cas Cen ren ya lQuESTTON 3 : TOPIC: Foreign exchange Text lvou NEED To BUY SPOT USD 5,000,000 AGAINST GBP AND ARE QUOTED THE FOLLOWING RATES CONCURRENTLY, BY j1.5047/52. AT WELCH RATE DO YOU TRADE? Option A: 1.5052 option B: 1.3050 option c: 1.3047 option D: 1.5045 lvou selected A which was INCORRECT. Inhe correct option was C: 1.5047 ltnformation Notes limon you buy USD ayainst GBP as a market user, you want the most USD por GBP - tho highest rate qui lnarket maker's price (narket naker'e Bid for GBP, Offer of USD) here 1.5047. loursrrow 4 : ToPTC: Foreign exchange Text [Tr THE CURRENT SPOT DATE TS FRIDAY 27TH FEBRUARY, WAT IS THE FIXED 1-MONTH DATE IN FOREIGY EXCHAN Option A: ist April Option B: 27th March Option C: 31st March Option D: 26th March lvou selected A which was INCORRECT. Inte correct option was C: 31st March lnntormation Notes : IBecause of “Endjend” convention the forward dealing value date for 1 month deals dealt for Spot val lin a leap year) 31st March. lQuesrION 5 : TORIC: Foreign exchange Text lie HE 3-OWNM FORWARD POINTS FOR USD/DKK ARE CURRENTLY QUOTED AS 229-250, AND MARKET INYEREST RATE [RIAN STABLE: I THE US, HOW WOULD YOU EXPECT THE YORWARD POINTS TO CHANGE? Option A: 223-280 option B: 223-250 option c: 250-265, Option D: 200-225, lvou selected B which was INCORRECT. [the correct option was D: 200-225Ci See oer [The correct. option was D: 200-225 ltntormation Notes : lthe interest differential would narrow (the US Preniun would reduce) meaning the nunber of points 0 lQuESTTON 6 : TOPIC: Foreign exchange Text [IF YOU ARE DEALING IN THE INTERNATIONAL AUD/USD SPOT MGRKET, BY MARKET CONVENTION MOST INTERBAKK TH lawourrs oF. Option a: Option B Option c Option D it depends on the counterparty bank it depends on the dealing centre uD US Dollars lvou selected B which was INCORRECT. inne correct option was C: AUD lnrormation Notes : lror ease of position Keeping, rate Uracking and profit and loss calculations dealers in te Laterba lquotea currency against the USD) would tend to deal in rowed amounts of the base currency MUD. loussrron 7: TorrC: Foreign exchange Text limiwr Ts MOE ISO CURRENCY CODE FOR SOUTH AERICAN RAND? Option A: RSA Option B: ZAR Option ¢: SIR Option D: SAF lvou selected the CORRECT option ~ ltntormation Notes : lthe TS0 Code for the South African Rand is ZAR. ZA = South Africa. R = Rand. lQuESTION & : TOPIC: Foreign exchange Text [Ir THE FORWARD OUTRIGHT FUR/USD RATE IS MMGRICALLY LOWER THAN THE SPOT RATE, THE EUR Is DESCRIBED Option A: a forward Discount Option B: a forvard Premium Option C: parity Motion D af _theseoption D: none or these lvou selectea the CORRECT option - a forward Discount lnatormation Notes: : Int the forward EUR/USD outright rate is numerically lower than the Spot rate, the BUR (hase currenc lbiscount.. loussrron 9 : TOPIC: Foreign exchange Text [nr 6 MONTHS EUR/USD FORWARD RATES NRE QUOTED 21-16, YHICH OF TE FOLLOWING STATEMENTS IS CORRECT? Option A: FIR interest rates are higher than USD rates in the six months Option B: There is a positive FUR yield curve Option C: There is not enough information to decide Option D: USD interest rates are higher than HUR rates in the six nonths lyou selected the CORRECT option - A: EUR interest rates are higher than USD rates in the six months ltntormation Notes : Ithe High - Low quote for forvard EUR/USD means that the EUR is at a forvard discount to the USD (th lusp). the currescy at a forvard premium has a lower rate, the currency at a forward discount has a lquoted High - Low means HUR interest rates are higher than USD in the six months period. lQuESTTON 10 : TOPIC: Foreign exchange Text [Ir SPOT GBP/USD IS QUOTED 1.50 00 -05 AND USD/JPY IS QUOTED 115.50 - 60. AS MARKET USER WHAT TRANSA Option A: You can buy GBP against JPY Option B: insufficient information to decide Option C: You can sell JPY against GEP option D: You can buy JPY against GBP lvou selectea ¢ which was INCORRECT. Inne correct option was D: You can buy JPY against GBP Information Motes : las market user you can buy JPY ayainst GBP at 173.25 (115.50 X 1.5000). louesrrom 11 : TOPIC: Foreign exchange Text lvou mre BASED TH THE UK IHD CRERTE A SVNTMETIC FORETGH CURRENCY ASSET BUT BUYING RMD SELLING USD/CHOU ARE EASED IW THE UK MD CREATE A SYNTHETIC FOREIGN CURRENCY ASSET BUT BUYING AND SELLING USD/CH Option A: switched a CHE asset inte USD without currency risk Option B: created an exchange exposure to GF Option C: created an exchange exposure to UD Option D: switched a USD asset inte CHF without currency risk lvou selected A which was INCORRECT. Inhe correct option was D: switched a USD asset inte CHF without currency risk lnntormation Notes : Inthe spot purchase and forward sale of USD effectively funds a USD asset already on the book whilst lourchase of CHF means the USD asset has been switched into GIF. loussriom 12 : Torc: Foreign exchange Text jmccot oF THE FOLLOWING WOULD YOU CONSIDER THE STANDARD PERTODS FOR FORWARD FUR/USD SWAP QUOTATIONS option A: none of these Option D: all of 1, 2, 3, 6 and 12 months Option C: 1, 2, 3, 6 months only