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NEW QUESTION: 1
Which of the following is not in the Model Code?
A. Banks and brokers should record, by tapes or other such means, conversations between dealing counterparties.
B. The storage of recorded tapes should be strictly managed to prevent their contents from being tampered with.
C. There is no need to inform new counterparties and clients that conversations will be recorded.
D. On completion of recordings, tapes should be kept for a period sufficient to enable the details of any transaction contained therein to be confirmed.
Answer: C
NEW QUESTION: 2
Where futures are being used to hedge a commodities position, which of the following formulae should be used to determine the number of futures contracts to buy (or sell)?
A. Minimum Variance Hedge Ratio x Units in Position Held / Units in Single Futures Contract
B. Minimum Variance Hedge Ratio x Dollar Value of Position / Dollar Value of Single Futures Contract
C. Minimum Variance Hedge Ratio x Dollar Value of Position / Units in a Single Futures Contract
D. Minimum Variance Hedge Ratio
Answer: B
Explanation:
Explanation
When using a futures contract to hedge a position, the correct way to determine the number of futures contracts to use is to use the following formula. This adjusts for the 'tailing the hedge' adjustment required as a result of the daily settlement feature of futures contracts.
Minimum Variance Hedge Ratio x Dollar Value of Position / Dollar Value of Single Futures Contract When using forward contracts to hedge a position, no adjustment to tail the hedge is required (as settlement happens only at the end), and the number of units of the exposure when compared to the number of units per contract should be used. The formula in the case of forward contracts is:
Minimum Variance Hedge Ratio x Units in Position Held / Units in Single Futures Contract In practice however, the difference between the above two formulae is de-minimis; and for the exam you should be okay to use either of the above two to determine the number of contracts - unless the question is directed to testing your knowledge of the 'tailing the hedge' adjustment.
NEW QUESTION: 3
A security administrator has been tasked with implementing controls that meet management goals. Drag and drop the appropriate control used to accomplish the account management goal. Options may be used once or not at all.
Answer:
Explanation:
* Standard naming convention
* Group policy
* Usage auditing and review
* Permission auditing and review
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