Question 1

Some large losses occurred in the past from derivatives trading because:

Options :

A : Derivatives brokers significantly over-charged their clients

B : Institutions did not understand the leverage of their transactions

C : Money managers engaged in intra-day trading

D : Money managers embezzled money using derivatives

Answer: B

Question 2

The calculation method of the foreign exchange rates for value today or for value tomorrow outrights:

Options :

A : is based on the interest rate differential between the two currencies

B : is based on the same calculation method as the forward rate agreements (FRA)

C : is based on linear interpolation

D : is based on the calculation of compound interest rates

Answer: A

Question 3

Which one of the following best describes the correct order of the settlements process?

Options :

A : netting, trade entry, settlement, confirmation, nostro reconciliation

B : confirmation, netting, trade entry, settlement, nostro reconciliation

C : trade entry, confirmation, netting, settlement, nostro reconciliation

D : trade entry, confirmation, settlement, nostro reconciliation, netting

Answer: C

Question 4

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 5

On the sale of a CD, the seller

Options :

A : receives a lower price than he originally paid

B : receives a higher price than he originally paid

C : receives a price calculated using the price originally paid

D : there is not enough information to know how much the seller receives

Answer: D

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