ACI 3I0-008 Online Practice Questions and Exam Preparation

ACI 3I0-008 Online Questions & Answers

• Question 71:

  Click on the Detail Button to view the Formula Sheet. A 6-month SEK/NOK Swap is quoted 140/150. Spot is 0.9445. Which of the following statements is correct?

  A. SEK interest rates are higher than NOK interest rates
  B. NOK interest rates are higher than SEK interest rates
  C. NOK interest rates are higher than USD interest rates
  D. SEK interest rates and NOK interest rates are converging
  B. NOK interest rates are higher than SEK interest rates

• Question 72:

  Click on the Detail Button to view the Formula Sheet. The Interest Rate Parity Theorem states that:

  A. Interest rates in different currencies will tend to move into line with each other over time
  B. Interest rates in different currencies differ due to differences in expectations about inflation
  C. Selling a low interest rate currency to invest a high interest rate currency will only be profitable if one hedges the currency risk
  D. Selling a low interest rate currency to invest in a high interest rate currency should not be profitable if one hedges the currency risk
  D. Selling a low interest rate currency to invest in a high interest rate currency should not be profitable if one hedges the currency risk

• Question 73:

  Click on the Detail Button to view the Formula Sheet. You need to buy USD 5,000,000 against GBP and are quoted the following rates concurrently by two separate banks: 1.6045-50 and 1.6047-52. At which rate do you trade?

  A. 1.6045
  B. 1.6047
  C. 1.6050
  D. 1.6052
  B. 1.6047

• Question 74:

  Click on the Detail Button to view the Formula Sheet. You are quoting forward FX prices to a broker subject to finding a counterparty for a matching transaction. The Model Code says:

  A. You must tell the broker, who must qualify your quotes.
  B. For credit reasons, you must tell the broker when he presents a name.
  C. You cannot do this.
  D. The Model Code does not make recommendations on this subject.
  A. You must tell the broker, who must qualify your quotes.

• Question 75:

  Click on the Detail Button to view the Formula Sheet. Basis risk on a futures contract is:

  A. The risk of an adverse change in the futures price
  B. The risk of an adverse change in the spread between futures and cash prices
  C. The progressive illiquidity of a futures contract as it approaches expiry
  D. The risk of a divergence between the futures price and the final fixing of the underlying interest rate
  B. The risk of an adverse change in the spread between futures and cash prices

• Question 76:

  Click on the Detail Button to view the Formula Sheet. Dealers are allowed to trade for their own account if:

  A. The dealers have good track records in their dealing both for the institution and for themselves.
  B. There has been no previous conflicts of interest in the dealing room.
  C. There is a clearly laid down policy.
  D. The dealers see no conflict of interest in such dealing.
  C. There is a clearly laid down policy.

• Question 77:

  Click on the Detail Button to view the Formula Sheet. If a dealer has any intention of assigning an interest rate swap to a third party soon after transacting that swap:

  A. The dealer should not reveal his future dealing intentions to his counterparty.
  B. The dealer should make his intention to assign clear before transacting.
  C. The dealer should agree the method of assignment before transacting.
  D. The counterparty should specify whether or not assignment would be acceptable in negotiations.
  B. The dealer should make his intention to assign clear before transacting.

• Question 78:

  Click on the Detail Button to view the Formula Sheet.

  You quote the following rates to a customer:

  spot GBP/CHF 2.2005-10

  3M GBP/CHF swap 120/115

  At what rate do you sell GBP to a customer 3-month outright?

  A. 2.1890
  B. 2.2125
  C. 2.1895
  D. 2.1885
  C. 2.1895

• Question 79:

  Click on the Detail Button to view the Formula Sheet. Which of following is not true?

  A. Inter-bank market participants have a duty to make absolutely clear whether the prices they are quoting are firm or merely indicative.
  B. It is the duty of the dealer to periodically confirm with the broker the validity of his price.
  C. It is the responsibility of the dealer to ensure that prices given to a broker are taken off if they have not been hit or were subject to a time limit.
  D. No deal is done if one counterparty is unable to conclude a deal due to credit line problems and a name switch is not found within a reasonable period of time.
  B. It is the duty of the dealer to periodically confirm with the broker the validity of his price.

• Question 80:

  Click on the Detail Button to view the Formula Sheet. A customer based in the UK exports automotive parts to the US. His main competitor is in France? What type of exposure to currency risk is posed by movements in EUR/USD?

  A. Transaction exposure
  B. Translation exposure
  C. Economic exposure
  D. None
  C. Economic exposure