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1. Which of the following is true?a) Depreciation is claimed by nancier in Lease & not in case of hire

purchaseb) Tax deduction can be claimed for the full value of the rental paid in

case of lease

c) Alld) The nancier owns the asset both in case of lease! and "ire

#urchase!

Lease is a long-term rental agreement for the asset, while Hire Purchase is allows theuser to own the asset after all the payments have been made to the lender.LeaseTwo main types – operating, financial

The inancier owns the asset. !epreciation is claimed by the financier. Ta" deduction can be claimed for the full value of the rental paid. inancier ta#es care of maintenance, insurance etc.

Hire Purchase The asset is owned by the financier. !epreciation can be claimed by the borrower. Ta" deduction can be claimed only to the e"tent of the interest repayment.

2. $nnuities are%a) Discounted loanb) apitali'ed loanc) $morti'ed loand) True discounted loane) A loan that is paid in periodic installments with capitalized

interest

3. The counterparty in futures contracts trade isa) (overnmentb) an*sc) The bro*ers who stuc* in deald) The exchangee) The buyer and seller

4. $ person purchases a share at +,-. $fter / years the price is at 0+-

and he decides to sell the share at that price. What is the annualized

return that person has earned?12 3 0+#23+,

1v3pv456i)n i : Interest rate per unit time period n : Number of time periods I = .224!

". an* operations are divided into?a) 7iddle o8ceb) 1ront o8cec) ac* o8ced) All

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#. #rimary source of income for ban*s?a) Interest incomeb) 1ees for servicesc) 9oned) Deposits from public

e) (rants from entral ban*s

$ ban# ma#es a profit by investing or lending money that is earning ahigher rate of interest than it pays to its depositors.They borrow money from individual or businesses %who have money&, and lend it to those %who need money&, by adding a mar# up, to pay fore"penses and profit. The difference between the rates, which ban#s offerto depositors and lenders, is generally referred to as %'pread&.

!. :f a ban* charges ;< for 5 year from customer $ and 5,< from

customer for similar loan= this can be attributed to

a) :nterest rate ris*b) redit ris*c) Li>uidity ris*d) $perational ris% e) 7ar*et ris*

(ar#et ris# is the ris# that the value of a portfolio, either an investment portfolio or a trading portfolio, will decrease due to the change in value ofthe mar#et ris# factors. The four standard mar#et ris# factors are stoc#

prices, interest rates, foreign e"change rates, and commodity prices. Theassociated mar#et ris#s are)

• *+uity ris# , the ris# that stoc# prices andor the implied volatility willchange.

• nterest rate ris# is the ris# variability in value/ borne by aninterest-bearing asset, such as a loan or a bond , due to variabilityof interest rates.

• 0urrency ris# , the ris# that foreign e"change rates andor theimplied volatility will change.

• 0ommodity ris# , the ris# that commodity prices e.g. corn, copper,crude oil/ andor implied volatility will change.

0redit ris# is an investor1s ris# of loss arising from a borrower who doesnot ma#e payments as promised.Li+uidity ris# is the ris# that a given security or asset cannot be traded+uic#ly enough in the mar#et to prevent a loss or ma#e the re+uired

profit/. $n operational ris# is, as the name suggests, a ris# arising from e"ecutionof a company1s business functions.

http://en.wikipedia.org/wiki/Risk

http://en.wikipedia.org/wiki/Equity_risk

http://en.wikipedia.org/wiki/Implied_volatility

http://en.wikipedia.org/wiki/Bond_(finance)

http://en.wikipedia.org/wiki/Interest_rate

http://en.wikipedia.org/wiki/Currency_risk

http://en.wikipedia.org/wiki/Commodity_risk

http://en.wikipedia.org/wiki/Equity_risk

http://en.wikipedia.org/wiki/Implied_volatility

http://en.wikipedia.org/wiki/Bond_(finance)

http://en.wikipedia.org/wiki/Interest_rate

http://en.wikipedia.org/wiki/Currency_risk

http://en.wikipedia.org/wiki/Commodity_risk

http://en.wikipedia.org/wiki/Risk

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&. hec* /5 act facilitates%a) 9etting of chec*s at day endb) 9etting and substitution of chec*s at day endc) 9etting and pooling of chec*s at day endd) learing chec* by manually processing the chec*e) 'hec% truncation and creation o( substitute chec%

The law allows the recipient of the original paper chec# to create a digitalversion of the original chec#2called a 3 substitute chec# ,3 therebyeliminating the need for further handling of the physical document.

. Tax and insurance premiums collected as part of loan repayment are

handled through which of the following type of account?a) *scrowb) D7$Tc) 71$

*scrow account - $ trust account held in the borrower1s name to pay obligations

such as property ta"es and insurance premiums.

1. #ic* the odd onea) Agenc+ loansb) 1"$ loansc) 2$ loansd) :nterest only loans

$gency loan - $ conventional loan is a mortgage that is not guaranteed or

insured by any government agency, including the ederal Housing $dministration

H$/, the armers Home $dministration mH$/ and the !epartment of

4eterans $ffairs 4$/. t is typically fi"ed in its terms and rate.

H$ loans - $ mortgage issued by federally +ualified lenders and insured by the

ederal Housing $dministration H$/. H$ loans are designed for low to

moderate income borrowers who are unable to ma#e a large down payment.

H$ loans allow the borrower to borrow up to 567 of the value of the home. The

87 down payment re+uirement can come from a gift or a grant, which ma#es

H$ loans popular with first-time buyers.

4$ loans - $ mortgage loan program established by the 9nited 'tates!epartment of 4eterans $ffairs to help veterans and their families obtainhome financing nterest only loans - (ortgage in which the borrower pays only interest fora set term. $t the end of this term, typically five to ten years in the 9nited'tates, the loan converts to a fully amorti:ing loan in which both interestand principal are paid. $n interest-only loan reduces loan payments in theearly years of a loan, so borrowers who e"pect their income will grow over the loan term can ta#e out a larger (ortgage for purchase of a home.

http://en.wikipedia.org/wiki/Cheque

http://en.wikipedia.org/wiki/Substitute_check

http://www.businessdictionary.com/definition/trust-account.html

http://www.investorwords.com/2299/held.html

http://www.investorwords.com/7518/borrower.html

http://www.investorwords.com/3626/pay.html

http://www.investorwords.com/3373/obligation.html



http://www.investorwords.com/3903/property_tax.html

http://www.investorwords.com/2510/insurance.html

http://www.answers.com/topic/mortgage

http://en.wikipedia.org/wiki/Cheque

http://en.wikipedia.org/wiki/Substitute_check

http://www.businessdictionary.com/definition/trust-account.html

http://www.investorwords.com/2299/held.html

http://www.investorwords.com/7518/borrower.html

http://www.investorwords.com/3626/pay.html


http://www.investorwords.com/3903/property_tax.html

http://www.investorwords.com/2510/insurance.html

http://www.answers.com/topic/mortgage

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11. an* $= bases in @= provides safe*eeping services for securitiesto its @ clients. :T also has clients in 1rance & elgium and providessecurities safe*eeping services to these clients through an*s and Drespectively. Which of the following terms best describes an* $?a) @econdary custodianb) ,lobal custodian

c) 9oned) 7ain custodiane) @ub custodian

$ global custodian provides custody services for cross-border securitiestransactions. n addition to providing core custody services in a number offoreign mar#ets, a global custodian typically provides services such as e"ecuting foreign e"change transactions and processing ta" reclaims.

$ global custodian typically has a sub-custodian, or agent ban# , in each localmar#et to help provide custody services in the foreign country.

12. :n 9ormal distribution AA< condence interval corresponds to BB a) 5.C+sdb) 5sdc) sdd) 2.33sde) 5.ACsd

4alue at ;is# is an estimate of the worst e"pected loss on a portfoliounder normal mar#et conditions over a specific time interval at a givenconfidence level.4a; 0alculation) 557 < =.88 > standard deviation

13. $ll of following are benets of netting EFE#T%a) Geduction in cost of settlementb) Geduction in the no. of deliveries and receiptsc) Geduction in compliance ris*d) -eduction in s+stemic ris%

0learing is the process of determination of obligations, i.e. who oweswhat, to whom and how much. 'ettlement on %net& basis reduces thenumber of transactions to be settled drastically reducing the overalltransaction cost for everyone. $s per an estimate, netting reduces thenumber of settlements needed by more than 5?7.'ettlement for clearing che+ues presented to the clearing houses ta#es

place on a netting basis at a particular time either same day or on the ne"t day. This system gives rise to ris#s such as credit ris#, li+uidity ris#, legalris#, operational ris# and systemic ris#.

0ompliance ris# are $ssociated with 0ustody 'ervices.14. $ll the following statements concerning @ government

securities are correct EFE#T%a) Treasury bills have their interest paid in a lump sum at maturity

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b) Treasur+ bonds hae maturit+ dates up to 3 +earsc) Treasury notes have maturity dates up to 5, yearsd) Treasury bills have a greater interest rate ris* than either Treasury

bonds or Treasury notes.

1". /0 = /pecial purpose ehicle

1#. 2:@$ is involved in which of the followingi. 0roide the interchange s+stems to trans(er data and

(unds between membersii. @et credit limitsiii. :ssue credit cards

a) : b) :: c) ::: d) : and ::

4isa does not issue cards, e"tend credit or set rates and fees forconsumers@ rather, 4isa provides financial institutions with 4isa-branded

payment products that they then use to offer credit, debit, prepaid andcash-access programs to their customers

1!. :n reality people hold part of their loans as cash. This ma*es themultiplier%a) @ame as if people did not hold cashb) Largerc) Herod) /maller

1&. The share price of a company may drop considerably from its

current levels. :n scenario= what type of ris* are the investors facing?a) Li>uidity ris*b) ompany ris*

c) ar%et ris% d) usiness ris*e) redit ris*s

1. @ecurities functionality is a function of BBBBB a) ac* o8ceb) @pecialistsc) 1ront o8ced) 7id o8ce

e) Traders

'ecurity is a financial instrument that signifies ownership in a company a stoc#/,

a creditor relationship with a corporation or government agency a bond/, orrights to ownership an option ).

Private Aan#ing ront Bffice covers functions li#e 'ales C 0lient prospecting, 0ontact (anagement, $ccount $ggregation and inancial $dvisory services.

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Private Aan#ing (iddleAac# Bffice covers functions li#e $sset $llocation,;esearch, Portfolio $nalysis, ;is# (anagement, Trade Processing,0ompliance and documentation.

Traders facilitate the buying and selling of stoc#, bonds, or other securities

such as currencies, either by carrying an inventory of securities for sale or by e"ecuting a given trade for a client. Traders deal with transactions largeand small and provide li+uidity the ability to buy and sell securities/ forthe mar#et. This is often called ma#ing a mar#et./ Traders ma#e moneyby purchasing securities and selling them at a slightly higher price. This

price differential is called the 3bid as# spread.3 2. (enerally if bond F had a lower rating than bond I= the yield on

bond F would bea) @ame as that of ond yb) Lower than that of bond I

c) igher than that o( ond 5 d) 2olatile

$nnual rate of return also called 0oupon, i"ed, 'tated or Dominal Eield/Higher the credit rating, the lower the Eield

21. Trade 1inance primarily helps ina) 1acilitating corporate lendingb) 1acilitating setting up of new factoriesc) 1acilitating intercompany transaction

d) 6acilitating international transactionse) 1acilitating intra3company transactions

The main obFective of trade finance is to facilitate transactions. There aremany financing options available to facilitate international trade such as pre-shipment finance to produce or purchase a product, and post-shipmentfinance of the receivables.

22. Which of the following is a type of underwriting spread?a) nderwriterJs allowance

b) Allc) 9oned) oncessione) 7anagerJs 1ee

$n 9nderwriter is a bro#erdealer or an investment ban#. He guaranteesthat the capital issue will be subscribed to the e"tent of his underwrittenamount. He will ma#e good of any shortfall. The contract between theissuer and the Lead or (anaging 9nderwriter is the 9nderwriting

$greement. The agreement states the terms and conditions of theoffering, such as, the 9nderwriting 'pread the amount the underwritersma#e on sales/, the Public Bffering Price PBP/, and the amount of

proceeds from the offering that will go to the issuer.

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9nderwriters earn 8 types of 9nderwriting 'pread)· (anager1s fee - The lead underwriter receives this fee on all securities sold.· 9nderwriter1s $llowance is the total spread minus the (anager1s fee. This fee

is shared by syndicate members based on the type of syndicate account.· 0oncession - t is typically the largest part of the spread and is paid to the

bro#erdealer that actually too# the clientGs order.23. oming together of 9I and 7ellon together is an example of

BBBB a) $llb) Ta*eoverc) $c>uisitiond) ergere) ro*erage

24. $ co wants to identify the best way for ma*ing salary creditsto its huge employee base. an you select the best option?a) #aper chec*s

b) ontactless paymentsc) ashd) Automated clearing house

2". :n private ban*ing #T$ is 0a+able thorough account

2#. Loc is 7etter o( credit2!. Kn trading day at an exchange= a bro*er underta*es the

following trades.uy@ell ompan

y9o of shares @hare

priceuy 7@ /,, -5,

@ell 7@ 5,, -5,.+uy (oogle 5,, -/,@ell 7@ , - 55@ell (oogle +, /,.+@ell 7@ M, -A

How much did the broker payout to exchange on total in-case of a) gross settlementsystem b) net settlement system?

a) 8a) 94 8b) 9123"b) 4a) -5/+ 4b) -//+c) 4a) -/C, for 7icrosoft - A0+ for (oogle & -/C, for 7@

d) 9onee) 4a) - 5/+ 4b) - M,,,

ross

Auy =II JKI -J=,III Auy KII J=I -J=,III

J III needs to be paid to e"change to get =II (' share and KII google shares.

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e) oil (utures

· Call Options are options to buy a stoc# at a specific price on or before a certaindate.

· Put Options are options to sell a stoc# at a specific price on or before a certain date.· Long-Term Options are options with holding period of one or more years, and they

are called L*$P' Long-Term *+uity $nticipation 'ecurities/.· Swaps are the e"change of cash flows or one security for another to change the

maturity

32. What could be the type of mortgage interest?

a) Allb) 1ixedc) 1loatingd) "ybrid

$ mortgage loan is a loan secured by real property through the use of a mortgage

note which evidences the e"istence of the loan and the encumbrance of that realty

through the granting of a mortgage which secures the loan.The two basic types of amorti:ed loans are the fi"ed rate mortgages ;(/ and

adFustable rate mortgages $;(/ also #nown as a floating rate or variable ratemortgage /. 0ombinations of fi"ed and floating rate are also common, whereby a

mortgage loan will have a fi"ed rate for some period, and vary after the end of that

period.

33. an*s are nancial intermediaries thata) "elp connect public to the central ban*sb) Do not operate e8ciently in the nancial systemc) @hould not be allowed to open savings accountsd) $re not re>uired

e) 7in% depositors to borrowers34. :n electronic chec* conversion 4E)= what happens once the

chec* is processed?a) Geceive cash immediatelyb) The customer signs a receipt authorizing the store to

present the chec% to ban% electronicall+ and deposit

the (unds into the stores accountc) $lld) The customer can present a chec* to store cashier

3". Which is 9KT a aptive nance company?

a) an% o( Americab) 1ord 7otor creditc) "yundai 7otor 1inance ompany

d) (eneral 7otors $cceptance orporatione) 9one

0aptive finance company is a subsidiary whose purpose is to provide financing to

customers buying the parent company1s product.

The captive finance company is usually wholly owned by the parent company.

$lthough there are numerous e"amples of these, the best ones occur in the

automotive industry.eneral (otors has eneral (otors $cceptance 0orporation ($0/,

http://en.wikipedia.org/wiki/Loan

http://en.wikipedia.org/wiki/Collateral_(finance)


http://en.wikipedia.org/wiki/Real_property


http://en.wikipedia.org/wiki/Mortgage_note



http://en.wikipedia.org/wiki/Encumbrance



http://en.wikipedia.org/wiki/Mortgage_law

http://en.wikipedia.org/wiki/Security_interest

http://en.wikipedia.org/wiki/Fixed_rate_mortgages

http://en.wikipedia.org/wiki/Adjustable_rate_mortgages

http://en.wikipedia.org/wiki/Floating_interest_rate

http://en.wikipedia.org/wiki/Variable_rate_mortgage



http://en.wikipedia.org/wiki/Loan






http://en.wikipedia.org/wiki/Mortgage_law

http://en.wikipedia.org/wiki/Security_interest

http://en.wikipedia.org/wiki/Fixed_rate_mortgages

http://en.wikipedia.org/wiki/Adjustable_rate_mortgages

http://en.wikipedia.org/wiki/Floating_interest_rate



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!aimler 0hrysler has 0hrysler inancial, andord (otor 0ompany has ord (otor 0redit 0ompany (00/

'imilarly Hyundai (otor inance 0ompany serves Hyundai dealers

3#. What is KT?a) Kperating the company

b) $er the counterc) Kptions on the counterd) 9one

3!. FIH orporation is a large client of ban* and on average for a period it

maintains -/, million in its ban* account. "owever the ban* allows the

authori'ed representatives oN FIH to utili'e funds up to 5+< over the balance

maintained. This is an example of which of the following option?a) $ccrual loanb) ommitted loansc) "eld for sale loansd) $erdra(te) ndrawn loan

Bverdraft limits are e"tended to help the corporate manage the day-to-day cash flowneeds of the business. The ban# ma#es available a certain sum of money for a

period of time say, 9'! =I.I million for a period of K year/. There would be aseparate account called the overdraft account created to monitor withdrawals underthis loan. Ohenever the corporate has a deficit in its main business account, it candraw money from the overdraft account up to the limit of 9'! =I.I million/. t canalso put bac# money in the overdraft account as and when they have surpluses inthe business account.

3&. Iou purchase a stoc* for -M,. Kne year later you receive -/ asdividend and sold the share for -M;. "ow much is the return of holding

period?a) M+<b) 9onec) 2">d) 5,<e) +,<

3. Which of the following is 9KT a core private ban*ing function?a) :nvestment analysis and adviseb) sales and mar*etingc) deposit mobilizationd) client management

e) research

4. Treasury bills can be transacted and settled on the same date?4T-?*)

41. :dentity the odd one outa) E>uitiesb) @haresc) @toc*s

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d) ommon stoc*

e) 'onersible bond

42. The amount owed by a company to suppliers in the next one year willbe categori'ed under BBBB

a) 'urrent liabilities

b) Deferred liabilitiesc) $nnual liabilitiesd) $ccrued liabilities

43. ompany $ has a gross prot of -+,,,,. The operating expensesamounts to -5,,,,. The interest on loans availed amounts to -+,,, andtaxes to be paid amounts to -+,,,. alculate the E#@ if there are total of/,,,, shares.

a) 1."b) 5./+c) /.+d) /ross profit < ?IIII Bperating e"penses < KIIII

Bperating ncome < ross profit - Bperating e"penses < IIII *AT *arnings Aefore nterest and Ta"es/ < Bperating ncome M other income – other e"penses

< IIII Profit Aefore Ta" PAT/ < *AT - nterest *"penses < IIII – ?III < 8?III Det ncome or P$T Profit after Ta"/ < Profit Aefore Ta" PAT/ – income ta"es < 8IIII

EPS (Earnings Per Share) = Profit after Ta ! "o. of Shares < 8IIII=IIII < K.?

44. :n an account earning simple interest from the rst year is

reinvested at the beginning of the second year. 6A7/*

4". $n investor has multiple investment options yielding various

dollar returns at various points of time= while he is comfortable with a

return of F< pa. Which method should he use to compare the various

investments?a) External rate of return

b) @et present aluec) @imple interestd) ompound interest

Det Present 4alue DP4/ is a concept often used to evaluate proFectsinvestments usingthe!iscounted 0ash low !0/ method. The !0 method simply uses the time valueconcept and discounts future cash flows by the applicable interest rate factor to arrive at the presentvalue of the cash flows.

4#. # & L statements represent transactions over a period of time

while the balance sheet information as of a specic date. T-?*

4!. Which of the following Ls is similar to a ban* guarantee?a) @traightb) 9egotiablec) ac* to bac*

d) /tandb+

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d) oth close and open ended funds are listed on stoc* exchanges

Eou can buy mutual funds when mutual fund companies ma#e initial public offerings.

illing out an application form with a payment of some initial deposit is all it ta#es.

Auying mutual funds called closed end funds is from stoc# e"changes. 0losed end funds

are initially sold by fund companies in limited numbers and they are listed in a stoc#e"change to facilitate trading by investors. These will be usually at premium prices or as

dictated by demands in the mar#et higher demands for various reasons attract higher

premiums/.

Eou can also buy mutual funds open end funds - funds purchasable perpetually from the

company/. Here the price at which you buy will be a figure called as D$4 in the industry

circles.

"#. Warrants are the combination of which of these instruments?a) #ut options and swapsb) ash and call optionsc) all and put options

d) E>uities and futurese) *uities and call options

"!. Kn trading at 9I@E= a bro*er underta*es the following trades

uy :7 5,, -55

@ell :7 +, -5,.+,

uy 7@ 5,, -/,

@ell :7 /, -55

@ell 7@ 5, /,.+

@ell :7 , -A

"ow much did the bro*er pay to exchange? $) gross )netAnswer B 31 8gross) 1&& 8@et)

Auy A( KII JKK -JK,KII KII

'ell A( ?I JKI.?I J?=? -?I

Auy (' KII J=I -J=,III KII

'ell A( =I JKK J==I -=I

'ell (' KI =I.? J=I? -KI

'ell A( 8I J5 J=6I -8I

Detting -JK,QQI 8I A( 5I ('

ross -J8,KII to buy KII A( C KII ('

"&. Which institution is responsible for monetary policy for the

country? '*@T-A7 A@C

". Which of the following represents the correct hierarchy of

corporate ratings 4highest to lowest)?

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a) $$$= $$= D= b) D=$$==$$$

c) AAA:AAD:Ed) D==$

Bond Rating Grade Risk

Moody's Standard & Poor's

Aaa AAA Investment Lowest Risk

Aa AA Investment Low Risk

A A Investment Low Risk

Baa BBB Investment Medium Risk

Ba, B BB, B Junk Hig Risk

!aa"!a"! !!!"!!"! Junk Higest Risk

! # Junk In #efau$t #. Which of the following is treasury management system?

a) #innacleb) 1lex cubec) T@/d) 1innacle

e) 6ront Arena

Treasury (anagement 'ystems are

• 'ungard ront $rena

• 'ummit

• 0alypso

• Oall 'treet 'ystems

#1. orporate loans are%a) 9ever securedb) 9ever unsecuredc) /ecured or unsecuredd) $lways unsecurede) $lways secured

0orporate Lending refers to various forms of loans e"tended by ban#s to corporatebodies li#e

proprietorship, partnership, private limited companies or public limited companies. Aan#s

lend tosuch entities on the strength of their balance sheet and business cash flows.0orporate loans are provided by ban#s for various purposes li#e new proFects, capacitye"pansion or plant moderni:ation, daily cash flow re+uirements wor#ing capital/ etc.!epending on the nature of the re+uirement, loans may be long-term or short-term innature.

Loans can be either secured or unsecured in nature. n case of secured loans, if thecorporate

http://www.investopedia.com/terms/d/default2.asp

http://www.investopedia.com/terms/d/default2.asp

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defaults on payment of principal or interest on the loan, the ban# can ta#e possession ofthesecurity and sell off the same to meet principal or interest payment on the loan. 'ecurityis usually in the form of land, buildings, plant and machinery, physical stoc# of the raw material,goods for sale etc.

#2. Two maPor functions of corporate nance division of investment

ban*s are?a) Technology and m&a Qsb) Gis* management and underwritingc) @ecurity trading and underwriting

d) ergers and acuisitions adisor+ and underwritinge) @hort selling

#3. Which of the following are 9KT the benets of using credit

derivatives?a) redit derivatives can be used either to ta*e more ris* or to avoid

4hedge) it

b) redit derivatives can be used to credit positions that can otherwisenot easily be established in cash mar*et.

c) Increasing the credit limit o( a corporated) redit derivatives can be used both to diversify their credit ris*

exposures and free up capital from regulatory constraints.

9ses of 0redit !erivatives

• Li#e any other derivative instrument, credit derivatives can be used either to ta#e

on more ris# or to avoid hedge/ it.

• credit derivatives can be used to create positions that can otherwise not easily be

established in the cash mar#et.

• Aan#s use credit derivatives both to diversify their credit ris# e"posures and to

free up capital from regulatory constraints

#4. Which of the following represents that the company is

incorporated in @$?a) LTDb) #TEc) #Ld) I@'

#". (E shares are selling for -5+ each. Iou bought /,, shares one

year ago at -5/ are received dividend payments of -/ per share. What

was your total dollar capital gain this year?

a) /,,b) C,,c) 9oned) 1e) M,,

##. :f the nominal interest rate is 5,< and rate of inRation is /<=

what is the real interest rate?

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also payable on the committed amount of the loan. $lso, in most cases, the corporatewould haveto pay a certain amount as processing fees for the loan. This would cover the ban#Gsoverhead costs in the loan process.

!4. @ecurities with an original maturity of lesser than 5Oyear are

traded on money mar*ets?T-?*

(oney mar#et is for short term financial instruments, usually a day to less than a year.Treasury bills of very short tenure, commercial paper, certificates of deposits etc. are alsoconsidered as money mar#et instruments.

!". #roduct development in sales and mar*eting refers to which of

the following option?a) ollateral e.g. cars in case of car loans= houses in case of

mortgagesb) #roducts that are bought using online payment such as eOcommercec) Developing and diNerentiating deposits= loans etc

d) $lle) :dentifying products such as @$#= Kracle for the ban*

!#. BBB of securities trade involves the transfer of the securities from

the seller to the buyer.a) learing

b) /ettlementc) 9ettingd) Trading

Settlement of securities is a business process whereby securities or interests in

securities are delivered, usually against in simultaneous e"change for/ payment of

money, to fulfill contractual obligations, such as those arising under securities trades $ number of ris#s arise for the parties during the settlement interval, which are

managed by the process of clearing , which follows tra&ing and precedes

settlement. 0learing involves modifying those contractual obligations so as to

facilitate settlement, often by netting and novation. clearing denotes all activities

from the time a commitment is made for a transaction until it is settled.

!!. The type of loan in which spread varies over the life of the loan

is called BBBB a) #ositive spread loan

b) 6loating rate loanc) @emiOxed rate loand) 9egative spread loane) 1ixed rate loan

!&. Which two ris*s of a nancial institution may gain as well as

losses?

a) Interest rate ris% and (oreign exchange ris% b) 9onec) redit ris* and foreign exchange ris*d) Li>uidity ris* and credit ris*e) redit ris* and interest rate ris*

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!. What is the settlement standard followed in the @?a) T6/

b) TD3c) T6Md) T65

&. What is the diNerence between residential and commercial

mortgage?

a) T+pe o( propert+ being collateralized

b) Gange of loan tenure

c) $lld) Type of customer

&1. What are Ian*ee bonds also *nown as? Fun% bonds&2. Who is participating ban*?

a) A ban% which participates in eer+ process o(

s+ndication

b) an* which underwrites a loanc) an* which participates in arranging a loand) an* which participates in disbursing a loane) an* that participates in the syndication by lending a portion of the

total amount re>uired

&3. Dividend declaration is an example of a) #rivate ban*ingb) :nitial public oNerc) 7erger & ac>uisitiond) :nvestment ban*ing

e) 'orporate action

0orporate $ction refers to dividend declarations, stoc# splits etc. The 0orporate $ction!epartment ma#es sure that the rightful owners as on the ;ecord !ate/ receive thedividends, 'plits etc.

&4. 1rom the given options identify the services that can be

categori'ed under asset servicing line of businessi. orporate action processing iii. Transfer agency

servicesii. :ncome processing iv. $ll

a) : onlyb) :ii onlyc) :: only

d) oth : and ::e) I

&". "ow would you categori'e account activity alerts in mobile

ban*ing?a) $ccount informationb) @upportc) :nvestment

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d) Transactions

&#. Which of the following is involved in the retail bro*erage

business in @?a) 1reddie 7ac

b) @allie 7aec) (innie 7aed) 1ederal Geserve

e) *GTrade $ bro#erage that primarily serves retail investors rather than institutional investors is

referred to as a retail bro#erage. ;egistered representatives who wor# for these retail

bro#erage firms are e"pected to mar#et their services directly to individual investors and

offer investment advice.

&!. 7oney laundering refers to which of the following option?a) Extending loans to corporateb) $llc) @hort term borrowing & placements

d) 'onerting the pro<ts (rom criminal actiities intolegitimate (unds'one% laun&ering is generally regarded as the practice of engaging in financial

transactions to conceal the identity, source, andor destination of illegally gained

money by which the proceeds of crime are converted into assets which appear to

have a legitimate origin.

(oney laundering occurs over a period of three steps, which include the physical

distribution of the cash %placement&/, the second step involves carrying out comple"

financial transactions in order to camouflage the illegal source %layering&/, and the

final step which entails ac+uiring wealth generated from the transactions of the illicit

funds %integration&/.

