Bank Financial Management mock test with old question most imp question 5 year old question. Question multiple choice questions and answers prepared by senior officer’s click on finish test after attend all the question to know your result with right wrong answer

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Q - 1 .Which is not an approach to measure Credit Risk?

• Basic Indicator Approach
• Standardized approach
• IRB (Internal Rating Base Foundation approach
• IRB (Internal Rating Base Advanced approach

Q - 2 .Where the results into a banking or financial crisis for the entire system on account of failure of a large bank, it is called

• Liquidity Risk
• Settlement Risk
• Systematic Risk
• Legal Risk

Q - 3 .Which of the following is not included in pricing ?

• Cost of Deploying funds
• Operating Expenses
• Profit Probabilities
• Capital Charge

Q - 4 .The higher the risk, the higher would be ......

• return expectation
• capital requirement
• both a and b
• none of these

Q - 5 .A proportion per thousand is called as ......

• per cent
• per mile
• chain rule
• none of the above

Q - 6 .To grant extension of an export bill beyond 12 months from the date of export, the total export outstanding of the exporter should not be more than USD ...... or __ % of the average of export realizations during the preceding __ years, whichever is higher.

• USD 1.00 million, 5, 1
• USD 2.00 million, 5, 2
• USD 1.00 million, 10, 3
• USD 2.00 million, 10, 4

Q - 7 .What are the two reserve requirements that treasury has to comply with?

• PLR and SLR
• CRR and SLR
• Repo and CRR
• VaR and CRR

Q - 8 .An RFC account can be opened by ...... with an A

• returning Indians who were non residents earlier and are now returning to India for permanent settlement to keep their foreign currency assets held outside Indi
• resident Indians, companies or firms to transact forex business.
• a person resident in India to keep his/her foreign currency assets (notes / traveller cheques, etc)
• diamond exporters

Q - 9 .The value of derivative depends on ______ market.

• spot
• forward
• TOM
• ready

Q - 10 .Risk mitigation results in ...... 1.Reduction of downside potential 2.Reduction in profit potential 3.Which of the following is true?

• All the statements are correct
• Statement 1 is correct
• Statement 2 is correct
• Both are incorrect

Q - 11 .Where the currency rate is not directly available for a particular currency and has to be worked out indirectly through some other currency, it is called ......

• Direct Rate
• Indirect Rate
• Cross Rate
• Spot cum Forward Rate

Q - 12 .Tier 1 is also known as ...... capital.

• core
• supplementary
• complementary
• none of these

Q - 13 .On account of Sale and purchase of various currencies there could be mismatch between assets and liabilities, which is called:

• Liquidity Risk
• Gap Risk
• Exchange Risk
• Market Risk

Q - 14 .A contract to deliver foreign currency on a future date at a fixed exchange rate is known as ......

• forward contracts
• futures
• options
• swaps

Q - 15 .As per Nayak Committee, the margin contribution of the SSI unit is ...... % of the annual projected turnover.

• 0%
• 0%
• 0%
• 0%

Q - 16 .Deferred credits will appear on the balance sheet with the

• Assets
• Liabilities
• Owner's/Stockholders' Equity
• None of the above

Q - 17 .Which of the following is not true regarding OTC?

• It is a derivative product that can be directly negotiated and obtained from authorized banks and investment institutions.
• It is mostly used for hedging underlying risks.
• Settlement is mostly by physical delivery.
• No counter party risk at all.

Q - 18 .A mismatch in assets / liabilities and receivables / payables is ...... risk.

• Credit
• Exchange
• Gap
• Interest

Q - 19 .Exchange Rate means the ...... at which one currency is exchanged for another currency.

• Price
• Ratio
• Value
• Any one of the above

Q - 20 .Globalization refers to ......

• Full convertibility of all currencies in the world
• Removal of all trade barriers in the world
• The process of integrating domestic market with global markets, characterized by free capital flows and minimum regulatory intervention
• Fixed rate of exchange for all currencies of the world

Q - 21 .Basis Risks are type of ......

• Interest Rate Risk
• Market Risk
• Credit Risk
• Operational Risk

Q - 22 .Counter party Risk is a type of ......

• Interest Rate Risk
• Market Risk
• Credit Risk
• Operational Risk

Q - 23 .Funding risk, time risk and call risk are the types of ...... risk.

• market
• credit
• liquidity
• operational

Q - 24 .______ rates indicate liquidity available in the inter-bank market.

• call money
• notice money
• term money
• all of these

Q - 25 .RBI has permitted banks to borrow and invest through their overseas correspondents in foreign currency subject to ......

• 25% of there Tier-I Capital
• 25% of there Tier-I Capital or USD 10 million
• 25% of there Tier-I Capital or USD 10 million whichever is higher
• 25% of there Tier-I Capital or USD 10 million whichever is lower

Q - 26 .Authorised persons - Category III was earlier known as ......

