Question 1

EURIBOR, the Euro Interbank Offered Rate is:

Options :

A : the rate at which Euro interbank term deposits are offered by one prime bank to another prime bank published at 11.00 a.m. CET

B : the interest reference rate for the Euro calculated daily from the rates of 16 London banks

C : the interest reference rate for all major currencies calculated daily from the rates of panel banks from EU countries

D : the rate at which Euro interbank term deposits are offered by prime banks to corporate published at 11.00 a.m. CET

Answer: A

Question 2

What is a bank required to do when entering into a new business relationship with a natural person?

Options :

A : inform the central bank of their country

B : no action is required

C : verify the identity of the person

D : inform the compliance department

Answer: C

Question 3

Bank A has a large number of forward OTC trades with Bank B. What risks will be reduced by concluding a netting agreement?

Options :

A :

market-price-risk and replacement risk

B : market-price-risk and delivery risk

C : replacement risk and delivery risk

D : replacement risk and basis risk

Answer: C

Question 4

A Certificate of Deposit (CD) was issued at 2.50% which you now purchase at 1.75%. What would you expect to pay?

Options :

A : The original face value of the CD

B : More than the originally paid value

C : Less than the originally paid value

D : There is too little information to decide

Answer: B

Question 5

Herstatt Risk is also known as:

Options :

A : settlement risk

B : translation risk

C : replacement risk

D : operational risk

Answer: A