Option D: 1, 3, 6, 42 and 24 months lvou selected ¢ which wae INCORRECT. lrne correct option we B: all of 1, 2, 3, 6 and 12 monthe ltnformation Motes : lthe standard periods for forward FUR/USD swap quotations in the interhank market are 1, 2, 3, 6 and loursrron 13 : TOPIC: Foreign exchange Text lropay IS TUESDAY 28TH FEBRUARY 200K. (200K IS A LEAP YEAR). WHAT IS TODAY'S SPOT VALUE DATE FOR DEI Option A: Thursday 1st March 200K Option B: Friday 2nd March 200K Option C: None of these Option D: Monday 5th March 200K lvou selected the CORRECT option - : Thursday Ist Karch 20x ltntormation Notes : Inhe rule for calculating Spot date is Today + 2 business days forward in the GBP and USD/najor cur laate is the Thursday which in 200X (a leap year) will be ist March, February having 29 days in a 1¢Ci See Oe eee loussrrom 14 : TOPIC: Foreign exchange Text lrour pas IN THE INTERNATIONAL MARKET PROVIDE YOU WITH SPOT QUOTES IN EUR/USD. WHICH IS THE BEST ¥ Option A: 0.88 68 - 72 Option B: 0.88 70 - 77 Option ¢: 0.88 66 - 71 Option D: 0.88 6? - 73, lvou selected R which was THCORRECT. IThe correct option was C: 0.88 66 - 71 ltnormation Notes : Itt you are selling the quoted (Non-Base) currency as a narket user, you obviously want to sell at t lside of the closest two way price. In this example you want to pay the least USD and hare to deal ¢ lright hand side of the market makers’ price (the market maker's Offer of FUR, Bid for USD). lQuEsrToN 15 : TOPIC: Foreign exchange Text [eORWARD GBP/USD SWAP POINTS OF 15 - 10 MEAN... Option A: You should afd points to spot te arrive at forward rate Option B: GBP interest rates are lower than USD in this period Option C: USD interest rates are lower than GBP in this period Option D: USD interest rates are higher than GBP in this period lvou selected the CORRECT option - Usp interest rates are lower than GBP in this period lnrormation Notes : lrorvara GBR/USD swap points of 15 - 10 mean that USD interest rates are lower than GBP in Unis per loussrro 16 : TOPIC: Foreign exchange Text lA FORWARD FOREXGH EXCHENGE SWAP PRECE REFLECTS. .. Option A: the interest rates expressed as a percentage Option B: the empectations of the future pot rate of two currencies Option C: the interest rate differentials between two currencies Option D: the FX pipe expressed ac a percentage lvou selected RB which was THCORRECT. IThe correct option was C: the interest rate differentials between two currenciesCen ren ltntormation Notes : la foreign exchange swap price reflects the interest differential between the two currencies involve lQuEsrToN 17 : TOPIC: Foreign exchange Text IIe SPOT GHE/JPY IS QUOTED 88.62-67 AKD THE 6 MONTHS FORWARD PRICE IS 87-82. HOW aRE 6 MONIMS FORWAK Option A: at a forvard JPY Discount Option B: at a forvard CHP Fremium Option C: at a forvard CHF Discount option D: none of these lvou setectea the CORRECT option - C: at a forvard cM Discount Information Notes : Inne 6 months forward EUR/JPY price of 07 2 means the sap points are being quoted at a forward GE loussrrom 18 : TOPIC: Foreign exchange Text [nr YOU ARE LONG OF CHF RGRTNST USD AT 4.7515 AND YOU SQUAPE YOUR USD POSTITON AT 4.7617 YOU WILL. Option R: none of these Option B: Sel] USD / Ruy CHF Option C: make a profit Option D: make a loss lvou selected C which was INCORRECT. Inhe correct option was D: make a loss ltntormation Notes : Itt you are long of CHF against USD at 1.7515 and you square your USD position at 1.7617 you will nA lQuEsrToN 19 : TOPIC: Foreign exchange Text [Ir USD INTEREST RATES ARE QUOTED A 3 P.C. IN 1 MONTHS AND THE SAME PERIOD JPY INTEREST RATES IRE Inra FORWARD USD/JPY SWAP POINTS TO BE QUOTED? Option A: Low-High Option B: High-Low Option C: insufficient information to decide Option D: around PAR lvou selected the CURRECT option ~ B: High-Lowcas Cen ren lzou selected the CORRECT option - B: High-Low ya Information Notes : Irn forward exchange terminology, the currency with the higher interest rate can he described as hei lcurrency is the hase currency (the USD) in a directly quoted currency pair (here the USD/IPY, then lbe quoted "High-Low", the countercurrency (here the quoted currency - JPY]) can he described as hei lLondon and continental terms in respect of the currency being so described. lQuEsrToN 20 : TOPIC: Foreign exchange Text [I DURING A TELEPHONE CONVERSATION THE DEALER QUOTING A SPOT FX PRICE CAUTIONS THE MARKET USER “YOU Option A: the price is not firm at all and is for indication only Option B: advice given alongside the price quote is subject to local regulatory authority guideli Option C: if not dealt on immediately, the price is subject to change and should be rechecked bet Option D: any transaction ensuing is at the risk of the market user lvou selected the CORRECT option - C: if not dealt on immediately, the price is suhject to change am Information Notes : las explained in The Model Code hasic spot FX dealing termincloyy “Your risk” indicates to the recei limmediately, the price may have to he re-queted at the receiver’s risk. loussrion 21 : TOPIC: Foreign exchange Text ln Iso CODES FOR