ACI ACI Certifications 3I0-012 Questions & Answers

• Question 411:

  The Model Code recommends that standard terms and conditions be used in legal documents. Which one of the following statements is correct?

  A. When trading in financial products described by the Model Code, dealers and voice brokers need not clarify whether they propose to use standard terms.

  B. Standard terms and conditions should be signed bilaterally by senior management of both principals before any applicable market transactions are entered into.

  C. When using legal agreements any proposed modifications or choices offered in the agreement must be clearly stated as soon as the trade is agreed.

  D. For many instruments, standard master agreements issued by recognized authorities need not be signed by senior management of the principals intending to transact business.

  Correct Answer: B

• Question 412:

  For which one of the following disputes is the Chairman and members of the ACI's CFP ready to assist through the ACI's Expert Determination?

  A. all legal disputes

  B. disputes related to market practice or conduct as set out in the Model Code or in any other Code of Conduct

  C. disputes between two market participants, at least one of them being a member of ACI

  D. disputes related to over-the-counter financial instruments as detailed in appendix four of the Model Code

  Correct Answer: D

• Question 413:

  Which one of the following statements about claims is true?

  A. Claims are not expected to be submitted after 15 days from the actual settlement date.

  B. Claims of less than USD 5,000.00 are not expected to be submitted.

  C. Claims are calculated on the full principal amount of the failed transaction. Interest rates are imposed by the agent banks, unless a higher negotiated rate is to be applied.

  D. Acknowledgement of receipt of a claim should be confirmed within 48 hours by email or SWIFT.

  Correct Answer: C

• Question 414:

  What should be done if a broker fails to conclude a transaction at the quoted price and the dealer has to accept a lesser quote to neutralize his risk?

  A. `stuff' the broker and insist on a replacement name at the original price

  B. accept a bank transfer compensation payment in favour of the bank or adjustment to brokerage bills

  C. refuse any sort of compensation from the broker for the amount concerned

  D. acknowledge the excuses of the broker and accept his offer of entertainment in compensation for the failed transaction

  Correct Answer: B

• Question 415:

  Which of the following is the best description of a "broken trade"?

  A. when a trade has been agreed to with dates (maturities) different from the standard dates

  B. when one of the parties to the deal unilaterally decides to withdraw from the on-going transaction

  C. when, due to a system break, one or both parties to the deal chooses to withdraw from the ongoing transaction

  D. when, due to a system break, one or both parties to the deal are unclear as to whether the deal has been done

  Correct Answer: D

• Question 416:

  What is the policy of the Model Code on drugs, alcohol and other substance abuse in the dealing room?

  A. Management is to proximately inform the local regulator of any suspected drug abuse in either the front office or operations department.

  B. The chief dealer must inform the ACI's Committee for Professionalism as soon as he suspects any drug or alcohol abuse in his dealing room.

  C. Policies should be developed and clearly announced, including penalties for individuals who are found to be substance abusers.

  D. Management should take all reasonable steps to stop the abuse of drugs, including alcohol and other substances.

  Correct Answer: C

• Question 417:

  Which of the following statements is true? The repo legal agreement between the two parties concerned should:

  A. detail the rights of counterparties regarding the substitution of collateral

  B. include named securities permitted to be traded

  C. be bi-laterally signed by both dealers involved in any transaction

  D. need not be in place before any deals are executed or finalized

  Correct Answer: A

• Question 418:

  The risk associated with a stock or a bond that is not correlated with events in the market is known as:

  A. interest rate risk

  B. model risk

  C. currency risk

  D. specific risk

  Correct Answer: D

• Question 419:

  What is the correct interpretation of a EUR 5,000,000.00 one-week VaR figure with a 99% confidence level?

  A. A loss of at least EUR 5,000,000.00 can be expected in 99 out of the next 100 weeks.

  B. A loss of at most EUR 5,000,000.00 can be expected in 1 out of the next 100 weeks.

  C. A loss of at most EUR 5,000,000.00 can be expected in 1 out of the next 100 days.

  D. A loss of at least EUR 5,000,000.00 can be expected in 1 out of the next 100 weeks.

  Correct Answer: D

• Question 420:

  Which one of the formulae below is correct?

  A. Long a FRN + pay fixed on a swap = long a synthetic straight bond

  B. Long a FRN + receive floating on a swap = long a synthetic straight bond

  C. Long a FRN + pay floating on a swap = short a synthetic straight bond

  D. Long a FRN + pay floating on a swap = long a synthetic straight bond.

  Correct Answer: D