Question

In: Finance

1. Which of the following is the best term to describe an exchange of a fixed...

1. Which of the following is the best term to describe an exchange of a fixed interest payment for a floating interest payment?. Single choice.

A. Forward rate agreement

B. Interest rate future

C. Swap

D. Repo

2.

Which of the following does NOT take place in the front office of an investment bank?. Single choice.

A. Strategy

B. Client Fund management

C. Financing of Client Corporate actions

D. Mergers & acquisitions Advice

3.

An employee of an investment bank makes a mistake entering data onto a trade ticket and costs the bank $1 million. What kind of risk is this an example of?. Single choice.

A. Market

B. Reputational

C. Systemic

D. Operational

Please answer all these 3!!!

Solutions

Expert Solution

1. Which of the following is the best term to describe an exchange of a fixed interest payment for a floating interest payment?. Single choice.

Correct answer is C. Swap

Not

A. Forward rate agreement - since this a fixed rate agreement to lend / borrow a sum of money at a future date for a fixed specified period

B. Interest rate future - the underlying asset pays a fixed interest rate

D. Repo - instrument repurchase agreement used in money market operations usually by central banks

2. Which of the following does NOT take place in the front office of an investment bank?. Single choice.

Correct answer is A. Strategy

Not

B. Client Fund management

C. Financing of Client Corporate actions

D. Mergers & acquisitions Advice

all of which are functions undertaken by Investment Banks.

3. An employee of an investment bank makes a mistake entering data onto a trade ticket and costs the bank $1 million. What kind of risk is this an example of?. Single choice.

Correct answer is D. Operational

Arising from failure of internalised processes or human errors or breaches in systems all of which may be interntional or purely accidental

Not

A. Market - due to fluctuation in market prices of securities, assets, interst rates etc

B. Reputational - risk of loss of trust of clients and the public in general

C. Systemic - risks that are inherent in the external system and are faced by the entire investment banking industry

jeff jeffy answered 2 years ago
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