When banks transact FX swaps, the spot price should be determined:

Answer(s): C

Which of the following statements is true?

Prices quoted by brokers should be taken to be firm in marketable amounts unless otherwise qualified
Prices quoted by brokers should be taken to be indicative in marketable amounts unless otherwise qualified
Prices quoted by brokers should be taken to be firm in amounts of 1,000,000.00 of the quoted currency unless otherwise qualified
Prices quoted by brokers should be taken to be indicative in amounts of 1,000,000.00 of the base currency unless otherwise qualified

Answer(s): A

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

This is considered as a normal discount for bulk business.
The offer should be agreed only by directors or senior management on each side and should be recorded in writing.
The offer should be expressly approved by both the individuals concerned and clearly recorded in writing.
The Model Code strongly discourages such practices.

Answer(s): B

What ought to be done in the event a trade erroneously occurs at an off-market rate?

By agreement between the two counterparties, the trade must be cancelled as soon as practically possible since a rate amendment is prohibited.
By agreement between the two counterparts, the trade should, as soon as practically possible, either be cancelled or have its rate amended to an appropriate market rate.
The off-market rate should be adjusted as soon as possible to the appropriate current market rate and a new authenticated SWIFT confirmation sent immediately to the counterparty.
Nothing need be done, since once a trade is agreed to by the front office it is a binding agreement for both counterparties.

Answer(s): B

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