As far as fineness and weight are concerned, what are the London Bullion Market Association (LBMA) requirements for a "good delivery bar"?
A. at least 995/1000 pure gold; weight between 350 and 430 fine ounces
B. minimum 999.9/1000 pure gold; weight between 350 and 430 fine ounces
C. at least 995/1000 pure gold; weight of 400 fine ounces
D. minimum 995/1000 pure gold; weight of 400 fine ounces
It is June. You are over-borrowed from October to January on your deposit book. How would you hedge using FRAs?
A. Sell 3x6
B. Buy 3x6
C. Sell 4x7
D. Buy 4x7
VaR increases with:
A. lower correlation of underlying risk factors
B. a shorter time horizon
C. a lower confidence level
D. a higher confidence level
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
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
As to general risk management principles, the Model Code mentions that the organizationalstructure should ensure independent risk management and controls. Which one of the following is not among those controls?
A. open and effective communication channels between all levels of staff and cross-functions should be maintained.
B. regular internal audits should be carried out together with trading and risk management to ensure early identification of internal control weaknesses
C. complete segregation of duties between the front, middle and back office activities
D. a separate system for independent monitoring to ensure compliance with the risk management framework should be in place
In dealing terminology, what does "my risk" refer to?
A. the market amount for which the quote is valid
B. the acknowledgement by the broker that he may be stuffed
C. the acknowledgement by the dealer receiving the quote that the rate may have to be re-quoted
D. the quoting dealer cautions the receiver of the quote that the price may have to be re-quoted at the receiver's risk
If manual trade capture methods are used, when should deals be recorded in systems used for this purpose?
A. The same day they are dealt
B. Promptly
C. Within 24 hours of execution
D. Within an hour of execution
You are quoted the following market rates:
spot EUR/CHF 1.1005 6M (180-day) EUR 3.45% 6M (180-day) CHF 1.25%
What are the 6-month EUR/CHF forward points?
A. +121
B. +120
C. -116
D. -119
Which of the following would not constitute an event of market isruption under the Model Code?
A. The imposition of capital controls.
B. A major terrorist attack on a financial centre.
C. The failure of SWIFT.
D. Concerted cestal bank intervention.
