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

You will pay a cash settlement to the counterparty

You will receive the cash settlement

There is no cash settlement pending

There is insufficient information to make a determination

The risk that a bank makes its payment but does not receive a return payment in the exchanged currency

The risk that exchange rates move against a bank’s position

The risk a counterparty defaults on a contract and a bank has to replace that contract at adverse rates

The risk of a disaster that disables a bank’s trading floor

Thursday, 27 June

Friday, 28 June

Saturday, 29 June

Monday, 1 July

The loss of the entire principal amount of the deal

The “replacement risk”, also known as “replacement-cost risk”

The loss of the negative mark-to-market value of the deal

As the deal is in the future, there is no impact on P&L

The sum of all the fixed and floating rate payments

The net difference between fixed and floating rate payments

The amount on which floating and fixed interest payments are calculated

The amount at which the two counterparties can close-out their transaction

The FX spot and forward dealing input and processing module

Standard back office features

The money market dealing and processing module

The securities trading and processing module

Market makers must ensure that their prices are adequate and appropriate for their trading style

Prices must be posted with the clear intent to be tradable

There need not be a clear and genuine intent to trade on each posted price

Prices quoted should be firm unless clearly labeled as indicative

Standard settlement instructions

Netting agreement

Terms of engagement

Master agreement

Keep the information to yourself

Tell your supervisor

Tell your work-mates but not your supervisor

Talk to the colleague in question

The futures exchange itself

The clearing house of the futures exchange

Your broker

The ISDA

The settlement amount is the sum of the redemption value plus all coupons paid by the issuer.

If the yield and the coupon are exactly the same, the settlement amount and the face value will be identical.

The settlement amount is always calculated using the redemption price.

On a coupon date, if the bond quotes at par, the settlement amount and the face value will be identical.

To simplify domestic payments

To handle interbank liquidity more efficiently

To accelerate cross-border payments

To minimize settlement risks

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

A unique identification code for European financial institutions

The short form of the IBAN-code

A unique access-code to SWIFT-platforms

1%

0.01%

0.1%

0.0001%

A report that starts with the net open position and runs off day by day to arrive at a zero balance

A report of outstanding securities transactions

A report that begins with a zero balance and at the end of the day, lists all FX deals by maturity

A list of the maturity of all deals per value date

Short EUR 2,450,000.00 at 1.3528

Long EUR 2,450,000.00 at 1.3528

Long EUR 2,000,000.00 at 1.3532

Long EUR 2,450,000.00 at 1.3525

Market and loss

Market and money

Market and credit

Market and unavailability

The risk that there is no liquid market at the exchange to close a trade

The risk that the present value of a trade will be negative one day prior to value date

The risk that an OTC-derivative product cannot be closed before maturity

The loss incurred if the counterparty defaults

Always paid in case of an early redemption

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

Always paid at final maturity

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

Cash-settled currency forward between two counterparties

Exchange-traded, cash-settled currency forward

Over-the-counter, cash-settled spot FX

Principal-settled currency forward between two counterparties

NZD 5,000,000.00

NZD 5,076,205.48

NZD 5,076,250.00

NZD 5,075,000.00

Liquidity, market and counterparty risk

Only a funding risk

Only a liquidity and a funding risk

Settlement, funding and liquidity risk

Is responsible only for the settlement of those securities

Is responsible only for safeguarding the securities that you have on your account

Is responsible for safeguarding both the securities that you have on your account and their settlement

Is never responsible for safeguarding securities

Is higher than its face value if, and only if, its coupon rate is higher than its yield to maturity on the coupon date

Is higher than its face value if, and only if, its coupon rate is lower than its yield to maturity on the coupon date

Is lower than its face value if, and only if, its coupon rate is higher than its yield to maturity on the coupon date

Is always higher than its face value

Continuous Linked Settlement

Cash Linked Settlement

Credit Linked Securities

Counterparty Limit System

An instrument for managing interest rate risk

An instrument for managing credit rate risk

An instrument that never impacts P/L

The forward leg of an FX swap

Largely the interest rate differential between two currencies

The price of an option

The expectation of an appreciation of a currency

The volatility of a currency

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.

