Question 1

What is the rate of interest paid by the European Central Bank on cash amounts exceeding the minimum reserve requirement (excess reserves)?

Options :

A : Repo rate 1%

B : EONIA 0.25%

C : 0%

D : EONIA 1%

Answer: C

Question 2

What financial product involves exchanging a fixed interest rate for a floating interest rate?

Options :

A : A FX Swap

B : A repurchase agreement

C : An interest rate swap (IRS)

D : A dual swaption

Answer: C

Question 3

Which of the following is the best description of a broken trade”?

Options :

A : When a trade has been agreed to with dates (maturities) different from the standard dates

B : When one of the parties to the deal unilaterally decides to withdraw from the on-going transaction

C : When, due to a system break, one or both parties to the deal chooses to withdraw from the ongoing transaction

D : When, due to a system break, one or both parties to the deal are unclear as to whether the deal has been done

Answer: D

Question 4

You find that you have paid an amount to the wrong counterparty. What action should you take?

Options :

A : wait until the counterparty contacts you to before deciding what to do

B : immediately contact the counterparty to find the most appropriate way to have the funds returned as quickly as possible to minimize the loss of value days

C : ask the counterparty to keep the money and to place (invest) it at a special rate

D : ask your accounting department to book the amount as a loss

Answer: B

Question 5

What is a settlement date?

Options :

A : The date by which the interest payment on an operation must be made

B : The last date by which the minimum reserve amount can be paid to the central bank

C : The date, on which settlement must be made on the contracted amount or the differential amount of an operation

D : The date a deal is processed

Answer: C