CS eee [vou selected the CORRECT option - R: you have bought GRP spot against SEK and sold GRP 3 months for ya Itnformation Notes : [xt on a quote of 370/350 the custoner deals on your forvard Offer of GBP of at 350 you have bought forward against SEK. lQuEsrTON 68 : TOPIC: Foreign exchange Text [spor GBP/us> IS AT 1.8500/10. THE TOM-HEXT IS QUOTED 1.1/ Option A: 1.8490/05 Option B: 1.9510/19 Option C: 1.85009/1. 85111 Option D: Not enough data to calculate <9. HOW SHOULD T QUOTE FOR YALUE TOMORROY lvou selected the CORRECT option - 1.85009/1. 85111 lntormation Notes : leor value tomorrow the outright rate is (1.4900 plus 0.9 points) to (1.6500 plus 1.1 points) - the Iswap ana spot cover loursrro 69 : TOPIC: Foreign exchange Text [Ir TH FORWARD YOINTS TOR 4 MONT USD/DKK ARE QUOTED 60 - 55, NOW IS THE FORWARD DEK BEING QUOTED? Option A: DKK is at a forward discount Option B: USD is at a forvard premium Option C: DKK is at a formrd premium Option D: DKK is cithor side of par lvou selected the CORRECT option - 1: DKK ie at a forvard premium, Itnformation Notes : Itt the numbers in the swap bid-offer spread are quoted "High-Low then the quoted currency (here th lpHIRTU in relation to the base currency (London terminology). or to put it another equally correct @ere the US Dollar) is at a forward DISCOUIT in relation to the quoted currency (international ter luEsrroN 70 : TOPIC: Foreign exchange Text lwmaccH OF THE FOLLOWING STATEMENTS INCLUDES DATA ACCURATELY DESCRIBING THE CONCEP? OF INTEREST RATE lscnrris. Option A: Spot EUR/USD 1.2100, 3 months EUR deposit 2.75 p.c., 3 months USD int rate 4.00 p.c., 3laiscount Option B: Spot HUR/USD 1.2100, 3 months EUR deposit 4.00 p.c., 3 months USD int rate 2.79 p.c., : larscount Option C: Spot EUR/USD 1.2100, 3 months EUR deposit 2.75 p.c., 3 months USD int rate 4.00 p.c., % lpremium Option D: Spot EUR/USD 1.2100, 3 months EUR deposit 4.00 p.c., 3 months USD int rate 2.75 p.c., % lpremiun lvou selected the CORRECT option - |svap points: 0.0038 FUR premix Spot FURAISD 1.2100, 3 months FUR deposit 2.75 p.c., 3 months ltnormation Notes : linterest rate parity is a relationship that must hold between the spot interest rates of two curres lopportunities. i.e. the interest rate in one currency is equal to the interest rate in the second ¢ lHere the only statement where this parity exists is with Spot EUR/USD 1.2100, 3 nonths EUR deposit 3 months EUR/USD swap points: 0.0038 EUR premium (EUR int rates lover than USD}. loussriom 71 : TOPIC: Foreign exchange Text lvou QUOTE A CORFORATE CUSTOMER FUR/GBP 0.63 63 - Option R: you sell GBP at 0.63 70 Option D: you sell FUR at 1.57 10 Option C: you buy EUR at 1.57 10 Option D: you buy GBP at 0.63 65 ME ASKS TO DEAL AT THE RECIPROCAL OF 1.57 10. lvou selected the CORRECT option - C: you buy FUR at 1.57 10 ltntormation Notes : lat the reciprocal rate of 1.5710 (1 divided by 0.63 65) you sell GP and buy EUR. lussrron 72 : TOPIC: Foreign exchange Text Ina: DISCOUNT OR PREMIUM OH FORWARD FOREIGN EXCHANGE POTNTS IN THE 2 MONTHS PERIOD IS CALCULATED FRA Option A: the current volatility ia the FX markets Option B: the shape of the yield curve of interest rates in the currency for one to twelve months Option C: the differential hetween the interest rates ia the two currencies for that period Option D: the emected appreciation or depreciation of the hase currency against the quoted curre lvou selected the CORRECT option - C: the differential between the interest rates in the two currentcas ltnormation Notes : lin all forvard dealing the @iscount or premium between the