CANADIAN DOLLAR, SINGAPORE DOLLAR, SOUTH AFRICAN RAND AND SWISS FRANC, THOUGH NOI Option A: SSD, ZAR, CAD, CHE Option D: CAD, GIE, SGD, SAR Option C: SFR, SoD, ZAR, CAD Option D: SAR, CAD, SER, SoD lvou selected the CORRECT option — SO, ZAR, CHD, CF Information Motes : |sep = Singapore Dollar, ZAR = South African Rand, CRD = Canadian Dollar and CHF = Swiss Franc {Conf loursrron 22 : TOPIC: Foreign exchange Text [Ir TopaY's SPOT DATE Is FRIDAY 277M FEBRUARY, WHAT WOULD THE ONE MONTH FORWARD VALUE DATE FOR DEHLI Option A: 30th March Option B: 31st MarchCS eee Option C: 29th March Option D: 27th March vou selected the CORRECT option - 1: ist March lnrormataon Notes : lenayena applies nere. spot aate Friday 27tn February (1eap or non leap year) 1s the last working ad lvatue date of all subsequent nonths Will be the last working date of the appropriate moath, here 1 loussrrow 23 : TOPIC: Foreign exchange Text la 3 MONTHS EUR/GBP SWAP IS QUOTED 9-10 (THE SPOT RATE TS 0.69 00). WGK OF THE FOLLOWING STATmIENT Option A: FUR interest rates are higher than USD interest rates. Option B: FUR interest rates are higher than GBP interest rates. Option C: GBP interest rates are higher than EUR interest rates. Option D: FUR interest rate yield curve ic positive. lvou selected the CORRECT option - C: GBP interest rates are higher than FUR interest rates. ltntormation Notes : I-Low - High” forward points signify that the FUR is at a forvard premiun against the GBP (GBP are 4 \GeP interest rate must be higher than FUR in the 3 months period. lussrroN 24 : TOPIC: Foreign exchange Text [Spor EUR/USD IS QUOTED BY THE BROKER 1.07 03 - 08. YOU MAVE AN INTEREST TO SELL EUR AT 1.07 06 AND IKE HES NEW TWO WAY PRICE TO THE MARKET? Option A: 1.07 03 - 08 Option B: 1.07 06 either way Option C: 1.07 06 - 08 Option D: 1.07 03 - 06 lvou selected C which was INCORRECT. Inne correct option was D: 1.07 03 - 06 lnrormation Notes : lvou want to se11 EUR at 1.07 06, you put the broker on (you advise hin of your OFFER at 06). He is limprovenent on iis Current OFFER Of 1.07 08, making ls new price to the market 1.07 03 - 06.cas Cen ren ya laursrrow 25 : TOPIC: Foreign exchange Text [TF YOU MHKE A GUOTE OF 1.4520/25 TH CABLE AND THE CALLER *GIVES YOU 2", WHAT DEAL HAS BEEN DONE? Option A: They sold you USD 2,000,000 at 1.4525 Option B: They sold you GBP 2,000,000 at 1.4525 Option C: They sold you GBP 2,000,000 at 1.4520 Option D: They sold you USD 2,000,000 at 1.4520 lvou selected the CORRECT option - : They sold you GBP 2,000,000 at 1.4520 ltntormation Notes : Inhe calling cousterparty is dealing in a round amount of the base currency (Cable base currency = ( lare selling GBP 2 million to your market making Bid for GBP (the left hand side - 1.4520). luEsrTON 26 : TOPIC: Foreign exchange Text lvou Have JUST DEALT IN A EUR/USD FX SWAP (SPOT AGAINST 3 MONTHS FORWARD} AT 25 POINTS FUR PREMIUM 1 lovoren 0. 9000-10. WHICH UF THE FOLLOWING WOULD BE THE CORRECT SPOT AND FORWARD EXCHANGE RATES APPL Option A: 0.9005 and 0.9030 option B: 0.9025 and 0.9030 option C: 0.9025 and 0.9000 option D: 0.9005 and 0.8950 lvou selected B which was INCORRECT. |The correct option was A: 0.9005 and 0.9030 ltnformation Motes : lrhe rule in LBT Lugano (Model Code Chapter VII) requires that the epot leg of the swap nust be rate lene time of dealing, therefore here spot 0.9005 and forward 0.9030 are the correct rates to apply. loursrrow 27 : TOPIC: Foreign exchange Text [Tr THE USD/CHF SPOT FXCHRNGE DEALER SAYS HE TS CURRENTLY ‘FIVE LONG". WHAT TS HIS ACTUAL, POSITION? Option A: Overborrowed CHF 5 million overaiaht Option B: Overbought USD 5 million against GF Option C: Overbought CHF 5 million against USD Option D: None of these lvou selected the CORRECT option - B: Overhought USD 5 million against CHEcas Cen ren ya laursrrow 25 : TOPIC: Foreign exchange Text [TF YOU MHKE A GUOTE OF 1.4520/25 TH CABLE AND THE CALLER *GIVES YOU 2", WHAT DEAL HAS BEEN DONE? Option A: They sold you USD 2,000,000 at 1.4525 Option B: They sold you GBP 2,000,000 at 1.4525 Option C: They sold you GBP 2,000,000 at 1.4520 Option D: They sold you USD 2,000,000 at 1.4520 lvou selected the CORRECT option - : They sold you GBP 2,000,000 at 1.4520 ltntormation Notes : Inhe calling cousterparty is dealing in a round amount of the base currency (Cable base currency = ( lare selling GBP 2 million to your market making Bid for GBP (the left hand side - 1.4520). luEsrTON 26 : TOPIC: Foreign exchange Text lvou Have JUST DEALT IN A EUR/USD FX SWAP (SPOT AGAINST 3 MONTHS FORWARD} AT 25 POINTS FUR PREMIUM 1 lovoren 0. 