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3I0-013 Questions and Answers

Question # 1

In the weekend newspapers you read that one of your FX counterparties has gone into liquidation. You have no netting or close-out agreements in place with this counterparty and remember that you have one forward deal outstanding. What is the main risk affecting your bank?

A.

The loss of the entire principal amount of the deal

B.

The “replacement risk”, also known as “replacement-cost risk”

C.

The loss of the negative mark-to-market value of the deal

D.

As the deal is in the future, there is no impact on P&L

Question # 2

Which of the following statements about "standard settlement instructions" (SSI) is correct?

A.

The Head of Operations has the sole responsibility of ensuring the correctness and validity of the SSI set up.

B.

SSIs should be stored and maintained in the bank's general static data system.

C.

Each institution should have a separate SSI team to prevent / minimize the potential risk of fraud.

D.

SSI staff should be fully integrated within Operations to insure consistent and reliable settlement guidelines.

Question # 3

Today is Monday, 8 December. You sell a 9x12 FRA in EUR. When will the settlement amount be paid or received, assuming that there are no bank holidays?

A.

8 September

B.

10 September

C.

8 December

D.

10 December

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