&&. $ll of the following are valid means for custody client to

communicate trade instructions to its custodian EFE#a) 1EDW:GEb) y 1ax

c) + telephoned) @W:1T networ*

&. Which of the following is an issuer and ac>uirer?a) Elavon

b) Amex

c) Tsysd) 1irst Data orporation

irst !ata 0orp Processor/T'E' Processor/

$merican *"press $c+uirer, 0ard Brgani:ation C ssuer/

. :f a nancial instrument has a /,< chance of paying ;,< and an;,< chance of paying +,< what would be the expected return?

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a) ,./b) ,.MMc) ,./;

d) ."#

E(R)= Sum( probability (in scenario i) * the return (in scenario i)) ER = ( 0.2 * 0.8 ) + (0.8 * 0.5) = 0.1 + 0.! = 0.5

1. $n open end funds with 5,=,,, units outstanding had the total

assets of Gs 5/,=,,, and the liabilities of Gs /+=,,,. alculate the

fundJs 9$2 per unit.

AnswerB @A = Assets H liabilities no. o( outstanding

shares = 8":1:) = ."

Det asset value,3 or 3D$4,3 of an investment company or a mutual fund is thecompanyfundGstotal assets minus its total liabilities. or e"ample, if an investment company has

securities and other assets worth JKII million and has liabilities of JKI million, the investmentcompanyGs D$4 will be J5I million. Aecause an investment companyGs assets and liabilities change daily,D$4 will also change daily. D$4 might be J5I million one day, JKII million the ne"t, and JQImillion theday after.The investment companyfund calculates the D$4 of a single share or the 3per shareD$43/ by dividing its D$4 by the number of shares that are outstanding.

2. The components to determine the rate of exchange in a 1orward

contract are%a) ross currency Gate and forward rate adPustment

b) 'urrent spot rate and (orward rate adFustmentc) 1orward rate adPustment and amount of currency boughtsoldd) urrent spot rate= amount of currency boughtsold

The most basics tools of fore" ris# management are 1spot1 and 1forward1 contracts. Thesearecontracts between end users and financial institutions that specify the terms of ane"change of two currencies. n a spot transaction the currency that is bought will be receivable in twodays whilst the currency that is sold will be payable in two days.

(ost mar#et participants want to e"change the currencies at a time other than two daysinadvance but would li#e to #now the rate of e"change now. This is done through a forward contract to e"change the currencies at a specified e"change rate at a specified date. ndetermining the rate of e"change in si" months time there are two components)R the current spot rate is simply the current mar#et rate as determined by supply anddemand/R the forward rate adFustment orward rate Local currency9'!/ < 'pot rate >KMinterest rate in 9'/ KM local interest rate//

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3. :n trade nance= which of the following factors are considered

while choosing mode of nancing?

a) *xporters (und: ris% (actors: cost o( <nancing: time

(rameb) 9one

c) Time frame= cost of nancing= buyers trade associatesd) (overnment guarantee program= seller preference

$0TB;' D 0HBB'D TH* (B!* B D$D0D 0osts, Time frame, ris# factors,government guarantee program and e"porterGs funds.

4.$ custodian processes interest proceeds from the xed income

securities held under its custody. Which division= within the custodian

company= is responsible for carrying out the positiona) Transaction managementb) :ncome management

c) 'ash managementd) ro*erage services

e) 1und administration".$ ban* has a portfolio of <+, million worth of loans of which it wants

to hedge -/, million worth of loan. What is the process called?

a) eld (or sale loansb) ommitted loansc) ndrawn loansd) Trading loanse) $ccrual loans

#. What term is used to describe an L that remains valid for years there

by eliminating the cost of separate Ls for each transaction with a regularclient?a) Gevolving L

b) *ergreen clausec) (reen claused) :rrevocable Le) 1ixed clause

The standby L0 can remain valid for years *vergreen 0lause/ it eliminates the cost ofseparate L0s for each transaction with a regular client.

!. :nterest rate spread is e>ual to?

a) apOcurrent rateb) urrent rate SRoor

c) 'urrent rate H base rated) 9onee) ase rate S Roor

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&.$ settlement can be considered as nal only if %a) The settlement is unconditionalb) The settlement is irrevocablec) The trans(er o( (unds and securities ta%e place

simultaneousl+d) The settlement is unconditional as well as irrevocable

.redit derivatives can be used to reduce the regulatory capital

re>uirement and a diersi(+ credit ris*.

1. Which of the following combination holds true?a) Documentation collection= strict compliance rules apply

b) /tandb+ letter o( credit: less costl+ than documentar+

collectionc) Wire transfer= more costly than other payment alternativesd) 1oreign chec*s= not useful for cross border tradee) ommercial letter of credit= improves applicantJs credit facilities

11. :ncreasing the cash reserve ratio for ban*s would have animpact on which of the followinga) :ncreased interest ratesb) :ncreased money supply in the economyc) #rotability of rmsd) -educed mone+ suppl+ the econom+

12. :n dened benet plans= the benets is expressed as an BBB and

in dened contribution plans= the benet is expressed as anBBBBB a) $ccount balance= account balanceb) $ccount balance= annuity

c) $nnuity= annuityd) Annuit+: account balance

13. :dentify the services oNered by retail ban*s%a) @avings and chec*ing accountsb) #ersonal loansc) Debit cards

d) All

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14. Trading of previously issued securities ta*es place where?a) $t company head>uarters

b) /econdar+ mar%etc) $lld) #rimary mar*ete) Through private placement

1". 9$@D$ is based out of BBBBBBBBBB a) Londonb) hicago

c) @oned) @ingaporee) "ong Uong

NASDAQ is an American stock exchange (located in New York).

"NASDAQ" originally stood for "National Association of Securities

Dealers Automated Quotations.

1#. :n a securities lending transaction= if the buyer of securitiesprovides cash as collateral= then the seller of securities has to provide

the buyer with an interest amount for the cash. What is this interest

amount called?a) ollateral interestb) 9onec) :nterest rate

d) -ebate ratee) Geturn rate

Securities len&ing or stoc len&ing refers to the lending of securities by one party to

another. The terms of the loan will be governed by a 3'ecurities Lending $greement3,which re+uires that the borrower provides the lender with collateral, in the form of cash,government securities, or a Letter of 0redit of value e+ual to or greater than the loanedsecurities. The agreement is a contract enforceable under relevant state law, which isoften specified in the agreement.

$s payment for the loan, the parties negotiate a fee, +uoted as an annuali:ed percentageof the value of the loaned securities. f the agreed form of collateral is cash, then the feemay be +uoted as a 3rebate3, meaning that the lender will earn all of the interest whichaccrues on the cash collateral, and will 3rebate3 an agreed rate of interest to the borrower

1!. :nRation represents which of the following option?

a) Increase in pricesb) 2ery high change in pricesc) urrency crisisd) Decrease in pricese) Economic crises

1&. T$G# stands for% Troubled Asset -elie( 0rogram

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1. Gam deposits -5,, in xy' ban*. #uPa ta*es a loan of -5,, from

FIH ban*. Which of the following is most li*ely to happen?a) 9oneb) an* is charging < interest to #uPa and paying +< interest to Gamc) an* is charging +< interest to Gam and paying +< interest to #uPa

d) an% is charging "> interest to 0uFa and pa+ing 3>interest to -ame) an* is charging < interest to #uPa and paying +< interest to Gam

11. :f the limit 3 -/,,,= margin 3 /,< and asset value 3 - /,,,=

then drawing power for an open ended loan is e>ual to?a) /,,,

b) 1#c) //,,d) /M,,

rawing Power (P) - lower of L an& (*-')+, Limit L/ – ma" outstanding allowed

(argin (/ – percentage of limit that can be drawn $sset value $4/ – value of underlying asset

L<=III <S ma" value for !P is not greater than =III K-(/$4 < K-I.=/=III < KNII

111. Direct investment in stoc* mar*ets can be a better option

investing through mutual funds if%a) The inestor has large capital: %nowledge and

resources (or researchb) The investor has identied a bullish phase in the stoc* mar*etc) The investor wants to invest for the long termd) The investor wants better returns than those oNered by mutual

funds

112. The process of creating buNer against the potential loss of nonO

performed loans is called%a) Loan classifyingb) 7oan proisioningc) Loan buNeringd) Loan monitoring

113. Getail loans are asset products oNered by the ban*. T-?*

114. Which of the following is a corporate action?a) $llb) Declaring dividend

c) /toc% splitd) Gights issuee) 7&$

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:ederal Reser/e 5edera$ Reserve Board Reserve Bank of 6nited 'tates !entra$ Bank of 6nited 'tates Reserve Bank of Ameri(a

f the Limit ; <6277) margin ; 37= and Asset ,al"e ; <3777 then >rawing Power for an*$en ended loan is e?"al to<6)27778,0))78,-))71))None of te $isted 9ptions

+hich of the following is the most $rofita!le for %redit %ard %om$any- !ustomers wo a$wa&s pa& in time !ustomers wo never pa& %"stomers who defa"lt !"t finally $aya$$ of te $isted options

None of te $isted 9ptions

+hich of the following is not in/ol/ed in a credit card transaction- Independent sa$es organi4ationMer(ant

a&ment gatewa& Associations

+ho checks for the credit limit of the card !efore a$$ro/ing the transaction- a&ment pro(essor A(%uiring banks a&ment gatewa& ss"ing !ankNone of te $isted 9ptions

*ne sho"ld ha/e the ime >e$osits if one is looking for- ;ui(k, (onvenient and, fre%uent/a((ess to te mone& A ig rate of interest G"aranteed rate of interest Low feeNone of te $isted 9ptions

E:A stands for<$e(troni( 5unds 2rading A(t

<$e(troni( 5inan(ia$ 2ransfer A(tElectronic :"nds ransfer Act

<$e(troni( 5ee 2ransfer A(t

<$e(troni( 5unds 2e$e(ommuni(ation A(t

%@PS stand for !$earing House for Internationa$ a&ments 'ett$ement %learing @o"se for nter!ank Payment System !$earing Head of Interbank a&ment 'ett$ement !$earing Head of internationa$ a&ment 'ett$ement !$earing House for Interbank a&ment 'ett$ement

he $rocess flow in a Pri/ate !anking firm goes as

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'ervi(ing 'pe(ia$ist => !$ient Representative => Midd$e 9ffi(e => Ba(k 9ffi(e !$ient Representative => 'ervi(ing 'pe(ia$ist => Midd$e 9ffi(e => Ba(k 9ffi(e !$ient Representative => 'ervi(ing 'pe(ia$ist => Ba(k 9ffi(e => Midd$e 9ffi(e Midd$e 9ffi(e => Ba(k 9ffi(e => 'ervi(ing 'pe(ia$ist => !$ient Representative%lient Re$resentati/e ; Middle *ffice ; Ser/icing S$ecialist ; Back *ffice

+hich of the following roles and res$onsi!ilities are correctly stated- Ser/ices Pro/ider a0 Ser/ices Midd$e 9ffi(e? 'tatements @ Advi(es 5ront 9ffi(e? !$ient Reporting Ba(k 9ffi(e: Risk Management Midd$e 9ffi(e? !ustodia$ 'ervi(es

he !elow stated res$onsi!ilities are carried o"t !y which of the following $layers. %ashSer/icesC%lient Re$ortingCStatements & Ad/icesC>omestic & Glo!al Settlements 'ervi(es rovider !$ient Representative Back office 5ront 9ffi(e Midd$e 9ffi(e

Pri/ate !anking offers Dstr"ct"red lending that $ro/ides !ustomi4ed asset/based (redit so$utions Long/term $i%uidit& to ($ients Advi(e/$ed (redit so$utions %redit sol"tions to @igh et worth indi/id"als

A$$ of te $isted options

:inancial $lanning in/ol/es all EF%EP !as f$ow management Retirement p$anning Risk management 2a p$anning

Portfolio management

Loan can take many of the following !asic forms EF%EP 9verdrafts Bi$$s and promissor& notes %or$orate !onds Advan(es!redit $ine

f a f"nd $"rchases a loan in the Primary) they also "se another word for that. +hich termis "sed to indicate the initial gro"$ of lenders Primary LendersH- A$$o(ation Syndicate

'e(ondar& AssignmentNone of te $isted 9ptions

+hich of the following is not a sec"red loan- <%uit& Loans 'e(ured Loans wit 'avings <%uit& Lines of !redit Personal Loans !ar Loan

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#o(umentar& !o$$e(tion Letter of !redit Both Stand!y Letter of %redit & Letter of %redit

%ash management techni?"es incl"de oo$ing Netting 'wapping Both Pooling and ettingoo$ing, Netting and 'wapping

All of the following are $ayment modes e0ce$t <52 !e%ue #ebit to a((ount troug #ebit (ardLock!o0


+hich of the following are $rinci$les "sed !y an asset manager- #iversifi(ation

'(reens and 5i$ters !apita$ preservationAll of the listed o$tions 9n$& #iversifi(ation and '(reens and 5i$ters

BidAsk s$read refers to #ifferen(e in pri(e between bu&ing one asset and anoter simi$ar one #ifferen(e in opinion between te se$$er and bu&er on te pri(e of an asset >ifference !etween the !"ying and selling $rice of the same asset Bot #ifferen(e in pri(e between bu&ing one asset and anoter simi$ar one and #ifferen(e inopinion between te se$$er and bu&er on te pri(e of an assetNone of te $isted 9ptions

he $rocess of I@iring of the Lead ManagersJ in the case of P* is referred to as Red Herring Road/sow Investment Manager !ontest Advisor !ontest Bea"ty %ontest

he difference !etween D:ill or Kill and DAll or one order is D5i$$ or Ei$$F a$$ows mu$tip$e tradesDAll or one can !e a Good ill %ancelled order

2e& are s&non&ms D5i$$ or Ei$$F (an be va$id ti$$ end of da& D5i$$ or Ei$$F a$$ows partia$ ee(ution

+hat is the key reg"latory a"thority o/er the American sec"rities ind"stry- 5edera$ Reserve 5#I! #2!! A'A Sec"rities E0change %ommission

+hat is the hird Market- NA'#A;

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*%NG'<

InstinetNone of te $isted 9ptions

he D:o"rth Market refers to NA'#A; 92!NG'<

nstinetNone of te $isted 9ptions

%ore %"stody Ser/ices $erforms the following f"nctions e0ce$t ri(e se(urities positions Re(ord Eeeping :id"ciary and com$liance monitoring Reporting servi(es ro(esses (orporate a(tions

Ser/ices like the settlement) safekee$ing) and re$orting of c"stomersJ marketa!le

sec"rities and cash are $ro/ided !y ################# %"stodian Broker Investment bank 5und Administrator #ea$er

hree $illars of the new ca$ital accord) Basel ) are ;uantitative? 'upervisor&? enera$ ;ua$itative? Market 5or(es? eograpi( ;uantitative? 9perationa$? 'upervisor& "antitati/e "alitati/e Market :orces ;ua$itative? Mandator&? ;uantitative

1. Auto loans are given by which of the following entities? Marks: 1

Answer:a. All of the listed Options

b. Banks

C.Dealerships

d. Auto manufacturers’

e. Credit Unions

2. XYZ corporation is a large client of bank and on a average for a

period it maintains $20 million in its bank account However. the bank

allows the authorized representatives off XYZ to utilize funds up to 1

5% over the balance maintained This is an example of which of the

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following option? Marks: 1

Answer: a. Committed Loans

b. Undrawn Loan

c. Held for Sale Loans

d Accrual Loan

e. Overdraft

3. Company ABC has a gross profit of $50000. The operating

expenses amounts to $10000. The interest on loans availed amounts

to $5000 and the taxes to

be paid amounts to $5000. Calculate the EPS if there are total of

20000 shares.Marks: 3Answer: a. 2.5 b.1.25

c.2

d. 1.5

5. Which of the following is a corporate action? Marks: 3

Answer:a. All of the listed options

b. Rights Issue

c. M&A

d. Declaring Dividend

e. Stock split

7. BAFT stands for: Marks: 1

Answera. Bankers Association for Foreign Trade

b. Bankers Acceptance for Foreign transactions

c. Bankers association for Factoring Trade.d. Bankers Acceptance for Factoring Transactions

e. Bankers Association for Forfaiting & Factoring transaction

9 In a economy where inflation is 4%, future value of 100 units of

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money after 2 year would be which of the following option? Marks: 2

Answer: a. Around Rs 104

b. None of the listed options

c. Exactly 108

d.108.16‘

e. Exactly 100

10. The type of loan in which spread varies over the life of the loan is

called Marks: 3

Answer: a. Fixed rate loan

b. Semi-fixed rate loan

c. Positive spread loand. Negative spread loan

e. Floating rate loan

11 Simple interest is calculated on which of the following basis? Marks: 1

Answer:a. Beginning principal only

b Accumulated interest in each period

c. beginning principal+accumulated interest in each periodd. None of the listed Options

12 Bank ABC interest rate on deposits is 7.20% and its interest rate

on loans is 9.25% during 2009. What is the spread for Bank ABC?

Marks: 3

Answer: a. ‘10195

b. 00225c. None of the listed options

d. 01655

16. With continuous compounding at 10 percent for3years. the

future value of an initial investment of $2000 is closest to ____________ Marks:

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3

Answer: a. 2870

b. 2662

c. 3000

d. 2700

17.Which are true in a ‘Basic or No Frill Checking’ Account? Marks:

3

I: Limit the number of checks written

II: Interest paid

III: Limit the number of withdrawals made

Answer: a. All of the listed Optionsb. II and III

c. I and III

d. I and II

18. When Checks are deposited they are converted into digital files

and then images are transferred to financial intermediaries. What is

the process of clearing

and settlement called? Marks: 3

Answer:a. Check Imaging

b. Paper check processing

c. None ofthe listed options

d. Certified check

19.VISA is involved in which of the following? Marks: 2

I: Provide the interchange systems to transfer data and funds betweenmembers

II: Set credit limits

Ill: Issue credit cards

Answer:a. I only

b. Both I and II

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c. II only

d III only

20. Tax and Insurance premiums collected as part of Loan repaymentare handled through which of the following type of account? Marks:

2

Answer: a. Mutual fund account

b. Fixed deposit

c. DMAT account

d. Escrow account

21 Number of stages in loan syndication are _____ Marks: 2

Answer:a. 1

b. 4

c. 3

d. 5

e. 2

22. Choose the correct order of occurrence of followingactivities: Marks. 3

-Answer: a. Trade execution. Trade confirmation, Trade matching.

Trade clearance, Trade settlement

b. Trade execution, Trade matching. Trade clearance. Trade

confirmation, Trade settlement

c. Trade execution. Trade matching, Trade confirmation. Trade

clearance. Trade settlement

d. Trade matching. Trade execution. Trade confirmation. Trade

clearance, Trade settlement

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23. The counterparty in a futures contracts trade is: Marks: 3

Answer a. The brokers who struck the deal

b. Banks

c. The Exchange

d. Governmentseller

24. P&L Statements represent transactions over a period of time

while the balance sheet show information as of a specific dataState True or False Marks: 1 Answer:True False

29. Hedge Funds are now regulated by: Marks: 3

Answer: a.SEC

b. Industry wide SROs

c. State regulatory agencies

d. None of the listed options

30. What happens when the interest rates rise? Marks: 1

Answer:a. Bond prices decrease

b. Bond prices do not change

c. Interest rates never fall, they always go up

d. Bond prices increase

31. Bank A, based in the US, provides safekeeping services for

securities to its US clients. It also has clients in France and Belgium.

and provides securities safekeeping services to these clients through

Banks C and D respectively. Which of the following terms best

describes Bank A? Marks: 2

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Answer: a. Secondary Custodian

b. None of the listed Options

c. Sub Custodian

d. Global Custodian

e. Main Custodian

32 SMA oners investors a customized approach to investing. Rawer than a

generic product State True or False. Marks: 2

Answer:True False

33 What is the role of a Central Bank in Forex market of a country?

Marks: 2,

Answer:a.Regulatory role depending on country’s economic policies b.Acts as a trader for maximum profit making

c. Encouraging trading in all currencies and not be limited to USD only d.

Seller of USD

34 What are Yankee bonds also known as? Marks: 3

Answer: a. Shares

b. T-Bills

c. None of the listed Options

d. Call Options

e. Junk bonds

35. Which of the following LCs is similar to a Bank Guarantee? Marks:

2

Answer:a. Stand by

b. Negotiable

c. Back to Backd. Straight

e. Revolving

36. You purchased a stock for $40. One year later you received $2 as

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dividend and sold the share for $48. How much is the return of

holding period? Marks: 3

Answer: a. 10 percentage

b. 50 percentage

c. None of the listed options

d. 45 percentage

e. 25 percentage

37. Banks operations are divided into which of the following option?

Marks: 2

Answer: a. Back Office

b. All of the listed options c. Middle Office

d. Front office

39 Which of the following Mechanisms is used for financing for auto

loans? Marks: 2

Answer: a. Dealer financing

b. Direct Lending

c. Leasing

d. All of the listed Options

41. Which of the following methods eliminate country risk and

commercial risk upon confirmation? Marks: 1

Answer: a. Documentary Collection, Letter of Credit

b Letter of Credit, Back to back Letter of Credit

c. Stand by Letter of Credit, Letter of credit

d. Documentary collection. Stand by letter of credit

e. Back to back Letter of Credit. Documentary collection

42. Which of the following methods of payment is most risky to the

Buyer? Marks: 2

Answer: a.Open Account

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b. Letter of Credit

c. Documentary Collection

d. Cash in Advance

e. Counter trade

44. TARP stands for which of the following option? Marks: 1

Answer: a. Term Assets Relief Program

b. Troubled Assets Relief Program

c. Troubled Assets Reform Program

d. Term Assets Reform Program

e. None of the listed options

45. Hedge Funds can use which of the following investment

Strategies? Marks: 1

Answer a. Short Bias

b. All of the listed options

c. Short Selling

d. Regulation D

e. Credit Arbitrage

46. Which two risks of a financial institution may bring gains as well

as losses? Marks: 3

Answer:a.Interest rate risk and foreign exchange risk

b. None of the listed options

c. Liquidity risk and credit risk

d. Credit risk and foreign exchange risk

e. Credit risk and interest rate risk

47. Which of the following is NOT a core private banking function?

Marks: 3

Answer: a.Investment Analysis and Advise

b. Client Management

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c. Sales and Marketing

d. Deposit Mobilization

e. Research

50 There are 5 participants A, B, C, D, E in a 25M USD syndicated loan

and A is the lead manager. The borrower has agreed to pay 0.4% ($1 ,

00,000)

participant fee How much each participants will share in participant

fee? Marks: 3

Answer: a.$1 ,00.000 will be received every time money is withdrawn

b. $1 ,00.000 will be charged towards undrawn portion

c. None of the listed Optionsd. $1 ,00.000 will be received every month

e. $1 ,00.000 will be received affront

51 A Custodian processes Interest proceeds from the fixed

income securities held under its custody. Which division within

the custodian company is responsible for carrying out the

process. Marks: 2

Answer:a. Transaction management

b. Income processing

c. Brokerage services

d. Cash Management

e. Fund administration

52 Check 21 Act facilitates Marks: 1

Answer: a. Netting and pooling of checks at day end

b. Check truncation and creation of substitute check

c. Netting and substitution of checks at day end

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d. Clearing check by manually processing the check

e. Netting of checks at day end

54 ______________assumes the counter party risk of each member and

guarantees financial settlement. Marks: 3

Answer: a. Depository

b. Custodian

c. clearing house

d. Stock Exchange

55 Which of the following is a Top 10 US Bank? Marks: 1

Answer: a. HDFC

b. INC Bank

c. Rabo bank

d. Morgan Stanley

e. Wells Fargo

56SPVmeans: Marks: 2

Answer:a. Special Purpose Vehicle

b. Security Purpose Vehicle

c. Special Principal Vehicle

d. Securitized Planning Vehicle

e. None of the listed options

57The term OTC usually stands for which ofthe following in the

context of financial markets? Marks: 1

Answer: a. Over the cash

b. Overview of trading courses

c. Online trading in commodities

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I: Buyer to open new LC against an already issued LC

II: Seller to use the LC received from his buyer in favor of another

Ill: Buyer to use the LC received from his seller to open his own LC

IV: Seller to receive one more LC against an already issues LC from his

buyer

Answer: a. I only

b. I. III and IV

c. III only

d. IV only

e. II only

67. Which of the following is NOT a Settlement Method for BankLoans? Marks: 3

Answer:a Securities Repository

b. Assignment

c Participation

d Sub-Participation

e Pre closure

68 Which of the following operations cannot be done on a LC (Letter

of Credit)? Marks: 2 ,

Answer: a Purchase

b None of the listed Options

c Discount

d. Acceptance

71 In a Securities lending transaction, if the buyer of securities

provides cash as collateral. Then the seller of securities has toprovide the buyer with a interest amount for the cash What is this

interest amount called? Marks: 3

Answer: a Interest Rate

b Rebate Rate

c Collateral Interest

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d. Return Rate

e None of the listed Options

72 The term ‘settlement cycle’ refers to which of the followingoption? Marks: 1

Answer: a time period between the date on which an investor first makes

the decision to enter a trade and the date when the trade is settled b None

of the listed option are correct

c time period between the date on which the trade is cleared and the date

when the trade is settled

d time period between the date on which the trade is executed and the date

when the trade is settled

74 Jet Airways and Citibank have tied up to offer this type of credit

card what type of card is it? Marks: 2

Answer: a. Gift Card

b Co Branded card

c Smart Card

d Affinity Card

77 The share price of a company may drop considerably from itscurrent levels. In this scenario, what type of risk are the investors

facing? Marks: 3

Answer:a. Market Risk

b. Credit Risk

c. Company Risk

d. Business Risk

e Liquidity Risk

81 __________represents the credit worthiness of the borrower Marks:

2

Answer: a. LOAN score

b. score

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d. The company’s management has not done a good job

e. The standard deviation of the return is zero

92 Trading of a corporation’s stock or other securities (eg bonds orstock options) by individuals with potential access to non-public

information about the company is called: Marks: 2

Answer: a. Insider Holdings

b. Lock in Period

c Insider Trading

d Hedging

e Initial Public Offer

93 If total spread on underwriting is $ 500000 and Manager’s fee is S

100000. What is the amount which will be distributed in the

syndicate? Marks:3

Answer a. Cannot be determines• . . . .

b. 100000

c. 400000

d. 600000

e. 500000

94 If an investment company has securities and other assets worth

$100 million and has liabilities of $10 million. the investment

company’s NAV will be? Marks: 2

Answer a. $110 million

b. $10 million

c. $100 milliond. $90 million

95 is the amount of net income related to each share. Marks: 1

Answer a. EBIT

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b. PAT

c. PBT

d. LEPS

98 What is Line of credit? Marks: 2Answer: a. None of the listed Options

b. Irrevocable credit provided by financial institution

c. A formal, legal commitment to extend credit up to some maximum

amount over a stated period of time

d. Similar to credit card

e. Removing credit agreement

100 Dividend declaration is an example of: Marks: 3

Answer: a. Private Banking

b. Investment Banking

c. Merger and acquisition

d. Initial Public Offer

e. Corporate action

101 Which is NOT a type of corporate bond? Marks: 1

Answer: a. Unsecured bonds

b. Sub-ordinated debentures

c. T-BiIIs

d. Secured Bonds

105 At the end of the trade cycle. the trades are to determine the

obligation of the trading members to deliver securities/funds asper settlement

schedule. Marks: 2

Answer: a. Offset

b. Grossed

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c. Netted

d. Aggregated

107 From the given options identify the service(s) that can be

categorized under Asset Servicing line of business.

I: Corporate Action processing

Marks: 1 II: Income Processing

Ill: Transfer Agency services

IV: All of the listed options

Answer: a. Ill only

b. I only

c. Both I and II

d .IV

0 e. II only

108 Identify the odd one out: Marks: 1

Answer: a. Treasury Notes

b. Stocksc. Treasury Bills

d. Bill of Exchange

e. Commercial Papers

109 Which of the following is NOT an example of an option?

Marks: 1

Answer:a. Oil Futures b. Call Option

c. LEAPS (Long Term Options)

d. Swap option

e. Put Option

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111 _____________of a securities trade involves the transfer of the

securities from the seller to the buyer. Marks:2

Answer:a. Settlement

b. Netting

c

115. In Electronic Check Conversion (ECC), what happens once

the check is processed? Marks: 3

Answer: a. Receive Cash immediately

b. The customer signs a receipt authorizing the store to present the

check to the bank electronically and deposit the funds into the store’saccount

c. The customer can present a check to a store cashier

d. All of the listed options

117 Open ended loan allow the borrower to borrow additional

amount subject to the maximum amount less then a set value.

State True or False Marks: 1

Answer:True False

118 Private Banking Clients have high _________ Marks: 1 _

Answer a Investible Assets

b. Net worth. Investible assets and Income

c. Income

d. Net worth

119 Which of the following risks for the investor is associated

with corporate bonds but NOT U.S. Treasury securities?

