Question 1

What is an essential feature of nostro reconciliations?

Options :

A : That a daily nostro reconciliation report is sent out to the correspondent bank

B : That they are performed before the next business day

C : That they are performed in a timely and efficient way

D : That open items are booked on an internal account

Answer: C

Question 2

Which of the following is an example of a foreign currency nostro account from the perspective of a bank in London?

Options :

A : a GBP account with another UK bank

B : a CHF account with a bank in Zurich

C : a CHF account that it holds for a customer in London

D : a GBP account that it holds for a bank in New York

Answer: B

Question 3

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 4

Which risk factors fall under counterparty risk?

Options :

A : Currency risk, interest rate risk and swap risk

B : Settlement risk, delivery risk and replacement cost

C : Operational risk

D : Settlement risk and swap risk

Answer: B

Question 5

What is the meaning of "good value" in FX?

Options :

A : the funds must be in the nostro account of the beneficiary institution by close of business on the agreed upon value date

B : the funds must be in the nostro account of the beneficiary institution by the beginning of the next business day

C : the value of interest to be received is higher than the value of fees to be paid

D : the funds must be in the internal cash account of the clearing house by close of business on the agreed upon value date

Answer: A

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