QUESTION: 185

The use of netting in foreign exchange dealings has increased because it reduces:

The volume of confirmations that have to be sent to the counterparties
Foreign exchange dealing limits and the currency risk exposure of the banks
The potential foreign exchange trading losses incurred by banks
Interbank payments, counterparty credit risk exposure, as well as the amount of capital allocated to foreign exchange activity

Answer(s): D

QUESTION: 186

Your FX swap dealer bought and sold 1 month GBP/USD 25,000,000,00; rates were set to 1,5305 against 1.5300. What payment is your bank expecting in a month from now?

USD 38,250,000.00
USD 38,262,500.00
GBP 25,000,000.00
USD 16,339,869.28

Answer(s): A

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QUESTION: 187

In FX swaps, the rate of the spot leg:

May be freely chosen by the quoting party as long as both parties agree on it
Must always be fixed immediately at the current mid rate, to reflect the rate at the time the deal was made
Should be fixed immediately within the current spread, to reflect current rates at the time the transaction was made
Should always be fixed off the current spread in order not to be mistaken for a spot FX transaction

Answer(s): C

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