ERI eed ftnrernatioa Notes : luo rorma needed, This sterling cP rate 48 already a yield LIBOR + 0.30 = 4.30 p.c. lomsriow 3 : TOPTC: Cash Money markets Calculations lou BRE CURRENTLY LONG 3 MONTHS (90 DAYS) GOP 5 IOLLTON CASI AT 4.00 PC. YOU DUY a DP 5 MMLLTON loRKeIMAL MATURITY 100 DAYS WITH 90 DAYS 70 RUM AND PAY GHP 5,064,027.21 TO MOLD IT TO MATURITY. Tt 90 pavs? Option A: GBP 2,901.01 Profit Option B: GBP 2,901.01 Loss Option ¢: GBP 49,315.07 Loss Option D: GBP 52,296.08 Profit lvou selected B which wae INCORRECT. Inthe correct option was A: GHP 2,981.01 Profit lnfornation Notes : IPrin + int at 4.75 p.c. receivable on the @ at maturity 5,117,123.29 less price paid 5,064,827.21 lon cash position = Profit GBP 2,981.01. lourstion 4 : TOPIC: Cash Money markets Calculations IF YOU BUY A USD 1 NULLION 90 DAY BILL DISCOUNTED AT 4.15 P.C., WHAT IS THE TRUE YIELD? Option A: 4.1250 Option B: 4.1875 Option Cc: 4.1500 Option D: 4.1935 lvou selected the CORRECT option - D: 4.1935 linfornation Notes : lHere you must use the true yield formula on the ACI Formilae sheet to calculate the true yield as luestio 5 : TOPIC: Cash Money markets Calculations [GLGREATED EDGES PLC ISSUES 1 MONTH (30 DAYS) CP IN LONDON IN THE AMOUNT OF GBP 1,000,000.00 aT lropay AT 4.00 P.c, YHAE IS THE CP WORTH AT MATURITY? Option A: GBP 1,003,287. 67 Option B: GBP 1,003,493.15 Option C: GBP 1,000,000..00 Option D: GBP 1,003,541. 67ERINser lyou selected & which was INCORRECT. |nne correct option was C: GBP 1,000,000.00 linformation Notes : lcP in London is issued at a discount hy reference to a yield rate (typically LIBOR) and redeemed a 1,000,000. 00. lomssrion ¢ : TOPIC: Cash Money markets Calculations lr vou PRY USD 15,097,159.94 FOR 4 SECONDARY YGRKET cD ISSUED BY DUNCAN BANK LONDON ORIGINALLY TSS lense oF 2.00 p.c. FOR 1€0 DAYS AMD THEN YOU SELL THE CD WITH 40 DAYS REMAINING TO MATURETY AT A YI jwinr 1S THE GROSS PROFIT ON THES cb FOR THE PERIOD? Option A: USD 32,527.78 option B: USD 29,437.80 Option ¢: USD 34,487.36 Option D: USD 32, 666.95 lvou selected B which was THCORRECT. IThe correct option was D: USD 32,666.96 linfornation Notes : lusing the ACI Secondary CD formila we can calculate the sale proceeds received by you are USD 15,1 lprice of USD 15, 097,159.94 = USD 32,665.96. luestio 7 : TOPIC: Cash Money markets Calculations [IF Usp BAS ARE BEING QUOTED IN THE TWO MOWIMS (61 DAYS) AT 1 3/4 - 17/8 P.C. WHAT PRICE WOULD YOU \VALUE OF USD 7 MILLION? Option A: USD 6,979,243.06 Option B: USD 6,978,065.07 Option C: USD 6,977,760.42 Option D: USD 6,979,527.40 lyou selected the CORRECT option - A: USD 6,979,243.06 linfornation Notes : lyou would pay the market maker USD 6,979,243. 06, calculated on his offer of Bills at 13/4 p.c. an lquoted as a rate of discount forma in the ACI Formilae sheet to calculate the price.ERINser fousstion : Torrc: Cash Money markets Calculations lIr GBP ELIGIOLE BILLS ARE FEING QUOTED IN THE THREE MONTHS (92 DAYS) AI 6 7/6 P.C. WAT IS THE FOV option A: 6.88 p. option B: 6.89 p. Option C: 6.59 ps option D: 7.00 p. lyou selected the CORRECT option - D: 7.00 p.c. linfornation Notes lueing the true yield formula in the ACI Formulae ehest to calculate the equivalent yield and remem lbasio tho equivalent truo yield rate is 6.9962 p.c. rounded to 7.00 p.c. lamsriow 9 + ToPTC: Cash Money markets Calculations lern.rme HTL. BROKERS LTMTTED LONDON QUOTE YOU 4.00 - 3 2/8 P.c. TH 3 MONTHS GRP SECONDARY CDS. YOU lyou ‘Pur THE RROKER OW’ AT THES LEVEL. WMAT TS THE ROKER’S MEW PRICE 10 THE MARKET? Option A: 4.00 - 3.875 Option B: 3.9375 - 3.875 Option C: 4.00 - 3.9375 Option D: 3.9375 choice price lvou selected the CORRECT option - C: 4.00 - 3.9375 linfornation Notes : lin the secondary CD market in London the price is quoted Bid - Offer for the securities, therefore Ine is currently quoting the new price will be 4.00 - 3.9375 (3 15/16 p.c.). lusrion 19 : TOPIC: Cash Yoney markets Calculations [IF GBP ELIGIELE BILLS ARE HEING QUOTED IM THE THREE MONTHS (90 DAYS) AT 4 1/8 P.C. WAT IS THE FOU Option A: 4.21 p.c. Option B: 4.17 p.c. Option C: 4.13 p.c. Option D: 4.07 p.c. lvou selected the CORRECT option - B: 4.17 p.c. linfornation Notes : lusing the true yield formula in the ACI Formulae sheet to calculate the equivalent yield and renemERI eed ftnrernatioa Notes : lusing tne true yield formula in the ACI Formlae sheet to calculate the equivalent yield and renest lbasis tne equivalent true yleld rate 1s 4.167 p.c. rounded to 4.47 p.c. lomsriow 11 : TOPIC: Cash Honey markets Calculations la 90-DAY C> WETK A FACE YALUE OF USD 1 MILLION WAS ISSUED BEARING AN INTEREST RATE OF 6.73%, AND 9 lsecoNDARY MARKET AT A YIELD OF 5.92%. IF YOU MOLD ET TO MATURITY, WAT IS YOUR MOLDING PERIOD RETU Option A: 5.92% Option B: Impossible to say Option ¢: 6.73% Option D: 0.98% lvou selected C which wae INCORRECT. Ithe correct option was R: 5.92% ltnfornation Notes : Ithe price paid reflects the rate to maturity you will achieve on the CD, therefore the correct. ans bc lousstion 12 : TOPIC: Cash Yoney markets Calculations IwoU CALL SCHOLES BARK WHO QUOTES YOU 1.875 - 2.00 FOR 1 PONTH USD AND YOU LEND USD 10 MILTON FoR haruerry? Option A: USD 16,145.83 Option B: USD 15,924.65 Option C: USD 19, 016,145.83 Option D: USD 16,150.00 lvou selected the CORRECT option ~ A: USD 16,145.83, linfornation Notes : lusing the simple interest formula the interest due on a deposit of USD 10 million for 31 days at 1 luesrion 13 : TOPIC: Cash Honey markets Calculations ITF YOU PAY USD 15,097,159.94 FOR 4 SECONDARY MARKET CD ISSUED BY STRAW BANK LONDON ORIGINALLY TSSU lor 2.00 p.c. FOR 180 DAYS WHEN IT HAD 90 DAYS REMAINING TO MATURITY (YIELDING 1.40 P.C.) RMD THER larurrry AT % YIELD OF 1.20 P.C. IGRORING WY FUNDING COST WHAT IS THE HOLDING PERIOD RETURN OW TH Option A: 1.20 p.c. option B: 1.40 