Marks: 2

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Answer:a. Credit Rating Risk

b. Interest Rate Risk

c. None of the listed options

d. Default Risk

e. Reinvestment Risk

121 On a trading day at an exchange. a broker undertakes the

following trades: Marks: 3

Buy 200 Microsoft shares for S10.00 each

Sell 100 Microsoft shares for S10.00 each

Buy 100 Google shares for $20.00 each

Sell 30 Microsoft shares for $11. 00 eachSell 50 Google shares for $20.50 each

Sell 40 Microsoft shares for $9.00 each

How much did the broker pay out to the exchange in total in case of (a)

gross settlement system (b) net settlement system?

Answer:a. (a) $4000 (b) $1285

b. (a) $1235 (b) $2235

c. (a) $260 for Microsoft $975 for Google (b) $975 for Google & $260 for

Microsoftd. (a) $1235 (b) $4,000

e. None ofthe listed Options

122 On a trading day at the NYSE. a broker undertakes the following

trades: Marks: 2

Buy 120 Dell shares for $10.00 each

Sell 70 Dell shares for $10.50 each

Buy 200 Cisco shares for $20.00 each

Sell 20 Dell shares for $1 1.00 each

Sell 50 Cisco shares for $20.50 each

Sell 1 0 Dell shares for $9.00 each

Given that a net settlement system is being used, find out the net position

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of the broker at the end of the day.

Answer: a. Dell: 70 shares to give out: Cisco: 90 shares to receive: $3,000

to pay out to the exchange

b. Dell: 20 shares to receive: Cisco: 1 50 shares to receive: $31 30 to pay

out to the exchange

c. Dell: 150 shares to receive: Cisco: 20 shares to receive: $3130to receive

from the exchange

d. None of the listed Options

e. Dell: 20 shares to pay out: Cisco: 1 50 shares to receive: $3,780 to pay

out to the exchange

123 The process of netting: Marks. 1.Answer: a. Increases the number of settlements

b. Neither reduces nor increases the number of settlements

c. Increases the transaction costs

d Reduces the number of settlements

124 On a trading day at the NYSE. a broker undertakes the following

trades: Marks: 3

Buy 100 IBM sharesfor$11.00 each

Sell 50 IBM shares for $10.50 each

Buy I 00 MSFT shares for $20.00 each

Sell 20 IBM shares for $1 1 .00 each

Sell 1 0 MSFT shares for $20.50 each

Sell 30 IBM shares for $9.00 each

How much did the broker pay outto the exchange in total in case of (a)

gross settlement system (b) net settlement system?

Answer:a. (a) $3100 (b) $1880

b.(a) $1880 (b) $3100

c. None of the listed Options

d. (a) 0 for IBM, $1 ,795 for MSFT (b) $1,780

e. (a) $1 .780 (b) 0 for IBM. $1 ,795 for MSFT

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126 If a financial instrument has a 50% chance of paying 20% and a

50% chance of paying 60% percent, what would be the expected

return? Marks: 2

Answer: a. 0.2

b. 0.8

c.0.4

d. 0.5

127 Warrants are the combination of which of these instruments?

Marks: 3

Answer:

a. Put Options and Swaps

b. Cash and Call Options

c. Equities and Call Options

d. Equities and Futures

e. Call and Put Options

128 is the legal and professional proceeding in which a lender,obtains a court ordered termination of a borrower’s equitable right of

redemption.Marks: 3

Answer:

a. Credit-Freeze

b. Foreclosure

c. Securitization

d. Sub-Prime

129 The components to determine the rate of exchange in a Forward

Contract are: Marks: 2,Answer

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a. Current Spot Rate and Forward rate adjustment

b. Forward rate adjustment and amount of currency bought 7 sold

c. Current Spot Rate, amount of currency bought / sold

d. Cross Currency Rate and forward rate adjustment

130 Money laundering refers to which of the following option?

Marks. 1

.Answer:

a Extending loans to corporate

b. Converting the profits from criminal activities into legitimate funds

c. Short term borrowing & placements


6. If the price of share pf cognizant changes fro 65 to 60 this can !e attri!"te# to:

a. $ar%et ris%

!. nterest rate risk c. !redit risk d. "perational risk e. #i$uidity risk

3. &cco"nt aintaine# in the hoe c"rrenc' !' one !an% is the nae of another!an% !ase# a!roa# is ca((e# as:

a. !urrent account!. ostro accountc. Vostro acco"nt

d. &orex accounte. "'erseas account

23) *hich is not !an%s priar' "se for #eposits+

a( ayment to employers b( one

c( n'estmentd( #oane) *ith#ra,a(

27) -n the tra#ing #a' at the ./S a !ro%er "n#erta%es the fo((o,ing tra#es

"' 100 I$ shares for 10)00 each

Se(( 50 I$ shares for 10)50 each

"' 100 $ST share for 20)00 each

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Se(( 20 I$ shares 11 each

Se(( 10 $ST share at 20)50 each


o, "ch #i# the !ro%er pa' o"t to the echange in tota( in case of i 9ross

sett(eent s'ste ii .et Sett(eent S'ste+

a( *i) +,./ *ii) +0/// b( *i) / for 13 +,45 for 6&7 *ii) +,./(c) i 3000 ii 1780

d( onee( *i) +,./ *ii) / for 13 +,45 for 6&7

31) *hi(e proi#ing sec"rit' (en#ing serices to its c(ients ,hich ris% ,i(( a

c"sto#ian hae to anage for its c(ients

A) #i$uidity risk

1) 1oth !redit risk and interest rate risk!) nterest rate risk8) !redit risk oth cre#it ris% an# (i;"i#it' ris%)

50) *hich of the fo((o,ing is not a treas"r' anageent s'ste+

A) !alypso1) 6ummit!) 9all street system8) &ront arena (e c"!e

51 . Syndicate helps in all of the following activity but

A) anaging large bond issues1) :aising huge money from the bank !) anaging large capital raising act< $anaging conf(ict !et,een inestent !an%s)

& IP- #istri!"tion

56) in an internationa( sec"rities transaction= ,hich of the fo((o,ing participant ,i((

not !e ino(e#

A) ;lobal custodian 3 domestic sub custodian 3 depository in foreign country andsometime stock exchange in foreign country

1) 8epository in foreign country!) ;lobal !ustodian< stoc% echange in foreign co"ntr'

<) domestic sub custodian

65) & fora( >ega( coitent to eten# cre#it to soe a ao"nt oer a state

perio# of tie is #escription of

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a( 7rade !redit!) ?eo(ing @re#it agreeent

c( Agreement rre'ocable !reditd( #ine of !redite( #etter of !redit

64) *hich of the fo((o,ing factors affect the choice of Pa'ent $etho#+

a( <xporters &und!) &((

c( ;o'ernment ;uarantee rogramd( 7ime &ramee( !ost of &inancing

76) *hich of the fo((o,ing accor#ing to 'o" has res"(te# in #efining contri!"tion

p(ans gaining pop"(arit' oer #efine# !enefit p(ans

a( 8! plans fix the monthly contribution from the employee making his financial planning easier(

b( 8! plans are seen by employees as in'estment which to accumulate retirementincome(

c) &((

d( <mployer increasing wants employees to share responsibility for retirement

77) AAAAAAAAis t'pica((' (argest part of sprea# an# is pai# to !ro%erB#ea(er or that

act"a((' too% c(ients or#er

a( 6alary b( anager feec( 9age#) @oncession

e( =nderwriter

78) .&S< is not an S?- for

a) >iste# ar%et

b( "'er the counter marketc( 7hird marketd( &ourth market

74) igh net ,orth in#ii#"a(s genera((' hae AAAAAAAAAAAA)a( arket capitali>ation more than +2///// b( Allc) .et ,orth greater than 500000

d( Household income of max +5//// year(

80) *hich is tr"e a!o"t retai( !an%ing+

a( 7he business focuses on small no( of high net worth indi'iduals(

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b( 7he business focuses on small and medium enterprises(c) The !"siness foc"ses on (arge no) of in#ii#"a(s)

d( 7he business focuses on large no( of corporation bodies(

81) -ffer is price at ,hich a fir

a( 7rades in securities b( uotes to its bets customer c) Inten#s to !"'

#) Inten#s to se((

e( uotes when it does not want to trade(

82) Sec"rities ,ith origina( at"rit' greater than 1 'ear are tra#e# on one'

ar%et)

a. 7rue !) a(se

83) *hich is not a !an%ing serice+

a) Stoc% ar%et

b( :etail bankingc( !orporate bankingd( !ustomer lending

8C) *hich is tr"e+

a( &inancer owns the asset both in case of @#ease’ and @hire urchase’( b( 7ax deduction cab be claimed fro the full 'alue of the rental paid in case of leasec( All#) <epreciation in c(aie# !' the financer in (ease an# not in case of hire

p"rchase)

85) an% a !ase# in DS proi#es safe %eeping serices for sec"rities to its DS c(ients)

It a(so has c(ients in rance an# e(gi" an# proi#es sec"rities safe %eeping

serices to these c(ients thro"gh !an%s @ E < respectie(') *hich !est #escri!es

!an% &+

a) 9(o!a( c"sto#ian=

b( onec( ain custodiand( 6ub custodiane( 6econdary custodian

86) &(( fo((o,ing stateents re(ating to on#s are correct ecept)

A) 1onds sell at a discount when !oupon :ate is less than arket nterest rate( .one

!) 1ond is debt instrument gi'ing issues(

87) *hich of the fo((o,ing t'pe of (oan re;"ires the ao"nt of interest that

,o"(# !e earne# on the (oan to !e pai# "pfront !' the !orro,er+

A) !apitali>ed loan Tr"e <isco"nte# (oan

!) Amorti>ed loan

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8) :e$uiring 1usinesses3 which were only to report cash transactions in'ol'ing morethan ,(//3///?

4C) -n a tra#ing #a' at a stoc% echange a !ro%er "n#erta%es the fo(( tra#es:

"' 100 I$ shares for 10 each

Se(( 50 I$ shares for 10)5 each"' 100 $ST shares for 20 each

Se(( 20 I$ shares for 11 each

Se(( 10 $ST shares for 20)5 each

Se(( 30 1! shares for 4 each

&t the en# of the #a'= the !ro%er o,es 1780 to the echange ,hi(e echange o,es

hi 40 shares of $ST) Is it possi!(e+

A) es under :7;61) o@ /es "n#er netsett(eent s'ste

45) <o, Jones in#"stria( aerage is a#e of & 30 stoc%s

1) 2/ stocks!) B/ stocks8) ,/ stocks<) 5/ stocks

46) *hich is the %e' feat"re of >etter of @re#it+

A) basis for de'ising proper currency hedging strategy1) <istri!"tes ris% !et,een !"'er n se((ers)

!) basis for de'ising proper currency hedging strategy and opportunity for recei'ing payment in ad'ance of the due date(8) All<) "pportunity for recei'ing payment in ad'ance of the due date(

47) *hich ris%s !ring gain an# (osses+

A) nterest rate and foreign exchange1) #i$uidity and credit!) !redit and nterest rate8) !redit and &oreign exchange &((

48) in# the f"t"re a("e of 1200 ineste# at 5)25 K per ann" pa'a!(e

ann"a((' after 6 onths+ $ar%s: 2

,( ,0B5(,2( ,2B0(,3) 1231)1

B( one5( ,205

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44) Inestor serices (i%e !ro%erage= cash anageent an# short ter

inestents= coission recapt"re= foreign echange transactions=

transaction anageent etc) can !e c(assifie# "n#er AAAA gro"p of serices)

$ar%s: 1)

1) Tra#ing2( n'estment anagement0( n'estor ser'iceB( one5( Asset 6er'icing

101) The ter @P is "se# in corporate (en#ing for AAAA) $ar%s: 1

,( !ollateral pro'ision2( !lient artner 0( @oercia( Paper

B( !ommodity ut options

5( !redit ro'ision

102 *hat are the ris%s associate# ,ith the e#ge f"n#s+ $ar%s: 3

,) &(( of the a!oe

2( High exposures in deri'ati'es0( High #e'eragingB( High 6peculation

103) The tra#e ters L15G2 net 30Min#icates that AAAAA) $ar%s: 3

a. 2% discount is offered if payment is made within ,5 days(!. 15K #isco"nt is offere# if pa'ent is a#e ,ithin 2 #a'sN the pa'ent

sho"(# ho,eer !e a#e in 30 #a's)

c. 0/% discount is offered if payment is made before ,5 of the month(d. ,5% discount is offered if payment is made between 2 C 0/ daysDe. ,5% discount is offered if payment is made within 0/ days(

10C) & !an% is re;"ire# to ho(# reerses at (east e;"a( to a prescri!e# fraction of its

tota( #eposit (ia!i(ities)

a( Tr"e b( &alse

105 *hat ter is "se# to #escri!e n >@ that reains a(i# for 'ears there!'

e(iinating the cost of separate >@’s for each transaction ,ith a reg"(ar c(ient+not

s"re !o"t the ans,er

a( rre'ocable #! b( one

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c( :ed claused( :e'ol'ing #!e) ergreen c(a"se

106 *ho appoints inestent anager to anage a !enefit p(an+

a( lan sponsor b( lan administrator c) "n# tr"stee

d( onee( ;o'ernment

107 & copan' ,o"(# pa' the interest on ,hat portion of (oan+

a( !ommitted amount b( <ither disbursed or committed loanc( =nused amount of loan#) <is!"rse# ao"nt

e( one

108 In the echange on a partic"(ar tra#ing there is a !"' ar%et or#er for 100

@TS shares an# t,o se(( ar%et or#ers for 50 an# C0 @TS shares each= can the

!"' or#er !e atche# against the t,o se(( or#ers)

a( es b( oc) /es= !"t if prices on the !"' E se(( si#e atch)

104 If the (iit O 2000= argin O 20K an# asset a("e O 2000 then #ra,ing po,er

for an open en#e# (oan is e;"a( to+

a( one!) 1600

c( +22//d( +2B//e( +2///

110 ?is% cannot !e igrate# !'

a( 6etting risk limits b( Hedgingc( 8i'ersification#) &r!itrage

e( nsurance

111 & fie# incoe ana('st ,i(( ana('ze a(( !"t

a( unicipal bonds b( 1onds of go't( sponsed enterprisec( !orporate bondsd( =6 treasuriese) Shares

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112 In !enefit a#inistration ,hat are the re(ationships that eits !et,een the p(an

a#inistrator an# the inestent anager= an# !et,een Tr"stee an# the inestent

anager)

a( one b( lan administrator C trustee both ha'e outsourced plan administration as well as

fund management to in'estment manager c( Any#) P(an a#inistrator gies inestent instr"ction to inestent anager ,hi(e

tr"stee appoints the inestent anager)

e( 7rustee gi'es in'estment instruction to in'estment manager3 while planadministrator appoints the in'estment manager(

113 *hich entit' proi#es cre#it scores that are "se# !' iss"ers to process car#

app(ication+

a( ssuer processor b( !ollection agency

c( ssuing bank d( Authori>ation enginee) @re#it !"rea")

11C @PI stan#s for ,hich of the fo((o,ing+

a* !onsolidated rice indexb* !onsument popularity index(* !onsumer product indexd. @ons"er price in#e

e* one

115 & !an% #eci#es to sanction on(' 10K of the (oan so"ght !' a copan') The

copan' goes an# p(e#ges etra assets ,ith the !an% an# the !an% then agree to

sanction 50K of the (oan so"ght) The copan' has in#"(ge# in the process of

a( !redit scoring b( !redit increasec( !redit incrementationd( !redit re'isione) @re#it enhanceent)

116 spot #ea( ass"es at"rit' of ho, an' !"siness #a's ahea# +

a) B b) 5c) 0d) ,e 2

117 *hich of the fo((o,ing is !est Va? estiation $o#e(+

a) onte- !arlo b) Historical

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c Variance@oariance

d) Eariance-!o'ariance and onte- !arlo

118 *hich of the represent copan' is incorporate# in DS&+

a) lc b) tec) #td# Inc

114 *hich of the factors affect the choice of pa'ent etho#s+

a) ;o't( guarantee rogram b) 7ime framec &((

d) !ost of financinge) <xporter fund(

120 -rganization (ee( ris% appetite is #eterine# !':

a) :isk management b) &ront officec) 1ack officed) 7radee oar# of #irector

121 ?is% anageent is f"nction of:

a) 7raders b) 1ack officec) 6pecialistd) &ront officee $i# office

122 P"re(' copetitie financia( ar%et is not characterize# !'

a 9ot) reg"(ation

b) any tradersc "(( info

d) !ost effecti'e trading

123 .-T p(a'er in t'pica( tra#e c'c(eN

a) !ustodian bank b) !learing bank c) !learing member d) 7rading member e ?eg"(ator

12C -nce s'n#icate has so(# a(( other tra#es participant= s"! participant an#

assignent are consi#ere# tra#e in ,hat ar%et+

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a) rimary! Secon#ar'

c) articipantd) "7!e) ndex

125 Q"estion re(ates to price ,eighte# in#e+

1) <JI&

2( Hangseng0( <A&< indexB( A68A composite index5( 6C 5//

126 In #efine# contri!"tion retireent p(an )Ta she(tere# ann"ities fa(( "n#er

section of AAAAAAAAA?IS&

C03!

B/,k B/,bB/0k one

126 In !enefits a#inistration= tr"stee an# p(an a#inistrator s"!it cop(iance

report toAAAAAA ,hich in t"rn ;"a(ifies the p(an)

articipant.one ans,er is T?DST

;o'ernmentn'estment manager 6ponsor

127 "(( for of &<?

AnswerF &erican <epositor' ?eceipts

128 Q"estion re(ate# to &S> II

AnswerF @apita( a#e;"ac'

124 *hat is interest rate charge# on asset !ase# (oan+

AnswerF he interest rate charged is lower than $ersonal loans

617 "estion related to credit deri/ati/es as which of the following f"nction is not done !y

credit deri/ati/esAnswerF Answer was something as 7ransfer to o'er the counter

616 "estion related to credit deri/ati/es it was fill "$ the !lanks- E0actly donJt remem!er the ?"estionCAnswerF option ha'ing G7:A6&<:

613 "estion related to nondiscretionary n/estment Management

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AnswerF the !an% offers inestent recoen#ations !ase# on the @(ient’s

approa()

611 "estion ha/ing few o$tions like ncome Processing) a0 nformation Ser/ices) %ashSwee$

AnswerF &SST [email protected]

13C Q"estion re(ate# to Dn#er,riting+

-ptions:

8* =nderwriting 6pread0* ublic "ffering rice *")3* Lead or Managing 6nderwriter is te 6nderwriting Agreement*not sure about it* All

&ns,er is &>> the (iste# option

8* :isk atrices was de'eloped byF- JP $organ= 1ank of !alifornia3 !redit 6uisse3

610* :esearch analyst may recommend to F- !"'= ho(# an# se((

* :educing !:: for banks would ha'e impact onF-a. Increase# one' s"pp('

b. :educed interest ratesc. :educed money supply in the economyd. rofitability of firmse. one

* =nder corporate stock repurchase programa. @orporate p"rchase their o,n shares fro shareho(#ers

.* ri'ate banking pro'iding risk management ser'ices stri'es toF-a. <liminate risk and maximi>e returnsb. <liminate risk without worrying about returnsc. ?e#"ce ris% an# optiize ret"rns

d. A'oid risk and returnse. Allf.

-* "ne would go for bank deposits becausea. oney easily a'ailableb. nterest earnedc. nsurance co'er a'ailable

d. &((

K* 1asic B parties in'ol'ed in any transaction using letter of credit are followingexcept

a. ssuing bank b. 1uyer c. ?ei!"rseent !an%

d. 6eller

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e. 1eneficiary bank

+* &rom seller’s point of 'iew which method has least risk a. >@

b. 8irect debit

c. 8ocumentary collectiond. !ounter tradee. @ash in a#ance

1* A1! rated as AAI and JK rated 8( 9ho gets loan from bank a. <$ually unlikelyb. <$ually likelyc. &@

d. JKe. one

8)* 9hich is not the settlement method for bank loans?a. re-closureb. Assignmentc. articipationd. 6ub participatione. Sec"rities repositor'

88* 9hich is correct hierarchy of corporate ratings *high to low)?a. &&&=&&R==<

80* nflation- 4%( &uture 'alue of ,// units of money after 2 yearsFa. 118)8

b. <xactly ,//c. <xactly 2//d. Around ,/4e. one

8* 1rokerage firms are regulated bya. 6<!b. ndustry wide 6:"sc. 6tate regulatory Agencyd. &((

8* "dd man outF-a. S@

b. 6<c. A68Ad. #6<e. 6<

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8.* &rom in'estor stand point a debenture issued by excellent company will appearrisky than share of preferred stock issued by excellent company

a. 7rueb. a(se

8-* :isk associated with hedge fundsF-a. High exposure in deri'ati'esb. &((

c. High speculationd. High le'eraging

8K* ot a feature of pri'ate bankingF-a. High in'estment in technologyb. #ot of researchc. @oercia( (en#ing

d. 6pecialist ad'ice

e. =nderstanding capital and in'estment needs

8+* 9hich of the following affects the choice of payment methoda. &((

b. ;o'ernment guarantee methodc. <xporter’s fundd. 7ime framee. !ost of financing

81* 9hich risk may bring gains and losses?a. !redit risk and interest rate risk b. &((

c. #i$uidity risk and foreign exchange risk d. !redit risk and foreign exchange risk

0)* 1ankers acceptance differs from sight draft in thata. 6ight drafts are negotiable instrumentsb. 1ankers acceptance demand immediate paymentsc. an% can raise f"n#s !' se((ing acceptance

d. 1ank acceptance reduces banks lending capacitye. one

08* &ormal legal commitment to extend credit up to some maximum amount o'er a period of time is a description of

a. #ine of creditb. rre'ocable creditc. #etter of creditd. ?eo(ing cre#it agreeent

e. 7rade credit

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00* 6ecurity settlement is function ofa. 6pecialistb. 7radersc. ac% office

d. &ront office

e. id office

0* 9hich of these instruments is not included as part of asset ser'icing ser'ices andthe category GricingL Holdings Ealuation which includes accurate pricing3 ratingetc(

a. <$uitiesb. !ertificate of participationc. ;o'ernment securitiesd. !ertificate of deposite. Serices a' !e proi#e# for a((

0* 9hich of the following is in'ol'ed in retails brokerage business in =6a. <-tradeb. !harles 6chwabc. 6allie aed. &ederal reser'ee. a an# ! !oth

0.* easures of performance of an in'estment portfolio are all of the followingexceptF-

a. :isk adMusted returnb. 6tyle maps scorec. rofitLloss on portfoliod. &(pha

e. =pLdown market analysis

0-* nterest rate spreadF-a. !urrent rate N floor b. !ap N current ratec. @"rrent rate!ase rate

d. 1ase rate-floor ratee. one

0K* 9ho insures stocks in stock marketa. 6ecurity and exchange commissionb. &ederal deposit insurance corporationc. =s department of treasuryd. .one

0+* A68 is not an 6:" for a. Bth market

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b. 0rd marketc. >iste# ar%et

d. 2nd markete. "7! market

01* 9hich of the following loan re$uires the amount of interest that would be earned onthe loan to be paid upfront by borrowerF-a. <isco"nte# (oans

b. Tr"e #isco"nt chec% not s"re

c. !apitali>edd. 8emande. Amorti>ed

)* #imit O +2/// arginO2/% Asset 'alueO2///a. <ra,ing po,er O 1600

8* "'er the counter market is also calleda. =nlisted marketb. 2n# = "n(iste# an# -T@ ar%et

c. =nlistedd. 6uper e. 2nd market

0* #i$uidity issues of credit can be addressed byF-a. 6weep facilityb. 6tructured lending to clientc. &((

d. 6hort term credit facilitiese. "'erdraft

* 6tandby letter is PPPPP secure than documentary collection and cheaper than PPPP a. $ore= coercia( >-@

* 9hich is not an optiona. !allb. utc. 6waptiond. -i( f"t"res

e. #eaps

.* $uestion on top ,/ =6 bank N ?-

-* A!H transaction in'ol'esa. !ashb. (ectronic #ata

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c. 8ocsd. !hecks and draftse. All

K* nterest rates fallsa. on# prices increase

b. 1ond prices decreasec. 8o not changed. <conomy goes to deflation

+* :ate at which bank purchases =6 dollars against home currency is F-a. i#

b. ndirectc. 8irectd. !ross currencye. Ask rate

04 "ffer price is the price at which the firm

f. ntends to buyg. Inten#s to se((

h. 7rades in securitiesi. one

1* 1id price is the price at which the firmThe price at ,hich ar%et a%ers ,i(( !"' or se(( a partic"(ar sec"rit')

B, resence of risk impliesa. 6tandard de'iation of return is /b. Dncertainties of fina( o"tcoe

c. &inal wealth is lower d. n'estment gain

)* !ompany would pay interest on what portion of the loan?a. <is!"rse# ao"nt

b. !ommitted amountc. 1othd. <ither e. one

8* "dd man out?a. <$uityb. 6tocksc. 6haresd. @onerti!(e !on#s

e. !ommon stock 0* A bank cannot co'er the money demanded by depositor3 then it goes out to N

a. e#era( resere !an%

* nstitutions in'ol'ed in benefit administration process3 discussing plansa. 6ponsor b. !ustodianc. P(an a#inistration

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d. :ecord keeper e. articipant

* 9hich of the following eliminates both country risk and commercial risk?a. oth stan#!' >-@ an# >-@

.* 9hen bank goes to the fed to borrow funds then the interest rate charged by fed is

known asa. rime rateb. 1ond ratec. <isco"nt rate

d. &ederal rate

Soe iportant ;"estions:

There ,i(( !e 1=2=3 ar%s ;"estions

There ,i(( !e 121 ;"estions

1 Page 5

State TG 'imp$e interest is (a$(u$ated on$& on te beginning prin(ipa$*2 Page 6 :LA* here will !e three ?"estions !ased on this form"la 2e re$ationsip between te R rea$ rate of interest, N nomina$ rate of interest

and I rate of inf$ation is as: R; .1H Page N

*ne ?"estion on f"t"re /al"e 2e formu$a for 5uture a$ue is:

5 = 8 in

B) Page N*ne ?"estion on ntrayear com$o"nding

uestion was like this if rate of interest is B% and compounded $uaterley for Byears then what is the 'alue of r and t

+ age 8-reas"ry Sec"ritiesreas"ry !ills issued for one &ear or $ess*reas"ry notes ave a term of more tan one &ear, but not more tan 8) &earsreas"ry !onds greater tan ten &ears

80 age 0)American >e$ository Recei$ts A>RH2e purpose of an A#R is to fa(i$itate te domesti( trading of a foreign sto(k*

8- page082wo %uestions wi$$ (ome:@edging invo$ves prote(ting an eisting asset position from future adverse pri(e movements* Inorder to edge a position, a market p$a&er needs to take an e%ua$ and opposite position in te

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futures market to te one e$d in te (as market*Ar!itrage: An arbitrageur is basi(a$$& risk averse* He enters into tose (ontra(ts were e (anearn risk $ess profits* Oen markets are imperfe(t, bu&ing in one market and simu$taneous$&se$$ing in oter market gives risk $ess profit* Arbitrageurs are a$wa&s in te $ook out for su(imperfe(tions*

0age 01Oat is Mone& MarketPMone& market is for short term financial instr"ments, usua$$& a da& to $ess tan a &ear*

0. age 01Oat is a repoP

A repo is a (ontra(t in wi( te se$$er of se(urities, su( as 2reasur& Bi$$s, agrees to bu& temba(k at a spe(ified time and pri(e*

0- age )regu$ators and supervisors forte finan(ia$ markets*2us India as 'e(urities and <(ange Board of India '<BIand te 6' as Sec"rities and E0change %ommission SE%H.

