Question 1

Which risk factors fall under counterparty risk?

Options :

A : Currency risk, interest rate risk and swap risk

B : Settlement risk, delivery risk and replacement cost

C : Operational risk

D : Settlement risk and swap risk

Answer: B

Question 2

On the sale of a CD, the seller

Options :

A : receives a lower price than he originally paid

B : receives a higher price than he originally paid

C : receives a price calculated using the price originally paid

D : there is not enough information to know how much the seller receives

Answer: D

Question 3

Which two countries are not participating in TARGET2?

Options :

A : Denmark and Finland

B : Latvia and Lithuania

C : The Czeck Republic and the United Kingdom

D : Bulgaria and Romania

Answer: C

Question 4

Which one of the following best describes the correct order of the settlements process?

Options :

A : netting, trade entry, settlement, confirmation, nostro reconciliation

B : confirmation, netting, trade entry, settlement, nostro reconciliation

C : trade entry, confirmation, netting, settlement, nostro reconciliation

D : trade entry, confirmation, settlement, nostro reconciliation, netting

Answer: C

Question 5

Herstatt Risk is also known as:

Options :

A : settlement risk

B : translation risk

C : replacement risk

D : operational risk

Answer: A