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ACI 3I0-013 ACI Operations Certificate challenging Exam Practice Test

Demo: 57 questions
Total 386 questions

ACI Operations Certificate challenging Questions and Answers

Question 1

Most non deliverable forwards (NDFs) are cash-settled in:

Options:

A.

GBP

B.

USD

C.

CHF

D.

EUR

Question 2

Which of the following is true about interest rate swaps (IRS)?

Options:

A.

The fixed rate and the floating rate payers know the cash value of their payments at the outset

B.

There is exchange of principal at the start and at the end of the swap

C.

Payment netting is only allowed through a third party

D.

The notional amount of the swap is generally not exchanged between counterparties

Question 3

An input message for the SWIFT network is composed of up to which five parts?

Options:

A.

1. Basic header block, 2. Communication header block, 3. Currency block, 4. Text block, 5. Trailers block

B.

1. Basic header block, 2. Application header block, 3. User header block (optional), 4. Text block, 5. Trailers block

C.

1. Sending header block, 2. Application header block, 3. User header block, 4. Text block (optional), 5. Transmission block

D.

1. Basic header block, 2. System header blocks (optional), 3. User header block, 4. Text block, 5. Security block

Question 4

What is a SWIFT message type 210?

Options:

A.

A request for financial institution transfer

B.

A general financial institution transfer

C.

A financial institution transfer for its own account

D.

A notice to receive

Question 5

In FX trading a “third party beneficiary” is best described as:

Options:

A.

The issuer of a payment for the relevant trade distinct from the counterparty

B.

The issuer of a payment for the relevant trade identical to the counterparty

C.

The recipient of a payment for the relevant trade distinct from the counterparty

D.

The recipient of a payment for the relevant trade identical to the counterparty

Question 6

Which of the following types of payment demands extra diligence and review procedures?

Options:

A.

Nostro funding payment

B.

Third party payment

C.

Value spot USD payment

D.

Value spot payment for currency equivalents> USD 3,000,000.00

Question 7

Which clearing system allows a transfer to be settled with immediate finality?

Options:

A.

EAF

B.

EBA

C.

RTGS

D.

SWIFT

Question 8

You bought a 6x9 EUR 8,000,000.00 FRA at 0.75%. Settlement is now due and 3 months (90 days) EURIBOR is 0.25%. What amount do you pay or receive?

Options:

A.

Pay EUR 10,000.00

B.

Receive EUR 10,000.00

C.

Pay EUR 9,993.75

D.

Receive EUR 9,993.75

Question 9

Which of the following statements best describes collateral?

Options:

A.

Liquid assets pledged by one or both counterparties to the other to reduce credit risk

B.

Deposits placed by a commercial bank with a central bank to fulfill reserve asset ratios

C.

Any deposit placed by an institution with another institution of a lower credit rating

D.

Any cross border payment of currency

Question 10

Major amendments to a prospectus can be made:

Options:

A.

At the discretion of the issuer and after the launch

B.

Only with the consent of the note holders

C.

Always in the case of default payment

D.

Only by the custodian with the consent of the issuer

Question 11

On Friday, your trader lends GBP 10,000,000.00 overnight at 0.60%. The instructions are for repayment of principal + interest. How much would you expect to be repaid?

Options:

A.

GBP 10,000,500.00

B.

GBP 10,000,164.38

C.

GBP 10,000,493.15

D.

GBP 10,000,166.67

Question 12

Which of the following are considered money market, cash or derivative instruments?

Options:

A.

Currency futures

B.

Forward FXs

C.

Currency options

D.

Forward rate agreements (FRA)

Question 13

A USD 1,0000,000.00 US Treasury Bill (91 days) is offered at a discount rate of 0.75%. The offer price will be:

Options:

A.

USD 1,000,000.00

B.

USD 998,104.17

C.

USD 992,500.00

D.

USD 998,130.14

Question 14

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

Question 15

If the 90-day rate is 3.10% and the 180-day is 3.50%, what is the 120-day rate using straight-line interpolation?

Options:

A.

3.20%

B.

3.21%

C.