p.c.ERINser option C: 1.779 p.c. option D: 1.557 p.c. lvou selected A which was THCORRECT. lthe correct option was D: 1.557 p.c. linfornation Notes : lusing the ACI Secondary CD formila we can calculate the sale proceeds xecedred hy you ate USD 15,1 lprice of Usp 15,097,159.94 — USD 32,665.96 which has been caraed over the 50 day holding period (9 lnanipulatiny the eimple interest formula: R — IX 360 X 100 / (P XD). USD 22,666.96 X 36000 / (15 lomsriow 14 : TOPIC: Cach Yoney markets Calculations lvou ARE CURRENTLY LONG 3 MONTHS (90 DAYS) GBP 5 POLLTON CASH AT 4.00 P.C. YOU BUY 4 GBP 5 MNLLTON lorem. waTURTTY 120 DAYS WITH 98 DAYS 70 RUM IND PAY GHP 5, 064,827.91 TO HOLD TT TO MATURITY. THE Option &: 4.00 pc Option B: 4.25 pc Option C: 4.1875 p.c. Option D: 4.125 p.c. lvou selected the CORRECT option - C: 4.1875 p.c. linfornation Notes : lprin + int at 4.75 p.c. receivable on the @ at maturity 5,117,123.29 less price paid 5,064,827.21 l4.1875 pec. luesrion 15 : TOPIC: Cash Honey markets Calculations lHow muctt WOULD YOU FAY FOR A GBP 5,000,000 CD THAT HAS 180 DAYS TO RUN AND IS YIELDING 7.50 P.C.? | Ip.c. EOR 270 DAYS. Option A: GBP 5,090,250.99 Option B: GBP 5,012,432.58 Option C: GBP 5,001,526.87 Option D: GBP 4,998,725. 84 lyou selected B which was THCORRECT. ithe correct option was A: GBP 5,080,250. 99 linfornation Notes : lhe secondary @ formula on the ACK formula sheet is used to calculate the price to he paid (hereERI eed funrernatioa Notes : lrne secondary @ formula on the ACK forma sheet is used to calculate the price te he paid (ere laccrued imterest to date and Une current "Iigher" interest rate enviroment. lomsriow 16 : TOPIC: Cash Honey markets Calculations lear 15 Mm VALUE AT MATURITY OF 4 KEW 3-20NT (91-DRY) @ WITH A FACE VALUE OF USD 100 MILLION IS: Option A: USD 190,442,261.11 option B: USD 190,425,173. 61 option ¢: USD 190,422,222. 22 option D: USD 190,000,000. 00 lyou selected tho CORRECT option - A: USD 100,442,361. 11 ltnfornation Notes : linterest payable on the CD USD 100 million iseued at a coupon of 1.75 p.c. for 91 days = USD 442,3 1100 442,361.11. louestiow 17 : TOPIC: Cash Yoney markets Calculations [A 180 DAY USD T-BILL IS QUOTED AT 5.85 P.C. WHAT IS THE TRUE YIELD? Option A: 6.0189 Option B: 6.0397 Option Cc: 6.0102 Option D: 6.0263 lvou selected the CORRECT option - D: 6.0263 linfornation Notes : luse the true yield formula in the ACI Formulae sheet to calculate the effective yield (Act/360) as lusrion 18 : TOPIC: Cash Noney markets Calculations lvou Have PAID GBP 498,361.55 FOR 30 DAY UK T-BILLS (FACE VALUE GBP 500,000). WHAT IS THE EQUIVALEN Option A: 3.96 p.c. Option B: 4.06 p.c. Option C: 4.00 p.c. Option D: 4.03 p.c. lyou selected A which was THCORRECT. ithe correct option was C: 4.00 p.c.ERI eed funrernatioa Notes : lrne price = face value less discomt. The discount rate is calculated hy reversing Ue simple inte 365 X 100 divided hy PRICE X No. of days rounded to 4.00 p.c. lomsrio 19 : TOPIC: Cash Honey markets Calculations lou IRVESTED GOP 5 ROLLION IN A NEWLY ISSUED 3 MONTH C.D. AY 4.75 P.¢. TWD MONTHS AGO (90 DAY MONT lSecoNDARY MARKER. THE YIELD FOR THE REMAINING ONE MONTH PERLOD HAS FALLEN TO 4.50 ?.¢. IGNORING FU lox me > aN HOW mvcH Option A: GBP 58,561.64 Profit Option B: GBP 58,561.61 Loss Option C: GBP 39,920.81 Profit Option D: GBP 39,920.81 Loss lvou selected A which wae INCORRECT. Ithe correct eption was C: GAP 39,920.84 Profit ltnfornation Notes : lyou bought: the CD at issue for GBP 5 million and you now sell it at GBP 5,039,920.84 — a profit of loussrion 20 : TOPIC: Cash Noney markets Calculations lwtr Is THE SECONDARY MARKET VALUE OF A GBP 200 MILLION 4 P.C. ORIGINALLY ISSUED FOR 3 MONTHS ( [60 pays? Option A: GBP 200,789,781. 36 Option B: GBP 201,389,244. 64, Option C: GBP 201,320,272. 70 Option D: GBP 200,800,684. 72 lyou selected B which was THCORRECT. Ithe correct option was C: GBP 201,370,272.70 linfornation Notes : lusing the ACI Secondary CD formila a GBP 200 nillion CD originally issued for 91 days with a coupo lat 3.65 is worth GBP 201,370,272. 10 luesrion 21 : TOPIC: Cash Yoney markets Calculations lnr YOU ARE OFFERED 14 DAY ECP EUR 10 MILLION ISSUED BY FOOTBALL CRAZY PLC AT LIBOR + 25 BP WND LIB lpny FoR 17? Option A: EUR 9,990,420.15ERINser fusstion 21 : TOPIC: Cash Honey markets Calculations lnr YOu ARE OFFERED 14 DAY ECP EUR 10 MILLION ISSUED BY FOOTBALL CRAZY FLC AT LIBOR + 25 BP AND LIB len FoR 17? option R: FUR 9,990,420.15 Option B: FUR 9,909,905.56 Option C: FUR 9,909,916.30 Option D: FUR 9,909,463.17 lvou selected D which was THCORRECT. Ithe correct eption was C: FUR 9,989,916.98 linfornation Notes : Ire you are offered 14 day ECP FUR 10 million issued by Football Crazy ple at 2.75 p.c. (2.50 + 0.2 lpaving inctrunent quoted ac a true yield formila) GBP $,989,316.98. lamsriow 22 : TOPIC: Cash Noney markets Calculations lropay Is 21ST JANUARY 200X (A LEAP YEAR) AND YOU ARE TRADING IN LONDON. YOU HAVE BOUGHT A SECONDAR loRTGTNALLY ISSUED BY HIGH STREET BARK LONDOW AT ARATE OF 3.625 P.C. FOR 182 DAYS WITH A MATURITY | Ins 3 1/46 P.c. HOW MUCH WIE, YOu PAY? Option A: GBP 20,000,000.00 Option B: GBP 20, 188,487.36 Option C: GBP 20,366,527. 78 Option D: GBP 20, 186,602.38 lyou selected B which was THCORRECT. Ithe correct option was D: GBP 20, 186,602.38 linfornation Notes : lcm purchase yield 3.4375 for 92 days. Using the ACI Secondary CD formila we can calculate the pric laussr1on 23 : TOPIC: Cash Money markets Calculations lropay Is 21ST JANUARY 200X (A LEAP YEAR) AND YOU ARE TRADING IN LONDON. YOU HIVE BOUGHT A SECONDAR loRteINALLY ISSUED BY SUBUREAN BANK LONDON AT A RATE OF 3.625 P.C. FOR 182 DAYS WITH A MATURITY DAT 7446 P.c. WOT IS THIS CD WORTH AT MATURITY? Option A: GBP 20, 186,602.38 Option B: GBP 20,361,506.85 Option C: GBP 20,366,527. 