0K age )Oat do u mean b& portfo$io management s&stemP2ese s&stems a$$ow te investment managers to (oose te instruments to invest in, based onte re%uirements or inputs su( as amount to be invested, epe(ted returns, duration or tenureof investment, risk to$eran(e et(* and ana$&sis of pri(e and oter data on te instruments andissuers

01 age .)2ere wi$$ two or tree %uestions from !RR**Oat do u mean b& !RR !as Reserve Ratio*2ere wi$$ be two numeri(a$s a$soQ**

'ame from book eamp$eP

8 age .Oat is $ass/'teaga$$ A(t P$ass/'teaga$$ A(t of 81, (reated a !inese wa$$ between (ommer(ia$ banking and se(uritiesbusinesses in 6'* 2at a(t was intended to address te per(eived (auses of bank fai$ures duringte reat #epression of 8101*

0age .KRead tis page (arefu$$& ** tree %uestions wi$$ (omeQ%hecking Acco"nts

;ui(k, (onvenient and, fre%uent/a((ess to te mone&*'ome banks pa& interest wi$e man& do not*

Money Market >e$osit Acco"ntsa&s a iger rate of interest tan a (e(king or savings a((ountMM#As often re%uire a iger minimum ba$an(e to start earning interest

Sa/ings Acco"nt A$$ows making witdrawa$s, but (e(ks writing fa(i$it& is not tere*Number of witdrawa$s or transfers one (an make on te a((ount ea( mont is $imited*

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ime >e$osits %ertificates of >e$ositHG"aranteed rate of interest for a term or $engt of time spe(ified b& te a((ount o$der*2e rate of interest is often iger tan savings or an& oter a((ount

Basic or o :rill Banking Acco"nts!e(king a((ounts, but wit a $imit on te number of (e(ks one (an write and te number of deposits and witdrawa$s one (an makeInterest is genera$$& not paid*

age -8

Oat is <52P<$e(troni( banking, a$so known as e$e(troni( fund transfer <52, uses (omputer and e$e(troni(te(no$og& as a substitute for (e(ks and oter paper transa(tions* <52s are initiated trougdevi(es $ike A2M (ards or (odes tat $et one to a((ess &our a((ount* Man& finan(ia$ institutionsuse A2M or debit (ards and ersona$ Identifi(ation Numbers INs for tis purpose*

. age -

Read se(tion Lost or Stolen AM or >e!it %ardsIf unautori4ed use o((urs before reporting, te $iabi$it& of te (ustomer varies depending on tede$a& in reporting te $oss to te (ard issuer*• Oitin two business da&s Liabi$it& $imited to 7.) for unautori4ed use*• Between 0 / -) da&s Liabi$it& $imited to 7.)) be(ause of an unautori4ed transfer*• If te $oss is not reported witin -) da&s, te $iabi$it& as no $imits*

- page -

Oat is <B and its advantagesPELE%R*% BLLG PRESEA* A> PA(ME

K page -./--

Read toroug$&** 'ome of te %uestions wereOat is 5edwireP5edwire is an e$e(troni( transfer s&stem deve$oped and maintained b& te 5edera$ Reserve'&stem* 2e s&stem (onne(ts 5edera$ Reserve Banks and Bran(es, te 2reasur& and oter government agen(ies

5u$$ form of !HI'P!$earing House Interbank a&ments '&stem

Oat is 'OI52P2e 'o(iet& for Oor$dwide Interbank 5inan(ia$ 2e$e(ommuni(ation 'OI52 runs a wor$dwide

network b& wi( messages (on(erning finan(ia$ transa(tions are e(anged among banks andoter finan(ia$ institutions

Oat is $atest version of 'OI52P'OI52 8.)00

14H Page 87 ,,im$

*ne ?"estion ie n"merical atleast on O

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(* Limit L ma outstanding a$$owedd* Margin M per(entage of $imit tat (an be drawne* Asset va$ue A va$ue of under$&ing assetf* #rawing ower # / $ower of L and 8/MA

7H Page 86*ne ?"estion which is not a re$ayment kind-Einds of repa&mentso <MI same insta$$ment amounto 5ied rin(ipa$ (onstant prin(ipa$, de(reasing interest amto 'tep/up prin(ipa$ amount in(reases in stepso 'tep/down prin(ipa$ amount de(reases in stepso Ba$$oon notiona$ amount initia$$&, $arge $ast pa&mento Bu$$et interest pa&ment initia$$&, entire prin(ipa$ at one soto Random s(edu$e @ amount of insta$$ments unde(idedo 'pe(ia$ produ(ts (ombination of above

3H Page 81Oat is !o$$ar and 'preadP

'pread= (urrent rate base rate!o$$ar = (ap/f$oor

age K%harge y$es• $edge go$d, bank as possession• H&pote(ation vei($e, borrower as possession• Lien against bank deposits• Assignment insuran(e po$i(ies, rigts get transferred to bank• 'ares / periodi( drawing power (a$(u$ation• Mortgage immovab$e propert&

age K- +hat are :reddie Mac) Ginnie Maes & :annie Mae-5edera$ Nationa$ Mortgage Asso(iation 5NMA or 5annie Mae, overnment Nationa$ Mortgage

Asso(iation NMA or innie Mae and 5edera$ Home Loan Mortgage !orporation 5HLM! or 5reddie Ma( are a$$ Sse(ondar& market $endersS*

- age +0Oat is te meaning of (orporate $endingP!orporate Lending refers to various forms of $oans etended !y !anks to (orporate bodies $ikeproprietorsip, partnersip, private $imited (ompanies or pub$i( $imited (ompanies*

1 age +.

Oat do u mean b& %ommercial Pa$er-!ommer(ia$ aper !s as (ommon$& known is an instrument b& wi( a (orporate borrowsmone& from banks for sort periods of time* A ! binds te (orporate to make a pa&ment e%ua$to te fa(e va$ue of te ! to te issuing bank on a spe(ified due date* In tis sense, a ! is $ikea sort term unse(ured $oan*

26H $age N8Atleast two ?"estions will come from credit deri/ati/es!redit derivatives are finan(ia$ (ontra(ts tat transfer (redit risk from one part& to anoter,

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fa(i$itating greater effi(ien(& in te pri(ing and distribution of (redit risk among market p$a&ers*

In market par$an(e, te (orporate bond investor in tis eamp$e is the !"yer of $rotection, tedea$ers the $rotection seller , and te issuer of te (orporate bond is (a$$ed te reference entity

21H Page 47+hat do " mean !y:orward Rate Agreement :RAH A (ontra(t tat determines te rate of interest,or (urren(& e(ange rate, to be paid, or re(eived, on an ob$igation beginning at a somefuture start date* It is a$so referred to as 5uture Rate Agreement*nterest Rate Swa$ RS / A dea$ between banks or (ompanies were borrowers swit(f$oating/rate $oans for fied rate $oans in anoter (ountr&* 2ese (an be eiter te sameor different (urren(ies* 2e motive ma& be te (ompetitive advantage of one (ompan& toave a((ess to $ower fied rates tan anoter (ompan&* 2e oter (ompan& ma& be(ompetitive$& p$a(ed to ave a((ess to $ower f$oating rates* A swap wou$d be benefi(ia$to bot* 2e swap is measured b& its notiona$ prin(ipa$*

2H $age 46+hat do " mean !y %MS-%ash Management Ser/ices / !M' is a servi(e provided b& banks to its (orporate ($ients for

a fee to redu(e te f$oat on (o$$e(tions and to ease te bu$k pa&ment transa(tions of te($ient* 2e tree e$ements of !M' are: Recei/a!les Management

Paya!les Management Li?"idity Managemet

22H Page 43+hat are the ca"ses of interest rate risk-Repri(ing riskGie$d (urve risk*Basis risk9ptiona$it&

25H Page 4*ne n"merical on• INR"6'# %uote: .*0-"*- ere, )*)8 is te sma$$est (ount, referred to as one TpipC• <6R"6'# %uote: 8*0.+"*0-8 ere, )*)))8 is te sma$$est (ount, referred to as one TpipCOi$e te derived (ross (urren(& rate wou$d be:INR"<uro %uote: .*0-8*0-8" .*-8*0.+ = .-*)"*.8

@ow many !"siness days are re?"ired for s$ot deal-Answer Q two days

28H Page 42+hich are the inter !anks

:ront ArenaS"mmit%ala$so+all Street Systems

5H$age 67+hat are risk factors choosing the mode of financing-%ostsime frameRisk factors

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Go/t g"rantee $rogramsE0$orters f"nds

55H $age 672PA(ME ME@*>S!as in advan(e•

Letter of (redit• #o(umentar& (o$$e(tion• 9pen a((ount or (redit• !ounter/trade or Barter

-+page 8)Kfour parties are invo$ved in an& transa(tion using an L!:6. B"yer or A$$licant3. ss"ing !ank1. BeneficiaryJs !ank. Beneficiary or Seller

K) page 88) positive$& (ome

2e stand!y L% is $ike a bank guarantee* It is not used as te primar& pa&ment metod but as afai$ safe metod or guarantee for $ong/term pro3e(ts*

Back to Back L% a$$ows a se$$er to use te L! re(eived from is bu&er as (o$$atera$ wit te bankto open is own L! to bu& inputs ne(essar& to fi$$ is bu&erCs order*

K8 page 88)>*%9MEAR( %*LLE%*#o(umentar& (o$$e(tion (arries te risk tat te bu&er wi$$ not or (annot pa& for te goods uponre(eipt of te draft and do(uments*

K0 page 888*PE A%%*9

2is (an be a /ery risky metod for te se$$er, un$ess e as a $ong and favorab$e re$ationsipwit te bu&er or te bu&er as an e(e$$ent (redit rating*

N3H $age 616613See the diagram and learn all the front office and !ack office f"nctions- wo ?"estions willatleast comeO

N1H$age 611In a(ieving te above goa$s, an Investment Manager uses te fo$$owing approa(es"prin(ip$es:• Asset Mi0• nternational >i/ersification• ScreensC:ilters*• %a$ital $reser/ation

• Alternati/e n/estments

N5H $age 614Read m"t"al f"nds ..two ?"estions will atleast come..

N4H $age 61

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+hat is the name of $ension f"nds-76k)RA

43H $age 64+hat do " mean !y @E %@ESE +ALL-

41H $age 6279>ER+RG6nderwriters earn t&pes of 6nderwriting 'pread:• Manager's fee / 2e $ead underwriter re(eives tis fee on a$$ se(urities so$d*• 9nderwriter's Allowance is te tota$ spread minus te ManagerUs fee* 2is fee is sared b&s&ndi(ate members based on te t&pe of s&ndi(ate a((ount*• %oncession / It is t&pi(a$$& te $argest part of te spread and is paid to te broker"dea$er tata(tua$$& took te ($ientCs order*

1 page 8.8SE%*>AR( MARKE RA>G

tere wi$$ tree %uestions at$east (ome, read it (arefu$$&:

<amp$es: 'to(k <(anges: NG'<, AM<V

NA'#A; is a good eamp$e of 92! market*

Anoter name for fourt market: Instinet

1. page 8.Bid or ask rate:

An individua$ firm (ou$d a(t as a broker on one trade and a dea$er on anoter* Oen a(ting as abroker, te firm is taking (ustomer orders and a(ting as teir agent to bu& or se$$ te se(urit&* 5or

tis servi(e, te broker (arges a (ommission* A firm a(ting as a dea$er is te a(tua$ bu&er or se$$er, taking te oter side of a trade* 2e pri(e at wi( market makers wi$$ bu& or se$$ aparti(u$ar se(urit& is known as the Bid or Ask Price*

1- page 8.*rder y$es Based on ,ol"meH:ill or Kill :*KH 2e order must be immediate$& fi$$ed in one trade or (an(e$ed (omp$ete$&*All or one A*H 2e entire order must be fi$$ed or (an(e$ed (omp$ete$&, but un$ike 59E, A9N(an remain good ti$$ (an(e$$ed*mmediate or %ancel *%H must immediate$& be fi$$ed for as mu( of te order as possib$e inone trade, wit te remainder being (an(e$$ed*Market ot @eld order Q 2e f$oor broker as te dis(retion (on(erning time and pri(e* A ke&point is tat Market Not He$d orders are never on te 'pe(ia$istUs Book*

;uestion: diff between 59E and A9NP

1Kpage 8-)

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2e important markets and te indi(es used are presented be$ow:6' #iversified market #ow Jones Industria$ Average #ow6' 2e(no$og& NA'#A; 8))6E London 5inan(ia$ 2imes 'to(k <(ange Inde 52'<erman& 5rankfurt #AV5ran(e aris !A!'wit4er$and Wuri( 'MIJapan 2ok&o NikkeiHong Eong Hang 'eng'ingapore 'trait 2imes Inde '2I

1+ page 8-'ee VL seet sure tree %uestione wi$$ (ome from risk%redit risk is te possibi$it& of $oss as a resu$t of defau$t, su( as wen a (ustomer defau$ts on a$oan, or more genera$$&, an& t&pe of finan(ia$ (ontra(t*Li?"idity risk is te possibi$it& tat a firm wi$$ be unab$e to generate funds to meet (ontra(tua$ob$igations as te& fa$$ due**$erational risk is te possibi$it& of $oss resu$ting from errors in instru(ting pa&ments or sett$ingtransa(tions*Legal risk is te possibi$it& of $oss wen a (ontra(t (annot be enfor(ed // for eamp$e, be(ause

te (ustomer ad no autorit& to enter into te (ontra(t or te (ontra(t turns out to beunenfor(eab$e in a bankrupt(&*Market risk is te possibi$it& of $oss over a given period of time re$ated to un(ertain movements inmarket fa(tors, su( as interest rates, (urren(ies, e%uities, and (ommodities*

8)8 page 8-.Numeri(a$**E0am$le ,aR %alc"lation

Assume tat &ou ave a o$ding in IBM 'to(k wort 78) mi$$ion* Gou ave (a$(u$ated testandard deviation '# of (ange over one da& in IBM is 7 )*0)*2erefore for te entire position, '# of (ange over 8 da& = 70)),)))2e '# of (ange over 8) da&s = 70)),))) X8) = 7-0,.-2e 11Y aR over 8) da&s = 0* -0,.- = 78,K,-08

8)0 page 8-.Oat is monto/(ar$oP Ans: A simu$ation te(ni%ue

8) page 8--MAAGG RSKS2ere are mu$tip$e strategies to manage risks* 'ome of te (ommon$& fo$$owed ones are:8* #iversifi(ation0* Hedging or Insuran(e* 'etting Risk Limits* Ignore te riskZ

8)1 page 8+/8+.

2e primar& emp$o&ee benefits are• #efined Benefits• #efined !ontribution• Hea$t and Oe$fare

>efined contri!"tion $lans ha/e gained $o$"larity as em$loyers ha/e !eg"n to ask their em$loyees to share res$onsi!ility for their retirement. he main $"r$ose of a definedcontri!"tion$lan is to $ro/ide an in/estment /ehicle for em$loyees to acc"m"lateretirement income. state tr"e or falseH tr"e

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diff between Defined Benefit Plan vs Defined Contribution Plan ?

,,/) page ,.Q2e fo$$owing p$ans are designated as defined (ontribution p$ans:• rofit 'aring $ans• !as 9r #eferred Arrangements 9r )8k $ans• 'to(k Bonus $ans And <mp$o&ee 'to(k 9wnersip $ans• 'imp$ified emp$o&ee pensions '<• 2a 'e$tered Annuities 9r )b Arrangements

Some common ?"estions

6H+hich is the !est market - ew (ork

3H which is not a f"nction of $ri/ate !ank-Ans to $rint notes

1H Re$ian(e Industries Limited, India wou$d $ike to raise mone& in NG'< for epanding its

operations in te domesti( market India* 2e se(urities issued wou$d beAmerican >e$ository Recei$t

6*An underwriter [[[[[[[[[[[[[[*a. g"arantees & makes good of any shortfall in s"!scri$tion to the e0tent of his"nderwritingb* de(ides te insuran(e premium(* is t&pi(a$$& an investment bankd* guarantees tat te (apita$ issue wi$$ be subs(ribed at premiume* A$$ of te $isted options

3* Oi( of te options best des(ribes te se%uen(e of fo$$owing eventsP 8* Issuing bank arranges for advising bank to make pa&ment

0* 5reigt forwarder sends do(uments to te advising bank * Issuing bank issues te $etter of (redit L! * Advising bank advises se$$er tat an L! as been opened

.* Advising bank sends do(uments to te issuing banka( B3,303235 b( B3532303, c( ,32303B35 #) 3=C=2=5=1 e( 2353,303B

3( !orporate #ending refers toFa( #oans pro'ided by companies to indi'iduals b( #oans pro'ided to high net worth indi'idualsc( #oans pro'ided to indi'iduals

d( #oans pro'ided to companies by ;o'ernmente. Loans $ro/ided to com$anies

. A (oi(e %uote is [[[[[[[[[[[[[[[*a* pri(e at wi( a firm is read& to bu& or se$$* It a$so means wen bid is e%ua$ to offer!. when !id is e?"al to offer (* were te firm as a (oi(e of de(iding te se(urit& to taked( price at which a firm is ready to buy or sell

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2. In an internationa$ se(urities transa(tion, wi( of te fo$$owing parti(ipants wi$$ N92 beinvo$vedP

a* >omestic S"!c"stodianb* b* 'to(k e(ange in foreign (ountr&(* (* $oba$ !ustodian, #omesti( 'ub !ustodian, #epositor& in 5oreign !ountr& and

'ometimes 'to(k e(ange in foreign !ountr&d* d* #epositor& in foreign (ountr& e* $oba$ !ustodian

5* 'to(k A is more vo$ati$e tan 'to(k B* Oi( sto(k is more risk&Pa* #ata on '# is re%uired for tis b* A (* Bd* #epends e. Both are e?"ally risky

8. Oi( of te fo$$owing wou$d be most attra(tive private banking destinationa* #e$i b* Jakarta (* 2impu d. ew(ork e* Laore

N. A good risk management s&stema* sends a$erts automati(a$$& wen te risk (rosses a defined to$eran(e $imit*

b* a$$ows te risk managers to dri$$ down te risk to $owest (omponentsc. All of the gi/en o$tionsd* (arries out sensitivit&, wat/if ana$&ses,e* generates (ustomi4ab$e reports

4. 9n a trading da& at te NG'<, a broker undertakes te fo$$owing trades: Bu& 8)) IBM sares for 78)*)) ea( 'e$$ .) IBM sares for 78)*.) ea( Bu& 8)) M'52 sares for 70)*)) ea( 'e$$ 0) IBM sares for 788*)) ea( 'e$$ 8) M'52 sares for 70)*.) ea( 'e$$ ) IBM sares for 71*)) ea(How mu( did te broker pa& out to te e(ange in tota$ in (ase of a gross sett$ements&stem b net sett$ement s&stemP

a. aH <6)8N7 !H 7 for BM) <6)842 for MS:b* a 78,K+) b 7,))) (* a ) for IBM, 78,K1. for M'52 b 78,K+)d* None of te $isted 9ptions e* a 7,))) b 78,K+)

67. Oi( of te fo$$owing is $ike$& to ave te igest interest ratea* 80 mont deposit wit minimum ba$an(e of 8)))7!. %annot !e determined(* - mont deposit wit minimum ba$an(e of 8)))7d* mont deposit wit minimum ba$an(e of )))7e* - mont deposit wit minimum ba$an(e of 0)))7

66. A !entra$ Bank in an e(onom& is a$so known as:a* 2e Retai$ #epositorsU Bank b* 2e Banking Boss(* None of te $isted 9ptions d* 2e Big Boss e. he Bankers' Bank

63. Retai$ $oans are asset produ(ts offered b& te bank* 'tate 2rue or 5a$se *2rue :alse

61. Oi( of te fo$$owing metods of pa&ment is most risk& to te 'e$$erP

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a* !ounter trade !. *$en Acco"nt (* !as in Advan(e d*Letter of !redit e* #o(umentar& !o$$e(tion

6. If te pri(e of a se(urit& on da& 8 @ 0 are 7 8)) and 7 8)0 respe(tive$& te return isa* 8Y !. 3= (* er& ig d* /8Y e* /0Y

62* !as management so$utions e$p (orporations to [[[[[[[[[[[ a. manage surp$uses and defi(its b* redu(e f$oat on (o$$e(tions(* outsour(e (o$$e(tions d* All of the listed o$tions e* automate (o$$e(tions

65. Oat is te ro$e of a !entra$ Bank in 5ore market of a (ountr&Pa* A(ts as a trader for maimum profit makingb* <n(ouraging trading in a$$ (urren(ies and not be $imited to 6'# on$&(* 'e$$er of 6'#d. Reg"latory role de$ending on co"ntry's economic $oliciese* No ro$e

68. If a bank gets a deposit of 78))), assuming a reserve re%uirement !RR of 8)Y, andtat it (ir(u$ates troug 0 more banks, $eading to te fo$$owing mone& mu$tip$ier effe(t

a* Loan of 78K8) b* !reate reserve of 781) (* None of te $isted 9ptionsd* !reate a reserve of 78)) e. Loan of <314

6N* Hig/Net wort individua$s genera$$& ave [[[[[[[*a. etworth greater than <277)777 b* A$$ of te $isted options(* Market (apita$i4ation more tan 70)),)))d* Houseo$d in(ome of maimum 7.),))) per &ear

64. Oi( of tese instruments is not in($uded as part of Asset servi(ing servi(es under te

(ategor& Sri(ing"Ho$dings a$uationS, wi( in($udes a((urate pri(ing, ratings, et(* Pa* <%uitiesb* he ser/ice may !e $ro/ided for all of these instr"ments(* overnment se(uritiesd* !ertifi(ates of parti(ipatione* !ertifi(ates of deposit

37. In te Histori(a$ 'imu$ation metod of aR (a$(u$ationa* no assumption is made about te distribution of returnsb* random returns are generated to (a$(u$ate aR(* returns are assumed to be not norma$$& distributedd. ret"rns are ass"med to !e normally distri!"tede* returns are not re%uired at a$$

36*Oi( is te most risk& of te fo$$owing:a* An asset wit a standard deviation of b* An asset wit a standard deviation of 8(* An asset wit a standard deviation of 0d. An asset with a standard de/iation of 2e* An asset wit a standard deviation of

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33. A mutua$ fund wit investment ob3e(tive of a(ieving ig (apita$ growt approa(es aninvestor servi(es firm for advi(e* 2e firm advises te mutua$ fund to invest +)Y of te fundin govt* debt, and 0)Y in e%uit&* 2e a$$o(ation towards debt advised b& te firm:

a. %annot !e determined) de$ends on market conditions $re/ailing at the timeb* Is too ig (* Is about rigt d* Is too $ow

31. In wi( of te fo$$owing (ases (an te 'e(urities Lending servi(e of a (ustodian beused to borrow se(uritiesP

a* A broker as made a sa$e of se(urities, but some of te se(urities were de$ivereddefe(tiveb* A$$ of te $isted options(* A edge fund manager wants to trade wit borrowed sares as part of is arbitragestrateg&d* A broker as made a sort sa$e of a se(urit&, and wants to (over it

3. 2e pro(ess of transferring ob$igation from one part& to anoter is (a$$ed [[[[[[[[[ a. Settlement b* Novation (* Netting d* None of te $isted 9ptions e* !ounterpart& risk

32. Oi( of te fo$$owing metods e$iminate (ountr& risk and (ommer(ia$ risk upon(onfirmationPa* 'tandb& Letter of !redit !. Both Stand!y Letter of %redit & Letter of %redit(* Letter of !redit d* Ba(k to ba(k Letter of !redit e* #o(umentar& !o$$e(tion

35* A#R stands for wi( of te fo$$owingPa* Ameri(an #emand of Russian bond b* Ameri(an #emand of Rented omes(* Ameri(an #emand Re(eivab$es d* Ameri(an #o$$ar Re(eivab$ese. American >e$ository Recei$ts

38. Oi( of te fo$$owing are eamp$es of a&ment MetodsPa* Letter of (redit b* 9pen a((ount or (redit (* !as in advan(ed. All of the listed o$tions e* #o(umentar& (o$$e(tion

3N. A$$ broker"dea$ers invo$ved in te underwriting of non/eempt se(urities must bea* NA'#A; Member b* No su( membersip is re%uired (* NG'< Member d* '<! Member e. AS> Mem!er

34. !redit derivative ave a$$ of te fo$$owing (ara(teristi(s <V!<2:a* 2raded over te (ounter b* 5inan(ia$ Instrument c. one of the listed *$tionsd* 2ransfers risk e* 5a(i$itate greater effi(ien(&

17. Risk Management is a fun(tion of

a* Ba(k 9ffi(e !. Mid *ffice (* 2raders d* 5ront 9ffi(e e* 'pe(ia$ists8* i(k te odd one outa. >emat b* ersona$ Loans (* None of te $isted 9ptionsd* Hire ur(ase e* Auto Loans

13. 2e term ! is used in !orporate Lending for:a* !$ient artner b* !redit rovision c. %ommercial Pa$erd* !ommodit& ut 9ptions e* !o$$atera$ rovision

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11* In defined (ontribution retirement p$ans, 2a/se$tered Annuities fa$$ under 'e(tion [[[[[[ of <RI'Aa* )8b b* None of te $isted 9ptions (* )8k d. 71!H e* )k

1*[[[[[[[[[[[[[ is t&pi(a$$& te $argest part of te spread and is paid to te broker"dea$ertat a(tua$$& took te ($ientCs order*a* 6nderwriterUs A$$owan(e b* Oage (* ManagerUs fee d. %oncession e* 'a$ar&

12. Oi( of te fo$$owing t&pe of $oan re%uires te amount of interest tat wou$d be earnedon te $oan to be paid upfront b& te borrowerPa. r"e disco"nted Loan b* #is(ounted Loan (* !apita$i4ed Loan

d* #emand $oan e* Amorti4ed Loan

15. Auto $oans are $oans finan(ed for vei($es for business use* 'tate 2rue or 5a$se*2rue :alse

18. 2e rea$ rate of interest is 1*.)Y wi$e te nomina$ rate of interest is 88*K)Y* 2eapp$i(ab$e inf$ation rate is:a. 3.3 b* 0*8 (* None of te $isted 9ptions d* ) e* /0*0

1N. If te pri(e of a se(urit& on da& 8 @ 0 are 7 8)0 and 7 8)) respe(tive$& te return is a* 0Y b* /0Y c. 6.45= d* 8 to 0Y e* er& ig

14. Oi( of te fo$$owing is N92 a (ategor& of ea$t @ we$fare p$anPa. Pro$erty ins"rance b* 'urvivor benefits (* A$$ of tese are va$id (ategoriesd* #isabi$it& in(ome e* Hea$t (are p$an

7. If tota$ spread on underwriting is 7 .))))) and ManagerUs fee is 7 8))))), wat is teamount wi( wi$$ be distributed in te s&ndi(atePa* 7)),))) b* 7.)),))) (* 7-)),))) d. %annot !e determined e* 78)),)))

6. Oat are te risks asso(iated wit Hedge 5undsP

a* Hig Leveraging !. @igh S$ec"lation(* Hig <posure in #erivatives d* A$$ of te $isted options

3. Oi( is te best aR estimation mode$a. ,ariance%o/ariance Matri0 b* !annot 'a& / depends on (ase to (ase(* Histori(a$ 'imu$ation d* A (ombination of Monte !ar$o and Histori(a$ 'imu$atione* Monte !ar$o 'imu$ation

1. A bank de(ides to sa(ntion on$& 8)Y of te $oan sougt b& a (ompan&* 2e (ompan&goes and p$edges etra assets wit te bank and te bank ten agrees to san(tion .)Y ofte $oan sougt* 2e (ompan& as indu$ged in te pro(ess of:

a* !redit Revision b* !redit In(rease (* !redit s(oring

d. %redit Enhancement e* !redit In(rementation* A pure$& (ompetitive finan(ia$ market is not (ara(teri4ed b&:a* Man& 2raders !. Go/ernment Reg"lation(* !ost effe(tive 2rading d* 5u$$ Information

2. 9n a trading da& at te NG'<, a broker undertakes te fo$$owing trades:Bu& 8)) IBM sares for 78)*)) ea('e$$ .) IBM sares for 78)*.) ea(Bu& 8)) M'52 sares for 70)*)) ea(

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'e$$ 0) IBM sares for 788*)) ea('e$$ 8) M'52 sares for 70)*.) ea('e$$ ) IBM sares for 71*)) ea(iven tat a net sett$ement s&stem is being used, find out te net position of te broker atte end of te da&*

a* IBM: K) sares to give out? M'52: 1) sares to re(eive? 7,))) to pa& out to tee(angeb* IBM: no e(ange of sares? M'52: 1) sares to re(eive? 7,))) to pa& out to tee(angec. BM no e0change of shares MS: 47 shares to recei/e <6)8N7 to $ay o"t to thee0changed* None of te $isted 9ptionse* IBM: no e(ange of sares? M'52: 1) sares to re(eive? 78,K+) to re(eive from tee(ange

5. !ard asso(iations provide wi( of te fo$$owing servi(es P a* 'et interest rates b* 'et (ard fees (* Issue (ards

d* 'et (redit $imits e. Sec"rityCRisk management

8. 5V 'pot #ea$ in 6' assumes a maturit& of ow man& business da&s aeadPa* 5ive da&s b* 2ree da&s (* 5our da&s d. wo days e* 9ne da&s

N. A fied in(ome ana$&st wi$$ ana$&4e a$$ buta* Muni(ipa$ Bonds !. Shares (* 6' 2reasuriesd* !orporate Bonds e* Bonds of overnment 'ponsored <nterprises

4. Oi( of te fo$$owing is not (orre(t for a persona$ $oanP

a* Loan amount is not $ inked to borrowersC repa&ment (apa(it&b* No se(urit& re%uired(* 2e finan(er is not interested in te intention of te $oan

d* 2e& are sort term $oans e* None of te $isted 9ptions

27. In !e(k 08, IR# stands for:a* Investor Rep$a(ement #o(ument b* Institutiona$ Rep$a(ement #o(ument(* Interna$ Rating #o(ument d. mage Re$lacement >oc"ment

26. In an a((ount earning simp$e interest, te interest from te first &ear is reinvested at tebeginning of te se(ond &ear* 'tate 2rue or 5a$se*

2rue :alse

23*Oi( of te fo$$owing is not a !arge 2&pea* H&pote(ation b* $edge c. %ollateral d* Lien

21*Jo inerited an anti%ue tie pin* It was va$ued at 78.)* <a( &ear its va$ue appre(iated b&.Y* Approimate$& ow mu( was te tie pin epe(ted to be wort . &ears $ater a* 78,K0 b* 78,.) (* None of te $isted options d* 78,-++ e* 78,).

