The exercise price in an option contract is:

A.

The price of the underlying instrument at the time of the transaction

B.

The price at which the transaction on the underlying instrument will be carried out if and
when the option is exercised

C.

The price the buyer of the option pays to the seller when entering into the options contract

D.

The price at which the two counterparties can close-out their position

A 3-month (91-day) deposit of AUD 25,000,000.00 is made at 3.25%. At maturity, it is rolled over three times at 3.55% for 90 days, 4.15% for 91 days and 4.19% for 89 days. At the end of 12 months, how much is repaid (principal plus interest)?

A.

AUD 25,962,011.00

B.

AUD 25,959,714.91

C.

AUD 25,948,878.47

D.

AUD 25,948,648.82

Are the forward points significantly affected by changes in the spot rate?

A.

Never

B.

For very large movements and longer terms

C.

Always

D.

Spot is the principal influence

What is the meaning of “under reference” in the terminology of trading?

A.

a term the quoting dealer uses to caution the receiver of the quote that the price may have to be re-quoted at the receiver’s risk

B.

the qualification that the rate quoted in the market may no longer be valid and requires confirmation before any trades can be agreed upon

C.

the statement that the rates quoted by the broker are for indication only

D.

an acknowledgement by the dealer receiving the quote that the rate may have to be requoted at the receiver’s risk

You have taken 3-month (92 days) deposits of CAD 12,000,000.00 at 1.10% and CAD
6,000,000.00 at 1.04%. Minutes later, you quote 3-month CAD 1.09-14% to another bank.
The other dealer takes the CAD 18,000,000.00 at your quoted price. What is your profit or
loss on this deal?

A.

CAD 2,722.19

B.

CAD 460.00

C.

CAD 3,220.00

D.

CAD 2,760.00

What happens when a coupon is paid on bond collateral during the term of a classic repo? 

A.

Nothing

B.

A margin call is triggered on the seller

C.

A manufactured payment is made to the seller

D.

Equivalent value plus reinvestment income is deducted from the repurchase price

A broker offers a dealer a financial incentive in the form of a price reduction to the previously agreed brokerage arrangements between the firms.

A.

This is considered as a normal discount for bulk business.

B.

The offer should be agreed only by directors or senior management on each side and should be recorded in writing.

C.

The offer should be expressly approved by both the individuals concerned and clearly recorded in writing.

D.

The Model Code strongly discourages such practices

In GBP/CHF, you are quoted the following prices by four different banks. You are a buyer of CHF. Which is the best quote for you?

A.

1.4340

B.

1.4343

C.

1.4337

D.

1.4335

Which of the following methods is a means of credit risk mitigation?

A.

entering into a plain vanilla IRS

B.

entering into collateral agreements

C.

hedging a portfolio’s USD exposure

D.

investing only in sizeable and liquid markets

Which one of the following statements correctly describes the increased capital ratios that will come into effect under Basel III?

A.

A. minimum tier 1 capital of 4.5% and minimum total capital plus a conservation buffer of 10.5%

B.

B. minimum tier 1 capital of 6% and minimum total capital including conservation buffer of 8%

C.

C. minimum tier 1 capital of 4% and minimum total capital including conservation buffer of 10.5%

D.

D. minimum tier 1 capital of 6% and minimum total capital including conservation buffer of 10.5%