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.

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.

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.

Are commonly used to register off-balance sheet movements

Are used to book internal tax related items

Generally mirror the nostro statements

Are reserved for audit and compliance purposes only

EUR 620.83

EUR 868.06

EUR 968.06

EUR 2,183.33

A report describing operational risks, the most significant incidents and corrective plans of action should be established on a quarterly basis.

It is good practice to collect and analyze incidents and near-misses so as to set up preventive action plans for the future.

Every time a report describing operational risks is produced, it should be provided to senior management.

Whenever possible action plans should be put in place that mitigate operational risks that have been identified.

The parties may agree verbally not to exchange confirmations

A party can unilaterally eliminate confirmations for these trades

It is left to the discretion of each party to send a confirmation or not

The parties may agree in writing not to exchange confirmations

Same day value payment in JPY

Same day value payment in EUR

Value tomorrow payment in AUD

Value tomorrow payment in NZD

SAR, CAD, SFR, SGD

CAD, CHF, SGD, SAR

SFR, SGD, ZAR, CAD

SGD, ZAR, CAD, CHF

Reverse and cash trade

Cash and carry

Reverse cash and carry

Offset

A level of risk on derivatives

A type of option

A derivative benchmark

A derivative strategy using options

Writing the deal ticket

Arranging the delivery of currency payments

Checking the availability of counterparty limits

Agreeing on the FX rate with the counterparty's middle office

Pay a cash settlement in USD

Pay a cash settlement in CNY

Receive a cash settlement in USD

Receive a cash settlement in CNY

The front office

The back office

The middle office

The compliance department

London Interbank Overseas Rate

London Interbank Offered Rate

Lending Interbank Offered Rate

Leading Interbank Offered Rate

Operations

Compliance

Internal Audit

Archives

Both currencies will be settled value date Friday

GBP will be settled value Friday, CHF value Thursday

Both currencies will be settled value Thursday

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

Buy an IRS

Sell an IRS

Buy a FRA

Do nothing because the bond coupon is already a fixed rate

At the end of the FRA period

When the deal is done

Two business days before the start date of the FRA period

On the third Monday of the contract month

Money market taking and placing, sale and repurchase agreements (repos)

Currency options and currency futures

Spot FX transactions

Caps, floors, collars, and interest rate futures

A convention whereby a transaction is dated the following business day, unless that day extends into the next month, in which case it is dated the preceding business day

A convention whereby a transaction is dated the following business day

A convention whereby a transaction is dated the preceding business day

A convention whereby a transaction is dated the next business day that corresponds to the same numerical day of the month as the preceding payment

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

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

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

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

International Swaps and Derivatives Association

Integrated System Data Association

International Swap Derivatives Agreement

International Swaps Dealer Association

Flat

Negative or inverse

Positive

Neutral

Amend the rate yourself

Ask the settlements clerk to amend the rate for you

Ask the dealer to manually amend the rate on the ticket and then pass it to the settlements clerk to amend

Make no amendment

TARGET2

Euro Link System (ELS)

Euroclear

Clearstream

For a foreign exchange confirmation

For multiple general financial institution transfers

For a general financial institution transfer

For a customer transfer

Keep the ticket in “stand-by mode” until a matching confirmation is received

Immediately refer the ticket to the compliance officer

Refer the ticket to the FX dealer for further details

Refer the ticket to the nostro account manager for further instructions

Amounts higher than USD 10,000,000.00 or the equivalent in other currencies

Amounts higher than USD 1,000,000.00 or the equivalent in other currencies

Any amount unless dealt via a broker

Any amount by any counter party

The most recently processed deal

The counterparties in your own country

The counterparty which claims first

Those positions with the highest loss potential

Matching should be performed by no later than the day after trading day

Matching processes are manual and may not be automated

Matching should be performed as soon as possible upon receipt of the confirmation

Confirmation matching should be a post-settlement workflow activity

The strike price of a Bermudan option is an average.

A Bermudan option can be exercised only on a few specific dates prior to expiration.

A Bermudan option can be exercised at any time before its maturity date.

A Bermudan option can be exercised only at maturity.