• Full Fledged Money Changers
• Restricted Money Changers
• Authorised dealers
• None of these

Q - 27 .As per the Reserve Bank of India in the draft guidelines for implementation of the new capital adequacy framework has modified the Gross Income definition slightly. The Net Interest Income has been replaced by ......

• Net Profit
• Operating Profit
• No Changes made
• Interest Expended

Q - 28 .Off balance sheet exposures is not exposed to ...... risk. 1. market 2. liquidity 3. credit or default 4. operational 5. interest

• only 1
• only 3
• both 2 and 4
• none of these

Q - 29 .Which of the following is not true regarding ETD (Exchange Traded Derivatives)?

• Forward contracts traded on only organized future exchanges are known as future contracts.
• It is mostly used for trading and speculation.
• Counter party risk is not present.
• Price is quoted by the bank, as the pricing is not transparent.

Q - 30 .Interest risk can be mitigated in which of the following way(s)?

• by using interest rate swaps
• by forward rate agreements
• by financial futures
• none of these

Q - 31 .As per the recommendations of Chore Committee banks have been asked to ensure ......

• Borrowers deposit 50% of their net profit in time deposits
• Relax norms prescribed by Tandon Committee
• Adopt 2nd Method of lending
• Borrowers do not contribute more than 25% as margin

Q - 32 .If the exporter has opted for commercial and political risks cover, failure of the LC opening bank in respect of exports against LC will be covered for the banks with World Rank up to ...... as per latest Banker's almana

• 1000
• 2000
• 15000
• 25000

Q - 33 .CBLO is a ...... market instrument issued by ......

• foreign exchange, RBI
• money, CCIL
• securities, GOI
• domesti SEBI

Q - 34 .Forward exchange rates are arrived at on the basis of interest rate differentials of two currencies, ...... from spot exchange rate.

• added
• deducted
• either of the two
• none of these

Q - 35 .Methods of assessment of Market risk are ... 1. Basis Point Value 2. Duration method

• Only 1
• Only 2
• Both 1 and 2
• None of these

Q - 36 .When a bank is unable to undertake profitable business opportunities when it arises, ......risk occurs.

• funding risk
• time risk
• call risk
• market

Q - 37 .Taking advantage by selling and buying of a currency in two different markets to take advantage of price differential prevailing at these markets is called as ......

• Hedging
• Arbitration
• Swap
• Speculation

Q - 38 .How forward rates are calculated?

• By adding a mark up to spot rates
• By adding premium or discount to spot rates
• By deducting premium or discount from spot rates
• By adding premium to and deducting discount from spot rates

Q - 39 .The concessional rate of interest in case of PCL is ...... and is valid for first ...... days.

• maximum PLR - 2.50 %, 120
• maximum PLR - 2.50 %, 180
• maximum PLR - 2.50 %, 120
• minimum PLR - 2.50 %, 180

Q - 40 .Which of the following risks the banking book is NOT exposed to? 1.liquidity 2.market 3.operational 4.credit or default 5.interest

• only 1
• only 2
• only 3
• both 4 and 5

Q - 41 .Under standardized approach for credit risk, loans considered past due is risk weighted at ......% (under normal case).

• 50
• 100
• 150
• 200

Q - 42 .Treasury uses a variety of money market instruments to optimize return on funds. Which of the following is not a money market instrument?

• Treasury bills
• CBLO
• Corporate debt paper
• Certificate of deposit

Q - 43 .The International Chamber of Commerce (ICC)was established in 1919 headquartered at ......

• New York
• Paris
• Brussels
• Switzerland

Q - 44 .In the notice money (a money market instrument), funds borrowed by banks need to be repaid ......

• on the same day
• on the next working day
• within a fortnight
• within a year

Q - 45 .Select the incorrect statement.

• The contract size in futures market is USD 1000 and all settlements take place in Dollars.
• The contract size in interest rate futures market is Rs 2 lacs.
• If an exporter needs to hedge receivables of USD 560,700, he would need to buy 561 forward sale contracts of USD 1000 each, aggregating to USD 561,000. The small difference is called basis risk.
• all are correct

Q - 46 .Short term funds flow have maturity ......

• more than 6 months but less than 1 year
• less than 1 year
• more than 1 year but less than 2 years
• none of these

Q - 47 .Basel II accord is based on 3 pillars. These pillars are ......

• Minimum capital requirement
• Supervisory review process
• Market discipline
• all of these

Q - 48 .In case of Domestic banks risk weights are assigned depends on?

• CRAR
• ECA
• CSU
• None

Q - 49 .Export bill is generally crystallized on ...... th day from the due date / notional due date.

• 7
• 10
• 21
• 30

Q - 50 .Which of the following methods of calculating VaR needs a variance / covariance matrix?

• historical simulation method
• monte carlo simulation method
• correlation method
• none of these

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