Question 1

Which one of the formulae below is correct?

Options :

A : Long a FRN + pay floating on a swap = long a synthetic straight bond.

B : Long a FRN + pay fixed on a swap = long a synthetic straight bond

C : Long a FRN + pay floating on a swap = short a synthetic straight bond

D : Long a FRN + receive floating on a swap = long a synthetic straight bond

Answer: A

Question 2

When may a broker assume a deal is closed?

Options :

A : When acknowledgement is received from the principals that the deal is done

B : When the principals give a written undertaking for all deals done at the end of the day

C : When one of the principals confirms the deal

D : When both back offices acknowledge the deal

Answer: A

Question 3

What does the Model Code say concerning repos and stock-lending?

Options :

A : The exact maturity (end) dates for transactions must be agreed as soon as possible after a transaction.

B : All market participants should use the Modified Following Business Day Convention.

C : Legal documentation must be put in place as soon as possible after transaction.

D : All market participants should use the Modified Previous Business Day Convention.

Answer: B

Question 4

What is the meaning of CCP within the Basel framework?

Options :

A : Collateralized Clearing Process

B : Collateralized Counterparty Protection

C : Central Clearing Counterparty

D : Collateralized Credit Protection

Answer: C

Question 5

What is the correct interpretation of a EUR 5,000,000.00 one-week VaR figure with a 99% confidence level?

Options :

A : A loss of at most EUR 5,000,000.00 can be expected in 1 out of the next 100 days.

B :

A loss of at least EUR 5,000,000.00 can be expected in 99 out of the next 100 weeks.

C : A loss of at most EUR 5,000,000.00 can be expected in 1 out of the next 100 weeks.

D : A loss of at least EUR 5,000,000.00 can be expected in 1 out of the next 100 weeks.

Answer: D

Smartly Prepare Exam with Free Online 002-101 Practice Test