78 Option D: GBP 20, 188,487.36ERINser lyou selected A which was INCORRECT. lmne correct option was B: GBP 20,361,506.85 linfornation Notes : loo coupon 3.625 for 102 days. Usiag the ACT maturity proceeds @ formula we can calculate the valu lamsrion 24 : TOPIC: Cash Honey markets Calculations lvou ane MOLDING EUR 20,000,000 30 DAY ECP AT A RATE OF 3.00 P.C. ISSUED BY INTERNATIONAL CAR HORE, lor mos nvestenr? Option A: FUR 19, 950,000.00 Option B: FUR 20,000,000.00 Option C: FUR 19, 950,124.69 Option D: FUR 20,050,000.00 lvou selected D which was THCORRECT Ithe correct eption was B: FUR 20, 000,000.00 ltnfornation Notes : lEcP is issued at a discount by reference to a yield, here 3.0 p.c. (act/360) the issue price was H |the paper is repaid at maturity therefore FUR 20,000,000.00. lussr1on 25 : TOPIC: Cash Honey markets Calculations lropay Is 21ST JANUARY 200X (A LEAP YEAR) AND YOU ARE TRADING IN LONDON. YOU HIVE SOLD 6 MONTHS ELI lwrurrry 21ST JULY 200X IN AN AMOUNT OF GBP 15,000,000.00 AT A DISCOUNT RATE CF 3 17/32 P.C. HOW Option A: GBP 14, 737,333.05 Option B: GBP 14, 733,544.52 Option C: GBP 14, 733,684.90 Option D: GBP 14, 735,881.85 lyou selected B which was THCORRECT. Ithe correct option was D: GBP 14, 735,881.85 linfornation Notes : 20x is a leap year so the No. of days is 182. Using the ACI discount-paying instruments quoted as |the price paid to you is GBP 14, 735,881.85. lauest1on 26 : TOPIC: Cash Honey markets CalculationsERI eed fusst1on zs : TUPIC: Cash Honey markets Calculations lyou HVE PURCHASED 90 DAY US DOLLAR BANKERS ACCEPTANCES FACE YALUE USD 10,000,000 AT A DISCOUNT RA [stamens 1s TRUE? Option A: you wil] pay USD 9,925,000.00 for the Bas Option D: you will pay USD 10,000,000.00 for the DAs Option C: you will pay UD 9,926,570.57 for the Das Option D; you will pay USD 9,925,550.91 for the Dis lyou selected the CORRECT option - A: you will pay USD 9,925,000.00 for the BAs lunfornation Notes : laankere Acceptances are noyotiable discount securities and you will pay lees than the USD 10,000,0 la diccount). Using the ACI formila (diecount -paying inctrunente quoted ac a rate of diecount formu lhe usp 9,925,000. lamsriow 27 : TOPIC: Cash Noney markets Calculations ITF YoU ARE OFFERED 30 DAY DOMESTIC US COMMERCTAL PAPER USD 12 MILLTOW ISSUED FY INTERNATIONAL CAR | [rs FIXED TODAY AT 2.00 P.C. HON? MUCH WILL YOU PaY FOR TT? Option A: USD 11,975,051.98 Option B: USD 11,975,000.00 Option C: USD 11,961,500.00 Option D: USD 11,970,164.38 lvou selected the CORRECT option - B: USD 11,975,000.00 linfornation Notes : Ite you are offered 30 day Domestic US Comercial Paper USD 12 million issued by International Car | lis fixed today at 2.00 p.c., using the ACI discount-paying instruments quoted as a rate of discou luesTion 28 : TOPIC: Cash Yoney markets Calculations las a MARKET USER, WHICH OF THE FOLLOWING PRICES WOULD YOU EXPECT T0 PAY FOR A GBP SECONDARY CD ORI [mount OF GBP 5 ROLLIN FOR 184 DAYS AT 6 1/2 P.C. WITH 92 DAYS TO RUN AND CURRENT 92 DAY INTEREST Option A: GBP 5,075,875.93 Option B: GBP 5,074,305.41 Option C: GBP 5,089,897.03 Option D: GBP 5,000,000..00 lyou selected C which was THCORRECT. ithe correct option was A: GBP 5,079,875.93ERI eed funrernatioa Notes : lusing tne secondary market CD fornula in the ACI Formilae sheet ant renembering that GBP is quoted loud pay as a market user would be GBP 5,076,876.93 lomsriow 29 : TOPIC: Cash Honey markets Calculations lropay xou BUY A EVR CD YIELDING 3.075 P.c. FOR $0 DAYS. TME CD MAS A FACE VALUE OF EUR 10 M0LLTOW lp.c, FOR 100 DAYS, WHAE IS THE MATURITY VALUE? Option A: FUR 10,099,009.40 Option B: FUR 10, 100,719.69 Option ¢: FUR 10,200,000.00 Option D: FUR 10, 102,135.56 lvou selected A which wae INCORRECT. lthe correct option war C: FUR 10,200,000.00 ltnfornation Notes : Ithe cb is worth its full face value of FUR 10 million plus interest for the issued period (180 day 110,000,000 plus 280,000.00 interest (simple interest. formila) lousrioN 30 : TOPIC: Cash Money markets Calculations lou Hav BOUGIT 3 MONTH UK T-BILLS AT AS DISCOUNT RATE OF 4 P.C. IF, ON THE SMM DAY, YOU SELL THE Option A: nake a loss of 12.5 hasis points? Option B: nake a profit of 3.875 p.c.? Option C: nake no profit or loss? Option D: nake a profit of 0.125 p.c.? lvou selected the CORRECT option - D: make a profit of 0.125 p.c.? linfornation Notes : [Buying T-Bills is Like making a loan and selling them in the seconlary market is like taking a dep lp.c. (ike lending the cash) and then sell them at 3.875 p.c. (Like borrowing the cash) you will m luestion 31 : TOPIC: Cash Noney markets Calculations WOU HIVE BOUGHT A 93 DAY US TREASURY BILL AT A RATE OF 5.63 P.C. WHAT IS THE TRUE YIELD? Option A: 5.713 Option B: 5.723 Option C: 5.623 Option D: 5.693ERINser fxou seiectea tne CORRECT optaon - A: 9.713 lnngornation Notes : luse the Discount to yield formula in the ACL Formulas shect te calculate the answer os 5.713 pic. lamssrion 32 : TOPIC: Cash Yoney markets Calculations lvour CUSTOMER STMPLEJET PLC ISSUE GBP 15,000,000 30 DAY UK COMRCTAL FAPER AI LIBOR + 75 BE. LIBO! jw, mmx RECEIVE ToDAL? Option A: GBP 14,911,438.36 Option B: GBP 15,000,000.00 Option C: GBP 14,910,859.10 Option D: GBP 14, 041,656.10 \vou selected & which was THCORRECT lthe correct eption was D: GBP 14, 941,666.10 ltnfornation Notes : luk cP is issued at a discount by reference to a yield, here LIBOR 4.00 plus 0.75 = 4.75 (act #365) lquoted as a true yield formula the issue price is GBP 14,941,666. 10. luesrion 33 : TOPIC: Cash Yoney markets Calculations lvou BUY USD DOMESTEC COMMERCIAL PAPER ISSUED BY CLINTON INVESTMENTS INC. USD 25,000,000 14 DAYS AT lcp2 Option A: USD 25,000,000.00 Option B: USD 24,916,943.52 Option C: USD 24,961, 111.11 Option D: USD 24,961,171.51 lvou selected the CORRECT option - C: USD 24, 961,111.11 linfornation Notes : lus Donestic CP is a Pure discount operation therefore using the ACE discount-paying instruments qu lpay USD 24, 961,111.11 (act/360). luestion 34 : TOPIC: Cash Honey markets Calculations lwtar WOULD YOU PAY FOR USD 1,000,000 30 DAY USD T-BILLS QUOTED AT A DISCOUNT RATE OF 1.85 P.C.? Option A: USD 1,000,000. 