<<123456789101112131415161718192021222324>> 1. Which event marked the beginning of the global financial crisis in September 2008?The collapse of Bear StearnsThe bankruptcy filing of Lehman BrothersThe subprime mortgage crisisThe bailout of AIGQuestion 1 of 24 2. What was one of the shortcomings of Basel II, as highlighted in the passage?It lacked capital adequacy requirementsIt allowed excessive discretion to financial institutions for computing risk weightsIt did not address liquidity risk adequatelyIt imposed excessive regulatory burden on banksQuestion 2 of 24 3. What is the primary objective of introducing a leverage ratio under Basel III?To limit the variability of risk-weighted assetsTo promote short-term resilience of banks to potential liquidity disruptionsTo reinforce risk-based requirements with a non-risk-based "backstop" measureTo encourage banks to maintain stable funding sources over medium to longer-term horizonsQuestion 3 of 24 4. What are the two minimum standards prescribed under Basel III for funding liquidity?Liquidity Risk Ratio (LRR) and Liquidity Asset Coverage Ratio (LACR)Net Stable Funding Ratio (NSFR) and Capital Adequacy Ratio (CAR)Liquidity Coverage Ratio (LCR) and Net Stable Funding Ratio (NSFR)Leverage Ratio (LR) and Capital to Risk-Weighted Assets Ratio (CRAR)Question 4 of 24 5. What is the objective of the Liquidity Coverage Ratio (LCR) under Basel III?To ensure banks have sufficient high-quality liquid assets to survive a stress scenario lasting 30 daysTo promote resilience over medium to longer-term time horizons by requiring banks to fund their activities with stable sources of fundingTo constrain the build-up of leverage in the banking sectorTo monitor the liquidity risk exposures of banks using a set of five monitoring toolsQuestion 5 of 24 6. What are the fundamental characteristics of high-quality liquid assets (HQLAs)?High credit and market risk, ease of valuation, and high correlation with risky assetsLow credit and market risk, ease and certainty of valuation, and low correlation with risky assetsHigh credit and market risk, difficulty of valuation, and high correlation with risky assetsLow credit and market risk, difficulty of valuation, and low correlation with risky assetsQuestion 6 of 24 7. Which category of assets includes cash and near cash equivalents without any haircut applied?Level 1 assetsLevel 2A assetsLevel 2B assetsNone of the aboveQuestion 7 of 24 8. What is the haircut applied to Level 2A assets for conversion into cash?0%15%30%50%Question 8 of 24 9. What is the maximum proportion of Level 2 assets allowed in the overall stock of HQLAs after haircuts have been applied?20%30%40%50%Question 9 of 24 10. What is the maximum proportion of Level 2B assets allowed in the total stock of HQLAs?10%15%20%25%Question 10 of 24 11. What does FALLCR stand for?Facility for Allocating Liquidity for Long-Term Capital RequirementsFacility to Avail Liquidity for Liquidity Coverage RatioFacility for Assuring Liquidity for Lending and Credit RatiosFacility for Allocating Liquidity for Long-Term Credit RisksQuestion 11 of 24 12. Under what conditions can banks avail liquidity against securities under FALLCR?During normal market conditionsOnly after exhausting all other HQLAsWithout any declaration requiredAnytime as per their discretionQuestion 12 of 24 13. What is the maximum tenor for which the FALLCR facility can be availed or rolled over?30 days60 days90 days120 daysQuestion 13 of 24 14. How is the haircut applied for liquidity against securities under FALLCR?No haircut appliedSame haircut as for MSFFixed rate of haircut irrespective of the securityVariable haircut depending on the securityQuestion 14 of 24 15. What is the rate of interest on funds availed under FALLCR?Equal to the LAF repo rate100 bps above the prevailing LAF repo rate200 bps above the prevailing LAF repo rate300 bps above the prevailing LAF repo rateQuestion 15 of 24 16. What does NSFR stand for?Net Stable Funding RatioNon-Stable Funding RateNational Stable Funding RegulationNew Stability Finance RatioQuestion 16 of 24 17. What is the objective of NSFR?To encourage overreliance on short-term wholesale fundingTo increase the probability of erosion of a bank's liquidity positionTo mitigate the risk of future funding stressTo promote funding instabilityQuestion 17 of 24 18. When did the NSFR guidelines come into effect in India?January 1, 2018October 1, 2020January 1, 2021October 1, 2021Question 18 of 24 19. What is the minimum requirement for NSFR?At least 50%At least 75%At least 90%At least 100%Question 19 of 24 20. What is the primary role of banks in financial intermediation?Facilitating investment in stocksProviding insurance servicesServing as intermediaries between borrowers and lendersManaging real estate investmentsQuestion 20 of 24 21. What is one of the inherent vulnerabilities of banks due to their role in financial intermediation?Credit riskMarket riskLiquidity riskOperational riskQuestion 21 of 24 22. What are the two separate but complementary objectives of the Basel Committee's liquidity framework standards?Increasing profits and minimizing costsEnsuring short-term resilience and reducing funding risk over a longer time horizonMaximizing market share and minimizing competitionAchieving regulatory compliance and enhancing shareholder valueQuestion 22 of 24 23. Which standard aims to promote short-term resilience by ensuring banks have sufficient High-Quality Liquid Assets (HQLA) to survive a significant stress scenario lasting for 30 days?Liquidity Coverage RatioStandard Net Stable Funding RatioCapital Adequacy RatioMarket Risk Capital RequirementQuestion 23 of 24 24. What is the purpose of the Standard Net Stable Funding Ratio (NSFR)?To ensure banks have sufficient HQLA to survive a significant stress scenarioTo reduce funding risk over a longer time horizon by requiring banks to fund their activities with stable sources of fundingTo assess the creditworthiness of borrowersTo measure the market risk exposure of banksQuestion 24 of 24 Loading...