9000-10. WHICH UF THE FOLLOWING WOULD BE THE CORRECT SPOT AND FORWARD EXCHANGE RATES APPL Option A: 0.9005 and 0.9030 option B: 0.9025 and 0.9030 option C: 0.9025 and 0.9000 option D: 0.9005 and 0.8950 lvou selected B which was INCORRECT. |The correct option was A: 0.9005 and 0.9030 ltnformation Motes : lrhe rule in LBT Lugano (Model Code Chapter VII) requires that the epot leg of the swap nust be rate lene time of dealing, therefore here spot 0.9005 and forward 0.9030 are the correct rates to apply. loursrrow 27 : TOPIC: Foreign exchange Text [Tr THE USD/CHF SPOT FXCHRNGE DEALER SAYS HE TS CURRENTLY ‘FIVE LONG". WHAT TS HIS ACTUAL, POSITION? Option A: Overborrowed CHF 5 million overaiaht Option B: Overbought USD 5 million against GF Option C: Overbought CHF 5 million against USD Option D: None of these lvou selected the CORRECT option - B: Overhought USD 5 million against CHEcas Cen ren lntormation Notes : lusp cH is a directly quoted currency to a USD base and dealers tend to describe their positions in |tmas case the dealer 15 confirming nis open position as orerbougnt USD 3 mL1i1on against GH. loursrrow 28 : TOPIC: Foreign exchange Text jwmccat OE OF THE FOLLOWING STATEMENTS IS THE HEST DEEINETION OF FX SWRP RATES? Option A: They are equal to the difference in the inflation rates of two countries Option B: They indicate the market’s emectation of future spot rates Option C: They reflect the interest rate differeatial between two currencies Option D: There io insufficient information to decide lvou selected the CORRECT option - They reflect the interest rate differential between two currer Itnformation Notes : IThe forward swap points reflect the interest differential hetwen the tw currencies in the FX quot loussrroN 29 : TOPIC: Foreign exchange Text [Ir YOU SELL CHF 10,000,000 TO A COMMERCIAL CUSTOMER AGAINST GBP ON YOUR QUOTE OF 1.4600-05 HOW MWY Option A: GBP 6,846,970. 22 Option B: GBP 6,459,657. 65 Option C: GBP 6,595,576. 50 Option D: GBP 6,849,315.07 lvou selected A which was INCORRECT. ithe correct option was D: GBP 6,849,315. 07 lnntormation Notes : ithe corporate client will pay you GBP 6,819,315.07 on value date. loussriom 30 : TORIC: Foreign exchange Text lvou BRE OVERLENT TIN 6 MONTHS CHF DEPOSIT. YOU NEED TO SQUARE THE POSITION USING THE USD DEPOSIT 1 lvou BRE QUOTED THE FOLLOWING USD/CHF SUAP RATES. WHIGH WOULD BE THE BEST RATE TO USE? Option A: 709/705, Option D: 700/708 Option ¢: 712/708, Option D: 710/706 lvou selected B which wae INCORRECT.Ci See oer [vou selected B which was INCORRECT. ithe correct option was C: 712/708 ltntormation Notes : lro square your position as a narket user you must buy and sell CHF (Sell and buy USD) therefore you ltne right hand side of the quoting bank's swap (their Offer of forvard USD), here 708 points your £ luEsrro 31 : TOPIC: Foreign exchange Text ln EXTENSION OF A CONTRACT AT OFF-MGRKET RATES MAY HAVE WHICH OF THE FOLLOWING IMPLICATIONS? Option A: All of these Option B: Deferring a profit to a future date Option C: Credit risk Option D: Deferring a loss to a future date lvou seiectea the CURRECT optaon - A: All of these lxacormation Motes : lnhe extension of a contract at off-market rates gives rise to credit risk implications and can pers loss to @ future accousting period. The Model Code recommends that this practice should be avoided. louesrron 32 : TOPIC: Foreign exchange Text lroun BANKS IN THE INTERNATIONAL MARKET PROVIDE YOU WITH SPOT QUOTES IN EUR/USD. WHICH IS THE BEST ¥ Option A: 0.88 66 - 71 Option B: 0.88 6? - 73, Option C: 0.88 68 - 72 Option D: 0.82 70 - 77 lvou selected the CORRECT option - 0.88 1-7 ltnormation Notes : Int you are selling the BISE currency as a market user, you chviously want to sell at the highest ra Iclosest two way price. In this exanple you want to receive the most USD and have to deal on the hig lside of the market makers’ price (the market maker's Bid for HUR, Offer of USD). lQuEsrTON 33 : TOPIC: Foreign exchange Text lr TopaY's DATE IS TUESDAY 277M FEBRUARY 200X (A LEAP YEAR), WHAT WOULD THE TWO MONTHS MATURITY Dat DEALING HE? Ontion A: Tuesday 30th Anvil 200%cas Cen ren ya Option A: Tuesday 30tn Apri1 200x Option B: Wednesday ist May 200 Option C: Monday 29th April 200 Option D: Friday 26th April 200 lvou selected the CORRECT option — 2 Tuesday 30th april 20x ltnformation Notes Int today ic Tuesday 27th February then Spot date will be Thureday 29th February 200K (a leap year). lita normally he the sane date in the appropriate forward month. But if today's spot date is the 12 [forward date calculation purposes this is deemed to be the nonth-end date, and all other standard y lbusiness dates in the appropriate forward months. The tw months maturity date from Spot date Thurs ltherefore he Tuesday 30th April 200X. This rule is termed the "End/end" rule. lussrroN 34 : TOPIC: Foreign exchange Text [spor EUR/USD IS QUOTED 1.1050-53 ON YOUR SCREEN BASED ATS AND YOU HIT THE “YOURS” BUTTON. WAT HAVE Option A: you have sold EUR at 1.1053 Option B: you have sold EUR at 1.1050 Option C: you have placed an order to sell FUR at 1.1953 Option D: you have sold USD at 1.1050 lvou selected the CORRECT option - B: you have sold EUR at 1.1050 lnntormation Notes : lHitting the Yours button means you are selling the base currency to the market bid (left hand side) loussrion 39 : TOPIC: Foreign exchange Text lwrowr BRE "DETAILS" IN THE CONTEXT OF THE DEALER/GROKER RELATIONSHIP? Option A: confirmation of brokerage charged on a deal Option B: information passed by the broker on dealing rates across various currencies and periods Option C: a