spot and the forward price of one curres lproportionate to the difference in interest rates between the two currencies involved for the perid lnarkets (provided both are freely convertible currencies) loussrrow 13 : Torre: Foreign exchange Text frat oF Mme FOLLOTING Ts Tie: MIST ACCURATE DESCRIPTION OF A FOREIGN EXCHANGE SIA? Option A: a short date FX netting arvangenent Option B: an exchange of interest flows calculated on principal amounts in two currencies Option ¢: an outright forvard foreign exchange contract | option p: an exchange of cashflows over tine lvou selected B which was INCORRECT. Inne correct option was D: an exchange of cashflows over tine lxacormation Motes : lrne most accurate description of a foreign exchange swap Nere is ‘an exchange of cashflows over ti loussrron 74 : TOPIC: Foreign exchange Text lroNonIG mi RISK ON UNCOVERED INTEREST FLOWS, WATCH OF THE FOLLOWING IS HY EXAMPLE OF 4 COVERED Th Option A: Lend 3 months EUR, eoll and buy FUR against USD in a FX wap spot against 3 months, Boz Option B: Lend 3 months EUR, buy and soll FUR against USD in a FX wap spot against 3 months, Boz Option C: Borrow 3 monthe EUR, eel and buy EUR againct USD in a FX eway spot againet 3 monthe, E Option D: Lend 3 monthe FUR, buy and cell FUR againct USD in a FX ewap spot against 3 months, Ler lvou selected D which was THCORRECT. IThe correct option was B: Lend 3 months FUR, buy and sell FIR against USD in a FX swap spot. against ltntormation Notes : ltonoring any risk on uncovered interest flows, an example of a covered interest arbitrage transact lselLing FUR against USD in a FX swap spot against 3 months and horrowing USD for 3 months lQuEsTTON 75 : TOPIC: Foreign exchange Text [Ir SPOT EUR/USD IS QUOTED 0.95 50 - 55 AND USD/JPY IS QUOTED 115.75 - 85. AS MARKET USER WHAT TRANS Option A: You can buy JPY against EUR Option B: You can buy FUR against JPY Option C: insufficient information to decide Ontion D: You can sell EUR asainst_JPYcas Cen ren ya Option D: You can sell EUR against JPY lyou selected the CORRECT option - D: You can buy BUR against JPY Information Motes : Ine market user you can buy FUR ayainst JPY at 110.69 (0.95 55 X 115.75). lousrrou 16 + ToPzC: Foreign exchange Text fs Denim SESHES To Rots, & LONG USD/APY FORETGH FREWRNGR POSTON TH THE TORCHES. WATCH OF THE FOL Option A: The dealer mst e11 USD/APY for value today and buy USD/IPY tor valve tomarrow | option B: The dealer mist Irey USDAIPY for value tomorrow and se11 WSDAUY for value =yot Option C: The dealer must se11 USD/PY for value tomorrow and buy USDATFY for value spot Option D: The dealer must buy USD/JPY for value tolay aad sell USD/IPE for valve tomorrow lvou selected the CORRECT option - C: The dealer mist sell USD/JPY for value tonorrow and buy USD/JE ltnormation Notes : Int the dealer is long USD/JPY (Long USD - the hase currency) then to roll this position forward Tor land sell JPY) in a TomMext swap, value tomorrow against the next day (Spot date). loussrrow 77 : TOPIC: Foreign exchange Text [Spor CABLE IS QUOTED 1.4575/80 AND YOU SAY ‘5 YOURS!' TO THE BROKER. HAVE YOU. Option A: hought GBP 5 million at 1.4580 Option B: hought USD 5 million at 1.4580 Option C: sold GBP 5 million at 1.4575, Option D: sold USD 5 million at 1.4575, lvou seectea A which was INCORRECT. [mie correct option was C: sold GBP 5 million at 1.4575, Information Notes : "Yours' is a way of advising the broker that you are selling the base currency (here GBP). Tt is ix lexprossion as noted above '5 yows!' meaning you are selling GBP 5 million to the broker's bid of 4 