3.23%

D.

3.30%

Question 16

A yield curve can be drawn for a wide variety of financial instruments. The most widely analyzed yield curves are those for benchmark instruments such as:

Options:

A.

Consumption and inflation levels

B.

Money market rates and government bonds

C.

Mortgage rates

D.

Commodities

Question 17

If your trader has dealt a 6-month USD/JPY FX-swap, selling and buying USD 10,000,000.00, will you:

Options:

A.

Expect a credit statement on your JPY nostro account on the near date

B.

Be required to obtain and execute the ICMA Master Agreement to document the transaction

C.

Need to instruct your USD nostro bank to pay out USD on the far date

D.

Anticipate no movement of principal, but a cash settlement on the far date

Question 18

What happens if an instruction remains unmatched and/or unsettled through CLS Bank?

Options:

A.

If there is more than one FX trade with a single counterparty to settle in the identical currencies, then both sides should bilaterally agree to settle the trades outside of CLS Bank on a net basis.

B.

If there is only one FX trade with a single counterparty to settle in the identical currencies, then either side can unilaterally decide to settle the trade outside of CLS Bank on a net basis.

C.

If there is more than one FX trade with a single counterparty to settle in the identical currencies, then both sides should bilaterally agree to settle the trade outside CLS Bank on a gross basis.

D.

If there is more than one FX trade with a single counterparty to settle in the identical currencies, then either side can unilaterally instruct the CLS Bank to settle the trades.

Question 19

Which of the following is characteristic of derivative instruments?

Options:

A.

Trades are executed in nominal amounts

B.

Derivates are bought and sold only over the counter (OTC)

C.

The final settlement of a derivates trade can only be made by physical delivery

D.

The accounting for derivative instruments is off balance sheet

Question 20

In the US commercial paper market, commercial paper is limited to:

Options:

A.

a 270-day tenor

B.

a 360-day tenor

C.

a 365-day tenor

D.

a 366-day tenor

Question 21

In the event that standard settlement instructions are provided by a third party, full authentication and authorization of those SSIs should be independently performed by?

Options:

A.

Sales / trading staff

B.

Operations staff

C.

Nostro staff

D.

Front office staff

Question 22

What are "de minimis" claims?

Options:

A.

Claims of less than USD 100.00

B.

Claims of less than USD 1,000.00

C.

Claims of less than EUR 100.00

D.

Claims of less than EUR 1,000.00

Question 23

A redemption premium for a bond is:

Options:

A.

Always paid in case of an early redemption

B.

Paid, if stipulated in the prospectus, at an early redemption

C.

Always paid at final maturity

D.

Only paid if a bond is redeemed after its initially scheduled maturity

Question 24

The risk associated with the failure of the overall financial system is best described as:

Options:

A.

Operational Risk

B.

Market Risk

C.

Systemic Risk

D.

Credit Risk

Question 25

What are the value dates of a torn next money market trade dealt Friday, 13 August?

Options:

A.

13 August-16 August

B.

16 August-17 August

C.

17 August-18 August

D.

13 August -17 August

Question 26

What is the main role of back office staff?

Options:

A.

To confirm the accuracy of counterparties' mailing addresses

B.

To inform the central bank when a country limit is higher than a fixed level

C.

To ensure that trades are confirmed and settled correctly in accord with best market practice recommendations

D.

To be in constant contact with the counterparties' front office staff

Question 27

Rising interest rates will cause:

Options:

A.

A higher volume on settlement

B.

Government borrowing to fall

C.

Bond prices to rise in response to higher interest rates

D.

Bond prices to fall

Question 28

If a dealer buys 1,000,000,00 EUR/USD at 1.3522, 2,000,000,00 EUR/USD at 1.3532, 3,000,000.00 EUR/USD at 1.3575 and sells 1,000,000,00 EUR/USD at 1.3585, what position is he left with?

Options:

A.

Long 5,000,000.00 EUR/USD at 1.3552

B.

Long 5,000,000.00 EUR/USD at 1.3545

C.

Short 5,000,000.00 EUR/USD at 1.3585

D.