phrase used by a broker confirming that a deal has been effected Option D: deal data held by the broker and passed to the dealer at a tine later than the moment « lvou selected A which wae INCORRECT. lnhe correct option was D: deal data hold by the broker and passed to the dealer at a tine later tha ltnformation Notes : Irvaditionally the term "details" refers to the information a dealer needs to complete a deal ticketCS ere on enieey ffraditionally the term "details" refers to the information a dealer needs to complete a deal ticket ldeal has heen agreed. This is particularly relevant to spot foreign exchange dealing where the spec leffected means that deal "details" are only requested and advised during a market lull after a peri lQuEsTTON 36 : TOPIC: Foreign exchange Text lusp/cap 1 MONTH SWAP POINTS ARE QUOTED 41-37. WHICH OF THE FOLLOWING STATMENTS 1S CORRECT? Option A: Insufficient information to decide Option B: USD interest rates are lower than CAD Option C: USD is worth more CW forward than spot Option D: USD interest rates are higher than CHD lvou selected the CORRECT option - D: USD interest rates are higher than CHD lxacormation Motes : liith the 1 month forward USD/CAD points quoted High - Low tie USD is at a forward discount and the |ttis period. loussrron 27 : TOPIC: Foreign exchange Text |HoW re FORWARD FORETGH EXCHANGE RATES QUOTED BY A MARKET XGKER IN THE INTERSANK MARKET? Option A: Upfront premium payable for hace curteacy purchase on the forward date Option B: Bid-Offer for base currency mvenent on the forvand date Option C: Upfront premium payable for coutercurrency purchase on the forvard date Option D: Offer-Bid for base currency movement on the forvand date lvou selected the CORRECT option - B: Bid-Offer for base currency movenent on the forward date lnntormation Notes : lrorwara foreign exchange rates are quoted in the interbank narket as the narket maker's Bid-Offer £ laate. lQuESTTON 38 : TOPIC: Foreign exchange Text [a CALLING COUNTERPARTY ASKS FOR A PRICE IN THE 3 MONTHS FORWARD GBP/JPY. YOU QUOTE 180-175. THE C'S Option A: Bought GBP against JPY spot and sold JPY against GBP 3 months forward Option B: Bought JPY against GBP 3 months outright Option C: Bought GBP against JPY spot and sold GBP against JPY 3 months forward Option D: Sold GBP against JPY spot and hought GBP against JPY 3 months forward lvou selected the CORRECT option - Bought GBP against JPY spot and sold GBP against JPY 3 monthsInformation Motes ln this transaction the hase currency is GBP therefore if the calling counterparty deals on the rig lvour quoted 180-175 swap price you are buying spot and selling forvard GBP in the three onthe evay laursrrow 29 : TOPIC: Foreign exchange Text [TF YOU ARE DEALING IN THE THTERNATLONAL USD/JPY SPOT MARKET, BY MARKET CONVENTION MOST INTERBANK TH favours oF. Option A: it depends on the dealing centre Option B: it depends on the counterparty bank Option C: US Dollars Option D: Japanese Yen lvou selected the CORRECT option - C: US Dollars ltntormation Notes : lror ease of position keeping, rate tracking and profit and loss calculations dealers in the interha lary against the USD) would tead to deal in round anounts of the base currency US Dollars. luEsrToN 40 : TOPIC: Foreign exchange Text [I USD INTEREST RAES ARE QUOTED AE 6 P.C. IN 6 MONTHS AND THE SAME PERIOD SGD INTEREST RATES ARE ¢ leORWaRD SWAP POINTS TO BE QUOTED? Option A: around FAR option B: 1nsurticient information to acide Option C: at a forvard sop rremiun Option D: at a forvard USD Fremiun lyou selected the CORRECT option - C: at a forvard SGD Preniun Information Motes lin forward exchange terminology, the currency with the higher interest rate can he described ac hei lcountercurrency will then he described ac being at a forward preniun. Here we are describing the St |aiffering London and continental terns in respect of the currency being so described, loursTTow 41 : TOPIC: Foreign exchange Text lvou NEED TO BUY SPOT GBP AGAINST USD AND YOU ARE QUOTED THE FOLLOWING RATES. WHICH RATE IS THE BEST Option A: 1.4415/20CS eee ‘UPCAON KT FELFZO Option B: 1.4408/13 Option C: 1.4410/15 Option D: 1.4412/17 lvou selected the CORRECT option - 1.4408 /13 lntormation Notes : lou are buying GBP (Selling USD). You must therefore deal on the right hand side and you vant to pa lyou tnererore 15 1.4413 (the 08/13 quote). loussrro 42 : TOPIC: Foreign exchange Text lvou mRE OVERLENT TN 5 MONTHS TUR DEPOSIT. YOU NEED TO SQUARE THE POSITION USING THE USD DEPOSIT 10H lvou are QUOTED THE FOLLOWING EUR/USD SWAP RATES. WMIGI WOULD BE THE BEST RATE TO USE? Option A: 14-9 Option B: 13-2 Option ¢: 12-7 Option D: 15-10 lvou selected the CORRECT option - lnntormation Notes : lvou must uy and sell EUR (the hase currency), sell and buy USD (the variable currency) you must th lnumber of points ayainst you ithe left hand side) therefore 12 - the 12-7 two way price quote. lqussrToN 43 : TOPIC: Foreign exchange Text [3 MONTHS USD/CHF IS QUOTED 76-75. INTEREST RATES IM SWITZERLAND ARE REDUCED AND USD RATES REMAIN Un [SWAP PRICES WICH WOULD YOU EXPECT THE