loussrron 78 : TOPIC: Foreign exchange Text las BUYER OF USD 1,000,000 WATCH OF THE FOLLOWNNG USD/CHF SPOT QUOTES WADE BY FOUR DIFFERENT YKRKE Option A: 1.24 01-06CS eee Uptaon Ar 1.22 1-06 Option B: 1.23 99-04 Option C: 1.23 98-03 Option D: 1.24 00-05 lvou selected the CORRECT option - C: 1.23 98-03 ltntormation Notes : lon a spot quote of 1.23 98-03 you can buy USD (sell GHF) at 1.24 03 the best spot offer of USD (hid loussrion 79 : TOPIC: Foreign exchange Text himacet oF THE FOLLOWING 15 AN EXAMPLE OF MARKET MAKING IN THE FUREXGN EXCHANGE MARKEE? option A: covering a recent sale of base currency by taking the offer on an electronic matching s option B: making a two way price to a calling counterparty Option C: jubbing a currency pair following the market trend Option D: dealing on a price quoted to you hy a broker lou sctected the CORRECT option - DB: making a two way price to a calling counterparty Information Notes : lot the alternatives available the only example of narket naking in the foreign exchange market ic 7 |counterparty. loursTTow 80 : TOPIC: Foreign exchange Text |OUR SPOT GBP/USD DEALER STATES HIS PROFIT as "15 POINTS OM 7 STERLING". HOW MUCH HAS HE ADE? Option A: USD 105 Option B: GBP 10,500 Option C: USD 1,500 Option D: USD 10,500 lvou selected the CORRECT option - D: USD 10,500 ltntormation Notes : lone point on GBP 1 million in GEP/ISD is worth USD 100 (calculated from the number of decinal place lusp 10,500. luesrron #1 : TOPIC: Foreign exchange Text la 12 MONIMS USD/CHE SWAP IS QUOTED 37/32. US INTERES RAIUS ARE EXPECTED 10 FALL WITH CHE INTERESTcas Cen ren fa 12 xmwmts UsD/cH SWAP TS QUOTED 37/32. US INTEREST RATES ARE EXVECTED 10 FALL WIM CHF INTEREST lou EXPECT OM THE FORWARD RATE? Option A: venain unchanged Option B: inoufficiont information to decide Option C: move towards 33/27 Option D: move towards 40-35 ya lvou selected the CORRECT option - C: move towards 33/27 lnnformation Notes : lHere the USD is at a forvard discount (CHF premium) so USD interest rates are higher than CHF. IF U lnarrow, i.e. swap points will move towards 33-27. lussrToN 82 : TOPIC: Foreign exchange Text law EX SWAP CAN BE USED TO. Option A: obtain cheaper funds Option B: arbitrage hetween deposits ani forvard points Option C: invest in the currency of your chaice Option D: all of these lvou selected the CORRECT option - 1: all of these lntormation Notes : lex swaps are an exchange of cash flows spot against forvard or forvard/torward. They can be used td lcurrency or your choice and arbitrage hetween deposits and forward points. The correct answer nere loursrrow 03 : TOPIC: Foreign exchange Text lropay IS TURSDAY 30TH DECRGER 200. WHAT TS TODAY'S SPOT VALUE DATE FOR DEALING IN GBP/USD? Option A: None of these Option B: Thureday it January 200Y Option C: Friday 2nd January 200% Option D: Monday 5th January 200% lvou selected the CORRECT option - C: Friday 2nd January 200¥ Itnformation Notes : Inne rule for calculating Spot date is Today + 2 business days forward in the GBP and USD/najor curt laate would normally be a Thursday but in this case this will be ist January, a bank holiday in thecas Te WU UGLY Ge a REMY OW AN HLS Case CE Wid HE IN OaNNEy, a HGNR HOLLY On -Ca lrriday 2nd January 200Y. luEsrToN #4 : TOPIC: Foreign exchange Text lice oF THE FOLLOWING IS NOT TRUE OF A TRADITIONAL FORWARD EXCHANGE (TIME OR DELIVERY) OPTION CONT Option A: mist be closed out at spot if full contractual amount is not delivered Option B: may be extended at maturity Option C: multiple partial deliveries are possible duriag the option period ‘option D: no obligation to complete the contract lvou selectea B which was INCORRECT. Iie correct option was D: no obligation to complete the contract Information Notes : lin a traditional forward exchange (time or delivery) option there IS a contractual obligation to cd loxchange option contract grants tho custonor the option as to date of delivery of the currency. Tt loption. The customer may not valk avay from his obligation. The full amount of the contract must be laursrrow #5 : TOPIC: Foreign exchange Text limtcct oF THE FOLLOWENG TSO COMES REPRESENT THE CURRENCTES OF THE FOLLOWING AFFILIATED ACT MEMBER Ci [SHEDEN, SLOVAKTA BHD TUNTSTA? Option A: SKK, SEK, ESD, and THB Option B: SEK, BHD, SKK and THD Option C: SIT, THD, EMD, and SKK Option D: BMD, SEK, SKK and THD lvou selected D which was INCORRECT. Inthe correct option was B: SEK, EHD, SKK and TD lnntormation Notes : [sek = Swedish Krona, BHD = Bahrain Dinars, SKK = Slovakian Koruna and THD = Tunisian Dinars lQuESTTON 86 : TOPIC: Foreign exchange Text [vou HavE QUOTED ANDIMER BANK SPOT USD/SEK 7.92 50 - 60. THE OMER BARK DEWLER IMMEDIATELY RESPONDS Option A: The other hank buys SEK 5 million at 7.92 50 option B: The other bank buys SEK 3 milton at 7.92 60 option C: The other bank buys USD 9 milton at 7.92 90 option D: The other hank buys USD 5 milion at 7.92 60cas Cen ren ya lvou selected the CORRECT option - D: The other hank buys USD 5 million at 7.92 60 ltnformation Notes : Itt you quote a rate to another hank you are acting as market maker and the other bank has to deal 4 17.92 50 - 60 means you are prepared to buy USD (sell SEK) at 7.92 50 and sell USD (buy SEK) at 7.92 |therefore means he is buying USD 5 million at 7.92 60. lQuEsrToN 87 : TOPIC: Foreign exchange Text [3 MONTHS USD/CHF SWAP IS QUOTED 13/15. INTEREST RATES IN SWITZERLAND ARE SLIGHTLY REDUCED AND USD F [FOLLOWING WOULD YOU EXPECT THE 3 MONTHS FORVARD USD/CHF PRICE TO BE? Option A: 10/12 Option B: unchanged Option C: 15/17 Option D: 12/10 lvou selected C which was INCORRECT. ithe correct option was A: 10/12 lnrormataon Notes : la uspscrw torward swap points quote of 13/19 (Low-itigh) indicates a USD Premium {CHF Discount) mean lusp 1m the three months. Ix CHE rates reduce and USD renain the sane then the differential will naz lPremun i.e. a lower Wo. of points differential therefore 10/12 1s Ue only possible answer. loussrrow 90 : TOPIC: Foreign exchange Text [Ie THE FORWARD YOINTS ARE INDICATED 4S 220-250, THIS INDICATES THAT. Option A: interest rates are vory similar in the 2 countries Option B: interest rates are higher in the hace currency than in the variable currency Option C: interest rates are lower in the hase currency than ia the variable currency Option D: the forward rate is the sane as the spot rate lvou selected the CORRECT option ~ interest rates are lower in the base currency than in the vari ltntormation Notes : Itt the forvard points are indicated as 220:250, this indicates that the base currency is at a Premi |currency than in the variable currency.cas Cen ren ya lQuEsrToN 89 : TOPIC: Foreign exchange Text [IF THE FORWARD YOINTS FOR ONE MONTH USD/CHF ARE QUOTED 60/55, HOW IS THE CHF BEING QUOTED? Option A: CH at a premun, Option B: ether side of par option Cc: par Option D: CH at a discount lxou selected the CORRECT option - A: CH at a premium Information Notes : Int the sap points are quoted High - Low then the base currency (USD) is being quoted at a forvard lcre) de at a forward Premiun jLondon terme} fresera so + trie: rorean ena test Korn san or ar et0,O on oP ee EREGWDE VSO/OY