2* Oi( of te fo$$owing represents te (orre(t ierar(& of (orporate ratings igest to$owestPa. AAA) AA) BBB) > b* AAA, AA/, #, BBB (* #,!,B,Ad* #, AA/, B, AAA e* AAA, AA, #, AA/

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22. 2e rate at wi( te bank wi$$ pur(ase 6' do$$ars against ome (urren(& is (a$$ed as [[[[[[[[[[[*a* #ire(t Rate b* Ask Rate c. Bid Rate d* Indire(t Rate e* !ross !urren(& Rate

25. Oi( among te fo$$owing is an investment (ompan& tat poo$s mone& from unito$dersand invests in a variet& of se(uritiesPa. M"t"al :"nd b* None of te $isted options(* 'to(k <(ange d* Mortgage !ompan&

28. i(k te odd one out*a* eorge 'oros !. Bill Gates (* Oarren Buffet d* Ben raam e* eter L&n(

2N. 6'<port and <6RImport agree to (arr& out te transa(tion, goods wort 78,))),)))under a (onfirmed term Letter of !redit wit a maturit& date of -) da&s from te time ofsipment* 2e A((eptan(e (ommission \ 8*.Y pa e%ua$s [[[[[[[[[[[*a* 0.)) b* None of te $isted 9ptions c. 177 d* 0.) e* )))

24. Oi( of te fo$$owing, a((ording to &ou, as resu$ted in defined (ontribution p$ansgaining popu$arit& over defined benefit p$ansP

a. All of the listed o$tionsb* <mp$o&ers in(reasing$& want emp$o&ees to sare responsibi$it& for teir retirement(* #! p$ans fi te mont$& (ontribution from te emp$o&ee, making is finan(ia$ p$anningeasier d* #! p$ans are seen b& emp$o&ees as an investment vei($e to a((umu$ate retirementin(ome

57. Oi( of te fo$$owing finan(ia$ institutions are (overed under te Anti/mone&$aundering, 6' atriot A(ta* Mutua$ 5unds b* 'e(urities brokers and dea$ers

c. All of the listed o$tions d* Banks and 2rust (ompanies

56. A$$ te fo$$owing statements (on(erning 6*'* overnment se(urities are (orre(t <V!<2:

a. reas"ry !ills ha/e a greater interest rate risk than either reas"ry !onds orreas"ry notes.b* None of te $isted options(* 2reasur& notes ave maturit& dates up to 8) &ears*d* 2reasur& bonds ave maturit& dates up to ) &earse* 2reasur& bi$$s ave teir interest paid in a $ump sum at maturit&*

53. Legitimate wa&s to (an(e$ te (redit (ard transa(tions witin a $imited time frame are [[[[[[[[[[[[[[[[[ a* !argeba(k and !argeba(k reversa$s b* !argeba(k reversa$s

c. %harge!ack d* resentment51. '&ndi(ate e$ps in a$$ te fo$$owing a(tivities buta* raising uge mone& from te banks b* managing $arge (apita$ raising a(tivit&(* I9 #istribution d. managing conflicts !etween in/estment !ankse* managing $arge bond issues

5. Bank New as a portfo$io of 7) mi$$ion wort of $oans, wi( it wants to edge* 2is isan eamp$e of wat kind of $oanP

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a. @eld for Sale Loans b* 2rading Loans (* !ommitted Loansd* A((rua$ Loans e* 6ndrawn Loan

52. 9perationa$ Risk is defined as

a. the risk of loss res"lting from errors in $rocesses) $eo$le and systemsb* e possibi$it& of $oss as a resu$t of defau$t, su( as wen a (ustomer defau$ts on a $oan(* te possibi$it& of $oss over a given period of time re$ated to un(ertain movements inmarket fa(torsd* te possibi$it& tat a firm wi$$ be unab$e to generate funds to meet (ontra(tua$ ob$igationsas te& fa$$ due*e* te possibi$it& of $oss wen a (ontra(t (annot be enfor(ed

55. 9pen ended $oan a$$ow te borrower to borrow additiona$ amount sub3e(t to temaimum amount $ess ten a set va$ue* 'tate 2rue or 5a$se*

r"e 5a$se

-K* Oi( risks ma& bring gains as we$$ as $ossesP

a* !redit risk and interest rate risk

b* Li%uidit& risk and (redit risk(* A$$ tese risks ma& $ead to profits as we$$ as $ossesd* !redit risk and foreign e(ange riske. nterest rate risk and foreign e0change risk

5N. Banks are finan(ia$ institutions tat are $i(ensed to a((ept deposits and issue $oansr"e 5a$se

54. Bank A, based in te 6', provides safekeeping servi(es for se(urities to its 6' ($ients* It

a$so as ($ients in 5ran(e and Be$gium, and provides se(urities safekeeping servi(es totese ($ients troug Banks ! and # respe(tive$&* Oi( of te fo$$owing terms bestdes(ribes Bank AP

a* 'ub !ustodian b* 'e(ondar& !ustodian (* None of te $isted 9ptions d* Main !ustodian e. Glo!al %"stodian

87* !redit derivatives (an be used to [[[[[[[[[[[ te risk and [[[[[[[[[[[ te regu$ator&(apita$ re%uirements*a. >i/ersify red"ce b* Manage? avoid (* 2ransfer? in(reased* Assess? estimate e* <$iminate? improve

86. Li%uidit& refers to te ease wit wi( an asset (an be (onverted into (as* 'tate 2rueor 5a$se*

r"e 5a$se83. 2rade 5inan(e e$ps in:a* 5a(i$itating (orpoate $ending b* 5a(i$itating intra/(ompan& transa(tions(* 5a(i$itating Internationa$ transa(tions, (orporate $ending and setting up of new fa(toriesd. :acilitating nternational transactions e* 5a(i$itating setting up of new fa(tories

81. Oi( of te fo$$owing is not a (ore private banking fun(tionPa* Investment Ana$&sis and Advise b* 'a$es and Marketingc. >e$osit Mo!iliation d* !$ient Management e* Resear(

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8. An insurer undertakes an ana$&sis of a portfo$io of insuran(e po$i(ies b& ep$orings(enarios for te pats fo$$owed b& swap rates, po$i(& surrender rates, mortgageprepa&ment rates for te mortgage/ba(ked se(urities in te portfo$io, et(* Oat is tispro(ess (a$$edPa* !as pro3e(tions b* 5und Administration c. AssetCLia!ility analysisd* Investment Manager 6niverse e* Asset a$$o(ation

82. 2e Brokerage firms are regu$ated b&:a. State reg"latory agencies b* Industr& wide 'R9s (* '<! d* A$$ of te $isted options

85. Oi( of te fo$$owing fa(tors affe(t te (oi(e of pa&ment metodsPa* overnment uarantee rogram !. All of the listed o$tions(* !ost of finan(ing d* 2ime frame e* <porterCs 5und

77) Oi( of te fo$$owing is asso(iated wit te purpose of regu$ating finan(ia$ institutionsPa* 2o offset te mora$ a4ard in(entives provided b& deposit insuran(e and oterguarantees*b* 2o provide stabi$it& of te mone& supp$& (* None of te $isted optionsd. o $re/ent fail"re of any financial instit"tione* 2o serve (ertain so(ia$ ob3e(tives

78) Retai$ banking is banking servi(es provided for (orporates* 'tate 2rue or 5a$se*2rue :alse

74) If te funding (ost of a !ompan& goes up due to ardening of interest rates, tis (an beattributed toa* !ommodit& Risk b* Li%uidit& Risk (* 9perationa$ Riskd* Lega$ Risk e. nterest Rate Risk

N7. I deposit 78)) in a bank* Bank $oans out 71) out of it to someone e$se wo ten invests

te mone& in setting up a new fa(tor&* 2is pro(ess is (a$$edPa* rofit making tendan(ies of te Bank b* None of te $isted options(* Moneter& o$i(& d. Money M"lti$lier Effect e* 5is(a$ o$i(&

N6* Oi( of te fo$$owing is N92 an eamp$e of an Asset Based LoanPa* Auto Loan b* Home Loan c. Personal Loan d* A$$ of te $isted 9ptions

N3. 2e pur(ase of an& sto(k for immediate de$iver& is a [[[[[[ market transa(tion*a* 9ption b* 5orward c. S$ot d* 5utures e* 'to(k

N1. 6niversa$ banks provide (ommer(ia$ banking as we$$ as investment bank servi(es underone roof* 'tate 2rue or 5a$se*

r"e 5a$se

N. If 8 da& aR is 7 8 mi$$ion, 1 #a& aR isa* 7 1 Mn b* 7 Mn (* 7 *. Mn d* 7 * Mn e. < 6 Mn

N2. Oi( of te fo$$owing is N92 a potentia$ benefit of 'traigt 2roug ro(essing Pa. ncreased di/ersity in systems of /ario"s $layers s"$$orting the trade cycleb* In(reased $i%uidit&(* Redu(tion in trade pro(essing timed* #rasti( redu(tion in operationa$ risk troug redu(tion of uman e$emente* <$imination of de$a&s in sett$ement

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86) 2e S!omp$ian(e reportingS servi(e, offered as part of Investor servi(es in te 6',provides automated, [[[[[[[[[[, information ig$igting potentia$ vio$ations of pre/agreedinvestment guide$ines, eterna$ regu$ations @ interna$ risk eposure $imitsa* Risk/based !. E0ce$tion!ased (* Ru$e/based d* !$ient instru(tion/based

N8* 2e Advising bank is used as a trusted bridge between te [[[[[[[[[[ and [[[[[[[[[[[[[[[ wen te& do not ave an a(tive re$ationsipa* Issuing bank? !onfirming bank b* Benefi(iar& bank? Reimbursing bankc. ss"ing !ank Beneficiary !ank d* Importer? <porter e* Reimbursing bank? Benefi(iar& bank

NN* i(k te odd one outa* Meri$$ L&n( !. :ederal Reser/e (* !'5B d* 6B'e* 'a$oman 'mit Barne&

N4. Oi( of te fo$$owing are disadvantages of using L! Letter of !reditPa* !redit Line tied up* b* !ost$& (* 'pe(ifi( and Binding

d. >eals with doc"ments and not with $rod"ctse* 2ime (onsuming

47. !I stands for wi( of te fo$$owingPa* !onsumer opu$arit& Inde b* !onsumer rodu(t Indec. %ons"mer Price nde0 d* None of te $isted optionse* !onso$idated ri(e Inde

46* Oi( of te fo$$owing o$ds true for an L! Letter of !redita* Are t&pi(a$$& revo(ab$e un$ess spe(ified oterwise*b* Advising bank as te $iabi$it& for te pa&ment of te L!*c. Shifts credit risk from the m$orter to the m$orter's Bank ss"ing BankH.d* #ea$s wit produ(ts and not wit do(umentse* 9ne of te re$ative$& (eaper forms of pa&ment guarantee*

42) Oi( of te fo$$owing is not a derivatives instrumentPa* 5utures !. %or$orate Bonds (* ut 9ptions d* !a$$ 9ptions e* 'waps

43( In a 0 wa& %uote for a sare te bid isa* more tan offer b* e%ua$ to offer c. less than offer d* 0Y $ess tan offer e* dependent on dea$erUs ski$$

4C( HL sares are (urrent$& se$$ing for 70.*)) ea(* Gou bougt 0)) sares one &ear agoat 70 and re(eived dividend pa&ments of 78*.) per sare* Oat was &our tota$ do$$ar(apita$ gain tis &earP

a* 7)) b* 70)) (* 7)) d. <277 e* None of te $isted options42. A bank providing (ustod& servi(es is in a good position to offer se(urities $endingservi(es to its ($ients as we$$* 'tate 2rue or 5a$se*

Tr"e &alse46) Oi( of te fo$$owing operations (an be done on a L! Letter of !reditPa* ur(ase b* Negotiate (* A((eptan(e d. All of the listed *$tions e* #is(ount

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48. 6nder wat (ategor& (an servi(es $ike asset"$iabi$it& ana$&sis, asset a$$o(ation, (aspro3e(tion, (omp$ian(e reporting, fund administration, investment manager universe, et(*provided b& an institution be ($assifiedPa* Asset servi(ing b* Investment management (. n/estor ser/icesd* 2rading e* None of te $isted 9ptions

1+* Oi( of te fo$$owing best des(ribes bank s&stemsPa* 6nregu$ated and safe b* 6nregu$ated and unsafe(* Regu$ated and unsafe d* None of te $ isted 9pt ionse. Reg"lated and safe

11* In a e(onom& were inf$ation is 1Y, future va$ue of 8)) units of mone& after 0 &earwou$d be wi( of te fo$$owingPa* Around Rs 8)1 b* None of te $isted opt ions c. 66N.Nd* <a(t$& 80) e* <a(t$& 8))

677. An investor wants to undertake a (ross/border transa(tion in a se(urit&* Oi( of tefo$$owing does N92 (orre(t$& represent a wa& in wi( su( a trade ma& be sett$edPa. >irectly thro"gh a local agent who is a mem!er of the local de$ositoryb* A$$ of tese are va$id wa&s for sett$ing te (ross/border trade(* 2roug a $oba$ !ustodian, operating troug a $o(a$ agent, wo is a member of te$o(a$ depositor&d* 2roug an Internationa$ !entra$ 'e(urities #epositor&, wi( as dire(t $inks wit te$o(a$ depositor&e* 2roug dire(t (ommuni(ation $ink between investorUs depositor& and $o(a$ depositor&

676. Gou pur(ased a sto(k for 7)* 9ne &ear $ater &ou re(eived 70 as dividend and so$dte sare for 7+* Oat was &our o$ding period returnPa* 8)Y b* .)Y (* .Y d* None of te $isted options e. 32=

673* NA'# is an not an 'R9 for [[[[[[[[[[[[*a* 9ver te (ounter market b* 'e(ond Market (* 5ourt Market

d. Listed Market e* 2ird Market

671. A su((essfu$ wea$t manager needs to know about [[[[[[[[[[[*a. All of the listed o$tions b* )8 k ro$ $overs (* ta and estate p$anningd* fied in(ome investments e* e%uit& investments

67. 9ffer is te pri(e at wi( a firma* intends to bu& b* trades in se(urit ies (* %uotes wen it does not want to traded* %uotes to its best (ustomers e. ntends to sell

105) Oi( of te fo$$owing best des(ribes ow banks make $oansPa* None of te $isted 9ptions b* Reasonab$&, not depending upon risk(* Oitout $imitation d* B$ind$& wit e%ua$ offers to a$$ (ustomers

e. Reasona!ly) de$ending "$on risk

675. Oi( of te fo$$owing is not an eamp$e of an optionPa. *il :"t"res b* !a$$ 9ption (* ut 9ption d* 'waption e* L<A' Long 2erm 9ptions

678. If te pri(e of sares of !ogni4ant (ange from 7 -. to 7 -), tis (an be attributed toa* !redit Risk b* Interest Rate Risk (* 9perationa$ Risk d* Li%uidit& Risk e. Market Risk

108) A (ompan& wou$d pa& te interest on wat portion of te $oanP

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a. >is!"rsed amo"nt b* 6nused amount of te $oan (* None of te $isted 9ptionsd* <iter disbursed or (ommitted amount e* !ommitted amount

674. A bank is re%uired to o$d reserves at $east e%ua$ to a pres(ribed fra(tion of its tota$deposit $iabi$ities* 'tate 2rue or 5a$se

r"e 5a$se

667* 'e(urities wit an origina$ maturit& of greater tan 8/&ear are traded on mone& markets*'tate 2rue or 5a$se*

2rue :alse

666. Interest rates are [[[[[[[[[[[[*a* te pri(es paid for te use of a rea$ asset b* te pri(es paid for te use of a rea$ $iabi$it&(* te pri(es paid for te use of a finan(ia$ $iabi$it&d. the $rices $aid for the "se of a financial assete* te pri(es paid for te use of a finan(ia$ $iabi$it& and te pri(es paid for te use of afinan(ia$ asset

663. Base$ (apita$ a((ord was instituted to (oordinate g$oba$ regu$ator& efforts to institute [[[[[[[[[[[[[[[ (apita$ re%uirements to e$iminate te treat posed b& [[[[[[[[[[[[[ a. Minim"m "nderca$italied !anksb* Maimum? under(apita$i4ed finan(ia$ institutions (* Minimum? over(apita$i4ed banksd* Maimum? over(apita$i4ed finan(ia$ institutions e* None of te $isted 9ptions

661. Oi( of te fo$$owing trading servi(es redu(es te trading (osts for institutiona$investorsPa* 2ransition management b* None of te $isted 9ptions(* 2ransition management and (ommission re(aptured* !ommission re(apture e* 'to(k repur(ase program

66. Mone& Market a((ounts never re%uire a minimum ba$an(e to operate* 'tate 2rue or5a$se*

2rue :alse

66. whi( of te fo$$owing is not a feature of private bankingPa* 'pe(ia$ist Advi(e b* !ommer(ia$ Lending (* Lot of resear(d* Hig Investment in te(no$og& e* 6nderstanding te (apita$ and investment needs

115) Oat appens wen te interest rates fa$$Pa* Interest rates never fa$$, te& a$wa&s go up b* <(onom& goes into a def$ation(* Bond pri(es de(rease d* Bond pri(es do not (ange e. Bond $rices increase

665. Oat are te two t&pes of portfo$io management servi(esPa* enn& wise and ound wise b* V and G (* #ire(ted and 'traigtd. >iscretionary and on >iscretionary e* 6niversa$ and Lo(a$

668* Oo ba(ks te do$$arPa* None of te $isted 9ptions b* 2e treasur&(* rivate (ompanies d* 2e government e. he :ed

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66N* Oarrants are te (ombination of wi( of tese instrumentsPa* !as and !a$$ 9ptions b* <%uities and 5utures (* !a$$ and ut 9ptionsd. E?"ities and %all *$tions e* ut 9ptions and 'waps

664. Oi( of te fo$$owing is (omputationa$$& te fastest metod for (a$(u$ating aRa* Monte !ar$o 'imu$ation b* Histori(a$ 'imu$ation(* A$$ wou$d take e%ua$ time if done using a softwared. ,ariance%o/ariance Matri0e* A (ombination of Monte !ar$o and Histori(a$ 'imu$ation

637*5a(toring is[[[[[[[[[[[[[[ a* ur(ase of a((ount re(eivab$es at a dis(ountb* works most$& wit (apita$ goods (* saring risk wit tird part&d* works wit medium and $ong term re(eivab$ese. a disco"nting method witho"t reco"rse

121(A life insurance company has guaranteed a payment of + . illion to a pension fund3B years from now( f the nsurance company has recei'ed a total premium of + Q(5million3 and can in'est this entire amount for 0 years at Q(5 %3 will it ha'e sufficient

funds to meet the + . million obligation?a .o

b) es

c) nsufficient data to draw any conclusions

633* ou ha'e in'ested +5///3 for 5 years and 0 months R an annual interest rate of Q%(9hat is the future 'alue of this amount?

a) + Q.4/(B2

! 6784)31

c) + Q./(2B

d) + 0BQ(5,

123( An in'estor is considering the purchase of a financial instrument3 that promises tomake the following paymentsFear , + ,//ear 2 + ,//ear 0 + ,//ear B + ,32//9hat is the price she should pay for this instrument3 assuming she wants a % annualinterest rate?SS E Ealues of + ,F E*,3/() *i(e( discounted o'er , period by %) O /(40BQ

E*23/()O/(.0BD E*03/() O /(.,Q0D E*B3/()O /(Q24Q//

a( +,5//

b( + ,20,(0,

c) 1177)41

d( + ,/4Q(2.

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<ata for ;"estions C7: 7he following data is gathered from !ogni>ant’s annual report2//2 *it is not an exact copy)(=se this to answer the next 0 $uestions( *all + 'alues inmillions)

7otal :e'enue F + 224(/.

8irect !ost + ,22(

7ax 20(05%

nterest ncome + ,(.

8epreciation C Amorti>ation + (.B

T shares outstanding 54(2 n

6elling3 ;eneral CAdministrati'e <xpense

+ 50(0B

"ther expenses + ,(4

12C)9hat is the ;ross rofit?

a) + 106)38 $n

!) + 22(,. n

c) + ,/B(B. n

#) + 5,(,B n

125( 9hat is the <17?

a( + ,/Q(0. n

b( + 50(/B n

c( + 52(4B n

#) C5)10 $n

126( 9hat is the A7?

a) + B5(, n

b) + 05(5 n

c 3C)56 $n

d) + 52(4B n

127( 9hat is the <6?a( /(Q

b( /(544

c) 0)58

d( /(Q0

128( (A firm’s undistributed profit falls under which category in the balance sheet?

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a) 9orking !apital b) Assetc -,ner’s ;"it'

d) 1orrowings

#eary !orporationUs snapshot as of 8ecember 0,3 2//2 is presented below in randomorder(Accounts recei'able +Q/3///6hareholdersU e$uity +03///6hort term debt +,0/3///Accounts payable +03///n'entory +,Q53///<$uipment +5//3///#ong-term debt payable + 05/3///#and +,4B3///!ash +253///

repare the balance sheet for 8ecember 0,3 2//03 and answer $uestions 4-,0(Assume depreciation R ,/%3 using straight-line method

124) 9ith the abo'e data3 what is the total of the assets Lor liabilitiesIshareholders’ e$uity?

a) + 4BB3///

! 84C=000

c) + 4//3///

d) + .B3Q//

130( 9hat is the total of the !urrent Assets?

a) 250=000

b( + .53///

c( + 2253///

d( + ,4/3///

131( 9hat is the total of the !urrent #iabilities?

a) + ,Q53///

b) + 03///

c) + 05/3///

# 167=000

132(9hat is the amount of depreciation?

a( + /

b( + ,43B//

c) 50=000

d( + Q43B//

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133( 9hat is the total of short term liabilities?

a) + 23///

b) + 03///

c) + 05/3///

# 167=000

61. A1! !orporation #td(’s capital structure is gi'en below( How much minimum cashwill the company need to meet its necessary payment obligations to in'estors this year?ref( e$uity + ,3///3/// di'idend rate 4%8ebentures + 5//3/// .% interest rate6ecured #oans+,32//3/// 5% interest rate!ommon shares +,3///3/// -Assume that principal need not be repaid this year on any debt3 and that A1! !orp ismaking no profits this year(

a( +/

b( +,4/3///

c) 100=000

d( +Q/3///

135( 7he following are the cash flows for a trader o'er the next days( He has :s( ,/3///in his current account with the bank( 7he bank also offers an o'erdraft facility( 8oes thetrader need to use o'erdraft on his account? f yes3 how much should be the minimumo'erdraft allowed by the bank? Assume that all payments are made using checks on theaccount and similarly all incoming payments are deposited directly in the same account(Assume that he gets a ,-day float on the payments made using checks3 and checks he

recei'es get credited immediately( Also assume that debits and credits for a day take place at the same time(8ay ,F ay supplier :s( 53B//8ay 2F ay telephone bill :s( B3///

:ecei'e payment :s( ,3.//8ay 0F ay instalment on #oan :s( 532//8ay BF :ecei'e payments :s( 034//8ay 5F ay salaries :s( 235//

:ecei'e payments :s( ,3//ay to 6upplier :s( 535//

8ay QF :eimburse expenses :s( ,3B//

8ay F :ecei'e payment :s( ,345/

a( o3 he doesn’t need an o'erdraft

b( es3 and the min( limit should be :s( B3Q5/

c( es3 and the min( limit should be :s( Q3Q//

#) /es= an# the in) (iit sho"(# !e ?s) 5=200

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62. An investment of 8),))) at te beginning of Gear 8 &ie$ds 780)) at te end of Gear 8, 78.))at te end of Gear 0* Oat sou$d be te return at te end of Gear , apart from prin(ipa$ re(over&,to 3ustif& te investment wit a (ut/off &ie$d of 8.*))YP78,)))*)) 78,0*-K <66)N45.82 780,.*1) None of te $isted 9ptions

65* A (onsumer goods (ompan& as a market sare of 0Y in te 5$at s(reen te$evision industr&*2e (ompan& is weiging te option of investing an additiona$ 78*0 mi$$ion in moderni4ation andepansion, wi( is epe(ted to &ie$d additiona$ revenues of 7)* mi$$ion over te first &earswi$e it wou$d &ie$d 7)* mi$$ion and 7)*8 mi$$ion ea( in &ears and .* Assuming tat te timewindow for te investment is . &ears and te urd$e rate for investments is 8.Y, sou$d te(ompan& go for te investment from a pure$& finan(ia$ perspe(tivePo Ges Ma&be Insuffi(ient information None of te $isted 9ptions

68. An investor as mu$tip$e investment options &ie$ding various do$$ar returns at various points oftime, wi$e e is (omfortab$e wit a return of VY p*a* Oi( metod sou$d e use to (omparete various investmentsPIRR N Either of these Insuffi(ient information None of te $isted 9ptions

6N* An investor estimates an investment of 78.,))) to &ie$d returns of 780)) ea( at te end ofte first &ears apart from return of prin(ipa$ at te end of &ears* Assuming tat te inf$ation

rate is .Y, sou$d te investor opt for te investmentP No Ges Ma&be ns"fficient information None of te $isted 9ptions

64* Oat is te IRR for an investment of 7 8),))) tat &ie$ds a return of 78))) at te end of ea(of te first &ears, 7-)) at te end of te t and .t &ears and prin(ipa$ re(over& at te end of .&earsP.*..Y K*-.Y N.8= Insuffi(ient information None of te $isted 9ptions

37* 2e fo$$owing (on(epts are derived from te basi( (on(ept of time va$ue of mone& e(ept:resent va$ue 5uture va$ue IRR Net resent a$ue one of the listed *$tions

08* A &oung student $ooking for mont$& in(ome sou$d invest most of is savings inBank deposits @ 5ied Interest instruments Reg"lar di/idend $aying com$anies

B$ue/(ip sares Wero (oupon bonds Rea$ estate

33* 'avings bonds are:Issued b& department of 2reasur& 9nregistered2ransferab$e witout registrationIssued b& department of 2reasur& and 2ransferab$e witout registration6nregistered and 2ransferab$e witout registration

31* 2e interest rate on a bond doesnCt depends onGears to Maturit& !redit Rating of te Issuer !urren(& of IssueBond :ace ,al"e A$$ of te $isted options

3* Oat is te Gie$d to Maturit& for a -Y / . &ears bond wit fa(e va$ue 7 8))) trading at 7 +))

after one &earP K*.)Y -Y 66= KY 8)Y

32* 6nse(ured bonds are:Issued on$& b& $arge and finan(ia$$& sound (ompanies'e(ured b& assets of te issuing (ompan&*@a/e lower $riority for re$ayment than sec"red de!tIssued on$& b& $arge and finan(ia$$& sound (ompanies and 'e(ured b& assets of te issuing(ompan&*

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'e(ured b& assets of te issuing (ompan& and Have $ower priorit& for repa&ment tan se(ureddebt

35* In wat form are bondCs t&pi(a$$& issued in 6'P &si(a$, RegisteredElectronic) Registered&si(a$, Registered and <$e(troni(, Registered&si(a$, 6nregistered<$e(troni(, 6nregistered

38* Oat is te ba(king for a Mortgaged BondPNo ba(king Bank uarantee 2e (redit wortiness of te issuing (ompan&Real estate owned !y the ss"er None of te $isted 9ptions

3N* Oat se(ured debt se(urities are genera$$& ba(ked b& a portfo$io of non/issuer se(urities,usua$$& 6*'* overnment 'e(uritiesP#ebentures Bearer Bonds %ollateral r"st Bonds Junk bonds <%uipment2rust #ebenture

34* Oat bondo$ders wou$d ave a genera$ (reditor statusP

>e!ent"res Bearer bonds 6nse(ured bonds Junk bonds <%uipment 2rustdebenture

17. Oat is te ' @ ratings be$ow wi( bonds are (onsidered to be spe(u$ativePLess tan AAA Less than BBB Less tan !!! # Junk grade

16* Oat se(urities eperien(e Reinvestment RiskP!umu$ative Interest Bonds %alla!le !onds Wero (oupon bonds Junk bonds

None of te $isted 9ptions 13* Oat are te (urrent maturities for 2/Bi$$sP8, 0 and monts 1) 5 and 63 months 8, 0 and &ears8 mont on$& None of te$isted 9ptions

* Oat is te maimum maturit& for !ommer(ia$ aperP1) da&s 8+) da&s 0K) da&s 157 days None of te $isted 9ptions

1* Oo sets te 5ed 5unds RateP:ederal Reser/e Banks '<! 'to(k <(anges Investors 8

.* Negotiab$e se(urities are:'a$e pri(e (an be negotiated :reely transfera!le !an on$& be so$d to te issuer !anCt be so$d e(ept on maturit&Have a $o(k in period

15* Mutua$ funds

Are often riskier tan investing in individua$ sto(ks*Re%uire investors to invest ver& $arge sums of mone&, wi( e$iminates sma$$ investors*Are less riskier than indi/id"al stocks as the f"nd managers in/est in a di/ersified$ortfolioive mu( greater returns tan te sto(k inde !arr& no risk

18* H&brid se(urities are!ombination of referen(e and !ommon sto(k!ombination of put and (a$$ %om!ination of de!t and e?"ity!ombination of growt and in(ome None of te $isted 9ptions

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1N* O& wou$d an investor (oose to invest in Mone& Market 'e(uritiesPInvestor $ooking for (apita$ gains n/estor looking for li?"idity

Arbitrageur Investor $ooking for regu$ar in(ome None of te $isted 9ptions

14. Oi( of te fo$$owing bonds invo$ves igest riskPS"!ordinated de!ent"re !onds. #ebenture bonds*!o$$atera$ bonds* Mortgage bonds None of te $isted 9ptions

7.Oi( of te fo$$owing statements is true about futuresP5uture pri(es are paid for (urrent transa(tionsRisk is often in(reased wen dea$ing in futures be(ause bu&ers and se$$ers ma& be re%uired toa((ept a pri(e oter tan te one to wi( te& agreed*5inan(ia$ futures are traded primari$& at te New Gork 'to(k <(ange*n/estors may hedge their risk !y entering into f"t"res5utures are same as 9ptions

6*2e responsibi$it& of enfor(ing futures (ontra(ts is taken on b&A clearing ho"se. 2e brokers wo stru(k te dea$*Banks 2e bu&er and se$$er* Arbitrageurs

3*Oat provides te in(entive for someone to se$$ an option wen tat individua$ as no rigts,

3ust ob$igationsP2e se$$er stands to gain from (anges in interest rates*2e se$$er stands to gain from (anges in pri(es*'e$$ing options is re$ative$& risk free2e se$$er earns (ommissionhe !"yer m"st $ay an o$tion $remi"m to the seller.