MARKET TO QUOTE? Option A: 75-75 Option B: 75-76 Option C: 80-79 Option D: 72-71 lvou selected the CORRECT option - 80-79 lnrormation Notes : lrx anterest rates 1n Switzerland are reduced and USD rates are uachanged then the margin hetween th (CHE Prenium of 76-75 ilicates thal GIF rates are lower Ulan USD therefore a widening margin woul lpossime answer Unerefore 1s 80-79.cas Cen ren lpoceibie answer therefore is 20-79. ya laurstrow 44 : TOPIC: Foreign exchange Text lv MmKE A CALL TO FOUR SEPARATE BANKS TH THE THYERNATTONGL, MARKET AND EACH QUOTES YOU SPOT USD /DKE \senER OF DKK? Option A: 6.31 52 - 57 Option B: 6.31 47 - 52 Option C: 6.31 44 - 51 Option D: 6.31 49 - 53 lvou selected A which was INCORRECT. Inhe correct option was C: 6.31 44 - 51 ltntormation Notes : lin a Direct quoted currency transaction, if you are selling the QUOTED currency {the non USD curren lse11 it at the highest rate which is not alvays one side of the closest two way price. In this exan land have to deal on the lowest rate of those quoted on the right hand side of the market makers’ pz {for DKK) . loussriom a9 : TOPIC: Foreign exchange Text lie USD INTEREST RAES ARE QUOTED AC 2.00 P.C. IN 3 MUNIMS AND THE SAME PERIOD GBP INTEREST RATES AH [za FORWARD CABLE SWAP POTHTS TO BE QUOTED? Option R: insufficient information to aecide Option B: Low-itigh Option ¢: High-Low Option D: around PAR lyou selectod the CORRECT option - C: High-Low Information Notes : lin forward exchange terminology, the currency with the higher interest rate can he described as hei lcurrency is the base currency (the GEP) in an indirect currency pair (here the GEP/ISD), then the 1 lauoted "High-Low" . lQuESTTON 46 : TOPIC: Foreign exchange Text [YOU SELL EUR/GBP 1 MONTH OUTRIGHT. HOW CAN YOU COVER THIS POSITION? Option A: Buy EUR Spot, Se11 and Buy EUR/GBP on a 1 month FX svap Option B: Buy EUR Spot, lend HUR for 1 nonth and borrow GEP for one monthCS ere oer renee Option C: Buy EUR/GBP 1 month outright Option D: Any of these lvou selected B which was INCORRECT. Inne correct option was D: any of these lxacormation Motes : lala of these are means to cover the forward outright sale of EUR against GDP. loussrrow 47 : TOPIC: Foreign exchange Text lemsr THONG IOV THE DEALING DAY, HOW YOULD YOU ROLL OVER THE LONG SPOT EUR/USD POSTTEON YOU HELD aT Option A: sell and buy FUR against USD in a ton/noxt swap Option B: buy and cell FUR against USD in an overnight swap Option C: sel] and buy FUR against USD in an overnight sup Option D: uy and sell FUR against USD in a ton/next swap lvou selected ¢ which was THCORRECT. Inte correct option was A: sell and buy EUR against USD in a tom/next swap ltnormation Notes : lyou will roll over the long Spot EUR/USD position you held at close of business last night by enter land buying (spot date) EUR against USD. luEsrToN 48 : TOPIC: Foreign exchange Text |cURRENT EUR/USD MARKET RATES ARE QUOTED SPOT: 1.1700-05, OVERNIGHT: 1.0 - 0.80, TOM/MEXT: 1.10 - 0. [ASKED TO QUOTE % FORWARD SWAP PRICE OUT OF TOMORROW. HOW DO YOU CALCULATE THIS? Option A: Add the T/H Bid to the 3 months Offer for the Bid side and add the T/A Offer to the 3m Option B: Add the T/ Bid to the 3 months Bid for the Bid side and add the T/M Offer to the 3 nor Option C: Subtract the T/M Bid fron the 3 months Bid for the Bid side and subtract the T/ll Offer lsiae Option D: Subtract the T/H Offer from the 3 months Bid for the Bid side and subtract the T/ Bid lsrae lvou selectea the CORRECT option - lorcerea sige Add the TAM Bid to the 3 moatis Bid for Une Bid side and add t Information Notes liith no profit or loss you can add the T/ Bid points to the 3 months svap Bid points (44.5 plus 1.CS ere oer renee Option C: Buy EUR/GBP 1 month outright Option D: Any of these lvou selected B which was INCORRECT. Inne correct option was D: any of these lxacormation Motes : lala of these are means to cover the forward outright sale of EUR against GDP. loussrrow 47 : TOPIC: Foreign exchange Text lemsr THONG IOV THE DEALING DAY, HOW YOULD YOU ROLL OVER THE LONG SPOT EUR/USD POSTTEON YOU HELD aT Option A: sell and buy FUR against USD in a ton/noxt swap Option B: buy and cell FUR against USD in an overnight swap Option C: sel] and buy FUR against USD in an overnight sup Option D: uy and sell FUR against USD in a ton/next swap lvou selected ¢ which was THCORRECT. Inte correct option was A: sell and buy EUR against USD in a tom/next swap ltnormation Notes : lyou will roll over the long Spot EUR/USD position you held at close of business last night by enter land buying (spot date) EUR against USD. luEsrToN 48 : TOPIC: Foreign exchange Text |cURRENT EUR/USD MARKET RATES ARE QUOTED SPOT: 1.1700-05, OVERNIGHT: 1.0 - 0.80, TOM/MEXT: 1.10 - 0. [ASKED TO QUOTE % FORWARD SWAP PRICE OUT OF TOMORROW. HOW DO YOU CALCULATE THIS? Option A: Add the T/H Bid to the 3 months Offer for the Bid side and add the T/A Offer to the 3m Option B: Add the T/ Bid to the 3 months Bid for the Bid side and add the T/M Offer to the 3 nor Option C: Subtract the T/M Bid fron the 3 months Bid for the Bid side and subtract the