobile phones approved by management.

  D. Deals transacted after normal business hours or off-premises either by mobile phones or any other equipment should only be undertaken with the approval of management.

  Correct Answer: D

• Question 374:

  What should be done when a voice broker calls "off" at the very instant the dealer hits the broker's price as "mine" or "yours"?

  A. The transaction should be concluded and the broker should inform both counterparties accordingly.

  B. The dealer who hits the broker's price may decide whether the deal is done or not; the broker should inform both counterparties accordingly.

  C. The deal should not be concluded and the broker should inform both counterparties accordingly.

  D. The broker should immediately inform both counterparties that the deal will have to berenegotiated.

  Correct Answer: C

• Question 375:

  Where there are shared management responsibilities or where an investment or shareholding exists in a broker by a counterparty:

  A. the broker is not obligated to reveal any material connections provided Chinese Walls are in place.

  B. the broker is not required to reveal any connections at all.

  C. the broker is legally obliged to advise his clients of any material connections that exist.

  D. is a matter which is not covered by the Model Code.

  Correct Answer: C

• Question 376:

  The rho of an option is:

  A. The sensitivity of the option value to changes in interest rates

  B. The sensitivity of the option value to changes in volatility

  C. The sensitivity of the option value to changes in the time to expiry

  D. The sensitivity of the option value to changes in the price of the underlying

  Correct Answer: A

• Question 377:

  Which of the following statements regarding economic capital is correct?

  A. Economic capital is calculated externally and is the amount of capital the firm should have to support its target credit rating

  B. Economic capital is calculated on an expected shortfall basis with a specific time horizon and confidence level.

  C. Economic capital is used for measuring and reporting risks across a financial organisation.

  D. Economic capital is always lower than regulatory capital because of the more adequate modelling of correlation effects compared to the regulatory approach.

  Correct Answer: C

• Question 378:

  Who typically communicates the bank's asset and liability management policy internally?

  A. the management board

  B. the chief risk officer

  C. the bank's ALCO

  D. the Risk and Capital Committee

  Correct Answer: C

• Question 379:

  You have prepared the following economic capital table for the next ALCO meeting: For which of the following risks should you consider actions?

  

  A. credit risk

  B. interest rate risk

  C. liquidity risk

  D. currency risk

  Correct Answer: C

• Question 380:

  All other things being equal the interest rate risk of a fixed coupon bond is:

  A. greater, the higher the coupon and the longer the term

  B. greater, the lower the coupon and the longer the term

  C. lower, the lower the coupon and the shorter the term

  D. lower, the higher the coupon and the longer the term

  Correct Answer: B