SPOT QHTES ONE PO DPI lvou selected the CORRECT option - A: 109.10-15 ltntormation Notes : lon a spot quote of 109.10-15 you can sell USD at 109.10 the hest spot hid for USD available. lquEsrToN 91 : TOPIC: Foreign exchange Text [SPOT EUR/USD = 1.2100. HOW DO YOU CONVERT AN RSOUNT OF USD INTO EUR. Option A: multiply the USD amount by the rate Option B: none of the abore Option C: divide the USD amount hy the rate Option D: divide the USD amount by the reciprocal of the rate lvou selected D which was INCURRECT. Inne correct option was C: divide the USD amount hy the rate lnnformation Notes: : lsyot EUR/ISD - 1.2100. to conrert a quoted (non-hase) currency anount of USD 2,250,000 into base cv lby the rate.cas lby the rate. Cen ren loursrron 92 : TOPIC: Foreign exchange Text [Ir THE SPOT EUR/JPY IS QUOTED TO YOU AS FOLLOWS, WEIGH IS THE BEST RATE FOR YOU 70 BUY EUR? Option A: 118. 30/35 Option B: 118. 25/30 Option C: 118. 28/33 Option D: 118. 31/36 lvou selected the CORRECT option - 118. 25/30 ltntormation Notes : Ithe rate quote is so many JPY per EUR therefore you vant to pay as few JPY per EUR as possible (the lthe right hand side of the market makers’ quotations) hence 118.30. loussrion 93 : TorIC: Foreign exchange Text [ie A 6 MUNTH EUR/USD SWAP IS QUUTED 72/68, WHICH OF THE FOLLOWING STATEMENTS WULD YOU CONSIDER 10 option R: FUR yield curve 1s positive wilist the USD curve 1s negative Option B: Spot EUR/USD will be lower by approximately 70 points in 6 months tine Option C: 6 months FUR rates are lower than 6 oaths USD rates Option D: 6 months FUR rates are higher than 6 months USD rates lvou selected the CORRECT option — 6 months BUR rates are higher than 6 months USD rates ltntormation Notes : Inne only thing you can positively identify fron thie quote ie that the EUR ie at a Diecount (USD ie lare higher than USD in the § nonths period. loursTToN 94 : TOPIC: Foreign exchange Text [spor Usp /cHe IS QUOTED BY THE BROKER 1.46 50 - 55. YOU WAVE AN INTEREST TO BUY USD AT 1.46 52 ND ¥ Ine HES NEW TWO WAY PRICE TO THE MARKET? Option A: 1.46 52 - 55 Option B: 1.46 50 - 52 Option C: 1.46 50 - 55 Option D: 1.46 55 - 52 lvou selected B which was INCORRECT. Inne correct option was A: 1.46 52 - 55lxacormation Motes : lvou want to uy USD at 1.46 52, you put the broker on (you advise him of your BED for USD at 52). 1 limprovenent on his current bid of 1.46 50, making his new price to the market 1.46 52 - 55. loussrrow 95 : TOPIC: Foreign exchange Text learwmro SWAP POINTS ARE HEST DESCRIBED AS. . Option A: A good forecast of future exchange rates Option B: In azbitrage free price that reduces long torn speculation in the currency narkets Option C: A good forecast of future interest rater Option D: The interest rate differential hetween two currencies lvou selected the CORRECT option - D: The interest rate differential between tym currencies ltntormation Notes : lrorwara swap points are equivalent to the interest differential between two currencies calculated 4 lto achieve the forward outright rate. lQuESTTON 96 : TOPIC: Foreign exchange Text liar Ts THE FUNCTION OF MT AUTOMATIC TRADING SYSTEM (ATS) OR ELECTRONIC BROKER IM THE SPOT FX MARKE Option A: a screen-based anonymous dealing systen for professional spot traders Option B: a screen-based conmmications system for professional spot traders Option C: a screen-based spot rates infornation systen Option D: a screen-based position keeping system for professional spot traders lvou selected B which was INCORRECT. inne correct option was A: a screen-based anonymous dealing systen for professional