00ERINser fomstion 34 : TORIC: cash Honey markets Calculations lwtAT WOULD YOU PAY FOR USD 1,000,000 30 DAY USD T-BILLS QUOTED AT A DISCOUNT RATE OF 1.85 P.C.? Option R: USD 1,000,000. 00 option B: USD 998,460.31. Option C; USD 990,450.39 Option D: USD 990,479.35 lyou selected the CORRECT option - C: USD 998,458.33 linfornation Notee luse the aiscount-paying instrument quoted as a rate of discount formula on the ACI Formulae shoot, l1oes puro discount). lamsriow 35 : TOPIC: Cash Noney markets Calculations la PIECE OF 4 MONTH US DOMESTIC cP WITH A FACE VALUE OF USD 5 MTLLTOW TS QUOTED aT 4 RATE OF DISCOU nvesmisarr? Option A: USD 4,990,375.00 Option B: USD 4,894,500.00 Option C: USD 4,990,506. 85 Option D: USD 4,990,393.49 lvou selected the CORRECT option - A: USD 4,990,375.00 linfornation Notes : lusing the ACI discount-paying instrument quoted as a rate of discount formula the price paid is ca lursTion 36 : TOPIC: Cash Yoney markets Calculations [A 180 DAY USD T-BILL TS QUOTED AT 5.85 P.C. WHAT IS THE TRUE YIELD? Option A: 6.0189 Option B: 6.0263, Option C: 6.0397 Option D: 6.0102 lyou selected the CORRECT option - B: 6.0263 linfornation Notes : luse the true yield formula in the ACI Formulae sheet to calculate the effective yield as 6.0263 p..ERI eed fusst1on 37 : TOPIC: Cash Honey markets Calculations lyou HVE PURCHASED 30 DAY US DOMESTIC COMMERCIAL PAPER FACE VALUE USD 9 MILLION ISSUED BY FOOTBALL lOcALER BANK - TRANSNATIONAL BANK IN NEW YORK AT ARATE OF 1.5 P.C. WOH OF THE FOLLOWING STATIN option R: Une US CP will cost you USD 4, 993,835.62 Option B: the US CP will be worth USD 5, 006,250.00 at maturity Option C: the US CP will cost you USD 4,993, 757.00 Option D: the US CP will cost you USD 4,993, 750.00 lvou selected B which was THCORRECT. Inne corxect option was D: the US CP will cost you USD 4,999,750.00 linfornation Notee lus comercial Paper ic priced and traded on a pure diccount basic and will cost you USD 4,993,750. lac a rate of discount formula). It will be redeemed at face vale at maturity. lamsriow 32 : TOPIC: Cash Noney markets Calculations lHow mcr WOULD YOU FAY FOR A EUR 10,000,000 CD THAT HAS 90 DAYS TO RUN AND IS YIELDING 2.50 P.C.? | Ip.c. FOR 180 Da¥S. Option A: FUR 19, 049,012.93 Option B: FUR 10,068,365.44 Option C: FUR 19,000,000.00 Option D: FUR 19, 049,689.44 lvou selected the CORRECT option - D: EUR 10,049, 689.44 linfornation Notes : Ithe secondary @ formula on the ACI formula sheet is used to calculate the price to he paid (here laccrued interest to date and the current interest rate enviroment (yield to naturity). luesr1on 39 : TOPIC: Cash Honey markets Calculations low PRIDAY YOU LEND GBP 10,000,000 OVERNIGHT AT 7.5 P.C. THE INSTRUCTIONS ARE FOR REPAMMENT OF PRIN lwo, HE REPAID? Option A: GBP 19, 006,250.00 Option B: GBP 19, 002,054.79 Option C: GBP 19, 002,083.33 Option D: GBP 19, 006,154.38 lyou selected B which was TRCORRECT Inne correct option was D: GBP 10,006,164.38Tren ERIN eren ni funrernatioa Notes : lovernignt on a Friday is a three day transaction (weekend). 19,000,000 X 7.5 X 3 / 365 X 100 = 6,4 lonaay. lomsriow 40 : TOPIC: Cash Honey markets Calculations Ir vou Duy 2 MONTH (60 DAY) EURO COMMRCTAL PAPER ISSUED DENOMTNATED IH EUR DY FOLLIES FRANCAISES option A: 4.01 option B: 4.25 Option ¢: 4.03 Option D: 4.00 lvou selected C which was INCORRECT. Ithe correct option wae D: 4.00 ltnfornation Notes : lnm denominated Euro Comercial Paper is issued at a discount by reference to a yield (here 4.00 p lbrice paid. answer therefore 4.00 p.c. loussT1oN 41 : TOPIC: Cash Yoney markets Calculations la 95 DAY USD BANKERS ACCEPTANCE IS QUOTED AT A DISCOUNT RATE OF 6.85 P.C. WHAT TS THE TRUE YIELD? Option A: 6.976 Option B: 6.952 Option C: 6.85 Option D: 6.995 lvou selected the CORRECT option - A: 6.976 linfornation Notes : lthe true yield formila in the ACI formilae sheet must be used to calculate the required rate of 6. luestion 42 : TOPIC: Cash Noney markets Calculations las a IARKET NOMER, ON WATCH OF THE FOLLOWING PURCHASE PRICES WOULD YOU SEYTLE BILLS OF EXCHANGE WI |WCIM CURRENT 2 MONTHS (61 DAY) DISCOUNT MARKET RATES QUOTED 5 7/8 - 5 3/4 P.C.? Option A: GBP 1,980,780. 82 Option B: GBP 1,990,090. 28 Option C: GBP 1,990,513.89 Option D: GBP 1,980,363.01ERINser lyou selected & Which was INCURRECT. Inne correct option was D: GBP 1,980,363. 01 linformation Notes : lusing the discount formula in the ACE Formulae sheet te calculate the price to he paid for these B jon Actual / 965 day Basis Uhe price you wuld poy as a market moker would be GOP 1,900,960.01 lamssrion 43 : TOPIC: Cash Honey markets Calculations lvou TaVESTED USD 5 RELLION IM A MEWLY ISSUED 3 MONTH C.D. AT 5.50 P.¢. THO MONTHS ACO (20 DA MONT leon THE REXAINING ONE MONTH PERIOD HAS FHLLEM TO 5.20 P.C. WAT PROCEEDS WILL YOU RECEIVE FOR THIS Option A: USD 5,047,298.98 Option B: USD 5,063,750..00 Option C: USD 5,046,653. 75 Option D: USD 5,068, 750..00 lvou selected R which ws THCORRECT |The correct option was A: USD 5,047,298. 