T/ll Offer lsiae Option D: Subtract the T/H Offer from the 3 months Bid for the Bid side and subtract the T/ Bid lsrae lvou selectea the CORRECT option - lorcerea sige Add the TAM Bid to the 3 moatis Bid for Une Bid side and add t Information Notes liith no profit or loss you can add the T/ Bid points to the 3 months svap Bid points (44.5 plus 1.CS eee [ith no profit or loss you can add the TAT Bid points to the 3 months svap Bid points (44.5 plus 1. lthe 3 months Offer points (41.4 plus 0.90), so the two way price is 45.60-41.4. ya luEsrToN 49 : TOPIC: Foreign exchange Text lvou aRE SHORT OF JPY DEPOSITS IN YOUR BANK, AND WISH TO FILL THIS GAP BY RATSING USD DEPOSITS AND U orKer. WICH OF THE FOLLOWING USD/JPY FORWARD POINTS WOULD BEST ASSIST THIS TRANSACTION? Option A: 331/324 Option B: The points do not matter Option Cc: 330/325 Option D: 329/323, lvou selected A which was INCORRECT. ithe correct option was C: 330/325 lntormation Notes : lxou want to raise JPY in a swap selling and buying USD against JPY earning as nany points your favd lavatiapie on the offered side (right hand side) of the swap. loursrrow 50 : TOPIC: Foreign exchange Text lvo HAVE A 9 MONTHS FORWARD OVTRIGHT DEAL WITH AMALGAMATED HANK PLC, YOU EUY GDP 4 MILLION AGAINST lane Is 1.5600 WHAT CREDIT RISKS DO YOU NAVE TO CONSIDER IM RESPECT OF THIS OUTSTANDING TRANSACTION Option A: market replacement and delivery risk Option B: delivery risk only Option C: market replacement rick only Option D: none of these lvou selected B which wae INCORRECT. lthe correct option was 1: market replacement and delivery risk lnntormation Notes : lvou have to consider market replacement risk (counterparty nay default and you will have to pay 1.1 (counterparty may not honour its side of the GBP 1 million cash transaction) in respect of this out lquesrrow 51 : TOPIC: Foreign exchange Text lwmacct oF THe FOLLOWING DO YOU NEED TO CALCULATE AN OUTRIGHT RATE FOR GBP /USD VALUE TODAY? Option A: Spot GBP/USD, O/T svap points and TAT swap points Option B: Spot GBP/USD, O/H USD interest rate and 1/N GBP interest rate only Option C: Spot GBP/USD and O/H swap points only Motion D: Snnt_GAPAISD and TAL son mnints onlyCaen ener Option D: Spot GBF/USD and T/N swap points only lvou selected the CORRECT option ~ A: Spot GBP/USD, OAT swap poluts and TAT suap points lnatormation Notes: : Ino calculate a value today exchange rate you need the Spot zate, the Tom/Next AND the Orexniyht sw loussrro 52 : TOPIC: Foreign exchange Text lvou ive BOUGHT AMD SOLD EUR/USD IN % 1-M0WTH FOREIGN FXCIANGE SWAP OUT OF SPOT. WHICH OF THE POLLC Option A: R11 of these Option B: You have bought FURAISD spot and sold FURASD 1-month forward Option C: You have dealt on the right hand cide of a market maker’s forvard swap price Option D: You are depositing USD and borrowing FUR for the period lvou selected C which was INCORRECT. Inhe correct option was B: You have bought EUR/USD spot and sold EUR/USD 1-month forvard lnnormation Notes : lHere you have bought EUR/USD spot and sold EUR/USD 1-month forward. luEsrToN 53 : TOPIC: Foreign exchange Text lvou @RE OVERLENT IN 3 MONTHS VSD DEPOSIT. YOU NEED TO SQUARE THE POSITION USING THE JPY DEPOSIT 20K |vou ARE QUOTED THE FOLLOWING USD/JPY SWAP RATES. WHICH WOULD BE THE BEST RATE TO USE? Option A: 53/48 Option B: 54/49 Option C: 52/47 Option D: 55/50 lvou seiectea tne CURRECT optaon - C: 92/47 lnaformation Notes: : lyou must Huy and seLL USD (the hase currency), sell and buy JPY. You must therefore deal as market lyou (the 1eft hand side) therefore 52 points of the 52-47 two way price quote. louesrrom 54 : TOPIC: Foreign exchange Text lvou ime QUOTED A BANK R SPOT USD/JPY BS 125.40/50. THEY SAY "T TAKE 5". YO DO THEY MERN? Option A: They buy JPY 5,000,000 at 125.40CS ere oem ey Option A: They buy JY 5,000,000 at 125.40 Option B: They buy USD 5,000,000 at 125.40 Option C: They buy USD 5,000,000 at 125.50 Option D: They buy JPY 5,000,000 at 125.50 lvou selected the CORRECT option - C: They buy USD 5,000,000 at 125.50 ltntormation Notes : Itt a calling baak's response to your quote as a market maker is to say ‘I take’ then the counterpaz lcurrency, i.e. they are buying USD on the right hand side of your quote. Here they are buying USD 4 lquesrroN 55 : TOPIC: Foreign exchange Text leIRSY THONG IN THE DEALING DAY, YOU VANE TO ROLL OVER THE LONG SPOT KUR/USD POSITION YOU HELD At CL lvou CALL Tw) BANKS FOR TOM/HEXT PRICES. BANK A QUOTES TAM: 1.00 - 1.30 POINTS AND BANK B QUOTES 1/1 lovorms you THE BEST PRICE AND AT WHICH RATE WILL YOU AGREE TO DERL? Option R: you buy and sell FUR against USD tomynext ab +1.00 points Option D: you sel and buy TUR against USD tom/next ab +1.10 points Option C: you buy and sell TUR against USD tom/next ab +1.40 points Option D: you sell and buy EUR against USD tom/next at +1.30 points lvou selected the CORRECT option — you 9011 and buy EUR against USD tom/noxt at 11.30 pointe Information Notes : laank @ is quoting T/M: 1.00 — 1.30 points which means when you sel] and buy EUR against USD to roll laeat on the market maker’s Offer (right hand