1* Oi( of te fo$$owing is used primari$& b& finan(ia$ intermediaries to edge interest rate riskfor $ong periods of time up to 8. &earsPSwa$s. ut options* 5utures !a$$ options L<A'

* Oi( of te fo$$owing is not an eamp$e of a derivativeP5inan(ia$ futures 9ptions Preferred stock of a com$any 'waps 'waptions

2. !ompan& AB! In(* #e($ares bankrupt(&* Now, 78+) mi$$ion as been a((umu$ated troug$i%uidation of its assets* 2e main stake o$ders in te firm are debt o$ders Bank of New Gork /78) mi$$ion, 6nion Bank of !a$ifornia / 7) Mi$$ion and e%uit& o$ders 2emp$eton Investments /78)) mi$$ion*Oat is te amount tat te tree stake o$ders end up wit in 7 mi$$ionP In te order, BNG,6B! and 2I), 8) and 8) -), -) and -) 1, 0) and -K 67) 17 and 67

8), ) and )

5. If enera$ <$e(tri( wou$d borrow 7)) mi$$ion from Bank of Ameri(a, ow wou$d its ba$an(eseet be affe(ted in terms on $everage ratioP Leverage ratio wou$d remain te same Le/erage ratio wo"ld increase Leverage ratio wou$d de(rease Leverage ratio as no re$ation wit borrowingNone of te $isted options

8* eop$e wo bu& sto(k in a (orporation su( as !o(a !o$a be(omeart owners of !o(a !o$a, so te benefits of o$ding te sto(k depend on !o(a !o$aCs profitsPart owners of %oca %ola) !"t the !enefits of holding the stock do not de$end on %oca%olaJs $rofits

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Re(eive interest!reditors of !o(a !o$a, so te benefits of o$ding te sto(k depend on !o(a !o$aCs profits!reditors of !o(a !o$a, but te benefits of o$ding te sto(k do not depend on !o(a !o$aCs profits

N* Assuming tat IBM as paid andsome dividends to its sareo$ders tis &ear, wat wou$d bea rigt assumption to makePNo re$ationsip between interest and dividend pa&outsIBM as on$& paid dividends and no interest on its issued bondsBM has $aid the di/idends after $aying interest to its !ondholdersIBM wi$$ pa& interest if it as enoug (as after its dividend pa&outIBM wi$$ pa& interest on$& if it is sti$$ in profit 4one after te dividend pa&out

4. Muni(ipa$ bondsAre e0em$t from federal ta0es.6sua$$& ave &ie$ds tat are iger tan 6*'* government se(urities wit simi$ar maturities*

Are guaranteed b& te federa$ government*6sua$$& support rea$ estate spending and student $oans*

Are 3unk grade bonds 27*Bonds wit re$ative$& $ow risk of defau$t are (a$$ed

Wero (oupon bonds Junk bonds n/estment grade !onds ri(e/premiumbonds Hig Gie$d bonds

26* A &oung investor (omes to an Investment !onsu$tant and asks im for advi(e for isinvestments* He de($ares tat e doesnCt mind te risk but e wou$d definite$& $ike is mone& togrow as fast as possib$e* He wou$d $ike to invest in a Mutua$ 5und wi( wou$d satisf& tese(riteria* Oat wou$d te (onsu$tants (oi(e for is profi$eP In(ome 5und Li%uid 5und Growth :"nd Ba$an(ed 5und Bank #eposit

23. Re$ian(e Industries Limited, India wou$d $ike to raise mone& in NG'< for epanding its

operations in te domesti( market India*2e se(urities issued wou$d beAmerican >e$ository Recei$t Indian 'are ub$i( offering in India$oba$ #epositor& Re(eipt None of te $isted options

21. If I epe(t te pri(e !2' sare pri(e to rise b& 7. from its (urrent $eve$s witin 8 mont, tenwi( wou$d be te best optionPBu& a put option on !2' sto(k 'e$$ a put option on !2' sto(kB"y a call o$tion on %S stock 'e$$ a put option on !2' sto(kBu& a put as we$$ as a (a$$ at different strike pri(es

2. !asab$an(a In(* Issues 78)) mi$$ion wort of se(urities wi( wi$$ (ontinue to pa& a fied(oupon of 0Y annua$$& for net five &ears*2e investors a$so ave an option of (onverting tese(urit& into e%uit& after te first &ear* 'u( a se(urit& wou$d be termed as

%on/erti!le Bond referred 'to(k 'to(k 9ption 5orward !ontra(t 5utures22* 'tate and $o(a$ government or muni(ipa$ bonds ave one uni%ue feature tat makes temattra(tive to wea$t& investors*Oi( of te fo$$owing is tat uni%ue feature of SmuniS bondsP 2e& are eempt from state taation for a$$ investorshey are e0em$t from federal and state resident in/estorsH income ta0ation'tate and muni(ipa$ bonds usua$$& ave (oupon rates'tate and $o(a$ muni(ipa$ bonds are a$$ revenue bonds2e& ave ig (redit rating

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25* If IBM finds it mu( (eaper to raise mone& in 6' and odafone in 6E* However, bot IBMwou$d $ike to raise mone& in 6E and odafone in 6', bot of wi( are (ost$ier propositions forte firms* Oat wou$d be best possib$e so$ution to tis prob$emP5uture (ontra(t L<A' ani$$a !a$$ 9ption 5orward !ontra(t %"rrency Swa$

28*5orward (ontra(ts are promises to bu& or se$$ foreign e(ange:9n a futures e(ange at some time in te future*9n a spe(ifi( future date at a pri(e estab$ised on tat spe(ifi( future date*

At a spe(ifi( fore rate at some time during te (ontra(t period*At a s$ecific $rice on a s$ecified f"t"re date.None of te $isted 9ptions

2N. If te forward rate 5ore"6*'* do$$ar is se$$ing at a premium over te spot rate, wi( of tefo$$owing statements best ref$e(ts te epe(tations of te foreign e(ange marketPNo fore(ast (an be made wit forward (ontra(tshe 9.S. dollar is e0$ected to a$$reciate2e foreign (urren(& is epe(ted to appre(iate2e spot rate is epe(ted to remain (onstantNone of te $isted 9ptions

24. A 6*'* importer wo owes 8 mi$$ion !anadian 7 in 1) da&s and wises to edge is"erforeign e(ange risk wou$d:2ake no a(tionOait and bu& !anadian in te spot market in 1) da&s'e$$ !anadian do$$ars forward for de$iver& in 1) da&sBu& !anadian do$$ars forward for de$iver& in -) da&sB"y %anadian dollars forward for deli/ery in 47 days

57* A 6*'* importer of !anadian ni(ke$ ore wit an invoi(e to pa& 78 mi$$ion 6*'* do$$ars in tirt&da&s wou$dPay the in/oice in thirty days.Bu& a forward (ontra(t in 6*'* do$$ars for de$iver& in tirt& da&s*

'e$$ !anadian do$$ars in te futures market*'e$$ 6' do$$ars in futures marketur(ase !anadian do$$ars for de$iver& in tirt& da&s*

56. A 6*'* importer wo as agreed to pa& 8 mi$$ion <uros to a 5ren( eporter in -) da&sde(ides to wait te fu$$ -) da&s before pa&ing* 2e importer isA foreign e0change s$ec"lator<pe(ting te do$$ar to depre(iate against te <uro

A edger in te foreign e(ange market$anning to pa& a set amount of do$$ars for te items pur(aseNone of te $isted 9ptions

53* A edger in te finan(ia$ futures market

6sua$$& bu&s finan(ia$ futures to edge6sua$$& se$$s finan(ia$ futures to edge<iter bu&s or se$$s finan(ia$ futures (ontra(ts so tat te under$&ing asset spot gains"$osses aredire(t$& re$ated to futures (ontra(t gains"$ossesEither !"ys or sells financial f"t"res contracts so that the "nderlying asset s$otgainsClosses are in/ersely related to financial f"t"res contract gainsClossesNone of te $isted 9ptions

51* Oo wi$$ $ose mone& if te pri(e of an& under$&ing instrument fa$$sP2e se$$er of a futures (ontra(t he !"yer of a $"t.

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2e writer of a (a$$* 2e bu&er of a futures (onta(t*None of te $isted 9ptions

5* 2e va$ue of optionsaries inverse$& wit te pri(e varian(e of te under$&ing asset*aries dire(t$& wit te $engt of time to epiration*aries inverse$& wit te $eve$ of interest ratesncreases with the decreased /olatility of the "nderlying asset.None of te $isted 9ptions

52. A 'tandard and oorUs bond rating of AAA refers toHig %ua$it& investment grade bonds*Bonds of ig %ua$it&, but wit an e$evated risk of $ong/term defau$t*Non/investment grade bonds, wit un(ertain $ong/term prospe(ts*Go/ernment !onds onlyNone of te $isted 9ptions

55* 2e first time a (ompan& issues sto(k to te pub$i( te issue is (a$$edAn initial $"!lic offering P*H.

A se(ondar& offering*

A sto(k option*Interna$ finan(ing*

An initia$ pub$i( offering I9 and Interna$ finan(ing

58* !ommon sto(ko$ders usua$$& trade [[[[[[[[ to preferred sto(ko$ders in return for [[[[[[[[[[*Interest in(ome? voting rigts

A prior ($aim on dividends? iger dividend in(omeA $rior claim on di/idends /oting rights2eir residua$ ($aim on assets in $i%uidation? preferred ($aim on dividendsBot 0 and

5N* Leverage finan(ing refers to

6sing romoterCs (redibi$it& to raise mone&Leveraging brand va$ue to issue e%uit&9sing de!t finance'e$$ing assets to raise mone&6se of retained profits for epansion

54* referred sto(k dividends are paid<a( &ear on a (ontra(tua$ basis, but before (ommon dividends*

After (ommon dividends are paid*Before interest is paid on debt*f declared !y the !oard of directors.

After bot interest and (ommon dividends are paid

87. 2e pur(ase of 6*'* 2reasur& bonds for immediate de$iver& is a [[[[[[ market transa(tion'to(k 9ption S$ot 5utures 5orward

86. 'uppose Rutie as te option of re(eiving a 78),+)) pa&ment toda& or a 78.,+-+*K pa&mentin si &ears* Oi( of te fo$$owing statements is true if te interest rate is + per(entP'e sou$d take te 78),+)) toda& be(ause te present va$ue of te 78.,+-+ paid in si &ears ison$& 71,K.0*.*2e present va$ue of te 78),+)) is 78.,+-+*K*'e sou$d take te 78.,))) in si &ears be(ause 78.,))) is more tan 78),)))*

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'e sou$d take te 78.,))) in si &ears be(ause te future va$ue of 78),+)) is on$& 78.,)))*Both are e?"al

83. 2e bu&ing or se$$ing of se(urities wit te ope of profiting from privi$eged information isknown as'pe(u$ation* 2e spot market* Ar!itraging 2e futures market* 2e term to maturit&*

81. If te issue pri(e of a . &ear 4ero/(oupon bond is 71) and its redemption pri(e is 78))),market pri(e 71..,ten te differen(e amount of 7. stands for2e interest for te ./&ear period2e return on te investment of 71-)Bot 2e interest for te ./&ear period and 2e return on te investment of 71-)9n$& 8Premi"m on the !ond

8* 2e effe(tive interest rate on a bond, wen te pri(e of te bond is greater tan its par va$ues lower than the co"$on rate.Is a$wa&s e%ua$ to te (oupon rate*In(reases as te bond pri(e de(reases*Is greater tan te (oupon rate*


82* Jon o$ds 0))K maturit& government se(urit& wi( pa&s a semi/annua$ (oupon of +Y* Oatsou$d Jon do wit tis se(urit&PSell it) if interest rate is increasing'e$$ it, if interest rate is de(reasing'e$$ it wit te net (oupon date, irrespe(tive of interest rates movement'e$$ it now or o$d it ti$$ maturit&!an never se$$

85. If bond portfo$io managers epe(t interest rates to in(reasehey will antici$ate a decrease in !ond $rices.2e& wi$$ probab$& bu& bonds now to avoid (apita$ $osses*

2e& wi$$ wait for te rates to a(tua$$& (ange before taking an& a(tion*2e& wi$$ probab$& se$$ more bonds now before te bond pri(es de(reases*2e& wi$$ bu& sort/term bonds*

88* Oi( of te fo$$owing is not a (ara(teristi( of mone& marketsPhey trade in a central location.2e& ave an a(tive se(ondar& market*2e& are wo$esa$e markets*2e& are be&ond te rea( of sma$$ investors*2e& trade in sort term instruments

8N* Investors use te mone& market2o redu(e te $i%uidit& of teir funds*

o red"ce the o$$ort"nity cost of idle f"nds.2o gain from epe(ted de($ines in future interest rates*2o earn ig returns on teir investments*2o manage $ong/term (as re%uirements

84. Oi( of te fo$$owing is true for 2e 5ed funds rateIt (an be raised if te ovt* bu&s se(urities from te pub$i(*It (an be raised if te 2reasur& wi$$ se$$ more bi$$s*It (an be raised if te ovt* announ(es an in(rease in te rate at its regu$ar meeting*t is cost of !orrowing immediately a/aila!le f"nds for one day.

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Money /s. ca$ital market'pot vs* futures marketrimar& vs* se(ondar& marketNone of te $isted 9ptions

N4. 2e initia$ sa$e of a se(urit& is in te [[[[[[ market, wi$e subse%uent trading in te se(urit&is in te [[[[[[[[ marketPrimary secondary'e(ondar&? primar&Mone&? (apita$'pot? futures#ebt? e%uit&

47* Oi( of te fo$$owing fun(tions of finan(ia$ markets best des(ribes te primar& fun(tions ofte finan(ia$ futures market were trading is done for de$iver& some time in te futureP'pe(u$ation? raise fundsa&ments s&stem? risk managementRisk management s$ec"lation5unds intermediation? risk managementRaise funds? pa&ment s&stem

46. 2e finan(ia$ s&stemPro/ides risk sharing) li?"idity and information ser/ices.rovides $i%uidit& servi(es on$&*rovides information servi(es on$&*Refers to te banking s&stem on$&*Oere on$& finan(ia$ assets are bougt @ so$d

43* Oi$e te primar& market provides [[[[[[[[ for spenders, te se(ondar& marketprovides [[[[[[[[ for investors:"nds li?"idity

A p$a(e for investing? $i%uidit&

5unds? $ow risk'e(urities? fundsLow risk? ig returns

41* Oi( of te fo$$owing is asso(iated wit in(reased $i%uidit& of a se(urit&PIn(reased transa(tions (ostsIn(reased time it takes to se$$ a se(urit&In(rease in taes for ever& transa(tionncreased n"m!er of dealers trading the sec"rity


4. Oi( of te fo$$owing is not asso(iated wit mone& market se(uritiesP'ort/term Marketab$e Hig %ua$it& E?"ity sec"rities Repo

42. 2e se(ond $argest amount of (apita$ market se(urities outstanding, after (ommon sto(k,is!orporate and foreign bonds Mortgages 6*'* 2reasur& se(urities6*'* Agen(& se(urities Muni(ipa$ Bonds

45* Regu$ations $imiting risk taking of finan(ia$ institutions are imposed for wi( of tefo$$owing reasonsP2e so(ia$ (osts to sareo$ders of a genera$ bank fai$ure are more tan te private (ost ofte bank fai$ure*

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2e (osts of regu$ation e(eed te benefits*2e private (osts of a bank fai$ure e(eed te so(ia$ (osts of genera$ bank pani(*he social costs of a general !ank fail"re e0ceed the $ri/ate costs to the shareholdersof the !ank that failed.rivate (osts to te sareo$ders of te bank e(eeds te so(ia$ (osts of te a genera$ bankfai$ure*

48* Oi( of te fo$$owing is asso(iated wit te purpose of regu$ating finan(ia$ institutionsP2o provide stabi$it& of te mone& supp$&2o serve (ertain so(ia$ ob3e(tiveso $re/ent fail"re of any financial instit"tion2o offset te mora$ a4ard in(entives provided b& deposit insuran(e and oter guarantees*


4N* Regu$ator& ba$an(e seet restri(tions are designed toLimit te si4e of depositor& institutions*Limit risktaking and to enco"rage di/ersification.Limit e(essive diversifi(ation*<n(ourage ig risk/taking b& proper diversifi(ation*Limit diversifi(ation and en(ourage risk taking

44* Regu$atorsU attempting to $imit (ompetition b& restri(ted entr&, e($usive servi(es, et(*was an attempt to serve wi( of te fo$$owing purposes of regu$ationP2o promote (ompetition in te finan(ia$ servi(es markets*2o promote $imited %uantities of finan(ia$ servi(es at maimum pri(es*o $romote safety and so"ndness of de$ository instit"tions.2o prote(t te soundness of te deposit insuran(e fund*None of te $isted 9ptions

677* Oi( of te fo$$owing are invo$ved in te regu$ation of !apita$ Markets in te 6'Pinnie Mae 5ed SE% 2e 6' government None of te $isted 9ptions

676* Oo among te fo$$owing wou$d not be a parti(ipant in te mone&/markets

Banks !entra$ Bank Small n/estor !ompanies 5inan(ia$ Institutions

673* RepoCs are (onsidered te safest finan(ia$ instruments ashey are !acked !y the go/ernment2e& are of ver& sort/term maturit&2e& (ome in ver& sma$$ denominations2e& are ba(ked b& a$$ big banks and (ompanies2e& offer $owest interest rates*

671* Individua$ investors are most $ike$& to trade se(urities in2e primar& market a brokered market an a"ction marketa b$o(k transa(tion a dire(t sear( market

67* 5inan(ia$ intermediaries differ from oter businesses in tat bot teir assets and teir$iabi$ities are most$&i$$i%uid* owned b& government real. f inan(ia$ regu$ated*

672* Insuran(e or a guarantee to (over $osses of a finan(ia$ institution ma& (reate a mora$a4ardOi( is an in(rease in te (an(e tat a random negative e(onomi( event wi$$ o((ur*Oi( is an in(entive to de(rease risk/taking b& te insured*Oi( is an in(entive to in(rease risk/taking b& te insuran(e autorit&*+hich is an incenti/e to increase risktaking !y the ins"red.

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Oi( is an in(entive to de(rease risk/taking b& te insured

675* In wat ro$es do investment bankers performPdesign se(urities wit desirab$e propertiesmarket new sto(k and bond issues for firmsprovide advi(e to te firms as to market (onditions, pri(e, et(*None of te $isted optionsAll of the listed o$tions

678* 5inan(ia$ intermediaries eist be(ause sma$$ investors (annot effi(ient$&gater informationadvertise for needed investmentsmonitor teir portfo$iosdiversif& teir portfo$iosAll of the listed o$tions

67N* <(ange rate riskresu$ts from (anges in te e(ange rates in te (urren(ies of te investor and te (ountr&in wi( te investment is made*(an be edged b& using a forward or futures (ontra(t in foreign e(ange*

(annot be e$iminated*Both res"lts from changes in the e0change rates in the c"rrencies of the in/estor andthe co"ntry in which the in/estment is made and can !e hedged !y "sing a forward orf"t"res contract in foreign e0change.resu$ts from (anges in te e(ange rates in te (urren(ies of te investor and te (ountr&in wi( te investment is made, (an be edged b& using a forward or futures (ontra(t inforeign e(ange and (annot be e$iminated*

674. A (oupon bond is a bond tatdoes not pa& interest on a regu$ar basis but pa&s a $ump sum at maturit&$ays interest on a reg"lar !asis ty$ically e/ery si0 monthsH(an a$wa&s be (onverted into a spe(ifi( number of sares of (ommon sto(k in te issuing(ompan&

a$wa&s se$$s at parNone of te $isted options

667* 6nder te present internationa$ monetar& s&stem,<(ange rates f$u(tuate free$& witout government intervention*!entra$ banks determine te e(ange rates in a$$ (ountries'upp$& and demand are te on$& fa(tors for pri(e determination* !entra$ banks donCtinterveneS"$$ly and demand are the $rimary forces that determine e0change rates) !"t central!anks may inter/ene if they !elie/e c"rrency /al"es are o/er or "nder/al"ed.It is i$$ega$ for (entra$ banks of ma3or (ountries to (oordinate teir intervention a(tivities*

666. 2e presen(e of risk means tat

5ew out(omes possib$e Investors wi$$ $ose mone&Investors wi$$ gain mone&he standard de/iation of the ret"rn is large5ina$ wea$t wi$$ be $ower tan te initia$ wea$t

663. Oi( asset ($ass wou$d provide igest returns for te $owest riskPropert& 'ares Bonds !as %anJt !e answered

661. Oi( asset ($ass wou$d provide $owest returns for te igest riskPropert& o$d Bank deposits !as %anJt !e answered

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66* If R<AL rate of return was 8)Y $ast &ear and inf$ation was Y, wat was &ourinvestment returnedP*)Y KY 61= )Y 8)Y

662* Oi( of te fo$$owing statements regarding risk/averse investors is trueP2e& wi$$ on$& a((ept $ower returns and $ow risk2e& a((ept investments tat provide ig returns*2e& on$& (are about rate of return*hey will only acce$t higher ret"rns and low riskNone of te $isted options

665* A$e is a more risk/averse investor tan 9$ivia* 2erefore:or the same risk) Ale0 re?"ires a higher rate of ret"rn than *li/ia.5or te same return, A$e to$erates iger risk tan 9$ivia*5or te same risk, A$e re%uires a $ower rate of return tan 9$ivia*5or te same return, 9$ivia to$erates $esser risk tan A$e*

Bot 0 and 668. If a 2/bi$$ pa&s . per(ent, wi( of te fo$$owing investments wou$d not be (osen b& arisk/averse investorP

An asset tat pa&s 8) per(ent wit a probabi$it& of )*-) or 0 per(ent wit a probabi$it& of)*)*

An asset tat pa&s 8) per(ent wit a probabi$it& of )*) or 0 per(ent wit a probabi$it& of)*-)*

An asset tat pa&s 8) per(ent wit a probabi$it& of )*) or *K. per(ent wit a probabi$i t& of)*K)*An asset that $ays 67 $ercent with a $ro!a!ility of 7.37 or 1.82 $ercent with a$ro!a!ility of 7.N7

An asset tat pa&s 8) per(ent wit a probabi$it& of )*.) or 0*K. per(ent wit a probabi$i t& of)*.)

66N* Gou pur(ased a sare of sto(k for 70)* 9ne &ear $ater &ou re(eived 78 as dividendand so$d te sare for 701* Oat was &our o$ding period return.Y .Y 27= )Y None of te $isted options

664* Bank of Ameri(a (arges a $ower rate of interest to Lo(keed Martin tan to enera$<$e(tri(* 2is (an be attributed to $ower [[[[[[[[ risk from Lo(keed as (ompared to <for Bank of Ameri(aMarket Risk %redit Risk L i%uidit& Risk Lega$ Risk None of Above

637. If Bank of New Gork as found errors in sett$ement of transa(tions wit some of its(ustomers, as tere is some mistake in some of i ts s&stems* 2is wou$d be ($assified asLi%uidit& Risk Market Risk !redit Risk !ountr& Risk *$erational Risk

636. aR is used for wi( of te fo$$owingRisk Meas"rement Risk Mitigation Risk 2aking Risk Assumption None of te $isted options

633* A trader $ost more tan 7.) mi$$ion as te market moved against is positions*However, wen measured te previous da& b& isrisk manager, is aR for a sing$e da& wasdefined at 70) mi$$ion* Is tis possib$e tat te aR is rigt

(es !eca"se ,aR does not co/er 677= of the o"tcomes

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No, it is impossib$eGes but on$& if te trader must ave broken te aR $imit purpose$&Bot a and (None of te $isted options

631. Risk is best measured wen $ooked at At a Ma(ro $eve$At the lowest $ossi!le le/el

At a sub/ma(ro $eve$ At organi4ationa$ $eve$ At (ountr& $eve$

63. Oi( per(entage of (onfiden(e for aR is te most (onservativeP44= 1.Y 1-Y 1)Y -+Y

632* Oi( of te fo$$owing is not a risk management measureP#iversifi(ation Hedging Insuran(e B"dgeting A$$ are risk management te(ni%ues

635* Risk is best measured wen $ooked at At a Ma(ro $eve$ At the lowest $ossi!le le/el At a sub/ma(ro $eve$

At a super/ma(ro or organi4ationa$ $eve$ At a ma(ro $eve$ and at te $owest possib$e $eve$

638. a$ue/at/Risk (an be estimated usingMonte !ar$o 'imu$ation Histori(a$ 'imu$ationarian(e/!ovarian(e Matri arametri( metodsAll of the listed o$tions

63N. Is time ori4on of importan(e wen (a$(u$ating aRP9n$& for (ertain instruments (es) for all financial instr"mentsNo* It is not a fa(tor used for (a$(u$ations*Ges but on$& time ori4ons $esser tan a weekGes but on$& ig va$ue finan(ia$ instruments 0

634. Oat wou$d be te most a((urate aR estimation metodPMonte !ar$o 'imu$ation Histori(a$ 'imu$ationarian(e/!ovarian(e Matri %annot Say Ana$&ti(a$ Metods

617. aR e$ps in des(ribing wi( of te fo$$owingP@ow !ig the loss wo"ld !e on a !ad day.How to minimi4e te $oss on bad da&s

Approimate$& predi(t movements of asset to e$p minimi4e $osses<p$ains te $oss on a bad da& as (ompared to oter da&sNone of te $isted options 8

616. A 0* sigma $imit for (a$(u$ating risk wou$d refer to wat $eve$ of (onfiden(eP

1.Y 44= 11*11Y .)Y 8))Y613* Risk/based (apita$ re%uirements, under te Base$ A((ord, fo(used on wat area of(ommer(ia$ bank riskP>efa"lt risk Interest rate risk Li%uidit& risko$iti(a$ risk None of te $isted options

611. An investorUs strateg& of o$ding man& risk& assets in an attempt to redu(e overa$$ riskis (a$$ed ////////////

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'pread management 'pe(ia$i4ation !oin(identia$i4ation'e(uriti4ation* >i/ersification

61* If a finan(ia$ instrument as a . per(ent (an(e of pa&ing 01 per(ent and a -. per(ent(an(e of pa&ing / 8 per(ent,it epe(ted return wou$d be)*))+ )*)- )*). 7.768 /)*)01

612* Risk is usua$$& measured as teotentia$ $oss* ,aria!ility of o"tcomes aro"nd some e0$ected /al"e.robabi$ it& of epe(ted va$ues* otent ia$ epe(ted $oss*None of te $isted options