98 linfornation Notes : lusing the ACI Secondary CD formila if you sell the @ in the secondary market you vill receive pro lusTion 44 : TOPIC: Cash Money markets Calculations lropay Is 21ST JANUARY 200X (A LEAP YEAR) AND YOU ARE TRADING IN LONDON. YOU HAVE BOUGHT A SECONDAR loRtGINALLY ISSUED BY HIGH STREET BARK LONDON AT ARATE OF 3.625 P.C. FOR 182 DAYS WITH A MATURITY | GMrURITY AND HAVE PAID GBP 20,186,602.38. WHAT IS THIS CD WORTH AT MATURITY? Option A: GBP 20, 366,527.78 Option B: GBP 20,361,506.85 Option C: GBP 20, 188,487.36 Option D: GBP 20,000,000.00 lvou selected the CORRECT option - B: GBP 20,361,506.85 linfornation Notes : lhe cb is worth GBP 20,000,000 plus interest for the full 182 day period at 3.625 p.c. a total of | lusrion 45 : TOPIC: Cash Noney markets Calculations liar 1S THE TRUE YIELD OF THUS USD TREASURY BILL: FACE VALUE VSD 12,000,000,00, DISCOUNE RATE: 1.3ERINser fomstion 49 : TOPIC: Cash Honey markets Calculations liar XS THE TRUE YEELD OF THUS USD TREASURY BILL: FACE VALUE VSD 12,000,000,00, DISCOUNE RATE: 1.3 option R: 1.3783, option B: 1.3725 Option ¢: 1.756 Option D: 1.375 lyou selected the CORRECT option - A: 1.3785 linfornation Notes : lueing the ACI fornwla we can calovlate the true yield ae 1.3785 p.c. lamsriow 46 : TOPIC: Cach Yoney markets Calculations [nr Yow ARE OFFERED 21 DAY UK STERLING COMMRCTAL PAPER GHP 15 WILLOW ISSUED EY THVERMAPTONGL CAR | lar 2.25 P.e. Mow mci WILL. vou PAY FoR 11? Option A: GBP 14, 075,051.98 Option B: GBP 14,961,500.00 Option C: GBP 14,970,164.38 Option D: GBP 14, 968,556.01 lvou selected the CORRECT option - D: GBP 14,968,566.01 linfornation Notes : Ite you are offered 21 day UK Sterling Comercial Paper GEP 15 million issued by International Car | jusing the ACI discount-paying instruments quoted as a trve yield formula you will pay GP 14,968, luestion 47 : TOPIC: Cash Noney markets Calculations |CCrEWATER IWVESTENTS INC. ISSUES 1 MONTH (30 DAYS) US DOMESTIC CP IN HEN YORK IN THE AMOUNT OF U lwoRnH AY 2aTURITY? Option A: GBP 25, 041,656.67 Option B: GBP 25, 041,095.89 Option C: GBP 25,000,000.00 Option D: GBP 24,958, 333.33 lyou selected A which was THCORRECT. Ithe correct option was C: GBP 25,000,000.00 lintornation Notes :ERI eed ftnrornatioa Notes : lus Donestic cP 1n New York 1s issued at a discount and redeemed at maturity at face value, here US lomsriow 40 : TOPIC: Cash Honey markets Calculations lvou ive PAID GOP 4,950,604. 99 FOR 90 DAY UK T-DILLS (PACE VALUE GOP 5,000,000). WAT DISCOUNT RAT Option A: 9.9596 p.c. option B: 4.0260 p.c. option ¢: 4.00 pec. option D: 4.0404 p.c. lyou selected tho CORRECT option - C: 4.00 p.c. linfornation Notes : Ithe price = face value less discount anount. The discount rate is calculated by reversing the sim lvatue - discount amount) miltiplied by 265 X 100 divided hy (face value multiplied by Ho. of days) lousstiow 49 : TOPIC: Cash Yoney markets Calculations IWOU HAVE ROUGHT A PRIMARY ISSUE DEK LONDON CERTIFICATE OF DEPOSIT WITH A COUPON RATE OF 6.00 P.C. IRATE OF 6.25 P.c. DO YOU. Option A: nake a profit of 25 basis points? Option B: nake a profit of 6.25 p.c.? Option C: nake a loss of 0.25 p.c.? Option D: nake no profit or loss? lvou selected the CORRECT option - C: make a loss of 0.25 p.c.? linfornation Notes : lbuying a prinary Certificate of Deposit is like lending the issuer money. Selling on a CD in the 5 ldeposit. Therefore if you buy a CD at 6.00 p.c. (1ike lending the cash) and then sell it at 6.25 p la loss of 0.25 p.c. You must alvays buy @s and other cowon bearing securities at a higher rate o lauesrion 50 : TOPIC: Cash Noney markets Calculations liar 1S THE TRUE YIELD OF THIS US COMERCIAL PAYER: FACE VALUE USD 12,000,000.00, PURCHASE RATE: 1. Iarurrry. Option A: 2.49 Option B: 2.51 Option C: 2.00 option D: 2.50ERINser fxou selected tne CORRECT optaon ~ B: 2.91 lnntornation Notes : lusing the ACI teue yield formla we can calculate the yield ax 2.51 (2.5052) p.c. lomsrion 51 : TOPIC: Cash Yoncy markets Calculations la 90 DAY UK T-BILL 1S QUOTED AT 4.75 F.C. WHAT 15 THE TRUE YIELD? Option A: 4.0189 Option B: 4.75 Option ¢: 4.3063 Option D: 4.9122 lyou selected the CORRECT option - C: 4.063 ltnfornation Notes : luse the true yield fornula in the ACI Formilae sheet to calculate the effective yield (ict/365) as lousrion 52 : TOPIC: Cash Yoney markets Calculations lropay Is 21ST JUNE 200X AND YOU ARE TRADING IN LONDON. YOU HAVE BOUGHT SECONDARY IGRKET T-BILLS, F lroR 182 DAYS WITH A MATURITY DATE SEPTEMBER 21ST 200X. THE DISCOUNT RATE APPLIED IS 3 7/16 P.C. WH Option A: GBP 20, 186,602.38 Option B: GBP 20,361,506.85 Option C: GBP 20,000,000.00 Option D: GBP 20, 188,487.36 lvou selected B which was THCORRECT Ithe correct option was C: GBP 20,000,000.00 linfornation Notes : Ir-Bills are discount instruments. They are traded at a discount in the secondary market but the go |therefore GBP 20,000,000.00. luesrion 53 : TOPIC: Cash Honey markets Calculations lnr You BUY 1 MONTH (30 DAY) COMMERCIAL PAPER ISSUED BY ERSYBUSES PLC AI LIBOR (FIXED AT 4 P.C.) 2! Option A: 4.27 Option B: 4.25 Option C: 4.01ERINser fxou se1ectea tne CORRECT optaon - B: 4.23 lnngornation Notes : lcoP denominated Commercial Payer is issued at a discoust hy reference to a yield (here LIDOR plus lwplied to the price paid. Raswer Unerefore 4.25 pic. lamsrion 54 : TOPIC: Cash Yoney markets Calculations lar 1S Mm VALUE AT MATURITY OF 4 NEW 3-260NTI {91-DRY) CD WITH A FACE VALUE OF GBP 200 MTLLTON 3 Option A: GBP 202,022,222.22 Option B: GBP 198,025,173. 61 option ¢: GBP 200,000,000. 