Financial Markets Foundation Qualification Exam (FMFQ) Free Practice Test

Question 1

Which of the following is not a factor in determining a fair value forward fx price?

A. Interest in the base currency

B. Interest rate in the quoted currency

C. View on where rates will be at the forward date

D. Spot rate

Correct Answer: C

Question 2

Thinking about dealing on two-way prices, which of the following statements is not true?

A. Price-takers prefer higher bids and lower offers

B. Price-makers buy high and sell low

C. Price-makers quote higher offers than bids

D. Price-takers sell low and buy high

Correct Answer: B

Question 3

You purchase a USD Treasury Bill. Which of the following sentences best describes the trade you have done?

A. You have purchased an interest rate risk free security for which you have paid face value and will receive at maturity face value plus accrued interest

B. You have purchased an interest rate risk free security for which you have paid less than face value and will receive at maturity face value

C. You have purchased a credit risk free security for which you have paid less than face value and will receive at maturity face value

D. You have purchased a credit risk free security for which you have paid face value and will receive at maturity face value plus accrued interest

Correct Answer: C

Question 4

You have bought a call option on a stock at a strike of EUR 29, and paid a premium of EUR 1.5 for this option. What is your breakeven price on this position?

A. EUR 27.50

B. EUR 29.00

C. EUR 32.00

D. EUR 30.50

Correct Answer: D

Question 5

How is the yield curve normally represented?

A. Yield against coupon

B. Yield against price

C. Yield against term

D. Coupon against term

Correct Answer: C

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ICMA Financial Markets Foundation Qualification (FMFQ) Free Practice Test