Short 5,000,000.00 EUR/USD at 1.3545

Question 29

A "turn of the month" deposit would be a transaction:

Options:

A.

Value first business day of a month against last business day of the same month

B.

Value last business day of a month against first business day of the next month

C.

Value last business day of a month against last business day of the following month

D.

Value first business day of a month against first business day of the following month

Question 30

A UK Treasury Bill has 91 days to maturity. Its redemption value is GBP 100,000.00, What is the purchase price of this bill using a discount rate of 1,25% per annum?

Options:

A.

GBP 98,750.00

B.

GBP 100,000.00

C.

GBP 99,688.36

D.

GBP 99,684.03

Question 31

If today's spot date were Friday, 27 February, what would the normal one-month deposit maturity date be? (Assume there are no bank holidays)

Options:

A.

28 March

B.

29 March

C.

30 March

D.

31 March

Question 32

Open position and exchange risk management by currency belongs to which treasury system module?

Options:

A.

The derivatives dealing and processing module

B.

Standard back office features

C.

The FX spot and forward dealing input and processing module

D.

The securities trading and processing module

Question 33

What is a straddle?

Options:

A.

A level of risk on derivatives

B.

A type of option

C.

A derivative benchmark

D.

A derivative strategy using options

Question 34

If the EUR/USD is quoted to you as 1.3550-53, what does this price represent?

Options:

A.

EUR per USD

B.

USD per EUR

C.

The interest rate differential between EUR and USD

D.

The fact that one USD is worth more than one EUR

Question 35

What does LIBOR stand for?

Options:

A.

London Interbank Overseas Rate

B.

London Interbank Offered Rate

C.

Lending Interbank Offered Rate

D.

Leading Interbank Offered Rate

Question 36

A bank in Luxembourg has dealt an interbank money market trade with a Canadian bank and must pay USD. Whom does the Luxembourg bank you instruct for payment?

Options:

A.

Its correspondent bank in Canada

B.

Its national central bank

C.

The European Central Bank

D.

Its correspondent bank in the USA

Question 37

In trading, which is the most often used deal capture system?

Options:

A.

An internet-based input system

B.

A SWIFT-based input system

C.

A TARGET-based input system

D.

A screen-based input system

Question 38

If today is Wednesday, what are the value days of a spot next money market deal assuming there are no intervening bank holidays?

Options:

A.

Wednesday against Thursday

B.

Thursday against Friday

C.

Friday against Monday

D.

Monday against Tuesday

Question 39

In what order would the currencies of the major currency pairs generally be quoted in forex?

Options:

A.

EUR/USD, USD/JPY, USD/GBP, USD/CHF, USD/CAD, USD/AUD

B.

EUR/USD, USD/JPY, GBP/USD, USD/CHF, USD/CAD, AUD/USD

C.

EUR/USD, USD/JPY, GBP/USD, USD/CHF, CAD/USD, AUD/USD

D.

EUR/USD, USD/JPY, GBP/USD, USD/CHF, CAD/USD, USD/AUD

Question 40

The owner of a convertible bond:

Options:

A.

Has the obligation to convert his bond

B.

Has the right to convert his bond

C.

Must wait for the decision of the issuer if he wants to convert his bond

D.

Has the obligation to convert the coupon into a variable or a fixed rate

Question 41

When is the settlement amount of a FRA normally payable?

Options:

A.

At the beginning of the forward period

B.

On the trade date

C.

On the maturity (final) date

D.

At any time before the contracts maturity date

Question 42

What are the major objectives of the Model Code?

Options:

A.

To promote the Basel agreements and their objective to enhance understanding of key supervisory issues and improve the quality of banking supervision worldwide

B.

To promote international cooperation to prevent the use of the financial system for the purpose of money laundering

C.

To promote domestic financial regulations

D.

To promote a high level of ethical and professional conduct in order to create an efficient market

Question 43

If a GBP/CHF trade is made on the spot foreign exchange market on Tuesday, when will the two currencies be settled if tomorrow (Wednesday) is a bank holiday in the U.K.?

Options:

A.

