Question 1

Which one of the following bonds uses variable rates?

Options :

A : bond warrants

B : reverse convertibles

C : zero coupons

D : FRN Minima's

Answer: D

Question 2

A Certificate of Deposit (CD) was issued at 2.50% which you now purchase at 1.75%. What would you expect to pay?

Options :

A : The original face value of the CD

B : More than the originally paid value

C : Less than the originally paid value

D : There is too little information to decide

Answer: B

Question 3

What is a bank required to do when entering into a new business relationship with a natural person?

Options :

A : inform the central bank of their country

B : no action is required

C : verify the identity of the person

D : inform the compliance department

Answer: C

Question 4

Internationally, USD FRAs are settled with reference to which market rate?

Options :

A : LIBOR

B : FEDFUNDS

C : LIBID

D : EURIBOR

Answer: A

Question 5

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

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