00 option D: GBP 201,991,520.55 \vou selected the CORRECT option - D+ GRP 201,994, 520.55 [information Notes : linterest: payable on the CD for GBP 200 million issued at a comon of 4p.c. = GRP 1,994,520.55 mak loursrion 55 : TOPIC: Cash Noney markets Calculations [Ir GBP CP IS BEING QUOTED IN THE THREE MONTHS (92 DAYS) AT 4 1/8 P.C. WHAT IS THE TRUE YIPLD PER @ Option A: 5.00 p.c. Option B: 4.94 p.c. Option C: 4.875 p.c. Option D: 4.81 p.c. lyou selected B which was THCORRECT. Ithe correct option was C: 4.875 p.c. linfornation Notes : lcaP cp is quoted on a discount by reference to a yield. Therefore the true yield is the transactio luestion 56 : TOPIC: Cash Noney markets Calculations lIr YOU ARE OFFERED 21 DAY US DOMESTIC COMERCIAL PAPER USD 15 MILLION ISSUED EY DISCOUNT AIR LINES lnre Option A: USD 14,975,051.98 Option B: USD 14,970,164.38 Option C: USD 14,961,500.00ERI eed frou se1ectea tne CORRECT option - D: USD 14,959, 762.90 lnngornation Notes : Ire you are offered 24 day US Domestic Comercial Paper USD 15 million issued by Discount Rix Lines lack discouat-payiag instruments quoted as a rate of discount forma) USD 14,905, 762.50. lamsrion 57 : TOPIC: Cash Yoney markets Calculations liar 1 BROKERS LIMITED LONDON QUOTE YOU 4.00 - 3 7/0 P.c. IN 3 MONTES (91 DAYS) GBP SECONDAR lave CHECKED THE DELIVERY RUSK LIMIT IN IME NAME OF MULTI BANK (THE EUVER) YOU DEAL ON THE BROKE (CDS ORIGINALLY ISSUED FOR 101 DAYS AT 2.75 P.C. BY OWEM BANK, LONDOM). HOW MUCH DO YOU RECEIVE? Option A: GBP 20, 186,602.38 Option B: GBP 20, 084,523.24 Option ¢: GBP 20,174,516.44 Option D: GBP 20,170, 762.20 lvou selected C which ws THCORRECT |The correct option was D: GBP 20,170, 762.80 linfornation Notes : ltn the secondary CD market in London the price is quoted Bid - Offer for the securities, therefore laealt on will be 4.00 p.c. The OD was issued for 181 days at 3.75 p.c. and using the ACI CD formul l4.00 p.c. you will receive GBP 20,170, 762.80 sale proceeds. luesrion 53 : TOPIC: Cash Money markets Calculations IWHICH ONE OF THE FOLLOWING STATEMENTS IS TRUE IH RESPECT OF INTEREST RATES CALCULATIONS? Option A: A 90 day @ for USD 5 million at a cowon rate of 3 p.c. is worth USD 5, 037,500.00 at : Option B: 4 90 day @ for USD 5 million at a cowon rate of 3 p.c. is worth USD 5, 037,500.00 in Option C: 4 90 day @ for USD 5 million at a cowon rate of 3 p.c. is worth USD 4,962,500.00 in Option D: % 90 day @ for USD 5 million at a cowon rate of 3 p.c. is worth USD 5,000,000.00 at : lvou selected the CORRECT option - A: A 90 day @ for USD 5 million at a coupon rate of 3 p.c. is u linfornation Notes : la 90 day CD for USD 5 million at a cowon rate of 3 p.c. is wrth USD 5,037,500.00 at maturity (pr lthe £u11 perioa . lauest1oN 59 : TOPIC: Cash Honey markets CalculationsERINser fmsstion 99 : TUPIC: Cash Honey markets Calculations lar WOULD YOU PAY FOR GBP 1,000,000 T-BILLS WITH 30 DAYS TO MATURITY QUOTED RT A DISCOMT RATE oF Option A: GBP 996,723.10 option B: GBP 996,666.57 Option C: BP 1,000,000..00 Option D: GOP 996,732.39 lvou selected B which was THCORRECT. lthe correct option was D: GBP 996,732.33 linfornation Notes : luce the T-ill pricing formula on the ACI Formulae sheet (diecount-paying instruments quoted az a lcsp 996,712.33 (face value less pure diccout}. lamsriow 60 : TOPIC: Cash Noney markets Calculations lvou Have PATD GHP 4,950,684.93 FOR 90 DAY UK T-BIILS (PRCE VALUE GRP 5,000,000). WHAT TS THE EQUIV Option A: 4.04 p.c. Option B: 4.03 p.. Option C: 3.96 p. Option D: 4.00 p.. lyou selected B which was THCORRECT. ithe correct option was A: 4.04 p.c. linfornation Notes : Ithe price = face value less discount. The discount rate is calculated hy reversing the simple inte 1365 X 100 divided hy Price X No. of days, rounded to 4.04 p.c. luesrion 61 : TOPIC: Cash Noney markets Calculations 1180 DAY US BANKERS ZCCEPTANCES ARE QUOTED AT 2.15 P.C. IN AY AMOUNT OF USD 10,000,000.00. aT IS. Option A: USD 19, 105,000.00 Option B: USD 9,892,500. 00. Option C: USD 19, 107,500.00 Option D: USD 19,000,000.00 lvou selected A which was TRCORRECT Ithe correct option was D: USD 10,000,000.00ERI eed finrornatioa Notes : lus mankers Acceptances are discount instruments amd are redeened at face value at naturity. lomsriow 62 : TOPIC: Cash Honey markets Calculations lvou mre QUOTED 3.075 - 4.00 P.C. IN 9 MONTNS (90 DAYS) FUR SECONDARY MARKET CDS. YOU PURCIASE cps | loRKGINALLY ISSUED AI ARATE OF 4 P.C. FOR 100 DAYS. WMAT IS THE PURCHASE PRICE? Option A: FUR 10, 100,719.69 Option B: FUR 19,000,000.00 Option ¢: FUR 10,099,009.40 Option D: FUR 10, 102,135.56 lvou selected C which wae THCORRECT. lthe correct option wae D: FUR 10, 102,135.56 ltnfornation Notes : lusing the ACT Secondary CD formila you will pay FUR 10,102,135.56 for this secondary market CD. louestiow 63 : TOPIC: Cash Yoney markets Calculations lnr YOU ARE OFFERED A 66 DAY USD 12 MILLION TREASURY BILL AT 1.375 P.C. HOW MUCH WILL YOU PAY FOR T Option A: USD 12,000,000.00 Option B: USD 11,969, 750.00 Option C: USD 11,970,164.38 Option D: USD 11,961,500.00 lvou selected the CORRECT option - B: USD 11, 969,750.00 linfornation Notes : Ite you are offered a 66 day USD 12 million Treasury Bill at 1.375 p.c. using the ACI discount-payi {formula you can calculate the price as USD 11,969,750. 00. lursrion 64 : TOPIC: Cash Yoney markets Calculations ITF YOU ARE OFFERED 14 DAY COMMERCIAL PAPER GBP 15 MILLION TSSVED BY MULTINEVS PLC AT LIBOR + 30 BP la.o0 F.c. HOW MICH WILL YOU PAY FOR IT? Option A: GBP 14,974,916.67 Option B: GBP 14,975,260.27 Option C: GBP 14,975, 301.01 Option D: GBP 11,970,164.38ERINser lyou selected & which was INCURRECT. lne correct option was C: GBP 14,975,301.01 linformation Notes : Ire you are offered 14 day Comercial Paper GD? 15 million issued by MultiNews ple at LIDOR + 30 bp l4.00 pic. using the ACI discount-paying instrument quoted as a true yield formula you will pay GBP lamsrion 65 : TOPIC: Cash Yoncy markets Calculations ln 90 DAY UK T-BILL IS QUOTED AT A DISCOUNT RATE OF 4.00 P.C. WHAT IS THE TRUE YIELD? option A: 4.0268 p.c. option B: 2.9596 p.c. option ¢: 4.0104 p.c. option D: 4.00 p.c. lvou selected the CORRECT option - C: 4.0404 p.c. ltnfornation Notes : luse the true yield formula in the ACI Formilae sheet. to calculate the effective yield as 4.0404 p.. loursT1oN 66 : TOPIC: Cash Honey markets Calculations ITF YOU PAY USD 15,097,159. 