Finastra Assessment Test Finastra Assessment Treasury and Capital Markets 5

Question 1

What distinguishes a 'hard call' provision from a 'soft call' provision in a callable bond, as classified in Finastra's securities master?

Accepted Answer

A hard call prohibits redemption for a fixed period; a soft call permits early redemption only if the stock price exceeds a threshold

Answer

A hard call (lockout) period absolutely bars early redemption, while a soft call allows it only when a specified price condition — typically a stock price hurdle — is met.

Question 2

In Finastra's ALM module, 'economic value of equity' (EVE) is best described as:

Accepted Answer

The difference between the market value of assets and the market value of liabilities

Answer

EVE equals the net present value of all asset cash flows minus the net present value of all liability cash flows, capturing the balance sheet's long-term interest rate sensitivity.

Question 3

Which Finastra module is specifically designed to handle Securities Finance transactions such as securities lending and repo?

Accepted Answer

Fusion Capital — Securities Finance (formerly Opics)

Answer

Fusion Capital's Securities Finance component (evolved from Opics) manages repo, reverse repo, securities lending, and collateral across the trade lifecycle.

Question 4

A trader uses a 'bull steepener' strategy in a rates portfolio. What does this imply about the expected yield curve movement?

Accepted Answer

Short-end rates fall more than long-end rates, steepening the curve

Answer

A bull steepener occurs when short-term rates decline faster than long-term rates (often driven by central bank easing), widening the spread between short and long maturities.

Question 5

In Finastra's cross-currency swap pricing, the 'cross-currency basis' represents:

Accepted Answer

The spread added to one leg of a currency swap to equate the present values of both legs in the market

Answer

The cross-currency basis is a market-observed spread (often negative for EUR/USD) reflecting supply and demand imbalances in dollar funding, required to make the swap fair-valued.

Finastra Assessment Test Practice Test

Finastra Assessment Test Practice Test

Finastra Assessment Test Finastra Assessment Treasury and Capital Markets 5