Pasaran Kewangan Malaysia Certificate (PKMC) Module III (Malaysia)

In the wholesale interbank foreign exchange market, what is the role of an approved money broker?

• ATo act as a principal intermediary by taking proprietary positions and absorbing exchange…
• BTo act as a pure matchmaker or agent, bringing together buyers and sellers of currencies…
• CTo regulate commercial banks' daily net open foreign exchange positions on behalf of Bank…
• DTo provide retail currency exchange services directly to corporate and individual clients…

Which of the following describes a direct exchange rate quotation in the Malaysian wholesale financial market?

• AExpressing the exchange rate as the number of units of foreign currency required to purch…
• BExpressing the exchange rate as the number of units of Malaysian Ringgit (MYR) required t…
• CA quote where the exchange rate is determined exclusively by the gold backing of the Ring…
• DA quote expressed relative to the Special Drawing Right (SDR) rather than a single nation…

Under standard market conventions, what is the typical value date for a 'spot' foreign exchange transaction?

• AThe same business day the trade is executed (T+0).
• BThe next business day following the trade execution date (T+1).
• CTwo business days following the trade execution date (T+2).
• DThree business days following the trade execution date (T+3).

In the currency pair quotation 'USD/MYR = 4.7230/4.7250', which currency is the base currency and which is the quote currency?

• AUSD is the quote currency; MYR is the base currency.
• BUSD is the base currency; MYR is the quote currency.
• CBoth currencies act as base currencies depending on whether you buy or sell.
• DThe base/quote distinction is determined by Bank Negara Malaysia on a daily basis.

Which of the following market participants is considered a 'price maker' in the interbank foreign exchange market?

• AA corporate treasurer hedging import payments.
• BAn interbank market-making bank quoting two-way prices to other market participants.
• CA retail investor trading foreign exchange through an online platform.
• DAn interbank money broker facilitating trade matchmaking.

What is the significance of the 'Modified Following Business Day' convention in FX value date determination?

• AIf a value date falls on a non-business day, it is moved to the preceding business day.
• BIf a value date falls on a non-business day, it is moved to the next business day, unless…
• CIf a value date falls on a non-business day, it is immediately moved to the nearest Monda…
• DIf a value date falls on a non-business day, it is moved to the next business day, regard…

Under standard FX market conventions, which currency pair settles on T+1 (value tomorrow) instead of the standard T+2?

• AUSD/MYR
• BEUR/USD
• CUSD/CAD
• DGBP/USD

Which of the following transaction structures represents an 'Outright Forward' contract?

• AA contract to exchange two currencies at the spot rate today with an agreement to reverse…
• BA single, binding transaction to buy or sell a specified amount of foreign currency at a…
• CAn option contract that gives the holder the right, but not the obligation, to buy a curr…
• DA series of monthly interest rate exchanges based on floating interbank reference rates.

How is the 'spread' defined in the wholesale foreign exchange market?

• AThe difference between the high and low trading prices of a currency over a 24-hour perio…
• BThe difference between the bid price (price at which a dealer buys) and the ask/offer pri…
• CThe percentage difference between the spot rate and the forward rate.
• DThe transaction commission fee charged by Bank Negara Malaysia on interbank trades.

If a Malaysian bank quotes USD/MYR as 4.7120/4.7140, at what rate can a corporate client purchase USD from the bank?

• A4.7120
• B4.7140
• C4.7130
• DThe bank's rate is negotiable and decided post-settlement.

What is the standard settlement system used for high-value Ringgit wholesale transactions between banks in Malaysia?

• ASWIFT Alliance Access
• BRENTAS (Real-time Electronic Transfer of Funds and Securities System)
• CFAST (Fully Automated System for Issuing/Tendering)
• DBursa Malaysia Clearing

In the foreign exchange market, what does the term 'settlement risk' (or Herstatt risk) refer to?

• AThe risk that interest rates will change before the value date, impacting the forward rat…
• BThe risk that one party to a transaction delivers the currency it sold but does not recei…
• CThe risk that Bank Negara Malaysia will impose currency controls before the trade settles.
• DThe risk that the exchange rate moves adversely between execution and settlement.

Which international system acts as a multi-currency settlement portal to mitigate Herstatt (settlement) risk by using a payment-versus-payment (PvP) mechanism?

• AEurusd Netting Hub
• BCLS Bank (Continuous Linked Settlement)
• CTARGET2 System
• DCHIPS (Clearing House Interbank Payments System)

Under standard market conventions, when does a 'Spot/Next' (S/N) transaction begin and end?

• AIt starts on T+0 (today) and matures on T+1 (tomorrow).
• BIt starts on T+1 (tomorrow) and matures on T+2 (spot value date).
• CIt starts on T+2 (spot value date) and matures on T+3 (one business day after spot).
• DIt starts on T+2 (spot value date) and matures in one calendar month.