94 FOR 4 SECONDARY MARKET CD ISSUED BY BECKETT BANK LONDOW ORIGINALLY IS: laare OF 2.00 P.c. FOR 180 DAYS AND THEN WITH 40 DAYS REMAINING YOU SELL THE CD WITH A YIELD OF 1.2 Inxs coe Option A: USD 15, 123,527.78 Option B: USD 15, 126,302.13 Option C: USD 15, 024,487.36 Option D: USD 15, 129,826.90 lvou selected B which was THCORRECT. Ithe correct option was D: USD 15, 129,826.90 linfornation Notes : lusing the ACI Secondary CD formila (15,000,000 at 2.00 for 180 days, yield 1.20 p.c. for 40 days} | lby you as USD 15, 129,826.90. lusrion 67 : TOPIC: Cash Honey markets Calculations lvou Buy 90 DAY US T-BILLS AE A RATE OF 5.91 B.C. THE FACE AMOUNT IS USD 10,000,000, YHAE WOULD YouERI eed fusstion 67 : TOPIC: cash Honey markets Calculations lyou Bux 90 DAY US T-BILLS AT A RATE OF 5.91 P.C. THE FACE AMOVNT IS USD 10,000,000, WHAT WOULD YoU Option A: USD 9,900,000..00 option B: USD 10, 097,750.00 Option C: USD 9,052,250..00 Option D: USD 9,054,273. 37 lou selected the CORRECT option - C: USD 9,052,250. 00 linfornation Notes lus t-itte are quoted on an Act/360 day basis and traded at a discount. Tho price paid will be the lanount which ie calculated uaing the diecount rate of 5.91 p.c. ayplied to the face value of USD 1 lbaying inetewment quoted as a xate of diecount formula the price ie USD 9,852,250.00 (10,000, 000.0 lamsriow 62 : TOPIC: Cash Noney markets Calculations lyou Have ROUGHT A 90 DAY PRIBARY ISSUE USD LONDOM CERTIFICATE OF DEPOSIT TH THE AMOUNT OF USD 10 2 low THe Sma DAY, YOU SELL THE CT A RATE OF 2.25 P.C. DO YOU. Option A: nake a profit of USD 6,215.04 Option B: nake a loss of USD 6215.04 Option C: nake a profit of 0.25 p.c.? Option D: nake no profit or loss lyou selected the CORRECT option - B: make a loss of USD 6215.04 linfornation Notes : lbuying a prinary Certificate of Deposit is like lending the issuer money. Selling on a CD in the 5 ldeposit. Therefore if you buy a CD at 2.00 p.c. (like lending the cash) and then sell it at 2.25 p la loss of USD 6,215.04 (10,000,000.00 minus 9,993,784.96). You must always buy @s and other coupo linterest than that at which you sell then. lursrion 69 : TOPIC: Cash Yoney markets Calculations ln DISCOUNT RATE ON A 90-DAY US TREASURY BILL 1S QUOTED AT 5.75%. WHAT IS THE TRUE YIELD ON THIS | Option A: 5.67% Option B: 5.63% Option C: 5.92% Option D: 5.93% lyou selected B which was THCORRECT. Inne correct option was D: 5.83%ERI eed funrernatioa Notes : lusing the ACI true yield forma the yield on a US T-hi11 quoted at a discout rate of 5.75 can be lomsriow 70 : TOPIC: Cash Honey markets Calculations lou Bux USD DORESTEC COMMERCIAL PAPER ISSUED BY BUSH INC. USD 20,000,000 30 DIYS AT 4.00 P.c. WOT Option A: USD 19,994746.50 Option B: USD 20,000,000.00 Option ¢: USD 19,933,554.82 Option D: USD 19,933,933.33 lvou selected B which wae INCORRECT. ltho correct eption was D: USD 19, 933,333.33 ltnfornation Notes : lus Donestic CP is a Pure discount operation therefore using the RCE discount-paying instruments «qu lpay usp 19,933,333. 33 (act /360) lousstiow 71 : TOPIC: Cash Yoney markets Calculations lvou BUY A 90 DAY US TREASURY BILL WITH A YIELD OF 4.18 P.C. THE FACE AMOUNT IS USD 10,000,000. vam Option A: USD 19,000,000.00 Option B: USD 8,995,500 Option C: USD 9,895,500..00 Option D: USD 10,104,500 lyou selected the CORRECT option - C: USD 9,895,500.00 linfornation Notes : Ithe discount rate of 4.18 p.c. is applied to the face value of the 90 day T-Bill of USD 10 million linstrunent quoted as a rate of discount formula in the ACI Formulae sheet te calculate the price t luestion 72 : TOPIC: Cash Money markets Calculations ITF YOU BUY A USD 1 MILLION 90 DAY TREASURY BILL DISCOUNTED AT 6.5 PCT, WHAT IS THE TRUE YIELD? Option A: 6. 6074 Option B: the same Option C: 6.8125 Option D: 6.25 lvou selected C which was INCORRECT.ERINser lyou selected ¢ wRich was INCURRECT. Inne correct option was R: 6.6074 linfornation Notes : la yield calculated from a discount rate will always work out « muericelly higher rate. The intere lbeiay based on a lower amount of principal (the price) which is calculated by applying the discoun lthe bi11. wexe using the ACI true discount forma the result is 6.6074. lomsrio 73 : TOPIC: Cash Yonoy markets Calculations lr cpr FLICIELE BILLS ARE FENG QUOTED I THE THREE MONTHS (92 DAYS) AI 37/8 — 3 3/4 P.C. WOT 7B luce % RCE VALUE OF GAP 5 ROLLION? Option A: GBP 4,951,164.38 Option B: GBP 4,951,636.75 Option ¢: GAP 4,952,739. 73 Option D: GRP 4,959,082. 23 lvou selected B which was THCORRECT. |The correct option was C: GBP 4,952,739. 73 linfornation Notes : lyou would pay the market maker GBP 4,951,739. 73, calculated on his offer of Bills at 3 3/4 p.c. an lquoted as a rate of discount forma in the ACI Formilae sheet to calculate the price. luestio 74 : TOPIC: Cash Honey markets Calculations |wr WOULD YOU PAY FOR GBP 1,000,000 60 DAY UK 7-BILLS QUOTED AT A DISCOUNT RATE OF 4.85 P.C.? Option A: GBP 1,000,000..00 Option B: GBP 7,912.60 Option C: GBP 992,027.40 Option D: GBP 991,916.57 lyou selected the CORRECT option - C: GBP 992,027.40 linfornation Notes : lUse the ACI discount-paying instrument quoted as a rate of discount formula on the ACI Formulae sh Jwalue less pure discount}. lauestion 75 : TOPIC: Cash Honey markets CalculationsERINser fusstion 79 : TOPIC: Cash Honey markets Calculations lyou HVE PURCHASED A SECONDARY MARKET US DOLLAR CD FACE VALUE USD 5,000,000 BASED ON A YIELD OF 5. lar 5.00 P.c. AND THERE ARE 60 DAYS REMAINING TO MATURITY. WACK OF THE FOLLOWING STATEMENTS IS TRU option A: For a trading profit on tne same day Ue GD must be sold for USD 5,024, 783.15 Option D: For a trading profit on the same day the @ must be sold for USD 5,026,059.50 Option C: none of these Option D: For a trailing profit on the same day the @ must be sold for USD 5,021, 671.03 lyou sclected the CORRECT option - DB: For a trading profit on the same day the CD mst he sold for | lunfornation Notee : Ino make a trading profit on the same day the CD must be sold at a lower yild rate (recoive a high lat a yield of 5.25 p.c. the CD must be cold at a lower yield. The price of USD 5,026,859.50 ie cal la trading protit. lamsriow 76 + TOPIC: Cash Noney markets Calculations [a 3-290 (91 DAY) UK TREASURY BILL WITH A FACE VALUE OF GBP 50 MILLION TS QUOTED AT DISCOUNT RATE Option A: GBP 49,462, 847.22 Option B: GBP 49,470,205.48 Option C: GBP 49,475,450.27 Option D: GBP 47,875,000.00 lvou selected the CORRECT option - B: GBP 49,470,205.48 linfornation Notes : lusing the ACI discount-paying instruments quoted as a rate of discount formula the price of a GBP l49,470, 205.48. luestion 77 : TOPIC: Cash Honey markets Calculations lvou PURCHASE EUR 20,000,000 14 DAY ECP AT A RATE OF 3.50 P.C. WHAT AMOUNT DO YOU PAY FOR THIS INE Option A: FUR 20,000,000.00 Option B: FUR 19,973,186.68 Option C: FUR 19,972, 814.78 Option D: FUR 19,972, 727.78 lyou selected A which was THCORRECT. Ithe correct option was C: EUR 19,972,814. 