spot traders lxacormation Notes : lan example of an automatic trading system (ATS) or electronic broker in the spot EX market is EBS v lanonynous dealing system for professional spot traders, operating 24 hours a day, seven days a week loussrron 97 : TOPIC: Foreign exchange Text Ine YOUR HU EURO ZONE COMERCIAL CUSTOMER, AM EXPORTER, WANTS TO COVER HIS FORWARD USD RECEIVABLES 2 [TRANSACTIONS BEST SUITS HIS REQUIREMENTS? Option A: He buys Outright USD ayainct FUR Option B: He buys Outright EUR ayainet USDCS er eo emery ‘Option B: He buys Outright EUR against USD Option C: He buys Spot USD and sells spot and buys forward FUR against USD Option D: He sells Spot USD and buys spot and sells forvard EUR against USD lvou selected the CORRECT option - He buys Outright EUR against USD Information Notes : lot these alternative sequences of transactions the only one which suits the customer's requirenents loutrignt USD receivables against EUR (he buys Outright EUR against USD). loussrrox 98 : roPrc: Foreign exchange Text lim 6 MUTA HUR/GBP SWAP 1S QUUTED 197-203, WHICH OF THE FULLOWING STATEMENTS WOULD YOU CONSIDER 1 Option A: Spot HIRY/GHP will be higher by approminately 2 ig figures in 6 montis tine option B: 6 months HK raves are agher tan ¢ months GBP rates | option c: 6 months HM rates are Lower than 6 montis. GBP rates Option D: GaP yield curve 1s positive whlist the EWR curve 1s neyative lvou selected the CORRECT option - 6 months EUR rates are lower than 6 nonths GDP rates Information Mote: Inne only thing you can positively identify from thie quote de that the EUR ie at a Promiun (GBP io laze lower than GAP in the 6 monthe period. laursrrow 99 : TOPIC: Foreign exchange Text [TF YOU ARE TOLD THAT THE FORWARD POINTS FOR 1 MONTH AUD/USD ARE QUOTED AT A AUD DISCOUNT (INTERNAT IrHEO TO FE DISPLAYED OW A DEALER'S RATES SCREEN? Option A: Low - High Option B: High - Low Option C: insufficient information to decide Option D: Around PAR lvou selected the CORRECT option - 2 High - Low ltntormation Notes : Itt the base currency of a foreign exchange rate quotation (here the WD} is described as being at 4 lswap bid-offer spread are quoted and displayed "High - Low’ (international terminology) or to put 4 lcurrency (here the USD) is described as being at a forvard IRMOUM in relation to the hase currencycas Cen ren ya loussrrow 100 : TOPEC: Foreign exchange Text Ine YOU HAVE SOLD AND BOUGET EVR IN A SIX MOWING FX SWAP AND BORROWED THE EUR OW DEPOSIT, IGNORING 2 lroserrow 1avE YOU CREATED? Option A: a synthetic FUR asset Option B: a synthetic USD liability Option ¢: a eynthetic FUR liability Option D: a eynthetic USD ascet lvou selected ¢ which was THCORRECT. ithe correct option was B: a synthetic USD liability lintormation Notes : let you have sold and bought EUR in a six noaths EX svap and borrowed the EUR on deposit, simoring « heaving the USD uncovered “for the tine being’ you have erated a synthetic USD Liability ~ long 1 rate lqussrro 101 : TOPIC: Foreign exchange Text lroRwaRD EX POINTS ARE CALCULATED FROM. Option A: inflation rates in the two countries whose currencies are involved Option B: the option premiun charged in both currencies Option C: interest rates in the two curreacies Option D: the volatility in the two currencies concerned lvou selected the CORRECT option - interest rates in the tim currencies lnrormation Notes : lrorvara Fx points are calculated fron interest rates in the two currencies loussrrow 102 : TOPEC: Foreign exchange Text lvou quoTE YOUR CORPORATE CUSTOMER SPOT EUR/USD 0.93 50 - 55. HE ASKS TO DEAL AT THE