615. 2e term Srisk averseS means tat An individua$ refuses to take risks*Most investors and businessmen seek risk*An indi/id"al will seek to a/oid risk or !e com$ensated with a higher ret"rn.9n$& investment proposa$s wit no risk sou$d be a((epted*Bot An individua$ refuses to take risks and 9n$& investment proposa$s wit no risk sou$dbe a((epted

618. If one pro3e(t as a iger standard deviation tan anoter t has a greater risk* It as a iger epe(ted va$ue*It as more possib$e out(omes*It ma& be riskier, but tis (an on$& be determined b& te (oeffi(ient of variation*Bot It as a greater risk and It as a iger epe(ted va$ue 8

61N. Oi( of te fo$$owing is a fa$se statementPRisk& investments ma& produ(e $arge $osses*Risk& investments ma& produ(e $arge gains*2e standard deviation of returns is a risk measure*Riska/erse in/estors cannot !e ind"ced to in/est in risky assets.Bot Risk& investments ma& produ(e $arge $osses and Risk& investments ma& produ(e $argegains

614* Risk, as used in finan(ia$ markets, means2e probabi$i t& of a $oss* 2e probabi$ it& of a gain*he $ro!a!ility of a gain and the $ro!a!ility of a loss.2e overa$$ rate of return* 2e present va$ue of a f inan(ia$ instrument*

67* Lega$ risk is teossibi$it& tat &ou wi$$ fa(e $ega$ a(tionLoss &ou (ou$d in(ur wen $ega$ a(tion is taken against &ouPossi!ility of loss when a contract cannot !e enforcedossibi$it& of $oss from errors in instru(ting pa&ments or sett$ing transa(tionsNone of te $isted options

66. 2e monetar& va$ue at risk is epressed as A number between ) and 8 ossib$e impa(t in #o$$ars6H T 3H (anCt be assigned None of te $isted opt ions

63. A ortfo$io Manager is eamining te sto(k performan(e of !ompan& #ee* 'e seestat, in te past, te maimum te sto(k as ever fa$$en is .Y* 'e bu&s 8 mi$$ion wort of!ompan& #ee sto(k* Oi( of te fo$$owing statements is trueP@er ,aR is <27)777 with a confidence le/el of 677=Her aR is 7 .,))) wit a (onfiden(e $eve$ of 8))Y

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Li%uidit& Risk Market Risk !redit Risk Lega$ Risk ri(e Risk

626* 5i$$ in te b$anks: 2e $iabi$it& of a bank in($ude [[[[[[[[[[[[, wi$e te assets of abank in($ude [[[[[[[[[[[[[ >e$osits) loans.'avings a((ounts and $arge time deposits, (e(king a((ounts*Long term deposits and sort term $oans Loans, deposits*None of te $isted 9ptions

623. Oat is te best basis for te (omparison of dividend pa&ing sto(ks wit oterinvestments su( as bonds, (ertifi(ates of deposits et(interest spread e(ange rate interest rate e%uit& &ie$d di/idend yield

621. Banks are finan(ia$ intermediaries tata Link $enders depositors to borrowersb <va$uate te $ike$iood of borrower repa&ment, redu(ing risk b& deve$oping a

diversified portfo$io rater tan $ending to a sing$e borrower*( !reate monopo$ies, monetar& @ fis(a$ po$i(ies*d Bot Link $enders depositors to borrowers and !reate monopo$ies, monetar& @

fis(a$ po$i(ies*

e Both Link lenders de$ositorsH to !orrowers and E/al"ate the likelihood of!orrower re$ayment) red"cing risk !y de/elo$ing a di/ersified $ortfolio ratherthan lending to a single !orrower

62. A bank fai$ure is more $ike$& to o((ur wenbank in(reases its e%uit& (apita$ bank o$ds more sort/term risk$ess se(uritiesbank $arge $oans outf$ows bank in(reases its o$dings of e(ess reserves

ca$ital ade?"acy ratio is red"ced

622. Oen &ou deposit 70)) in (urren(& into &our banki ts assets de($ine b& 70)) its reserves de($ine b& 70))its lia!ilities increase !y <377 ea( of te above o((ur

its assets de($ine b& 70)) and its reserves de($ine b& 70))

625. Oi( of te fo$$owing is N92 under te purview of te !entra$ BankMonitoring foreign (urren(& inf$ow and outf$ow'tabi$it& of te finan(ia$ s&stem%ond"cting the nations fiscal $olicyRegu$ating te Banking institutions!ondu(ting te nations monetar& po$i(&

628* Oi( of te fo$$owing represent too$s avai$ab$e to te 5ed to (ontro$ te mone& supp$&Pa 2e (apa(it& to make dire(t (ommer(ia$ $oans to te pub$i(*!H he a!ility to inUect or remo/e money held !y the $"!lic !y !"ying or selling

9.S. reas"ry Bonds.

( 2e abi$it& to write $egis$ation to generate in(reased government spending on pub$i(works pro3e(ts su( as bui$ding trai$s, parks, and bridges*d 2e abi$it&, troug its Interna$ Revenue 'ervi(e division, to (ange federa$ in(ome

ta rates, and tus var& (as o$dings b& te pub$i(*e a$$ of te $isted options*

62N* !RR stands for wi( of te fo$$owing%ash Reser/e Ratio !ommon Reserve Ratio !as Refund Ratio !as Re/servi(e Ratio !as Reserve Risk

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624* In(reasing te !as Reserve Ratio for banks wou$d ave an impa(t on wi( of tefo$$owingIn(reased Mone& 'upp$& in te e(onom& Redu(ed interest ratesRed"ced Money S"$$ly in the economy rofitab i$ it& of firmsBot In(reased Mone& 'upp$& in te e(onom& and Redu(ed interest rates

657* Oi( two risks of a finan(ia$ institution ma& bring gains as we$$ as $ossesP!redit risk and interest rate risknterest rate risk and foreign e0change risk!redit risk and foreign e(ange riskLi%uidit& risk and (redit riskNone of te $isted options

656* How does te (entra$ bank in(rease mone& supp$& in te e(onom&PBy red"cing the %ash Reser/e Ratio %RRHB& bu&ing fore ign (urren(&B& in(reasing te wages of te sa$aried ($assB& se$$ing overnment 'e(urities in te open marketB& maintaining a ig interest rate

653* Oen te interest rate rises, peop$e areLess $ike$& to borrow, tat is, se$$ a finan(ia$ asset*More $ike$& to borrow, tat is, se$$ a finan(ia$ asset*Less likely to !orrow) that is) $"rchase a financial asset.More $ike$& to borrow, tat is, pur(ase a finan(ia$ asset*Oou$d be neutra$ to borrowing

651*Banks must keep a per(entage of teir deposits on and asRe?"ired reser/es. <(ess reserves* 'avings a((ounts*Home $oans 'afe deposit reserves* 8

65* Oen a $arge ma3orit& of a bankUs depositors $ose fait in it and attempt to witdrawteir deposits, te bank

a Oi$$ not eperien(e diffi(u$ties be(ause its re%uired reserves wi$$ be ade%uate tomeet witdrawa$sb Oi$$ not eperien(e diffi(u$ties be(ause it wi$$ o$d suffi(ient e(ess reserves to meet

witdrawa$s( Oi$$ eperien(e diffi(u$ties but wi$$ not fai$dH +ill fail "nless it can o!tain additional reser/es or go/ernment assistance

e Bot Oi$$ not eperien(e diffi(u$ties be(ause its re%uired reserves wi$$ be ade%uateto meet witdrawa$s and Oi$$ not eperien(e diffi(u$ties be(ause it wi$$ o$d suffi(iente(ess reserves to meet witdrawa$s

652. A finan(ia$ asset is $i%uida If it (an be (arried easi$& from one p$a(e to anoter*

!H f it can !e readily e0changed for another asset or good.( 9n$& if it takes te form of (as*d If it is e$d b& te pub$i( and earning interest*e Bot If it (an be (arried easi$& from one p$a(e to anoter and If it (an be readi$&

e(anged for anoter asset or good*

655. In Harve&, N*#* tree $o(a$ banks ave issued no/interest $oans in te form of Harve&Bu(ks* 2e& (an be spent in $o(a$ stores* Retai$ers get 1. 6*'* (ents for ea( Harve& Bu(k*5rom tis information &ou (an (on($ude tat Harve& Bu(ks

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a A$toug $ess $i%uid tan 5ed Notes, are mone& be(ause te& are a((epted asmone&*

b A$toug $ess $i%uid tan 5ed Notes, are mone& be(ause te& are assets ofever&one wo o$ds tem*

cH Are not money !eca"se they are lia!ilities for cons"mers who ha/e !eeniss"ed @ar/ey B"cks.

d Are not mone& be(ause te& are not ba(ked b& te 5edera$ government*e None of te $isted options

658* If Bank of Japan was bu&ing #o$$ars fervent$&, it wou$d most $ike$& be for wi( of tefo$$owing reasons

aH o $rotect Va$anese e0$orters from loss d"e to mo/ement in (enb 2o prote(t Japanese importers from $oss due to movement in Gen( 5or spe(u$ative purposesd Bot 2o prote(t Japanese eporters from $oss due to movement in Gen and 5or

spe(u$ative purposese None of te $isted options

65N* A !ommer(ia$ bank wou$d be ab$e to make mone& in wi( of te fo$$owing wa&sa Make te $ending rate be$ow te deposit rate

b Make te $ending rate e%ua$ to te deposit ratecH Kee$ the lending rate a!o/e the de$osit rate !"t $lay the /ol"me gamed <iter Make te $ending rate be$ow te deposit rate or Make te $ending rate e%ua$

to te deposit ratee <iter Make te $ending rate e%ua$ to te deposit rate or Eeep te $ending rate

above te deposit rate but p$a& te vo$ume game

654* Retai$ Banking division in a bank wou$d not in($ude wi( if te fo$$owing departments

ersona$ Loans Home Mortgages >eri/ati/es rading !onsumer Loans ei($e Loans

687. $ass/'teaga$$ a(t 81 was (reated to ensure wi( of te fo$$owing

aH %reate a %hinese wall !etween %ommercial Banking and Sec"rities B"siness

b !reate a !inese wa$$ between !orporate Banking and Retai$ Banking Business

( 2o make te banks more effi(ientd 2o promote te (on(ept of 6niversa$ Bankinge Bot 2o make te banks more effi(ient and 2o promote te (on(ept of 6niversa$

Banking

686. Mone& Mu$tip$ier effe(t wou$d imp$&a An in(rease in te tota$ mone& $ent out into te s&stemb An in(rease in te tota$ mone& in te bank reserves in te s&stem( A de(rease in te tota$ mone& in te bank reserves in te s&stem

dH Both An increase in the total money lent o"t into the system and An increasein the total money in the !ank reser/es in the systeme Bot An in(rease in te tota$ mone& $ent out into te s&stem and a de(rease in te

tota$ mone& in te bank reserves in te s&stem

683. !as Reserve Ratio is maintained for wi( of te fo$$owing reasonsPaH o ens"re that the Bank doesnJt face a cash cr"nch d"e to hea/y withdrawals

b 2o ensure tat te !entra$ Bank (an take tis (as in (ase of its need( 2o (ontribute towards government needs in times of (risis

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d Bot 2o ensure tat te !entra$ Bank (an take tis (as in (ase of its need and 2o(ontribute towards government needs in times of (risis

e None of te $isted 9ptions

681* 2e 5ed as been redu(ing te interest rates wit aim of a(ieving wi( of tefo$$owing

aH ncreasing the growth rate of the economyb #e(reasing te growt rate of te e(onom&( He$p interest/rate traders book profitd Bot In(reasing te growt rate of te e(onom& and He$p interest/rate traders book

profite 2o e$p te government raise funds

68. Oi( of te fo$$owing is N92 a fun(tion of te bankPEns"re s"$ernormal ret"rns to its small de$ositors!anne$i4e 'avingsrovide (redit fa(i$ities to borrowerrovide investment avenues to investors5a(i$itate te trade and (ommer(e dea$ings 8

682. Regu$ations $imiting risk taking of finan(ia$ institutions are imposed for wi( of tefo$$owing reasonsP

a 2e so(ia$ (osts to sareo$ders of a genera$ bank fai$ure are more tan te private(ost of te bank fai$ure*

b 2e (osts of regu$ation e(eed te benefits*( 2e private (osts of a bank fai$ure e(eed te so(ia$ (osts of genera$ bank pani(*dH he social costs of a general !ank fail"re e0ceed the $ri/ate costs to the

shareholders of the !ank that failed.e None of te $isted 9ptions

685. Oi( of te fo$$owing is asso(iated wit te purpose of regu$ating finan(ia$institutionsP2o provide stabi$it& of te mone& supp$&

2o serve (ertain so(ia$ ob3e(tiveso $re/ent fail"re of any financial instit"tion2o offset te mora$ a4ard in(entives provided b& deposit insuran(e and oter guarantees*Bot 2o serve (ertain so(ia$ ob3e(tives and 2o offset te mora$ a4ard in(entives provided b&deposit insuran(e and oter guarantees*

688. Regu$atorsU attempting to $imit (ompetition b& restri(ted entr&, e($usive servi(es, et(*was an attempt to serve wi( of te fo$$owing purposes of regu$ationP

a 2o promote (ompetition in te finan(ia$ servi(es markets*b 2o promote $imited %uantities of finan(ia$ servi(es at maimum pri(es*cH o $romote safety and so"ndness of de$ository instit"tions.d 2o prote(t te soundness of te deposit insuran(e fund*e Bot 2o promote $imited %uantities of finan(ia$ servi(es at maimum pri(es and 2o

promote safet& and soundness of depositor& institutions68N* Regu$ator& ba$an(e seet restri(tions are designed toLimit te si4e of depositor& institutions*Limit risktaking and to enco"rage di/ersification*$imit e(essive diversifi(ationto promote 6niversa$ Bankingen(ourage ig risk/taking b& proper diversifi(ation 0

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684. A bank tat is earning KY on its earning assets and is pa&ing Y on its interest/earning$iabi$ities is said toHave a negative spread*Have a positive A position*@a/e a $ositi/e s$read.Oi$$ a$wa&s ave positive net earnings*Bot Have a negative spread and Oi$$ a$wa&s ave positive net earnings

6N7. Oi( of te fo$$owing is not a (ommon$& used term in te (ontet of BankingP!orporate banking Investment banking P"!lic !anking Retai$ banking rivate banking

6N6. 2e term T'preadC refers toa 2e amount of profit a bank makes after ($earing a$$ its (osts in($uding pa&ment of

interest to deposit o$ders*b 2e differen(e in te pur(ase and sa$e pri(es of an& finan(ia$ instrument %uoted b&

an& finan(ia$ Dintermediar&F su( as a bank, a broker, et(*( 2e differen(e between te $ending rates and deposit rates of a bank*dH Both he difference in the $"rchase and sale $rices of any financial instr"ment

?"oted !y any financial Dintermediary s"ch as a !ank) a !roker) etc. and he

difference !etween the lending rates and de$osit rates of a !ank.e None of te $isted 9ptions

6N3* O& do we need banksPa Banks are in te best position to $end out mone& at (ompetitive rates to businesses

and individua$sb #eposits are parti(ipants in primar& and se(ondar& markets( Banks are in te best position to $end out mone& at (ompetitive rates to businesses

and individua$s and #eposits are parti(ipants in primar& and se(ondar& markets

dH All of a!o/e of small in/estors are $rotected) hence it is a low risk in/estmenta/en"e

e Banks

6N1. !RR stands for !as Re%uirement Ratio !as Reserve Re%uirement %ash Reser/e Ratio!as Re%uirement Reserve !apita$ Reserve Re%uirement

6N. 2e (entra$ bank in te 6' is (a$$ed:ederal Reser/e 5edera$ Reserve Board Reserve Bank of 6nited 'tates!entra$ Bank of 6nited 'tates Reserve Bank of Ameri(a

6N2. Investment Banking division of a bank offers a$$ of te fo$$owing e(ept6nderwriting and distribution of e%uit& issues Leasing ser/icesMergers and a(%uisitions a$uation of firms None of te $isted 9ptions

6N5. Oi( division provides servi(es to Hig Net Oort individua$sP!orporate banking Investment banking Reta i$ bankingPri/ate !anking None of te $isted 9ptions

6N8. Oi( of te fo$$owing statements is truea Banks ma& $oan out a$$ te mone& te& re(eive troug deposits!H +hen the central !ank red"ces %RR) amo"nt of money in circ"lation in the

economy goes "$( Oen te (entra$ bank issues se(urities in te market, amount of $i%uidit& in te

e(onom& goes up

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d A$$ of te $isted optionse None of te $isted 9ptions

6NN. Oi( of te fo$$owing 6' banks is te biggest based on te asset si4e as on Ju$& 0))Bank of Ameri(a J** Morgan !ase @ !o %itigro"$) nc

ABN AMR9 Bank 9ne !orporation

6N4. If a bank gets a deposit of 78)), assuming a reserve re%uirement !RR of 8)Y, andtat it (ir(u$ates troug 0 more banks, $eading to te fo$$owing mone& mu$tip$ier effe(t(reate a reserve of 78) loan of <3 (reate reserve of 781$oan of 78K8 None of te $isted 9ptions

647. 2oda&, te most important monetar& po$i(& too$ isbank eamination and supervise (apita$ re%uirementsdis(ount rate po$i(& o$en market $olicy re%uired reserves po$i(&

646. Oi( of te fo$$owing is not (overed under retai$ operations of a BankPLoan for !onsumer durab$es Hire ur(ase Bi$$ #is(ountingLease Auto Loans

643. Oi( of te fo$$owing is not (orre(t for a persona$ $oanP2e finan(er is not interested in te intention of te $oanLoan amount is $inked to borrowersC repa&ment (apa(it&2e& are sort term $oansNo se(urit& re%uiredone of the listed *$tions

641* S2umb ru$es for (a$(u$ation of Maimum $oan amount in (ase of auto $oan arePa Not greater tan times te &ear$& in(ome of te borrower b Not greater tan 0 times te &ear$& in(ome of te borrower ( 2e <MI sou$d be $ess tan K) p(t of te gross mont$& in(omed 2e <MI sou$d be $ess tan -) p(t of te gross mont$& in(omeSb and ( aH and dH a and ( b and d None of te $isted 9ptions

64. Interest rate (arged on asset based $oans isreater tan te persona$ $oans A$wa&s e%ua$ to te persona$ $oansLesser than the $ersonal loans a$$ of te $isted optionsNone of te $isted 9ptions

645. Oi( is true for a ($osed ended $oanP2ere is no end to su( $oans 9verdraft is not a$$owed in su( $oansInterest is (a$(u$ated on dai$& outstanding ba$an(e2e borrower gets a (redit (ard a$ong wit te $oanone of the listed *$tions

648* If te Limit = 78.)), margin = 0)Y and Asset a$ue = 70))) ten #rawing ower for an9pen ended $oan is e%ua$ to78,.)) <6)377 78,-)) 71)) None of te $isted 9ptions

64N* If te Limit = 780)), margin = 0)Y and Asset a$ue = 780)) ten #rawing ower for an9pen ended $oan is e%ua$ toP78,.)) 78,0)) <457 71)) None of te $isted 9ptions

644. Oi( of te fo$$owing is trueP

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a 2e finan(ier owns te asset in (ase of DLeaseF but not in (ase of DHire ur(aseF

b #epre(iation is ($aimed b& te finan(ier bot in Lease and Hire ur(ase( !a$$ab$e bondsd 2a dedu(tion (an be ($aimed for te fu$$ va$ue of te pa&ment in $ease but on$& to

te etent of interest paid in Hire ur(asee one of the listed *$tions

377. Oi( of te fo$$owing is te most profitab$e for !redit !ard !ompan&P!ustomers wo a$wa&s pa& in t ime!ustomers wo never pa&%"stomers who defa"lt !"t finally $aya$$ of te $isted optionsNone of te $isted 9ptions

376. Oi( of te fo$$owing is not a repa&ment metodPost dated (e(ks 'a$ar& dedu(tions #ire(t re(eipts #ire(t debits one of the listed *$tions

373. Oi( of te fo$$owing is not a kind of repa&mentP

Slice $ayment 'tep up 'tep down Bu$$et pa&ment None of te $isted 9ptions

371. Interest rate spread is e%ua$ toP%"rrent rate Q Base rate !urrent rate 5$oor Base rate 5$oor !ap !urrent rate None of te $isted 9ptions

37. !o$$atera$ isP A form of $oan Asset put up as se(urit&*!ligations to !e f"lfilled !y the !orrower

A bad $oan None of te $isted 9ptions

372* Oi$e (omparing mortgages, one sou$d usePInterna$ rate of return Ann"al Percentage Ret"rn

Net present a$ue Rate of Interest app$i(ab$e for te $oanNone of te $isted 9ptions

375* Oi$e taking a Mortgage, one needs a $arge sum to furnis te ome, ten wi(interest rate dea$ sou$d be (osenP#is(ounted interest rate !apped rate 'tandard variab$e rateStandard /aria!le rate with cash !ack None of te $isted 9ptions

378* In (ase of dis(ounted interest rate dea$ for a mortgage te fo$$owing is truePa 9ne re(eives a substantia$ (as sum wen one takes te $oan*b Interest rate is guaranteed to be set amount be$ow te base ratecH he $ayments are set at less than that lenderJs going rate for a fi0ed $eriod of

time.

d 2e pa&ments go up and down as te mortgage rate (anges but are guaranteednot to go above a set $eve$e None of te $isted 9ptions

37N. !apped rate of interest in (ase of Mortgage imp$iesaH he rate of interest canJt mo/e a!o/e a set le/elb 2e rate of interest (anCt move be$ow a set $eve$( 2e (o$$ar of te interest rate (anCt move above a set $eve$d 2e spread of te interest rate (anCt move above a set $eve$e None of te $isted 9ptions

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ss"ing !ank None of te $isted 9ptions

08+* Oen te mer(ant ($i(ks te Bi$$ 9rders button in te store to S(aptureS te funds, testore sends te (apture information toPa&ment ro(essor MerchantJs $ayment gatewayIssuing bankCs pa&ment gatewa& A(%uiring bankCs pa&ment gatewa&None of te $isted 9ptions

364. Oi( information is not provided b& a !redit BureauP!redit Histor& Report in%uiries ersona$ Identif&ing Informationub$i( Re(ords one of the listed *$tions

337* Oi( of te fo$$owing data appear on a (redit reportPBank a((ount ba$an(es Ra(e @ Re$igion Hea$t In(ome @ #riving re(ords one of the listed *$tions

336* Oi( of te fo$$owing is not true for te (redit s(orePa Its based on oneCs (onso$idated finan(ia$ information from te !redit Reportb Its a number (a$(u$ated based on oneCs (redit istor&( Its used b& $enders for a simp$er S$end"donUt $endS answer

d Its a tree digit number var&ing between )) 1))e one of the listed *$tions

333. Oi( one of te fo$$owing (ontributes to oneCs (redit reportPBank a((ount ba$an(e ersona$ Assets 9neCs %ua$ifi(ationy$es of e0isting credit None of te $isted 9ptions

331. Oi( of te fo$$owing does not (ontributes to te (ost of using (redit (ardPE0$enses inc"rred thro"gh credit cards Annua$ er(entage rate6ti$it& Bi$$s paid troug (redit (ard Late pa&ment (argesNone of te $isted 9ptions

33. Oi( is not a banking a((ountP

!e(king A((ounts Mone& Market #eposit A((ounts>emat Acco"nt 2ime #eposits None of te $isted 9ptions

332. 9ne sou$d ave te (e(king a((ount if one is $ooking forP"ick) con/enient and) fre?"entaccess to the money

A ig rate of interest uaranteed rate of interestLow fee None of te $isted 9ptions

335* 9ne sou$d ave te MM#A if one is $ooking forP;ui(k, (onvenient and, fre%uent/a((ess to te mone&A high rate of interest uaranteed rate of interestLow fee None of te $isted 9ptions

338. 9ne sou$d ave te 2ime #eposits if one is $ooking forP;ui(k, (onvenient and, fre%uent/a((ess to te mone& A ig rate of interest G"aranteed rate of interestLow fee None of te $isted 9ptions

33N* 9ne sou$d ave te Basi( A((ount if one is $ooking forP;ui(k, (onvenient and, fre%uent/a((ess to te mone&

A ig rate of interest uaranteed rate of interestLow fee None of te $isted 9ptions

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334. 9ne sou$d ave te 'avings a((ount if one is $ooking forP;ui(k, (onvenient and, fre%uent/a((ess to te mone&

A ig rate of interest uaranteed rate of interestLow fee one of the listed *$tions .

317. Oi( one is true for a (apita$i4ed $oanPa Mont$& pa&ments go towards te interest, wi$e a $ump sum pa&ment at te end of

te term goes towards te prin(ipa$b Mont$& pa&ments goes part$& towards te interest and part$& towards te prin(ipa$cH he interest d"e and not $aid is added to the $rinci$al !alance of the loan.

interest !ecomes $art of the $rinci$le of the loansd 'u( $oans (ome at a ver& $ow pro(essing feee None of te $isted 9ptions

316. 2e term D!aptureF in (ontet of (redit (ards refers toPa !apture of (redit (ard number b& te issuing bank during a transa(tion for

autenti(ationb !apture of te person using a (ard not owned b& imcH %on/ersion of the a"thoriation amo"nt into a !illa!le transaction record.

d Re(ording of a personCs (redit detai$s in te (redit report*e None of te $isted 9ptions

313* !onsidering te amount of (ompetition in te retai$ market, wi( of te fo$$owing arete up(oming (a$$enge"s for te banks

a 'ing$e (ustomer interfa(e a(ross mu$tip$e departmentsb In(reasing teir (ross/se$$ opportunities to (ustomers( Improving interna$ pro(essing effi(ien(& and %ua$it&dH all of the listed o$tionse None of te $isted 9ptions

311. SA bank as provided te fo$$owing options to te borrower for 7.),))) of $ending forduration of . &ears*

a* a& 7+),.0.*. at te end of . &earsb* a& 70.,.)) now and 7.),))) at te end of . &ears(* a& 78-,8).*8 end of ever& &ear for . &earsd* a& 78-,8).*8 beginning of ever& &ear for . &ears!onsidering 8)Y as IRR for te borrowerS*$tion aH is the chea$est for the !orrower 9ption b is te (eapest for te borrower 9ption ( and d are e%ua$$& (ost$& to te borrowera$$ of te $isted optionsNone of te $isted 9ptions

31. <$e(troni( banking doesnCt (overs te fo$$owing servi(e"sa&/b& one s&stem A2M '&stem oint of 'a$e s&stem

a$$ of te $isted options one of the listed *$tions312. <52 a(t (overs repaid 2e$epone (ards TiftC (ards Mass transit passesBot repaid 2e$epone (ards @ TiftC (ards one of the listed *$tions

315. Oat is !e(king A((ountPaH An acco"nt at a !ank where f"nds ha/e !een de$osited against which checks

may !e writtenb An a((ount, fo$der, or fi$e were (e(ks are stored

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( A t&pe of bank a((ount tat a$$ows witdrawa$s b& pone or Internetd A form of do(umentation for transa(tions between &ou and te banke None of te $isted 9ptions

318. Net 'ett$ement stands for 'ett$ement of funds over te Internet Posting net de!it or net creditRea$ time sett$ement a$$ of te $isted options None of te $isted 9ptions

31N. #ire(t debits Autori4es spe(ifi( deposits to &our a((ount on regu$ar basis Autori4es a$$ deposits dire(t$& to &our a((ount PreA"thoried direct withdrawal

re/autori4ation to witdraw from oters a((ount None of te $isted 9ptions

314* <52A stands for<$e(troni( 5unds 2rading A(t <$e(troni( 5inan(ia$ 2ransfer A(tElectronic :"nds ransfer Act <$e(troni( 5ee 2ransfer A(t<$e(troni( 5unds 2e$e(ommuni(ation A(t

37. [[[[[[[[[[[[[[ preautori4es banks to pa& re(urring bi$$s $ike insuran(e premium,uti$it& bi$$s automati(a$$&a&/b&/one '&stem <52 >irect >e!it #ire(t !redit #ire(t #eposit

2C1( A7 stands fora) Automatic 7ransaction achineD Almost anytime banking! &"toate# Te((er $achineN ?eote (ocation transactions

c) Automatic 7ransaction achineD &und transfer between accountsd) Automated 7eller achineD 8irect 8eposite) Automatic 7ransaction achineD ersonal 1anking

2C2) 8ebit !ard

is a @stored 'alue’ card pro'ide credit line transfer money at oint of 6ale

"nly pro'ide credit line and transfer money at oint of 6ale.one of the (iste# -ptions 5

2C3) <&7 systems are a maMor form of electronic payment systems in banking andretailing industries( <&7 is an acronym for <lectronic &inancial 7ransactions <ncrypt &und 7ransfer <lectronic &und 7ransactions (ectronic "n# Transfer

<xternal &und 7ransfer

2CC( <&7 ser'ices re$uire institution to tell the following to the customersa) 6ummary of !ustomer’s assets for unauthori>ed transfers b) S"ar' of instit"tions (ia!i(it' if it fai(s stop certain transactions(c) #ist of institute holidaysd) !ircumstances under which institute will not disclose information to third party(e) one of the listed "ptions