78ERI eed funrernatioa Notes : lecr 1 issued at a discount ny reference to a yield, here 3.5 p.c. (act/360) using Ue ACT aiscoun formula the issue price 1s FUR 19,972,814. 78. lomsriow 70 : TOPIC: Cash Honey markets Calculations las aw TESTOR, WKEGH OF THE FOLLOWING PRICES WOULD YOU FAPECT TO PAY FOR A USD DOMESTIC comMERcrH aLLro FoR 92 DAYS AT 2.00 P.C.? Option A: USD 9,949,148..00 Option B: USD 10,000,000.00 Option C: USD 9,948,888.39 Option D: USD 10,054,411.12 lvou celected the CORRECT option - C: USD 9,948,889.89 ltnfornation Notes : lusing the ACT discount-paying instrument quoted as a rate of discount formula in the BCT Formilae lin the amount of USD 10 million for 92 days at 2.00 p.c. would cost you USD 9,948, 888.89. lousst1on 79 : TOPIC: Cash Yoney markets Calculations low 21st saMvaRY 200X (A LEAP YEAR) YOU BOUGHT A SECONDARY MARKET CD IN THE AMOUNT OF GBP 20,000,00 la RATE OF 3.625 P.C. FOR 182 DAYS WITH A MATURITY DATE APRIL 228) 200X. THE YIELD APFLIED ON PURCH law YOU SELL THE CD WITH A YIELD TO MATURITY OF 4.00 P.C. WHAT ARE THE SALE PROCEEDS? Option A: GBP 20,366,527. 78 Option B: GBP 20, 184,516.44 Option C: GBP 20,361,506.85 Option D: GBP 20, 186,602.38 lyou selected C which was THCORRECT. Ithe correct option was B: GBP 20, 184,516.44 linfornation Notes : lusing the ACI @ formula now with 80 days to maturity and a yield of 4.00 p.c. you will receive 6B lusTioN 80 : TOPIC: Cash Noney markets Calculations las A MARKET USER, WHICH OF THE FOLLOWING PRICES WOULD YOU EXPECT TO PAY FOR A USD SECONDARY CD ORI hauirow For 92 DAYS AT 6 P.C. WITH 61 DAYS TO RUN AND CURRENT 61 DAY INTEREST RATES QUOTED 2T 5 7/ Option A: USD 10, 054,253.58 Option B: USD 19,075,876.93ERI eed fusst1on so : TOPIC: Cash Honey markets Calculations Ins a IRRKET USER, WICK OF THE FOLLOWING PRICES WOULD YOU FXPECT TO PRY FOR R USD SECONDARY CD ORT aura ror s2 DAYS RT 6 P.C. WITH 61 DAYS TO RUN AND CURRENT 61 DRY INTEREST RATES QUOTED AI 5 7/ Option R: USD 10,054, 253.58 Option D: USD 10,075,076.93 Option C: USD 19,000,000.00 Option D: USD 10, 055,963.37 lvou selected € which was INCORRECT. lthe correct eption was D: USD 10,055,363.37 linfornation Notes : lucing the secondary market CD formula in the ACI Formulae sheet and renembering that USD ie quoted \would pay ac a market user would he USD 10,055,363. 37. Iroprc 4 : REPOS TEXT loursT1ow 81 : TOPIC: Repos Text lite OF THe FOLLOWING STATERENTS DIFFERENTIATES A CLASSIC REPO FRO AN UNDOCUMENTED SELL /BUY-BACK Option A: economic use of the collateral passes to the seller Option B: the seller has full use of the cash during the repo period Option C: legal title transferred from seller to buyer for the life of the repo Option D: initial margin can be charged by either party in a repo lvou selected the CORRECT option - C: legal title transferred from seller to buyer for the life of linfornation Notes : lot the statenents available only “Legal title transferred fron seller to buyer for the life of the lrepo. lQuEsTIoN 82 : TOPIC: Repos Text jsmaEN % CLASSIC REPO IS MARKED TO MARKET, THE CALCULATION TAKES INTO CONSIDERATION. Option A: only the clean price of the bonds involved Option B: accrued coupon on the collateral only Option C: accrued interest on the cash loan and accrued coupon on the collateral Option D: accrued interest on the cash loan onlyERINser frou selected tne CONNECT optaon - C: accrued interest on the cash Loan ani accrued coupon on the cl lnntornation Notes : limen « Classic Repo is marked to narket, the calculation takes into consideration accrued interest lcollateral. lauesrion 09 : TOPIC: Repos Text lAccORDING TO THE DARK OF ENGLAND GILT REPO CODE OF BEST PRACTICE WIAT 1S MEANT BY THE TERM "MAIRCU Option A: the excess either of cash over the value of sccurities or securities over cash at the Option B: the variation margin due on a Repo operation Option C: the mark to market process for Repo outetandings Option D: a Repo on a gilt where the coupon hae heen “stripped out! lvou selected R which ws THCORRECT lthe correct eption was 2: the excess either of cash over the value of securities or securities ove ltnfornation Notes : Ithe term "haircut (or initial margin) refers to the excess of either cash over the value of secur lin a Repo transaction at the tine it is executed and, subsequently, after margin calls. Care! In 0 laitterentiy. lQuESTION #4 : TOPIC: Repos Text lwHAT TYPE OF GILT REPO TRANSACTION REED WOT THVOLVE MARGINTNG? Option A: Cash driven trade Option B: HIC Repo Option C: Tri-party Repo Option D: Stock lending lvou selected the CORRECT option - A: Cash driven trate linfornation Notes : laccording to the Bank of England Gilt Code of best practice a Cash driven trade need not involve m lQuESTION 85 : TOPIC: Repos Text lwiAr IS THE PURCHASE PRICE OF A REPO? Option A: The anount of cash advanced in exchange for the collateral at the comencenent of the Option B: The clean price of the collateral at the comencenent of the repo