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FIA - Sample Questions

  1. The formulation of “Capital” is based on the primary issuance of which two types of financial instrument?
    1. ‘Foreign Exchange’ and ‘Commodities’
    2. ‘Precious Metals’ and ‘Futures’
    3. ‘Money Markets’ and ‘Oil Prices’
    4. ‘Equity Shares’ and ‘Bonds’
    5. ‘Credit Derivatives’ and ‘Interest Rate Swaps’

  2. What best describes the phrase “Secondary Market”
    1. The second most important market in a country
    2. Where instruments that have already been issued are subsequently traded i.e. bought and sold many times over
    3. A market where lower value instruments are traded
    4. A non regulated market
    5. Where instruments that have been traded on a Primary Market are stored for a period of at least one month before being removed from that market

  3. How is a “Proprietary Trader” different from an “Agency Broker”?
    1. A Proprietary Trader trades more frequently than an Agency Broker e.g. High Frequency Trading
    2. An Agency Broker works on a wide range of asset classes whereas a Proprietary Trader only focuses on one asset class
    3. A Proprietary Trader acts as the principal in a deal whereas an Agency Broker only ever acts on behalf of a client
    4. A Proprietary Trader works exclusively in one time zone whereas an Agency Broker can work anytime
    5. Agency Brokers are only recruited via recruitment agencies whereas Proprietary Traders are almost always recruited internally

  4. Which are examples of a Central Bank?(pick 3)
    1. Federal Reserve
    2. Royal Bank of Scotland
    3. Bank of England
    4. Bank of Japan
    5. Commonwealth Bank of Australia
    6. Deutsche Bank

  5. For what type of financial instrument would you expect investors to be interested in ‘Yield to Maturity’?
    1. Spot FX
    2. Soft Agricultural Commodities
    3. Metal Futures (only non ferrous)
    4. Fixed Income Securities e.g. Bonds
    5. Equity Shares

  6. What best describes the difference between ‘Level 1’ and ‘Level 2’ data from an Exchange?
    1. Level 1 data is the highest quality data from an exchange whereas Level 2 data has not been as closely checked and is therefore less reliable
    2. Level 1 data covers all data that comes from the exchanges domestic (local) market whereas level 2 data includes quotes or orders relating to international markets.
    3. Level 1 data displays only the best bid and offer whereas Level 2 provides data on greater depth e.g. more orders or quotes in that market
    4. Level 2 data conforms to all local and international regulations whereas level 1 is delivered more quickly but cannot be guaranteed to comply with all necessary regulations
    5. Level 1 data is always significantly more expensive than level 2 data, in some markets by a factor of 100
    6. Level 1 data consists of only the best bid and offer whereas Level 2 also provides last trade information

  7. Which would be considered to be “Fundamental Data”(pick 3)
    1. Share ownership data on publically listed companies
    2. Real time price data e.g. bid and offer - on shares
    3. News and Commentary
    4. Economic Statistics such as unemployment and Inflation etc
    5. Annual Reports and account from public companies e.g. P&L, Balance Sheets etc
    6. Charts and Graphs using time series data –i.e. Technical Analysis

  8. In what context would KYC be most relevant?
    1. Instrument reference data
    2. Company earnings estimates
    3. Economic fundamentals
    4. Counterparty reference data
    5. Theoretical pricing of options

  9. What best describes the concept of “Co-Location”?
    1. Where a trading or investment firm physically installs some or all of its trading applications at the site of the electronic trading venue (e.g. an Exchange)
    2. Where an exchange installs part of its data infrastructure at one its client firms e.g. an investment bank
    3. Where two or more sell side firms agree to fund a joint location for the installation of a common algorithmic trading application
    4. Where a sell side firm allows a small number of its buy side clients to visit its offices on an ongoing basis for the purposes of trading analysis

  10. In the financial markets which two of the following types of business is Dow Jones best known for?
    1. Credit Ratings
    2. Newswires
    3. Inter Dealer Broking
    4. Stock market Indices
    5. Wealth Management

