<<12345678910111213141516>> 1. Which one of the following is a source of funds in the balance sheet of banks?Balances with Reserve Bank of IndiaAdvances made to 'AAA' rated CorporateDeposits accepted from general publicSLR compliant investmentsQuestion 1 of 16 2. What is the feature of 'Notice Money' market?In this market, funds are transacted between 2 to 14 daysIn this market, funds are transacted between one week and six monthsIn this market, no interest is payable but safety of funds is ensuredIn this market only top class banks are allowed to participateQuestion 2 of 16 3. What can be described as Asset Liability Management (ALM)?The process of creating assets with maturity exactly as that of liabilitiesAsset Liability Management (ALM) is the act of planning, acquiring, and directing the flow of funds through an organisationStrategizing to have more assets than liabilities alwaysFunding short term assets with long term liabilitiesQuestion 3 of 16 4. How can the Net Interest Margin be understood?Average cost of funds for the bankAverage yield on funds for the bankSpread between Repo and Reverse Repo ratesSpread on earning assetsQuestion 4 of 16 5. What is the primary objective of Asset Liability Management (ALM) in a bank?To maximize short-term profitsTo generate adequate/stable earnings and build equity over timeTo minimize business risks at all costsTo achieve rapid innovation in financial productsQuestion 5 of 16 6. Why is Asset Liability Management (ALM) considered important for banks?To increase volatility in the financial systemTo decrease awareness among top managementTo prevent undesirable imbalances between asset and liability maturitiesTo limit the efficiency of capital allocationQuestion 6 of 16 7. What parameter is primarily selected for stabilizing in Asset Liability Management?Number of financial products offeredNet Interest Income (NII)Total assets held by the bankVolume of financial liabilitiesQuestion 7 of 16 8. What types of obligations are typically included under contingent liabilities for a bank?Short-term loans to customersClaims against the bank not acknowledged as debtsEquity investments in other companiesCash reserves held by the bankQuestion 8 of 16 9. Which of the following is NOT an example of a contingent liability for a bank?Liability for outstanding forward exchange contractsLoans provided to small businessesUnderwriting commitmentsGuarantees issued on behalf of constituentsQuestion 9 of 16 10. What do contingent liabilities represent for a bank?Current debts owed by the bankPotential future obligations that depend on certain events or circumstancesFixed assets owned by the bankOperating expenses incurred by the bankQuestion 10 of 16 11. Why is Asset Liability Management (ALM) significant for financial institutions?To maximize profits by increasing interest incomeTo minimize liquidity and market risk arising from asset liability mismatchTo invest in innovative financial products for higher returnsTo comply with regulatory guidelines on capital adequacyQuestion 11 of 16 12. What contributes to the growing importance of Asset Liability Management?Stability in interest rates and financial marketsLimited innovation in financial productsChanges in the regulatory environment for banksDecreased awareness among bank managementQuestion 12 of 16 13. What are the challenges posed by embedded options in assets and liabilities for ALM?They simplify the management of cash flows for banksThey increase the predictability of interest income and expensesThey create risks such as refinancing risk and reinvestment riskThey have no impact on ALM strategies and managementQuestion 13 of 16 14. What is the primary purpose of Asset Liability Management (ALM)?To increase the volume of assets and liabilitiesTo minimize fluctuations in short-term profits and enhance the quality of assetsTo eliminate all risks associated with assets and liabilitiesTo maximize the spread between interest income and interest expensesQuestion 14 of 16 15. How is Net Interest Margin (NIM) calculated?Total interest income divided by total assetsTotal interest expenses minus total assetsNet interest income divided by average total assetsNet income divided by total liabilitiesQuestion 15 of 16 16. What does the Economic Equity Ratio measure in Asset Liability Management?The ratio of short-term profits to long-term earningsThe ratio of shareholders' funds to total assetsThe ratio of liabilities to total fundsThe ratio of interest income to interest expensesQuestion 16 of 16 Loading...
