When is a broker allowed to assume a deal is closed:
A. When one of the principals confirms the deal.
B. When the principals give a written undertaking for all deals done at the end of the day.
C. When an acknowledgement is received from the principal that the deal is done.
D. When both back offices acknowledge the deal.
Which of the following is not in the Model Code?
A. Banks and brokers should record, by tapes or other such means, conversations between dealing counterparties.
B. There is no need to inform new counterparties and clients that conversations will be recorded.
C. On completion of recordings, tapes should be kept for a period sufficient to enable the details of any transaction contained therein to be confirmed.
D. The storage of recorded tapes should be strictly managed to prevent their contents from being tampered with.
How long does the Model Code recommend that tape recordings of dealers/brokers should be kept?
A. At least 2 months
B. One year
C. Up to one month
D. Until the maturity of the deal
Dealers should not conduct dealing activities outside the bank unless:
A. Clear written guidelines issued by management are in place.
B. They are in an approved brokers office.
C. There are on holiday.
D. None of the above.
Banks have a fiduciary responsibility to ensure that clients have all necessary information to understand the transaction because this:
A. Will encourage clients to do more business.
B. Will help prevent potential litigation.
C. Will help banks sell sophisticated risk management solutions.
D. Is required by all regulators.
The Committee for Professionalism strongly recommends intra-day oral deal checks to help reduce the number and size of differences, particularly when dealing through voice-brokers, for deals involving foreign counterparties, in faster moving markets such as FX and when dealing in other instruments which have very short settlement periods. This checking should:
A. Be carried out at least three times a day.
B. Be agreed between the parties.
C. Be done at the end of each day.
D. Be decided by the broker.
The Model Code recommends that when banks accept a stop-loss order A. Management must ensure ongoing lines of communication are in place between the parties.
B. Management must report to the central bank.
C. Management allows only experienced dealers to take such orders.
D. Bank staff must secure the approval of the counterpartqs management to accept such orders.
What is replacement cost a function of?
A. Credit risk
B. Market risk
C. Both of the above
D. None of the above
What is a master agreement intended to do?
A. Describe the parameters of a dealing relationship
B. Set out the rights and obligations of two parties
C. Apply to all transactions between two parties
D. All of the above
If you buy GBP 2,000,000 against USD at 1.6020; GSP 1,000,000 at 1.6035 and GBP 3,000,000 at 1.6028, what is the average rate of your position?
A. 1.6035
B. 1.6027
C. 1.6030
D. 1.6023
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