3I0-012 Online Practice Questions and Answers

From the following GBP deposit rates:

1M (30-day) GBP deposits 0.45% 2M (60-day) GBP deposits 0.50% 3M (91-day) GBP deposits 0.55% 4M (123-day) GBP deposits 0.65% 5M (153-day) GBP deposits 0.70% 6M (184-day) GBP deposits 0.75%

Calculate the 3x4 forward-forward rate.

A. 0.60%

B. 0.949%

C. 1.074%

D. 0.933%

A 3-month (91-day) US Treasury bill is quoted at a rate of discount of 4.25%. What is its true yield?

A. 4.19%

B. 4.25%

C. 4.30%

D. 4.31%

How would you compute the bid side of the forward/forward FX swap points?

A. bid side of the near leg swap points minus offered side of the far leg swap points

B. bid side of the far leg swap points minus offered side of the near leg swap points

C. offered side of the far leg swap points minus bid side of the near leg swap points

D. offered side of the near leg swap points minus bid side of the far leg swap points

You quote the following rates to a customer: Spot GBP/CHF 1.4535-45 6MGBP/CHF swap 46/41

At what rate do you sell GBP to a customer 6-month outright?

A. 1.4494

B. 1.4499

C. 1.4504

D. 1.4586

The weighted average duration of liabilities can be increased by:

A. buying additional 30-year German Government bonds

B. selling futures contracts on 30-year German Government bonds

C. buying futures contracts on 10-year German Government bonds

D. exercising an early repayment option on a long-term senior borrowing

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

You are quoted the following market rates:

Spot AUD/CAD 1.0600 12M (360-day) AUD 3.40% 12M (360-day) CAD 1.55%

What are the 12-month AUD/CAD forward points?

A. +190

B. -193

C. -192

D. -190

What is the major difference between a CD and a deposit?

A. The CD yields a higher rate of return

B. The CD has less credit risk

C. The CD is a transferable instrument

D. The CD has a shorter range of maturities

What happens when a coupon is paid on bond collateral during the term of a sell/buy-back?

A. Nothing

B. A margin call is triggered on the seller

C. A manufactured payment is made to the seller

D. The equivalent value plus reinvestment income is deducted from the repurchase price

A customer gives you GBP 25,000,000.00 at 0.625% same day for 7 days.

Through a broker, you place the funds with a bank for the same period at 0.6875%.

Brokerage is charged at 2 basis points per annum.

What is the net profit or loss on the deal?

A. ProfitofGBP 299.66

B. Profit of GBP 203.77

C. LossofGBP299.66

D. Loss ofGBP 203.77

The major difference between FRAs and futures is that FRAs are:

A. Exchange-traded

B. Margined

C. Standardized

D. Dealtoverthe counter

What is the maximum maturity of a London CD?

A. One year

B. 270 days

C. 183 days

D. 5years

The intrinsic value of a long call option:

A. Falls and rises with the price of the underlying commodity, but is always positive

B. Rises if the price of the underlying commodity falls and vice versa

C. Depends solely on the volatility of the price of the underlying commodity

D. Becomes negative if the market price of the underlying commodity falls below the strike price of the option

Click on the Exhibit Button to view the Formula Sheet. You are short of 6 Dec euro dollar futures contracts at 98.10. Yesterday, the closing price was 98.15. Today's closing price is 97.905.Whatvariation margin will be due?

A. You will have to pay USD 612.50

B. You will receive USD 612.50

C. You will have to pay USD 3,675.00

D. You will receive USD 3,675.00

When using legal documentation proposed modifications:

A. Should be documented as soon as possible after a deal is done.

B. Should be clearly stated before a deal.

C. Can be agreed verbally.

D. Are not permissible.