side) and pay away 1.30 points. louESTION 56 : TOPIC: Foreign exchange Text las A BUYER OF USD 1,000,000 WHIGH OF THE FOLLOWING SPOT GBP/USD QUOTES MADE BY FOUR DIFFERENT MARKE Option A: 1.74 00-05 Option B: 1.74 01-06 Option C: 1.73 98-03 Option D: 1.73 99-04 lvou selected the CORRECT option - 1.74 01-06 ltntormation Notes : lon a spot quote of 1.74 01-06 you can buy USD (sell GBP) at 1.74 01 the best spot bid for GBP (offecas Cen ren ya loussrrow 57 : TOPIC: Foreiga exchange Text lusp sary 1s quoTeD 119.00 - 05. IF USD INTEREST RATES ARE QUOTED 37 2.00 P.C. IN 3 MONTHS MD THE Si 0.25 P.c. HOW WOULD YOU FXPECT FORWARD USD/JPY 70 BE DESCRINED AND QUOTED IN FRANKFURT? Option A: around PAR Option B: 0.25 - 2.00 Option ¢: at a forvard Preniun Option D: at a forward Diccount lvou selected the CORRECT option - D: at a forvard Discount ltntormation Notes : lin forvard exchanue terminology, the currency with the higher interest rate can he described as hei lcurrency is the base currency (here the USD) in an direct currency pair (USD/JPY), then the swap pd lbiscount in "international terms" and would he quoted "High-Low lQuESTTON 58 : TOPIC: Foreign exchange Text \vo NEED TO SELL CHF AGAINST JPY VALUE SPOT. YOU ARE QUOTED THE FOLLOWING RATES. WHICH RATE IS THE Option A: CHF/IPY: 82.62 Option B 1.2093 Option c 82.65 Option D: aPy/cHF: 1.2101 lvou selected C which was INCORRECT. |the correct option was B: JPY/GH: 1.2093 lnrormation Notes : lon se1ing CH you want to receive as many JPY for your CHF as possible. CW 1.2093 (CHE per JPY 40 lon the standard macket quote. loussrron 59 : TOPIC: Foreign exchange Text Ine YoU QUOTE THE USD/EUR RECIPROCKL OF 0.85 43-47 WRT IS THE STANDARD INTERSANK QUOTE FOR SPOT FUT Option A: 1.1702-07 Option B: 1.17 05-10 Option ¢: 1.16 95-00 Option D: 1.17 00-05 lvou selected B which was THCORRECT. |The correct: option was D: 1.17 00-05Ci Serene emery fine correct option was D: 1.11 W-Us Information Notes : Int you quote the reciprocal USD/#HUR rate 0.35 43-47 the standard rate quoted in the interbank narke loussrrow 0 : torre: Foreign exchange Text far oF me FOLLOWING StATEMaNTS DOES NOT APPLY. TO WY FX SvRD? Uption a: It elimnates risk mth the counterparty. | option w: 11 reduces credit risk with the counterparty, comared to a money market deal Optaon €: It consists of a paar of transactions, esualiY one spot, one Zorvard. operon D: It can replace a pair Of money narket transactaons lvou selectea D which was INCORRECT. Inhe correct option was A: It eliminates risk with the counterparty. Information Mote: lot those only the statement “It eliminates rik with the countoxparty’ doce MOT apply te FX ewpe. laursrrow 61 : TOPIC: Foreign exchange Text [rr vou ARE TOLD THAT THE FORWARD POTWTS FOR 4 MONTH WZD/USD ARF QUOTED XT A USD DTSCOWT (LONDON TF ITH: WAY THESE RATES MRE DISPLAVED OW A DEALER'S RATES SCREEN? Option A: insufficient. information to decide Option B: 65 - 60 Option C: 55 - 60 Option D: + 5 - 5 lvou selected B which was INCORRECT. ithe correct option was C: 55 - 60 ltnormation Notes : Int the quoted currency of a foreign exchange rate quotation (here the USD) is described as being at lswap bid-offer spread are quoted and displayed "Low - High’ - here 55 - 60, (London terminology) ot lbase currency (here HZD) is described as being at a forvard PREMIUM in relation to the quoted curre louesrxon 62 : TOPIC: Foreign exchange Text [ASSURING NO HOLIDAYS INTERVENE, IF TODAY IS THURSDAY 12TH DECEMBER 200X WAT IS TODAY'S SPOT DATE? Option A: 19ta December 200x option B: 17ta December 200%cas Cen ren Option B: 17th December 200x Option C: 14th December 200x Option D: 16th December 200% ya lvou selected the CORRECT option - D: 16th Decenber 200% Itnformation Notes : Inhe rule for calculating Spot date is Today + 2 business days forvard in the USD/major currencies. laays' in Europe or America and so when today is a Thursday, today + 2 will fall on the following Md Inolidays on that date. In this case therefore Spot date is Monday 16th December 200K. lQuESrTON 63 : TOPIC: Foreign exchange Text [Ir USD INTEREST RATES 2RE QUOTED A 2 P.C. IN 4 MONTHS AND THE SAME PERIOD EUR INTEREST RATES ARE [FORWARD EUR/USD SWAP POINTS TO BE QUOTED? Option A: Low-High Option B: High-Low Option C: around PAR Option D: insufficient information to decide lvou selected the CORRECT option - High-Low lunrormation Notes : lin rorvara exchange terminology, the currency with the higher interest rate can he described as bet lcurrency 1s the base currency (ere Ue EUR) in an indirectiy quoted currency pair (here the EUR/US lpoimts wi11 be quoted "High-Low", the countercurreacy (the USD) can be described as being at a for linternational terms in respect of the curreacy beiag so described. loussrrom 64 : TOPIC: Foreign exchange Text [ne YoU ANE TOLD THAT THE FORWARD POINTS FOR 1 MONTH NZD/USD ARE QUOTED AT A NZD DISCOUNT (THTERNATI RoGHr Be THE WAY THESE RATES 2RE DISPLAYED ON A DEALER'S RATES SCREEN? Option A: - 5+ 5 Option B: + 5-5 Option ¢: 45 - 50 Option D: 50 - 45 50-45 lvou selected the CORRECT option - ltntormation Notes :