Both currencies will be settled value date Friday

B.

GBP will be settled value Friday, CHF value Thursday

C.

Both currencies will be settled value Thursday

D.

GBP will be settled value today, CHF will be settled value Friday

Question 44

The fixing of a EUR FRA usually takes place:

Options:

A.

At the end of the FRA period

B.

When the deal is done

C.

Two business days before the start date of the FRA period

D.

On the third Monday of the contract month

Question 45

What is the meaning of settlement (Herstatt) risk?

Options:

A.

The risk a payment order will not be processed due to a power failure in which the disaster recovery back-up system fails

B.

Any amount that is due to be received under a contract should be regarded as a settlement risk until final confirmation of receipt is confirmed

C.

The risk that settlement arrangements will be made with the wrong counterparty

D.

The risk of aborting settlement procedures due to the unavailability of back office staff

Question 46

What is the Bank Identifier Code (BIC)?

Options:

A.

A worldwide unique identification code for both financial and non-financial institutions

B.

A unique identification code for European financial institutions

C.

The short form of the IBAN-code

D.

A unique access-code to SWIFT-platforms

Question 47

Which of the following is a US payment system?

Options:

A.

CHAPS

B.

CHIPS

C.

BOJ-NET

D.

TARGET

Question 48

Which of the following is a description of a long OTC foreign currency option position?

Options:

A.

The obligation to buy one currency and to sell another currency at a predetermined price

B.

An option that uses 1MM maturities

C.

An option dealt directly between two counterparties

D.

An interest rate protection instrument dealt on an exchange trading floor

Question 49

What guidelines does the Model Code provide concerning the practice in the interbank market of only one party to a transaction sending a written confirmation?

Options:

A.

It is only permissible in derivatives markets

B.

Both parties of a trade should send confirmations

C.

It is recommended

D.

It is only permissible when dealing value today

Question 50

As far as interest rate swaps are concerned, which risk is reduced or eliminated when a close-out netting agreement is in place?

Options:

A.

Replacement risk

B.

Volatility risk

C.

Commercial risk

D.

Market risk is reduced to a predefined amount

Question 51

A counterparty pays your bank USD 10,000,000.00 5 days late requiring you to pay overdraft charges of 8% p.a. What expenses would you claim from the counterparty in GBP at an exchange rate of 1.6000?

Options:

A.

GBP 6,944.44

B.

GBP 7,944.44

C.

GBP 17,777.77

D.

GBP 6,849.32

Question 52

An American-style option is:

Options:

A.

An option traded in USD

B.

An option which can be exercised at any time between the purchase and expiration date

C.

An option based on any US dollar instrument

D.

An option which can be exercised only on its expiry date

Question 53

If a bank incurs interest charges from having overdrawn an account due to a late payment from a counterparty:

Options:

A.

The bank is entitled to seek reimbursement from the party responsible for the late payment.

B.

Nothing can be done to compensate the bank for the interest charges it incurs.

C.

The bank should file a complaint with ACI’s Committee for Professionalism.

D.

The bank will automatically be reimbursed by the party responsible for the late payment.

Question 54

Your bank purchases a FRA at 0.75% in USD. Under what conditions will you pay a cash settlement?

Options:

A.

If EURIBOR is higher than 0.75%

B.

If EURIBOR is lower than 0.75%

C.

If LIBOR is lower than 0.75%

D.

If LIBOR is higher than 0.75%

Question 55

If the maturity of a straight 3-month deposit fails on a Saturday, which is also the last day of the month, what will be the final end date of this transaction?

Options:

A.

The following Monday

B.

Saturday

C.

The last business day of the month

D.

The first business day of the following month

Question 56

Which of the following is an example of market risk?

Options:

A.

Counterparty risk

B.

Country risk

C.

Settlement risk

D.

Stock price risk

Question 57

What is the advantage of instantaneous matching?

Options:

A.

It gives the counterparty more time to cancel a deal

B.

It reduces errors and costs

C.

It gives front-office staff more time to process the payment orders

D.

It reduces the number of trades

Demo: 57 questions
Total 386 questions