What is the standard trading unit term used to describe 1 million units of currency in interbank wholesale dealer jargon?

• AA yard
• BA buck
• CA Mio (or million)
• DA pip

Given spot rate quotes: EUR/USD = 1.0850/1.0853 and USD/MYR = 4.7200/4.7210, calculate the EUR/MYR spot cross-rate quote.

• A5.1212 / 5.1237
• B5.1212 / 5.1228
• C4.3490 / 4.3512
• D5.1228 / 5.1237

If the USD/MYR spot rate is quoted as 4.7250/4.7260, what is the bid-ask spread in pips?

• A1 pip
• B10 pips
• C100 pips
• D0.001 pips

Calculate the percentage bid-ask spread for a spot USD/MYR quote of 4.7180/4.7210. (Round to three decimal places)

• A0.064%
• B0.063%
• C0.030%
• D0.127%

If EUR/USD is quoted as 1.0920/1.0922, what is the reciprocal quote for USD/EUR?

• A0.9156 / 0.9158
• B0.9156 / 0.9157
• C0.9155 / 0.9158
• D0.9158 / 0.9156

Given spot USD/MYR = 4.7000/4.7020 and spot AUD/USD = 0.6510/0.6515, calculate the spot rate at which a customer can sell AUD to a bank in exchange for MYR.

• A3.0597
• B3.0634
• C3.0615
• D7.2185

A transaction is executed on Thursday, June 18. Assuming no holidays, when is the standard spot value date?

• AFriday, June 19
• BMonday, June 22
• CTuesday, June 23
• DWednesday, June 24

A Tom/Next (T/N) USD/MYR swap is executed on Tuesday, June 2nd. Thursday, June 4th (the spot value date, T+2) is a public holiday in Malaysia. When do the two legs of the swap settle?

• AFirst leg settles Wednesday, June 3rd; second leg settles Friday, June 5th.
• BFirst leg settles Wednesday, June 3rd; second leg settles Monday, June 8th.
• CFirst leg settles Tuesday, June 2nd; second leg settles Wednesday, June 3rd.
• DFirst leg settles Thursday, June 4th; second leg settles Friday, June 5th.

Given spot quotes: GBP/USD = 1.2650/1.2655 and USD/MYR = 4.7000/4.7010, at what rate can a client sell GBP to buy MYR?

• A5.9455
• B5.9491
• C5.9473
• D3.7140

What happens to the bid-ask spread of a currency pair in the interbank market during periods of extreme market volatility or low liquidity?

• AThe spread remains constant due to Bank Negara Malaysia regulations.
• BThe spread narrows to encourage more market participants to trade.
• CThe spread widens to compensate market makers for the increased risk of holding positions.
• DThe spread disappears and only mid-rates are quoted.

Calculate the cross-rate Bid for USD/CHF given the following quotes: USD/MYR = 4.7100/4.7120 and CHF/MYR = 5.2500/5.2530.

• A0.8966
• B0.8975
• C1.1142
• D0.8971

In FX spot transactions, if the transaction is executed on Friday, when is the value date (assuming no holidays)?

• AMonday
• BTuesday
• CWednesday
• DThursday

What is the effect of a holiday in the base currency's home country on the value date of a spot FX transaction?

• AThe transaction is cancelled automatically.
• BThe value date is unaffected because settlement occurs in the quote currency's country.
• CThe value date is postponed to the next business day when both currency centers are open.
• DThe transaction must settle using value today.

Given USD/MYR spot is 4.7200 and EUR/USD spot is 1.0800, what is the EUR/MYR mid-rate?

• A5.0976
• B4.3704
• C5.0800
• D3.6400

If USD/MYR is quoted as 4.7100/4.7110 and a customer sells USD 10 million to the bank, how much MYR will the customer receive?

• AMYR 47,100,000
• BMYR 47,110,000
• CMYR 47,105,000
• DMYR 10,000,000

Which of the following is the standard day-count convention for Ringgit-denominated cash and money market transactions in Malaysia?

• AActual/360
• BActual/365
• C30/360
• DActual/Actual

If the spot USD/MYR rate is 4.7200 and the 3-month forward points are quoted as +150/+155, what is the 3-month forward outright quote?

• A4.7350 / 4.7355
• B4.8700 / 4.8750
• C4.7215 / 4.72155
• D4.7050 / 4.7045

When forward points are negative (e.g., -80/-75), what does this indicate about the base currency?

• AThe base currency is trading at a forward premium relative to the quote currency.
• BThe base currency is trading at a forward discount relative to the quote currency.
• CThe base currency has a lower interest rate than the quote currency.
• DThe forward rate is higher than the spot rate.

