<<1234567891011121314151617181920>> 1. Liquidity risk is reflected as_________which is the gap in_____________.Maturity mismatch, cash inflow and outflowTotal cash held, receipts and paymentsCommitted lines, lines utilized and unutilizedNPAs, total assets and performing loansQuestion 1 of 20 2. In a rising interest rate scenario, the risk of erosion of NII is on account ofAdvances with floating rate of interest and deposits with fixed rate of interestDeposits with floating rates and advances with fixed ratesDeposits with floating rates and advances with floating ratesDeposits with fixed rates and advances with fixed ratesQuestion 2 of 20 3. Derivatives can be used to hedge aggregate risks as reflected in the asset-liability mismatches. In this case a dynamic management of hedge is necessary becauseThe risks are staticNew hedging tools arrive in the marketThe composition of assets and liabilities is always changingA close monitoring of hedge is an RBI requirementQuestion 3 of 20 4. The participants in the derivatives market generally exchange the following agreementIFEMAICONISDAA stamped agreement devised by respective banksQuestion 4 of 20 5. Credit derivatives segregate___________from the assets through instruments known as____________and transfer the risk from the owner to another person who is in a position to absorb the credit risk for____________.The bad assets, NPAs, commissionThe credit risk, credit default swaps, a feeIncome, warrants, considerationGood assets, securitization, discountQuestion 5 of 20 6. In treasury operations, credit risk primarily arises from:Market fluctuationsCounterparty dealingsInterest rate movementsLiquidity constraintsQuestion 6 of 20 7. Which of the following is NOT a characteristic of bonds compared to loans in terms of credit risk?Bonds are tradable assetsBonds offer an easy exit strategyBonds have a fixed rate of interestBonds are marked-to-market frequentlyQuestion 7 of 20 8. What is one advantage of securitization for banks?It increases credit riskIt reduces liquidityIt frees up capitalIt decreases market riskQuestion 8 of 20 9. How does securitization benefit banks with surplus funds?By increasing market riskBy reducing liquidityBy expanding credit portfolio indirectlyBy increasing capital requirementsQuestion 9 of 20 10. Credit derivatives primarily aim to:Increase credit riskSegregate credit risk from assetsEnhance liquidityReduce capital efficiencyQuestion 10 of 20 11. In a credit default swap (CDS), who guarantees payment of the principal of the reference asset in case of credit default?Protection buyerProtection sellerRegulatorInvestorQuestion 11 of 20 12. What was one major consequence of the global financial crisis on credit derivatives and securitization?Increased market liquidityDecreased leverageSpread of the crisis to protection sellersReduced profitabilityQuestion 12 of 20 13. What entities are eligible to act as market makers for single name Credit Default Swaps (CDS) on corporate bonds according to the Reserve Bank of India?Only Commercial BanksOnly Mutual FundsOnly Insurance CompaniesCommercial Banks, standalone Primary Dealers (PDs), Non-Banking Financial Companies (NBCs), and others meeting RBI criteriaQuestion 13 of 20 14. What is the primary purpose of transfer pricing in a bank's Asset-Liability Management (ALM) framework?Maximizing branch-level profitsEnsuring fair assessment of profitabilityMinimizing liquidity risksFacilitating external borrowingQuestion 14 of 20 15. How does transfer pricing impact the profitability assessment of a branch when accepting deposits?Branches are credited with the nominal interest rate offered to customers.Branches are debited with the nominal interest rate offered to customers.Branches are credited with market-adjusted rates determined by the treasury.Branches are debited with market-adjusted rates determined by the treasury.Question 15 of 20 16. What role does the treasury play in the transfer pricing process at the branch level for lending funds?Determining market interest ratesSetting the lending rates for borrowersAdjusting transfer pricing based on market ratesHedging against liquidity risksQuestion 16 of 20 17. At the treasury level, what function does transfer pricing serve?Allocating costs and revenues across different business unitsManaging external market risksFacilitating international transactionsMaximizing branch-level profitsQuestion 17 of 20 18. Which of the following components is NOT typically included in an Integrated Risk Management Policy for a bank?ALM PolicyLiquidity PolicyInvestment PolicyCustomer Service PolicyQuestion 18 of 20 19. What is the purpose of a Transfer Pricing Policy in a bank's policy environment?Setting interest rates for customer depositsAllocating costs and revenues across different bank departmentsDetermining investment strategies for the treasuryEnsuring compliance with anti-money laundering regulationsQuestion 19 of 20 20. Which regulatory bodies' regulations should the bank's policies comply with, according to RBI requirements?FIMMDA and FEDAIALCO and SEBIRBI, SEBI and SROsSEBI and SROsQuestion 20 of 20 Loading...
