ICMA FMFQ Exam Practice Test Instant Access

Question 1

Which of the following best describes LIBOR?

AThe average rate at which wholesale bank deposits have taken place over the past 24 hours (since the last LIBOR fix)

BThe average rate at which wholesale banks are offering one another money at fixing time

CThe highest rate at which wholesale banks are offering one another money at fixing time

DThe average rate at which wholesale banks have offered money to their customers over the past 24 hours (since the last LIBOR fix)

Answer : B

Question 2

The dirty price of a bond is which of the following:

AThe same as the clean price

BClean price + interest of the period from the last coupon payment date

CClean price + interest of the period from settlement until the next coupon payment date

DClean price + trading commissions

Answer : B

Question 3

Which money market instrument is supported in the secondary market by primary dealers?

ADeposits

BCommercial paper

CT-bill

DCorporate bond

Answer : C

Question 4

A spot FX trade would traditionally follow which of the following settlement conventions?

ASame day

BT + 1 day

CT + 2 days

DT + 3 days

Answer : C

Question 5

When a rating agency is assessing a corporate bond rating/ which of the following will they take into consideration in giving their rating?

AThey assume all bonds will repay and so ignore the probability of default

BThey look at the severity of potential loss without considering the probability of default

CThey consider probability of default but must always assume 100% loss

DThey take into consideration both probability of default and specific severity of potential loss

Answer : D

Question 6

How are equity prices expressed?

AAs percentage of the nominal values of the share

BAs yields

CAs monetary units per share

DAs percentage of the value of the company

Answer : C

Question 7

Which of the following rates represents the lowest investment-grade rating?

AA-

BBBB-

CBB

DC+

Answer : B

ICMA FMFQ Financial Markets Foundation Qualification Exam Practice Test