If the USD/MYR spot rate is 4.7000, the USD interest rate is 5.0% p.a., and the MYR interest rate is 3.0% p.a., what will be the direction of the forward points for USD/MYR (USD as base)?

• APositive (USD will trade at a forward premium).
• BNegative (USD will trade at a forward discount).
• CZero (the forward rate will equal the spot rate).
• DIt depends on the balance of payments of Malaysia.

Calculate the 180-day USD/MYR forward outright rate using the following data: Spot USD/MYR = 4.7150, USD interest rate = 5.25% p.a. (Actual/360), MYR interest rate = 3.50% p.a. (Actual/365). (Use Interest Rate Parity)

• A4.6737
• B4.6775
• C4.7543
• D4.7150

In the context of forward transactions, what is a 'broken-dated' (or odd-date) forward contract?

• AA forward contract where the settlement date has been cancelled by one of the counterpart…
• BA forward contract with a maturity date that does not coincide with standard market perio…
• CA forward contract that is settled in cash rather than physical delivery of the currencie…
• DA forward contract that has defaulted due to regulatory changes by Bank Negara Malaysia.

How do you calculate the forward points for a broken-dated forward contract maturing between 1 month (30 days) and 2 months (60 days)?

• ABy taking the simple average of the spot rate and the 2-month forward rate.
• BBy linear interpolation of the forward points of the 1-month and 2-month standard maturit…
• CBy using the higher of the 1-month and 2-month forward points to protect the bank's margi…
• DBy multiplying the 1-month forward points by two.

If Spot USD/MYR = 4.7000, 1-month (30 days) forward points are -50, and 2-month (60 days) forward points are -90, interpolate the forward points for a 45-day broken date.

• A-70 points
• B-60 points
• C-80 points
• D-55 points

If the spot rate is 4.7200 and the forward points are -120/-115, what is the forward outright quote?

• A4.7080 / 4.7085
• B4.7320 / 4.7315
• C4.7080 / 4.7082
• D4.7212 / 4.72115

Which of the following conventions is used to determine the maturity date of a 3-month forward contract if the spot value date is November 30th and February 28th is the last business day of February?

• AThe Following Business Day convention.
• BThe Preceding Business Day convention.
• CThe End-of-Month (EOM) convention.
• DThe Modified Preceding Business Day convention.

What is the interest rate differential for a currency pair where the base currency interest rate is 4.5% and the quote currency interest rate is 2.5%?

• A+2.0%
• B-2.0%
• C+7.0%
• D1.8%

Under Interest Rate Parity, if the interest rate of the quote currency increases while the base currency interest rate remains constant, what happens to the forward points of the base currency?

• AThe forward points become more negative (the discount deepens).
• BThe forward points become more positive (the premium increases or discount narrows).
• CThe forward points are unaffected.
• DThe spot rate immediately drops to zero.

If a customer enters into a forward contract to sell USD/buy MYR in 6 months, what risk is the customer hedging?

• AThe risk that the USD will appreciate against the MYR.
• BThe risk that the USD will depreciate against the MYR.
• CThe risk that Malaysian interest rates will drop.
• DThe risk that US inflation will decrease.

What is the premium/discount percentage formula for a 360-day forward contract?

• A[(Forward - Spot) / Spot] * (360 / Days) * 100
• B[(Spot - Forward) / Forward] * (Days / 360) * 100
• C[(Forward - Spot) / Forward] * (360 / Days) * 100
• D(Forward - Spot) * 100

If Spot USD/MYR = 4.7000 and 180-day Forward USD/MYR = 4.6500, calculate the annualized discount of USD. (Use 360-day convention)

• A-2.13%
• B-1.06%
• C-4.26%
• D-2.17%

Why does Covered Interest Parity (CIP) hold in wholesale foreign exchange markets?

• ABecause central banks enforce the parity rates by law.
• BBecause any deviation from parity creates risk-free arbitrage opportunities that dealers…
• CBecause inflation rates in both countries adjust automatically to offset rate differences.
• DBecause investors prefer to hold assets in their domestic currency only.

Which of the following transactions describes a foreign exchange (FX) swap?

• AThe purchase of a currency on a spot value date and the simultaneous sale of the same cur…
• BThe purchase of a currency spot from one bank and the sale of that currency forward to a…
• CAn exchange of interest rate payments in the same currency over a ten-year period.
• DThe purchase of a currency option to buy USD in three months.

In a 'Tom/Next' (T/N) FX swap, when does the near leg settle and when does the far leg settle?

• ANear leg settles today (T+0); far leg settles tomorrow (T+1).
• BNear leg settles tomorrow (T+1); far leg settles on spot value date (T+2).
• CNear leg settles on spot value date (T+2); far leg settles on T+3.
• DNear leg settles today (T+0); far leg settles on spot value date (T+2).