ACI 3I0-012 Online Practice Questions and Exam Preparation

ACI 3I0-012 Online Questions & Answers

• Question 231:

  A 12-month EUR/USD swap is quoted at 41/44. EUR interest rates are expected to fall, with USD interest rates remaining stable. Assuming no change in the spot rate what effect would you expect on the forward points?

  A. Unchanged
  B. Move towards 28/31
  C. Move towards 5 7/60
  D. Insufficient information
  C. Move towards 5 7/60

• Question 232:

  Deals transacted directly or via a broker prior to 5:00 am Sydney time on Monday morning:

  A. are invalid
  B. must be approved by senior management before confirmation
  C. cannot be entered into without the approval of the local regulator
  D. are not considered to have been done in normal conditions or normal market hours
  D. are not considered to have been done in normal conditions or normal market hours

• Question 233:

  Which one of the following best describes expected shortfall/conditional value-at-risk at the 95% level?

  A. the expected loss on the portfolio in the worst 95% of cases
  B. the expected loss in those cases where the loss exceeds the VaR at the 95% level
  C. the maximum loss in those cases where the loss exceeds the VaR at the 95% level
  D. the expected loss in those cases where the loss exceeds the VaR at the 5% level
  B. the expected loss in those cases where the loss exceeds the VaR at the 95% level

• Question 234:

  Which of the following statements is correct?

  A. With liquidity transfer pricing (LTP) banks attribute the costs, benefits and risks of liquidity to respective business units within a bank
  B. With liquidity transfer pricing (LTP) banks are monitoring and diversifying their funding base
  C. With liquidity transfer pricing (LTP) banks are agreeing with external liquidity providers on the fair market price of funds
  D. Liquidity transfer pricing charges providers of funds for the cost of liquidity and users of funds for the benefit of liquidity
  A. With liquidity transfer pricing (LTP) banks attribute the costs, benefits and risks of liquidity to respective business units within a bank

• Question 235:

  Which of the following statements does not explain why banks accept some amount of interest rate risk?

  A. In their function as intermediaries, banks must necessarily accept some degree of interest rate risk.
  B. Banks incur interest rate risk to increase income
  C. Banks prefer c red it risk to market risk.
  D. If banks failed to take on interest rate risk they would not be able to meet the needs of their deposit and loan customers.
  C. Banks prefer c red it risk to market risk.

• Question 236:

  If 6-month USD/CAD forward rates are quoted at 40/45, which of the following statements is correct?

  A. USD rates are higher than CAD rates in the 6-month
  B. CAD rates are higher than USD rates in the 6-month
  C. There is a positive USD yield curve
  D. There is not enough information to decide
  B. CAD rates are higher than USD rates in the 6-month

• Question 237:

  When differences in payment arise because of errors in the payment of funds:

  A. claims should be made for the costs incurred by the injured party and include all administration costs
  B. no party involved can be enforced to contribute to achieve an equitable resolution to the problem
  C. no market participant should be unjustly enriched or injured by the action/error of another market participant
  D. claims are calculated on the full principal amount of the failed payment with the interest rate imposed by the injured party
  C. no market participant should be unjustly enriched or injured by the action/error of another market participant

• Question 238:

  The Interest Rate Parity Theorem should work because, when one sells a low interest rate currency to invest in a high interest rate currency and hedges the currency risk:

  A. The cost of hedging is given by the forward points, which are equal to the interest rate differential between the two currencies
  B. The high interest rate currency will depreciate
  C. The profit from the appreciation of the high interest rate currency has been hedged away
  D. Interest rates are mean reverting, which means the low interest rate will tend to rise and the high interest rate will tend to fall
  A. The cost of hedging is given by the forward points, which are equal to the interest rate differential between the two currencies

• Question 239:

  A customer would hedge a currency exposure with a forward FX time option if:

  A. he is unsure about the presence of a currency risk
  B. the amount of the currency risk is not precisely known in advance
  C. his currency risk might change over time
  D. the precise maturity of the currency risk is not known
  D. the precise maturity of the currency risk is not known

• Question 240:

  If you sell USD 3-month forward to a client against EUR, what should you do to hedge your position?

  A. Buy a 3-month EUR/USD outright forward
  B. Buy USD spot, and sell and buy a 3-month EUR/USD FX swap
  C. Sell EUR/USD in the spot market, lend EUR for 3 months and borrow USD for 3 months
  D. Sell EUR/USD in the spot market, borrow EUR for 3 months and lend USD for 3 months
  D. Sell EUR/USD in the spot market, borrow EUR for 3 months and lend USD for 3 months