QUESTION: 25 Topic: 1, Volume A

You have quoted spot USD/CHF at 0.9423-26. Your customer says “I take 5”. What does he mean?

He buys CHF 5,000,000.00 at 0.9423
He buys CHF 5,000,000.00 at 0.9426
He buys USD 5,000,000.00 at 0.9423
He buys USD 5,000,000.00 at 0.9426

Answer(s): D

QUESTION: 26 Topic: 1, Volume A

A 12-month EUR/USD swap is quoted at 41/44. EUR interest rates are expected to fall, with USD interest rates remaining stable.

Assuming no change in the spot rate what effect would you expect on the forward points?

Unchanged
Move towards 28/31
Move towards 5 7/60
Insufficient information

Answer(s): C

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QUESTION: 27 Topic: 1, Volume A

Assuming a flat yield curve in both currencies, when quoting a 1- to 2-month forward FX time option price in a currency pair trading at a discount to a customer:

you would take as bid rate the bid side of the 2-month forward and as offered rate the offered side of the 1-month forward
you would take as bid rate the offered side of the 2-month forward and as offered rate the bid side of the 1-month forward
you would take as bid rate the offered side of the 1-month forward and as offered rate the offered side of the 2-month forward
you would take as bid rate the bid side of the 1-month forward and as offered rate the bid side of the 2-month forward

Answer(s): A

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