Question 1

Dealers are authorized to deal:

Options :

A : anywhere, even away from their own dealing premises

B : after-hours, but only from their private residence

C : after-hours, but only if listed as such by management

D : away from their broker-s dealing premises

Answer: C

Question 2

What is the effect of netting?

Options :

A : To reduce the size of the balance sheet

B : To reduce the number and size of payments and transfers

C : All of the above

D : To reduce exposure to credit risk

Answer: C

Question 3

Which one of the formulae below is correct?

Options :

A : Long a FRN + pay floating on a swap = long a synthetic straight bond.

B : Long a FRN + pay fixed on a swap = long a synthetic straight bond

C : Long a FRN + pay floating on a swap = short a synthetic straight bond

D : Long a FRN + receive floating on a swap = long a synthetic straight bond

Answer: A

Question 4

If the yield curve is upward sloping, a bank would not profit from:

Options :

A : borrowing long and lending short

B : borrowing short and lending long

C : paying a higher rate on deposits than the market

D : increasing the banks leverage

Answer: A

Question 5

When a broker needs to switch a name this should be done:

Options :

A : only after approval by the broker-s senior management

B : only if the switching transaction is done at the current market rate

C : only after consultation with the local regulator

D : only provided that such transactions are identified as switching transactions

Answer: D

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