QUESTION: 29

You have two nostro accounts in USD, one account is long USD 5,000,000.00 and the other is short USD 5,000,000.00. What action should be taken to reconcile the accounts?

No action is required. The credit interest earned on the credit balance will offset the debit interest incurred on the short balance
You should borrow USD 5,000,000.00 to cover the short balance and leave the long balance as it is
You should lend the surplus USD 5,000,000.00 in order to compensate the overdraft charges on the short balance with the interest earned on the loan
You should instruct the bank with the long balance to transfer USD 5,000,000.00 to your nostro account at the other bank

Answer(s): D

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QUESTION: 30

Which kind of report is a reconciliation system unable to produce?

A “probable matched items report” (a report in which most fields match but there are some discrepancies)
A “calculated fees report” (a report of the expected fees owed)
A “matched items report” (a report of all fields that match)
An “unmatched items report” (a report of items for which one is unable to find matches)

Answer(s): B

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QUESTION: 31

What is the function of the cash positions keeper?

He/she acts as a running control on the balance of a nostro, alerting the treasury dealer when funds are running too low or too high for a particular value day measured by agreed upon internal parameters
He/she assists the dealer in deciding which currency to invest in
He/she informs back office staff about which kind of confirmations are to be used
He/she acts as a running control on the balance of an internal account, alerting the treasury dealer when fees are running too low or high for a particular value day

Answer(s): A

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QUESTION: 32

What is the most important feature of a brokerage reconciliation?

It must be processed once a year
Brokers’ bills should be reconciled during the night when no other system is running
Brokers’ bills must be reconciled promptly at month-end prior to payment
The existence of a single reference currency for all the brokers with whom your institution is dealing

Answer(s): C

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QUESTION: 32