RECIPROCAL OF 4 Option A: you sell FUR at 0.93 55 Option B: you sell USD at 0.93 55 Option C: you sell FUR at 1.06 95 Option D: you sell USD at 1.06 95 lvou selected the CORRECT option - D: you sell USD at 1.06 95cas ltntormation Notes : IAt the reciprocal rate of 1.06 95 YOU sell USD (reciprocal of 0.93 50). loussrzo 103 : TOPIC: Foreign exchange Text lvou MaKE A CALL OUT TO ANOTHER HANK AND OBTAIN A NZD/USD RATE FOR YOUR SPOT NZD DEALER. YOU SHOUT 1 “GIve XC TWO. CHOOSE THE MOST APPROPRIATE FORM OF WORDS TO USE TO EFFECT THE DEAL REQUIRED WITH 1 Option A: At 0.61 45 I buy USD 2 million Option B: At 0.61 40 I sell ND 2 million Option C: At 0.61 45 I sell ND 2 million Option D: At 0.62 40 1 sel1 USD 2 muon lvou selectea the CORRECT option - AE 0.64 40 C sell NZD 2 mi1ion lintormation Notes : Itt you advise a rate being quoted to you by another bank you will he acting as a market user ix ony laictates tho way you mist deal. Tn HZD/USD {an indixect quoted currency! the market maker's quote « lrzp (ae USD} at 0.64 40 and sell HZD (uy USD) at 0.61 45. Your words must therefore convey the £ Ico nie Bid of 0.64 40. laursrrow 101 : TOPIC: Foreign exchange Text ITH VALUE DATE OF A TRANSACTION TS BEST DESCRIBED aS... Option A: the date won which the fixing rate is agreed Option B: the date won which settlenent occurs Option C: the date won which a trade is undertaken Option D: the date won which confirmations are exchanged lvou selected A which was INCORRECT. lthe correct option was B: the date upon which settlenent occurs ltnormation Notes : Inhe Value date of a transaction is hest described as the date wpon which settlement occurs. loussrro 105 : TOPIC: Foreign exchange Text |How WOULD YOU DESCRIBE THE RELATIONSHIP OF STERLING 10 THE EURO? Option A: it is managed on an unsterilised intervention basis Option B: it is managed by Gordon Brown by means of his five tests option C: at as rreely Tleatang option D: 1t 1s managed on a ‘crawling peg’ basiscas Cen ren ya Option D: it is managed on a ‘crawling peg’ basis lvou selected the CORRECT option - C: it is freely fleating ltnformation Notes : luntit the UK decides to join its fellow HU countries in EMI the Sterling exchange rate renains free loussrro 106 : TOPIC: Foreign exchange Text leuryepP Is QUOTED 0.69 00 - 05. IF GBP INTEREST RATES ARE QUOTED AT 4.00 P.C. IN 3 MONTHS AND THE s 3.00 P.C. HOW WOULD YOU EXPECT FORWARD EUR TO BE DESCRIBED 2ND QUOTED AGAINST STERLING IN PARIS? Option A: at a forvard Discount Option B: around PAR Option C: 3.00 - 4.00 Option D: at a forvard Preniun lvou selected A vhich was INCORRECT. Itke correct option was D: at a forvard Premiun lnnormation Notes : lin forvard exchange terminology, the currency with the lover interest rate can be described as bei le the base currency (here the EUR) in an indirect currency pair (EUR/GBP), then the numbers in the leagn . loussrrow 107 : TOPIC: Foreign exchange Text lr Topay's DATE IS TUESDAY 29TH JANUARY 200X (A LEAP YEAR), WIAT WOULD THE ONE MONTE MATURITY DATE locas ne? Option A: Tuesday 27th February 200K Option B: Friday tet March 200 Option C: Wednesday 28th February 200% Option D: Thureday 29th February 200X lvou selected RB which was THCORRECT. Irhe correct option was D: Thursday 28th February 20 ltntormation Notes : Inthe standard period forward value date will normally be the sane date in the appropriate forvard mi land other non-business days in one or other or both of the financial centres where the currencies 4 lperiod forvard value dates. If today's spot date is the last business day in the current month for