PART A · QUESTION 1
You quote a client EUR/USD at 1.0795/1.0805. The client wants to sell EUR 5m.
// EXAM HALL25 QUESTIONS · 30 MINUTES
Markets Sales Practice Test
Pricing a client, one exporter's hedging file, and the conduct that comes with the seat.
BY MICHAEL SHANG · SIXTEEN YEARS IN COMMERCIAL BANKING · UPDATED
// THE SHORT ANSWER
A markets sales practice test asks whether you can price a client's hedge and tell them the truth about it. This paper has three parts: swaps, options, collars and natural hedges; one exporter's hedging policy and dealing line, set on an exhibit; and calls on mark-ups, suitability and client confidentiality. Every question is original, and none comes from any bank's test. It does not replace a desk's own mental arithmetic round, so practise speed as well. Sit it against a thirty-minute clock, or take it as practice.
BASIS Practitioner judgment from sixteen years in commercial banking, set out in How Bankers Think (Highbank Press, 2026). Every borrower on this site is a composite constructed for teaching, not a client. The market is mid-market commercial lending as practised in New Zealand and Australia; where a convention differs elsewhere, the page says so.
// HOW TO SIT IT
Answer below as practice, and each read opens as you go. Or sit it as a test: 30 minutes, with every read held back until you finish.
PART A
Pricing and products
What you are selling, what it costs the client, and what the client needs to understand before signing.
PART A · QUESTION 2
A company pays 4.0% fixed and receives floating on a US$10m interest rate swap. Floating is now 5.0%.
What is this year's net swap payment, at that rate?
PART A · QUESTION 3
An exporter buys an option to sell EUR 1m at 1.08, for a premium of US$15,000. At expiry the rate is 1.12.
What does the exporter end up with, after the premium?
PART A · QUESTION 4
A floating-rate borrower is offered two products: a swap that fixes its rate at 5%, or a cap that limits its rate to 6% for a fee paid upfront.
What is the difference that matters most?
PART A · QUESTION 5
You add one basis point to a five-year US$20m interest rate swap for a client. Its duration is about 4.5 years.
About what is that basis point worth to the desk today?
PART A · QUESTION 6
An exporter has EUR 10m of sales a year, and it buys EUR 4m of parts a year from Germany. It asks you to hedge EUR 10m.
How much is actually at risk?
PART A · QUESTION 7
A client wants protection against a fall in the euro, but says an option's premium is too high. You can offer a zero-cost collar.
What must the client understand before signing?
PART A · QUESTION 8
An importer will owe EUR 2m in three months if it wins a contract. It thinks the odds are about even.
Which hedge fits best?
PART B
The hedging file
One client, nine questions. Read the policy before you read the request.
EXHIBIT N · THE CLIENT'S HEDGING FILE
An exporter whose costs are in dollars and whose sales are in euros. Its board's policy sets how much of each quarter's sales must be hedged. Its treasurer rang at 9:40am about the third quarter.
| Sales | Hedged | Share | Policy | |
|---|---|---|---|---|
| Quarter 1 | 8 | 6 | 75% | 50–80% |
| Quarter 2 | 6 | 3 | 50% | 50–80% |
| Quarter 3 | 7 | 2 | 29% | 25–50% |
| Quarter 4 | 5 | 0 | 0% | 25–50% |
| Year | 26 | 11 | 42% |
| Today | |
|---|---|
| Spot EUR/USD | 1.0800 |
| Six-month forward, the desk's price to you | 1.0890 |
| Dealing line left | US$600,000 |
| Line used by a twelve-month forward | 20% of its dollars |
PART B · QUESTION 9
From Exhibit N.
Which quarter sits outside the client's policy?
PART B · QUESTION 10
In Exhibit N, the treasurer asks to sell EUR 3m more for the third quarter, taking it to EUR 5m of EUR 7m.
What do you say?
PART B · QUESTION 11
Exhibit N's fourth quarter has EUR 5m of sales and no hedge, against a policy of 25% to 50%.
What is the least that brings it inside?
PART B · QUESTION 12
In Exhibit N, EUR 15m of the year's EUR 26m of sales is not hedged.
What does a one-cent fall in EUR/USD cost the client?
PART B · QUESTION 13
Exhibit N's treasurer wants more hedges for later in the year, because 'the euro looks strong'.
What do you ask first?
PART B · QUESTION 14
In Exhibit N, spot is 1.0800 and the treasurer's screen shows the six-month forward at 1.0890. The treasurer says: 'Ninety points better than spot. You must think the euro is going up.'
What do you say?
PART B · QUESTION 15
In Exhibit N, the desk gives you 1.0890 for six months. You show the client 1.0875, and they sell EUR 1.5m.
What margin has the client paid?
PART B · QUESTION 16
In Exhibit N, a twelve-month forward uses 20% of its dollar amount from the dealing line, and US$600,000 of the line is left. The treasurer wants to sell EUR 2.5m at about 1.08.
Does it fit?
PART B · QUESTION 17
Exhibit N's client sold EUR 6m for the first quarter at 1.0700, and the rate for that date is now 1.0850. Its chief executive says: 'We are US$90,000 down on hedges. Stop hedging.'
Signal or noise?
PART C
The calls
Clients, mark-ups, and the conduct rules that apply to every one of them.
PART C · QUESTION 18
A year ago you sold an exporter a forward. The currency then moved so that the client would have been better off unhedged, and its chief executive rings: 'You cost us US$400,000.'
What do you do?
PART C · QUESTION 19
Two exporters of similar size trade the same currency with you. One checks every price; the other does not, and has been paying three times the mark-up for years.
What do you do?
PART C · QUESTION 20
For months you have told clients that rates will fall, and some have stayed floating on that view. This week's data points the other way, and you have changed your mind.
What do you do?
PART C · QUESTION 21
A small exporter has about EUR 2m of sales a year, hedged in line with its policy. You think the euro will fall sharply. The owner says: 'Should I sell EUR 5m forward and make some money?'
Your answer?
PART C · QUESTION 22
A long-standing client messages your personal phone: 'Easier on here. Sell me EUR 2m at the level you showed, I am boarding a plane.'
What do you do?
PART C · QUESTION 23
A treasurer you cover asks: 'Your desk sold a lot of this currency yesterday. Was that the big dairy group? It would help me to know.'
What do you say?
PART C · QUESTION 24
A bakery with US$3m of sales has US$800,000 of floating-rate debt. Your target this quarter is structured rate products. One would cut its rate by 0.5%, unless rates pass 7%, when the cost jumps.
What do you offer?
PART C · QUESTION 25
A client's treasurer, who decides next month's foreign exchange tender, asks if you can find two tickets to a final, worth US$3,000.
What do you do?
0 OF 25 ANSWERED · 0 WITH THE SENIOR READ · 0 STANDS UP · 0 OFF THE LINE
// THE REST OF THE ROUND
Every question here is original; none is any bank's real test. Written for: Markets salesperson.
- Markets salesperson: the interview questions, against a two-minute clock.
- Situational judgement, for any seat.
- The assessment centre: a whole case in forty-five minutes.
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