  11. Which company now owns ‘Capital IQ’?
    1. Interactive Data Corporation
    2. Standard and Poors
    3. Factset
    4. Thomson Reuters
    5. Markit

  12. What does the acronym ‘MISU” refer to?
    1. Measurement of initial service undertaking
    2. Median indicated sales utility
    3. Multiple issuance -simple and uniform
    4. Multiple instance single user
    5. Merit for initial stable users

  13. Which best describes the concept of a contract ‘rollover date’?
    1. The date by which a contract must be cancelled
    2. The date on which a contract is automatically renewed (i.e. continues) for another contract period unless a cancellation notice has been lodged before a designated date
    3. A date when more than one contract is up for renewal
    4. The date when an industry regulator demand that all contracts are double checked for compliance purposes

  14. Which are hardware components? (Pick 3)
    1. Relational Database
    2. Central Processing Unit (CPU)
    3. RandomAccess Memory (RAM)
    4. Windows XP and Windows VISTA
    5. Excel Spreadsheet
    6. Network Interface Card (NIC)

  15. What best describes what a ‘Router’ is?
    1. A software program for routing trades to exchanges and other electronic venues in the most effective manner
    2. A device for tracking routing errors and general anomalies in a networked computer application
    3. A networking device whose software and hardware are usually tailored to the tasks of routing and forwarding information
    4. The final destination of a message that has been routed over a wide area network
    5. The starting point of a message that has been routed over a wide area network

  16. What is a “Thin Client” desktop?
    1. Where client functions are abbreviated to save time and reduce workload
    2. A desktop with a specially designed keyboard which is more flush to the desk i.e. thin
    3. A desktop with significantly reduced functionality so as to not tax the hardware it is resident on.
    4. Software for a workstation that only operates with other software from the same vendor
    5. Where the majority of the software intelligence resides on a server and not the desktop workstation
    6. A desktop running only one software application

  17. Which vendor provides desktop software called “Kobra”?
    1. Interactive Data
    2. Thomson Reuters
    3. Factset
    4. Bloomberg
    5. Six Telekurs
    6. Markit Group

  18. What best describes the ‘latency’ that many firms aspire to?
    1. Most firms accept that sub millisecond latency is sufficient
    2. Competing firms are primarily interested in getting data faster than their competitors, there is no specific level of latency
    3. Firms aim to achieve sub micro second latency by 2012
    4. Based on academic studies the speed of light is the level of latency firms aspire to

  19. Which of these vendors supply HARDWARE products? (Pick 3)
    1. IBM
    2. Microsoft
    3. HP
    4. Sybase
    5. TIBCO
    6. Cisco

  20. With respect to MiFid what does the acronym MTF refer to?
    1. Member Trading Firm
    2. Money Transfer Fund
    3. Microsecond Transmission Facility
    4. Member Tape Format
    5. Multilateral Trading Facility
    6. Miscellaneous Total Feedback

  21. What best describes the phrase ‘Concentration Rule’, with respect to European stock exchanges (pre MIFID)?
    1. A rule which dictated that trading in listed equities must always be conducted on the local exchange
    2. A regulation that required local exchanges to share fees for certain designated ‘concentration’ stocks
    3. A set of rules that restricted how foreign banks could operate in certain European markets, most notably in Greece, Italy and Portugal
    4. An EU regulation that dictated that trading for stocks capitalized over a certain level most only be traded on one of the three large markets - London, Frankfurt or Paris

  22. What does the phrase “Sub Prime” refer to?
    1. Interest rates on US Treasury Bonds offered at a rate below the ‘Prime Rate’
    2. The coupon rate of a Eurobond that had been issued before Mifid came into force in 2007
    3. Mortgages (typically in the US) offered to borrowers who are in the riskiest sector and who therefore might realistically be expected to default
    4. UK equities under primary issuance conditions presented by a tier two investment bank
    5. Loans made at, or just below, par to the US Department of Defense for the refit of the US Navy’s Pacific submarine fleet
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