ACI ACI Certifications 3I0-012 Questions & Answers

• Question 421:

  Which of the following statements about requirements for limit setting is correct?

  A. In the case of trading transactions, counterparty limits are to be set by the front office and issuer limits are to be set by the back office

  B. In the case of trading transactions, counterparty and issuer limits are to be set by the credit committee

  C. In the case of trading transactions, counterparty limits are to be set by a front office vote and market risk limits are to be set by the back office

  D. In the case of trading transactions, counterparty limits and issuer limits are to be set by the front office

  Correct Answer: B

• Question 422:

  You are the buyer of protection in a credit default swap. All other things being equal your counterparty credit risk is increasing if:

  A. the credit spread is decreasing

  B. the credit spread is decreasing and recovery rate is increasing

  C. the credit spread is increasing

  D. the recovery rate is increasing

  Correct Answer: C

• Question 423:

  Which of the following statements is correct?

  A. The best strategy to treat and mitigate risk is avoiding the risk by avoiding the business

  B. The best strategy to treat and mitigate risk is transferring the risk to another party, e. g. by transfer to an insurance company

  C. The best strategy to treat and mitigate risk is to establish the appropriate processes for identifying, assessing, managing, monitoring and reporting risks

  D. The best strategy to treat and mitigate risk is to reduce the negative effect of the risk, e. g. by hedging

  Correct Answer: C

• Question 424:

  In the event that standard settlement instructions are provided by a third party, full authentication and authorization of those SSIs should be independently performed by?

  A. Sales I trading staff

  B. Operations staff

  C. Nostro staff

  D. Front office staff

  Correct Answer: B

• Question 425:

  Which of the following statements about operational risk awareness is correct?

  A. It is good practice to collect and disclose incidents and near-misses for the future benefit of the professional community.

  B. It is good practice to collect and analyze incidents and near-misses so as to set up preventive action plans for the future.

  C. A report describing operational risks should be made at the request of the front office.

  D. A report describing operational risks should be made at least once a year and provided to the front office.

  Correct Answer: B

• Question 426:

  If you lend for 3 months and borrow for 6 months, you may be said to:

  A. Be over-lent

  B. Have a negative gap

  C. Be exposed to higher interest rates

  D. Be over-borrowed

  Correct Answer: D

• Question 427:

  What is the purpose of a short straddle option strategy?

  A. To anticipate lower volatility in the price of the underlying commodity

  B. To anticipate moderately high volatility in the price of the underlying commodity

  C. To anticipate increasing volatility in the price of the underlying commodity

  D. To anticipate very high volatility in the price of the underlying commodity

  Correct Answer: A

• Question 428:

  The delta of an `at-the-money' long put option is:

  A. Between -0.5 and -1

  B. -0.5

  C. Between +0.5 and +1

  D. +0.5

  Correct Answer: B

• Question 429:

  Which of the following both provide credit enhancement to a true-sale securitization?

  A. reserve account and third-party insurance

  B. subordinated tranches and creditworthiness of the originator

  C. creditworthiness of the originator and third-party insurance

  D. reserve account and interest rate hedging

  Correct Answer: A

• Question 430:

  Which of the following situations would be most likely to result in a negative mark-to-market for a bank borrowing short term and lending long term?

  A. credit spread tightening of the long term position

  B. if the yield curve is inverted

  C. if the yield curve becomes steeper

  D. if there is a downward parallel shift in the yield curve

  Correct Answer: C