<<12345678910111213141516171819202122232425262728293031>> 1. What does a bank's obligations under the issuance of a letter of credit, guarantees, and acceptances represent?Fixed liabilitiesContingent liabilitiesCurrent assetsEquity investmentsQuestion 1 of 31 2. Which of the following is NOT considered a contingent liability for a bank?Claims against the bank not acknowledged as debtsArrears of cumulative dividendsUnderwriting commitmentsLoans provided to customersQuestion 2 of 31 3. What kind of liabilities might be reflected under 'Other contingent liabilities' in a bank's balance sheet?Liabilities on account of outstanding loansLiabilities from fixed asset acquisitionsLiability for partly paid-up investmentsLiabilities related to statutory reservesQuestion 3 of 31 4. What constitutes the primary revenue source for a bank?Fees and commissionsProfit on sale of assetsInterest incomeDividend incomeQuestion 4 of 31 5. Which of the following is categorized under 'Interest income' for a bank?Commission, Exchange, and BrokerageProfit on Sale of Land and BuildingIncome on InvestmentsProfit on Exchange TransactionsQuestion 5 of 31 6. What represents the revenue generated by a bank from fees and other non-interest sources?Interest on Balances with RBIProfit on Revaluation of InvestmentsCommission, Exchange, and BrokerageInterest/Discount on Advances/BillsQuestion 6 of 31 7. Which component of the Profit & Loss Account reflects the gains made by a bank from the sale of its assets?Profit on Sale or InvestmentsProfit on Exchange TransactionsProfit on Sale of Land, Building, and Other AssetsMisc. IncomeQuestion 7 of 31 8. What primarily constitutes the major expenses for a bank?Advertisement and PublicityPayments to and Provisions for EmployeesInterest on Deposits and BorrowingsDepreciation on Bank's PropertyQuestion 8 of 31 9. What falls under the category of 'Others' in interest expended by a bank?Payments to and Provisions for EmployeesInterest on RBI/Interbank BorrowingsDepreciation on Bank's PropertyRent, Taxes, and LightingQuestion 9 of 31 10. Which of the following is NOT typically included in a bank's operating expenses?Printing and StationeryInsuranceInterest on DepositsAuditors' Fees and ExpensesQuestion 10 of 31 11. What does 'Depreciation on Bank's Property' represent in a bank's operating expenses?Cost of repairs and maintenancePayments to employees for services renderedGradual decrease in value of bank-owned assetsAdvertisement and Publicity costsQuestion 11 of 31 12. What major expenses are covered under the 'Provisions and Contingencies' category for banks?Marketing and advertising costsProvisions for bad debts and doubtful debtsEmployee salaries and benefitsRent and utilities expensesQuestion 12 of 31 13. What purpose do provisions for bad and doubtful debts serve in a bank's financial records?Enhancing shareholder dividendsComplying with taxation regulationsSafeguarding against potential lossesIncreasing interest incomeQuestion 13 of 31 14. Which of the following would NOT be typically categorized under 'Provisions and Contingencies' for a bank?Provision for taxationDiminution in the value of investmentsEmployee salariesTransfers to contingency fundsQuestion 14 of 31 15. What does 'diminution in the value of investments' signify in a bank's 'Provisions and Contingencies'?Increase in the value of investmentsDecrease in the value of investmentsGains from investment salesProfits from investment dividendsQuestion 15 of 31 16. What does Asset Liability Management (ALM) primarily involve?Handling marketing strategiesManaging risk associated with changes in interest rates, exchange rates, credit, and liquidityTracking inventory levelsEnsuring compliance with tax regulationsQuestion 16 of 31 17. What does ALM aim to manage in a bank?Only net interest margin (NII)Only liquidity riskOnly credit riskNet interest margin (NII) and its risk level in line with the bank's risk-return objectivesQuestion 17 of 31 18. Why has the importance of ALM increased over time?Due to enhanced employee benefitsBecause of decreased regulatory guidelinesBecause of innovations in financial products impacting the bank's risk profileDue to reduced market volatilityQuestion 18 of 31 19. What has the deregulation of financial systems brought that significantly impacts the need for ALM?Decreased market volatilityEnhanced stability in financial marketsIncreased volatility and fluctuations in interest rates and market valuesReduced need for risk management practicesQuestion 19 of 31 20. What risk does the bank face when depositors opt for premature repayment of their deposits?Credit riskReinvestment riskRefinancing riskMarket riskQuestion 20 of 31 21. What risk does prepayment of borrowing by borrowers introduce to a bank's management?Credit riskMarket riskReinvestment riskLiquidity riskQuestion 21 of 31 22. Which of the following parameters is used to measure the impact of volatility on short-term profits in Asset Liability Management?Net Interest Margin (NIM)Economic Equity RatioNet Interest Income (NII)Return on Assets (ROA)Question 22 of 31 23. How is Net Interest Margin (NIM) calculated in Asset Liability Management?Net Interest Margin = Interest Income - Interest ExpensesNet Interest Margin = Net Interest Income / Average total LiabilitiesNet Interest Margin = Net Interest Income / Average total AssetsNet Interest Margin = Interest Income + Interest ExpensesQuestion 23 of 31 24. What is the purpose of Price Matching in Asset Liability Management (ALM)?Maximizing liabilities at a lower costMaintaining spreads by ensuring liabilities are deployed at a rate higher than costsMinimizing assets to reduce riskMatching assets and liabilities by their valuesQuestion 24 of 31 25. How does a positive gap (assets > liabilities) or a negative gap (liabilities > assets) affect an institution in terms of interest rate movements?A positive gap benefits from declining interest ratesA negative gap benefits from rising interest ratesA positive gap benefits from rising interest ratesA negative gap benefits from declining interest ratesQuestion 25 of 31 26. How does Asset Liability Management ensure liquidity?By ensuring all assets mature before liabilitiesBy grouping assets/liabilities based on their maturing profilesBy keeping all liabilities shorter-term than assetsBy investing in high liquidity assets onlyQuestion 26 of 31 27. What may affect the expected results in Asset Liability Management despite efforts to ensure maturity profiles match?Price fluctuations in the marketInterest rate changesMaturity mismatchesRegulatory changes in financial policiesQuestion 27 of 31 28. What formula represents the profit function for banks in terms of Income-Expense Functions?Profit = Interest Income + Interest expense + provision for loan loss + taxesProfit = Interest Income - Interest expense - provision for loan loss + non-interest revenue - non-interest expense - taxesProfit = Interest Income - Interest expense + non-interest revenue - non-interest expense - taxesProfit = Interest Income - Interest expense - taxes + provision for loan loss + non-interest revenue - non-interest expenseQuestion 28 of 31 29. Which of the following is NOT an objective of Asset Liability Management (ALM) for banks?Spread Management (NII)Loan QualityMaximizing non-interest revenueControl of non-interest operating expensesQuestion 29 of 31 30. What does 'Spread Management (NII)' primarily refer to in the context of ALM objectives?Managing the difference between interest income and non-interest incomeManaging the difference between interest income and operating expensesManaging the difference between interest income and interest expenseManaging the difference between interest income and taxesQuestion 30 of 31 31. Why is 'Loan Quality' an important objective in Asset Liability Management for banks?To minimize taxesTo maximize non-interest revenueTo manage the risk associated with loan defaultsTo reduce the provision for loan lossQuestion 31 of 31 Loading...