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2C5( A transaction error has occurred in customer’s account( 9hich of the followingholds as per <&7 act?

a) !ustomer has 0/ days to notify the error from the date a statement is recei'ed

b) &inancial nstitution has ,5 days to in'estigate the errors

c) &inancial nstitution has to communicate within working days the result aftercompletion of the in'estigation# inancia( Instit"tion has to correct the error ,ithin one ,or%ing #a' after

#etecting the sae)

e) 1oth &inancial nstitution has to communicate within working days the resultafter completion of the in'estigation and &inancial nstitution has to correct theerror within one working day after detecting the same(

2C6( !ustomer can lose much more on PPPPPPPPPPPPPPPP loss than on PPPPPPPPPPPPPloss !redit !ardD 8ebit !ard !redit !ardD A7 !ard !redit !ardD 6tored !ard

8ebit !ardD A7 !ard <e!it @ar#N @re#it @ar# 5

2C7( n the case of 8ebit or A7 carda) !ustomer liability is limited if the loss is reported before it is used without hisLher

permission(! @"stoer (ia!i(it' aries #epen#ing on the #e(a' in the reporting of the (oss=

if "na"thorize# "se occ"r !efore reporting

c) !ustomer liability is limited if the unauthori>ed use occurs before reporting theloss(

d) otification period can’t be extended e'en in the case of extenuatingcircumstances(

e) 7here can’t be unlimited liability

2C8) 6top-ayment pri'ilege pro'idesa) right to customer to stop payment on any <&7 transaction b) customer can stop payment if the purchase is defecti'e or not deli'eredc c"stoer can stop pa'ent on(' for prea"thorize# reg"(ar pa'ents

d) customers don’t ha'e pri'ileges for any transactione) one of the listed "ptions

2C4) 7erminal :eceiptsa) issued for regularly occurring electronic payments that are pre-authori>ed b) entitled to customer only when the electronic transaction is terminatedc) pro'ides statement of all the transactions terminated for a gi'en periodd) must show the amount and date of the transfer3 and its type3 such as Vfrom sa'ings

to checkinge) .one of the (iste# -ptions

250) 7he &ederal :eser'e offers financial ser'ices to banks and the =(6( go'ernment forall of the following reasons except to

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26C( 7he &ederal :eser'e 6ystem is responsible for regulating banks and financial institutionscreating a stable economic en'ironmentmanaging regional and national check clearingmonetary policy &(( of the (iste# options 5

265( 9hich of the following is probably the most familiar form of electronic banking? &T$ 8ebit card !redit card "6 systemA!H

266( 9hich of the following transactions would cost the most?A7 deposit <eposit at Te((er ,in#o, 8irect deposit <lectronic fund transfer one of the listed "ptions

267) &<89:< transferin'ol'es relati'ely large no( of book keeping entries

are free of costhandle high 'olume of small transactionsare settled on net settlement basishan#(e high a("e transactions

2Q.( 9hich of the following transactions costs the least?ayment by personal check Pa'ent ia &@ 8ebit card for point of sale purchase A7 withdrawal9ithdrawal at teller window

264( &<89:< differs from !H6 in thata <*I? is gross sett(eent s'ste

b) &<89:< is a pri'ate sector fund transfer systemc) !H6 pro'ide international fund settlementd) &<89:< offers free ser'icese) &<89:< pro'ides domestic fund settlement

270) 9hich of the following transfers are co'ered by the <lectronic &unds 7ransfer Act?a) 1ob’s purchase of an electronic toilet seat with a wire transfer b) Woe’s transfer3 made in person3 from his checking to his sa'ings account3 to post

bail from prisonc) #arry’s check written at the 7hree 6trikes and our "ut 1owling Alleyd) 7im’s point of sale purchase from his business account to buy that new hardware

store he has always wantede) .one of the (iste# -ptions

271) Inter #istri(t 'ett$ement 5und is aa 5und 2ransfer '&stemb <$e(troni( Bi$$ resentment '&stem( 'ett$ement A((ountdH Booking System

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e) None of te $isted 9ptions

38N. 2&pi(a$ 5ee (arged for private banking servi(esa Less tan 8Y!H Between 6 to =( Between - to 8)Y

d More tan 8)Ye None of te $isted 9ptions

384. !$ient re$ationsip manager doesnCt ave to understand wi( of te fo$$owing need"s forinvestment management and advi(e

a Li%uidit& re%uirementb !apita$ Base( 2a p$anningdH Ar!itrage tradinge None of te $isted 9ptions

3N7. Hig/Net wort individua$s genera$$& avea Houseo$d in(ome at$east 7.),)))!H etworth greater than <277)777( Market (apita$i4ation more tan 70)),)))d a$$ of te $isted optionse None of te $isted 9ptions

3N6. 2e pro(ess f$ow in a rivate banking firm goes asa 'ervi(ing 'pe(ia$ist => !$ient Representative => Midd$e 9ffi(e => Ba(k 9ffi(e!H %lient Re$resentati/e ; Ser/icing S$ecialist ; Middle *ffice ; Back *ffice( !$ient Representative => 'ervi(ing 'pe(ia$ist => Ba(k 9ffi(e => Midd$e 9ffi(ed Midd$e 9ffi(e => Ba(k 9ffi(e => 'ervi(ing 'pe(ia$ist => !$ient Representativee !$ient Representative => Midd$e 9ffi(e => 'ervi(ing 'pe(ia$ist => Ba(k 9ffi(e

3N3. In te (ase of Tse$f dire(ted investment managementC in rivate bankingaH BankJs $ortfolio managers make in/estment decisions only after c"stomer

a$$ro/alb BankCs portfo$io managers make Tse$f/dire(tedC investment de(isions( BankCs portfo$io managers make investment de(isions on bea$f of te (ustomerd BankCs portfo$io managers make investment de(isions bea$f of a$$ te (ustomer e None of te $isted 9ptions

3N1. Oi( of te fo$$owing ro$es and responsibi$ities are (orre(t$& statedPaH Ser/ices Pro/ider a0 Ser/icesb Midd$e 9ffi(e? 'tatements @ Advi(es( 5ront 9ffi(e? !$ient Reportingd Ba(k 9ffi(e: Risk Managemente Midd$e 9ffi(e? !ustodia$ 'ervi(es

3N. DHig net wortF individua$s are norma$$& defined based on tea Houseo$d in(omeb Net Oort( a$ue of sares e$d b& te ouseo$d ouseo$d in(omed Bot Net Oort and a$ue of sares e$d b& te ouseo$d ouseo$d in(omeeH Both @o"sehold income and et +orth

3N2. Oi( of te fo$$owing is"are not a responsibi$it& of te Midd$e offi(ePa A((ount Aggregationb #omesti( $oba$ 'ett$ement

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( !as ro(essingdH Sales & Brokeragee Bot A((ount Aggregation and 'a$es @ Brokerage

3N5. rivate Banking doesnCt dea$ wit te fo$$owing servi(es <V!<2a 2a @ estate p$anningb Insuran(e( 5oreign e(anged Automated (redit entit$ementeH all of the listed o$tions

3N8. A rivate Banking division wou$d entai$ te need for wi( of te fo$$owinga <ffi(ient ortfo$io Ana$&sisb Asset A$$o(ation te(ni%ues( Hig 2e(no$og& InvestmentdH all of the listed o$tionse 9n$& <ffi(ient ortfo$io Ana$&sis and Asset A$$o(ation te(ni%ues

3NN. rivate ($ients trade in [[[[[[[[[[[[ vo$umes and [[[[[[[[[[[ fees and (ommissionsaH larger larger

b sma$$? $arger ( sma$$? sma$$d $arger? sma$$e <iter sma$$? $arger or $arger? sma$$

3N4. D'weepF fa(i$it& providesa automati( transfer of funds from one a((ount to anoter a((ount, wose ba$an(es

ave fa$$en be$ow te pre/determined $imitb automati( transfer of funds from one a((ount to anoter a((ount, wose ba$an(es

ave e(eeded pre/determined $imit( automati( transfer of funds from one a((ount, wose ba$an(es ave e(eeded pre/

determined $imit, to anoter a((ountdH Both a"tomatic transfer of f"nds from one acco"nt to another acco"nt) whose

!alances ha/e fallen !elow the $redetermined limit and a"tomatic transfer of f"nds fromone acco"nt) whose !alances ha/e e0ceeded $redetermined limit) to another acco"nte Bot automati( transfer of funds from one a((ount to anoter a((ount, wose

ba$an(es ave fa$$en be$ow te pre/determined $imit and automati( transfer of funds from onea((ount to anoter a((ount, wose ba$an(es ave e(eeded pre/determined $imit

347. Managing ($ientCs $i%uidit& assumes paramount importan(e in private banking, it invo$vesa 'ort term (redit fa(i$itiesb 5$eib$e (as management( 9ptimi4ing returns on sort term (asdH all of the listed o$tionse None of te $isted 9ptions

346. 2e two most distinguising features of rivate banking are [[[[[[[[[[[[[ and [[[[[[[[[[[[[*aH Li?"idity management risk managementb 'pe(ia$ist advi(e? risk management( Oea$t management? finan(ia$ advi(ed <tensive resear(? spe(ia$ist advi(ee Li%uidit& management? stru(tured $ending

343. rivate Banking providing Risk management servi(es tereb& strives toa <$iminate risk and maimi4e returns

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!H Red"ce risk and o$timie ret"rns( Avoids risk and optimi4e returnsd 2ransfers risk and maimi4e returnse a$$ of te $isted options

341. rivate Banking provides p$etora of spe(ia$i4ed servi(es to it ($ients* Oi( of te fo$$owingstatements o$ds trueP

aH t is less de$endent on acce$ting de$osits than retail !anking.b !$ient portfo$ios are ref$e(ted on te $iabi$it& side of te bankCs ba$an(e seet( !$ient portfo$ios are ref$e(ted on te asset side of te bankCs ba$an(e seetd Bot It is $ess dependent on a((epting deposits tan retai$ banking and !$ient

portfo$ios are ref$e(ted on te asset side of te bankCs ba$an(e seete Bot !$ient portfo$ios are ref$e(ted on te $iabi$it& side of te bankCs ba$an(e seet and

!$ient portfo$ios are ref$e(ted on te asset side of te bankCs ba$an(e seet

34. Oi( of te fo$$owing (ompanies offer rivate banking servi(esPaH %redit S"isseb 5ide$it&( Merri$$ L&n(d a$$ of te $isted options


342. [[[[[[[[[[[[[ provides rivate banking in te 2rust or Investment management divisionwereas [[[[[[[[[[[[[[[ provides rivate !$ient 'ervi(es !'

a !redit 'uisse? 'a$omon 'mit Barne&b 5ide$it&? 6B'cH Mellon and Bank *ne Salomon Smith Barneyd A$$ of abovee None of te $isted 9ptions

345. 2e be$ow stated responsibi$ities are (arried out b& wi( of te fo$$owing p$a&ers* !as'ervi(es"!$ient Reporting"'tatements @ Advi(es"#omesti( @ $oba$ 'ett$ements

a 'ervi(es rovider

b !$ient RepresentativecH Back officed 5ront 9ffi(ee Midd$e 9ffi(e

348. rivate banking offers Dstru(tured $endingF tat providesa !ustomi4ed asset/based (redit so$utionsb Long/term $i%uidit& to ($ients( Advi(e/$ed (redit so$utionsd !redit so$utions to Hig Net wort individua$seH All of the listed o$tions

34N. rivate Banking (ustomers (an be (ategori4ed based on te fo$$owing parameters

a Risk taking (apabi$it&b Investib$e assets( NetwortdH Both n/esti!le assets and etworthe A$$ of te $isted options

344. In te (ase of Tdis(retionar& investment managementC in rivate bankinga BankCs portfo$io managers make investment de(isions on$& after (ustomer approva$b BankCs portfo$io managers make Tse$f/dire(tedC investment de(isionscH BankJs $ortfolio managers make in/estment decisions on !ehalf of the c"stomer

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d BankCs portfo$io managers make investment de(isions bea$f of a$$ te (ustomer e None of te $isted 9ptions

300) Jim Morrison, .0 &ears o$d, founder, (airman and $argest sareo$der of a sma$$ Austra$ian$isted (ompan&, seeking to borrow A7+ mi$$ion se(ured against is . per(ent sareo$dingva$ued at A7) mi$$ion to diversif& is asset base and invest in a separate business venture* He

as eisting re$ationsip wit te bank* iven te fa(t tat $oan represented %uasi/e%uit& as itwou$d be a$most impossib$e to off$oad te sares into te market, wat kind of so$ution (an beprovided b& te bank to te ($ientP

a) Issuer !apita$ formation b) Investment Management 'ervi(esc Str"ct"red Lendingd) Hedge 5undse) a&ab$e 2roug A((ount

301) In(reasing numbers of edge funds are $o(ating to T!a&man Is$andsC be(ause a$ <V!<2a) 2a aven b) 5$eib$e $egis$ation

c) Hig$& sopisti(ated venued) Numerous (apab$e professiona$se one of the listed *$tions

302) Hedge funds ave attra(ted investorsU attention due to some spe(ta(u$ar @ su((esses @fai$ures, but in fa(t te& aim to provide a $ow risk investment so$ution* Oi( of te fo$$owing doeso$d true for edge fundsP

a) Hig$& spe(u$ative b) rivate investment partnersipc) Hig$& $everaged# %onsistent $erformance

e) Investor needs to be fu$$& a((redited

303) 5inan(ia$ p$anning invo$ves a$$ <V!<2a) !as f$ow management b) Retirement p$anningc) Risk managementd) 2a p$anninge Portfolio management

30C) Oi( of te fo$$owing is not a se(ured $oanPa) 9verdraft on (e(king*

b) ersona$ $ines of (redit*c) 'tud& $oand) !redit (ardse All of the listed o$tions

172. Oi( of te fo$$owing statements is truePaH Re?"ires WcollateralW or something) which the lender can easily sell and "se to

$ay off the loan if the !orrower defa"lts.b Rates are genera$$& $esser for unse(ured $oans*

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!H 77 9S>( 8)) 6'#d 8.) 6'#e .) 6'#

161. !onsider a one/&ear $oan of 6'# 8),))) given b& bank to a borrower on Jan 8, 0))* 2e$oan (arries an interest rate of 8)Y p*a* As per te terms and (onditions of te $oan, te borroweras to pa& te interest amount togeter wit prin(ipa$ amount on #e( 8, 0))* 2e Bank fo$$owsstraigt/$ine a((rua$ wit mont$& fre%uen(&* Oat wou$d be bankCs in(ome as on June 8, 0))P

a 88,))) 6'#!H 577 9S>( 8,))) 6'#d .,.)) 6'#e 8),))) 6'#

16. Oi( of te fo$$owing t&pe of $oan re%uires te amount of interest tat wou$d be earned onte amount of interest paid upfront b& te borrowerP

a #emand $oan!H r"e disco"nted Loan( #is(ounted Loan

d !apita$i4ed Loane Amorti4ed Loan

162. Interest rates area 2e pri(es paid for te use of a rea$ $iabi$it&*b 2e pri(es paid for te use of a rea$ asset*cH he $rices $aid for the "se of a financial lia!ility.d 2e pri(es paid for te use of a finan(ia$ asset*e 2e pri(e paid for te use of a (ontingent asset

165. A $oan tat (an be paid in periodi( e%uated insta$$ments wit (apita$i4ed interest is (a$$eda Amorti4ed Loanb !apita$i4ed Loan

cH Ann"itiesd #is(ounted $oane 2rue dis(ounted Loan

168. Loan (an take man& of te fo$$owing basi( forms <V!<2a 9verdraftsb Bi$$s and promissor& notescH %or$orate !ondsd Advan(ese !redit $ine

16N. If a fund pur(ases a $oan in te rimar&, te& a$so use anoter word for tat* Oi( term isused to indi(ate te initia$ group of $enders rimar& LendersP

a A$$o(ation!H Syndicate( 'e(ondar&d Assignmente None of te $isted 9ptions

164. In te (ase of f$oating rate $oan, wi( of te fo$$owing is fa$sePa Base rate (an be reset at mutua$$& agreed time period or it (an be periodi(*b 'pread is app$ied over and above te base rate*cH he s$read /aries o/er the life of the loan.

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d 'pread (an be negative*e None of te $isted 9ptions

137. Oat does T$oan provisioningC stand forPa 2o (reate te provisions for doing business in different $ines of businesses*b Loan provisioning is done to ($assif& and grade te $oans*( A$$ of abovedH o create !"ffer against the loss of the non$erforming loans.e None of te $isted 9ptions

136. !redit risk in te swap market isa <tensive*b <%ua$ to te tota$ va$ue of te pa&ments tat te f$oating rate pa&er was ob$igated to

makecH Limited to the difference !etween the /al"es of the fi0ed rate and floating rate

o!ligations.d Bot <tensive and Limited to te differen(e between te va$ues of te fied rate and

f$oating rate ob$igations*e None of te $isted 9ptions

133. Oen a firm needs sort/term funds for a spe(ifi( purpose, te bank $oan wi$$ $ike$& be aa !ompensating ba$an(e arrangementb Revo$ving (redit agreementcH ransaction loan.d Line of (redite 2erm Loan

131. Oi( of te fo$$owing are te benefits of using (redit derivativesPa !redit derivatives (an be used eiter to take on more risk or to avoid edge it*b !redit derivatives (an be used to (reate positions tat (an oterwise not easi$& be

estab$ised in te (as market*( !redit derivatives (an be used bot to diversif& teir (redit risk eposures and free up

(apita$ from regu$ator& (onstraints*

dH All of a!o/ee None of te $isted 9ptions

13. A forma$, $ega$ (ommitment to etend (redit up to some maimum amount over a statedperiod of time

a Letter of (redit!H Re/ol/ing credit agreement( Line of (reditd 2rade (redite Irrevo(ab$e !redit

132. 6ti$it& (ompanies and medi(a$ servi(e organi4ations (ommon$& offer fi$$ in te b$ank (redita Revo$ving

!H Single $ayment( Insta$$mentd Retai$e !orporate

135. A (ommon advantage of using (redit isa $ess impu$se bu&ingb $ower (ost for items pur(asedcH a!ility to o!tain needed items nowd $ower (an(e of overspending

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327) A !ompan& as negotiated a 7.)),))) revo$ving (redit agreement wit a Nationa$ Bank*2e agreement (a$$s for an interest rate of 8)Y on fund used and a (ommitment fee of 8Y on teunused amount of te (redit $ine* 2e effe(tive annua$ interest (ost if te firm borrows 70)),)))for one &ear is ($osest to

a) 88*.)Y b) 8.Yc) 0-*.)Yd) 8*0.Ye 66.27=

328) Oi( of te fo$$owing is not a (redit derivativePa) !redit $inked Notes* b) 2ota$ return swaps*c) !redit defau$t swap*# %"rrency swa$.

e) A$$ of te $isted options

324) 'e(ondar& $oan trading refers to [[[[[[[[[[[[[[ of [[[[[[[[[[[[[ on te se(ondar&market*

a) Approving? new debts b) Bu&ing"'e$$ing? on$& bad debtsc) 'e$$ing? new debts# B"yingCSelling e0isting de!tse) Reassignment? debts

330) Asset se(uriti4ation refers toa) finan(ing vei($e (onsisting of poo$ing of eisting debts as (o$$atera$i4ed asset for te

issuan(e of te debt b) finan(ing vei($e (onsisting of poo$ing of government se(urities as (o$$atera$i4ed asset

for te issuan(e of debtc financing /ehicle consisting of the $ooling financial assets) and the iss"ance of

de!t collateralied !y these assetsd) finan(ing vei($e (onsisting of poo$ing of (orporate bonds and e%uities as

(o$$atera$i4ed asset for te issuan(e of debte) None of te $isted 9ptions

331) !redit derivatives (an be used to [[[[[[[[[[[ te risk and [[[[[[[[[[[ te regu$ator&(apita$ re%uirements

a) 2ransfer? in(rease! >i/ersify red"cec) <$iminate? improved) Manage? avoide) Assess? estimate

332) !redit derivative is a$$ B62a) 5inan(ia$ Instrument

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b) 2ransfers riskc) 2raded over te (ounter d) 5a(i$itate greater effi(ien(&e one of the listed *$tions

111. Oi( of te fo$$owing is not a se(ured $oanPa <%uit& Loansb 'e(ured Loans wit 'avings( <%uit& Lines of !reditdH Personal Loanse !ar Loan

11. In te inf$ationar& e(onom&, wi( of te fo$$owing is te best option for te bank wi$e$ending, 78),))) to a (orporate borrow Assume IRR at 8)Y

A* #is(ounted $oan \ 8)Y interest rateB* Bu$$et pa&ment $oan \8)Y interest rate!* 2rue dis(ounted $oan \8)Y rate of interest#* <%uated insta$$ed $oan \8)Y interest rate

aH *$tion A

b 9ption B( 9ption !d 9ption #e A$$ of te $isted options

112. 2e ke& feature of $etter of (redita Basis for devising proper (urren(& edging strateg&b #istributes risk between bu&er and se$$er ( 9pportunit& to re(eive pa&ment in advan(e of te due dated Basis for devising proper (urren(& edging strateg& and 9pportunit& to re(eive

pa&ment in advan(e of te due dateeH All of the listed o$tions

115. 6'<port and <6RImport agree to (arr& out te transa(tion, goods wort 78,))),))) undera (onfirmed term Letter of !redit wit a maturit& date of -) da&s from te time of sipment* 2e A((eptan(e (ommission \ 8*.Y pa e%ua$s

a )))b 0.)cH 3277d ))e None of te $isted 9ptions

118. A (ompan& (a$$ed 5iImport !o* awards 6'<port a (ontra(t tat re%uires not on$& making a$arge %uantit& of widgets, but a$so insta$$ing and integrating tem into an eisting manufa(turingpro(ess at 5iImportUs p$ant* 'o, 6'<port asks for 0.Y down pa&ment to finan(e te pre/sipment produ(tion* 5iImport agrees provided tat an Advan(e a&ment uarantee is issuedon its bea$f* 2o wat risk as !an<port eposed itse$f as a resu$t of issuing te Advan(ea&ment uaranteeP

aH +rongf"l demand against the Ad/ance Payment G"arantee.b !ountr& risk( 2e remainder of te pa&ment migt not be made on timed Risk of defau$t*e Interest Risk

11N. Oi( if te fo$$owing is true in te (ase of sigt draftPaH B"yer can ref"se to take the deli/ery

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b ;ua$it& of te ood is guaranteed( Bu&er is epe(ted to make te pa&ment after spe(ified (redit da&sd a&ments made based on on$& bi$$ of $adinge None of te $isted 9ptions

114. 6EImport, a finan(ia$$& sound /K (ompan&, (onvin(es to bu& widgets from 6'<port onopen a((ount basis, wit -) da&s (redit* 2e goods were dispat(ed b& 6'<port on 8.t 9(t,va$ue being 8),)))7* 2erefore, te pa&ment was due on 8t of #e(* However te pa&ment wasmade b& 6EImport on 08st 5eb* 2e de$a& in pa&ment (ost 6'<porter7QQQQ* be(ause ofoverdrawn a((ount (onsider 1Y pa interest rate

a 8K))b 81))( 81)dH 687e 08))

17. 6'<port and !anImport agree to (arr& out transa(tion under a (onfirmed $etter of (reditwit maturit& date of 8+) da&s from te time of sipment* But after sipping te goods, 6'<portrea$i4es tat it doesnCt ave te (as f$ow to wait 8+) da&s to re(eive te pa&mentP Oi( of tefo$$owing options (an 6'<port use to (o$$e(t te pa&ment before te maturit& dateP

a Re%uesting a 'igt Letter of !reditb App$&ing for Bank LoancH >isco"nting the term letter of creditd 2aking Advan(e from te Issuing Banke Not ossib$e before date of maturit&

16. 2e trade terms S8."0, net )S indi(ate tata 0Y dis(ount is offered if pa&ment is made witin 8. da&s!H 62= disco"nt is offered if $ayment is made within 3 days( 0Y dis(ount is offered if pa&ment is made witin ) da&sd 8.Y dis(ount is offered if pa&ment is made between 0 and ) da&se )Y dis(ount is offered if pa&ment is made before 8. of te mont

13. 2e basi( four parties invo$ved in an& transa(tion using L! Letter of !redit are tefo$$owing <V!<2a Issuing Bank!H Reim!"rsement Bank( 'e$$er d Benefi(iar&Cs Banke Bu&er

11. 2e Advising bank is used as a trusted bridge between te [[[[[[[[[[ and [[[[[[[[[[[[[[[ wen te& do not ave an a(tive re$ationsip

a Issuing bank? !onfirming bankb Benefi(iar& bank? Reimbursing bank

( Importer? <porter dH ss"ing !ank Beneficiary !anke Reimbursing bank? Benefi(iar& bank

1. Oi( of te fo$$owing is te safest t&pe of $etter of (redit from se$$er point of viewPa !onfirmed Letter of !reditb Irrevo(ab$e Letter of !redit( Red !$ausedH Stand!y Letter of %redite Revo$ving Letter of !redit*

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12. !redit (ardsaH %reate financial lia!ilities for those who "se them.b !reate finan(ia$ $iabi$ities for te issuer on(e te& are used b& te o$der ( !reate mone& for tose wo use temd !reate mone& for tose wo issue teme !reate finan(ia$ asset for tose wo use tem

15. Oi( of te fo$$owing operations (anCt be done on a L! Letter of !reditPa #is(ountb ur(ase( A((eptan(ed !o$$e(tioneH one of the listed *$tions

18. A Revo(ab$e L! Letter of !reditaH can !e re/oked witho"t the consent of the E0$orter b (an be revoked witout te (onsent of te <porterCs bank( (an be revoked witout te (onsent of te ImporterCs bankd (anCt be revoked wit te (onsent of te Advising bank

e (anCt be revoked witout te (onsent of <porter*

1N. 'tandb& L! $etter of !redita Is used as primar& pa&ment metod*!H Promises $ayment only if the !"yer fails to make an arranged $ayment( romises pa&ment on$& if te se$$er fai$s to meet pre/determined terms and (onditionsd !an remain va$id for sort duration on$&*e Invo$ves (omp$e pro(ess and (omp$i(ated do(umentation

14. Ba(k to Ba(k L! $etter of !redit a$$owsa bu&er to open new L! against an a$read& issued L!!H seller to "se the L% recei/ed from his !"yer to o$en his own L%( bu&er to use te L! re(eived from is se$$er to open is own L!

d se$$er to re(eive one more L! against an a$read& issues L! from is bu&er e Bu&er to open one more L! based on an a$read& issued L!

127. [[[[[[[[[[[[[[[[ eviden(es de$iver& of goods and servi(es wereas [[[[[[[[[[[[[[[re$ates to te apparent performan(e " non/performan(e of an ob$igation of te app$i(ant

a 2ransferab$e L!? !onfirmed L!b !onfirmed L!? Red !$ause( reen !$ause? Ba(k to Ba(k L!dH %onfirmed L% Stand!y L%e None of te $isted 9ptions

126. Oat term is used to des(ribe an L! tat remains va$id for &ears tereb& e$iminating te (ostof separate L!s for ea( transa(tion wit a regu$ar ($ientP

aH E/ergreen %la"seb Red !$ause( Irrevo(ab$e L!d Revo$ving L!e None of te $isted 9ptions

123. Oi( of te fo$$owing o$ds true for an L! Letter of !reditaH Shifts credit risk from the m$orter to the m$orter's Bank ss"ing BankH.b #ea$s wit produ(ts and not wit do(uments( Are t&pi(a$$& revo(ab$e un$ess spe(ified oterwise*

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d 9ne of te re$ative$& (eaper forms of pa&ment guarantee*e Advising bank as te $iabi$it& for te pa&ment of te L!*

121. #raft (ana be (a$$ed bi$$ of e(angeb be a written order b& one part& dire(ting a se(ond part& to pa& a tird part&( be a negotiab$e instruments tat fa(i$itate internationa$ pa&ments troug respe(ted

intermediariesd offer more f$eibi$it& tan L!seH not !e transferred from one $arty to another $arty

12. BankerCs a((eptan(e defers from sigt draft in tata 'igt drafts are negotiab$e instrumentsb BankerCs a((eptan(e demands immediate pa&ment*( BankerCs a((eptan(e redu(es bankCs $ending (apa(it&dH Bank can raise f"nds !y selling the acce$tancee None of te $isted 9ptions

122. !ounter/trade or barter is most $ike$& used wen bu&er a as a((ess to (onvertib$e (urren(&

b finds tat rates are favorab$ecH will com$ensate the seller in a manner other than transfer or money or $rod"ctsd (anCt e(ange for produ(ts or servi(es desirab$e to te se$$er e None of te $isted 9ptions

125. 5a(toring isa a dis(ounting metod wit re(ourse!H works with short term recei/a!les( works most$& wit (apita$ goodsd works wit medium and $ong term re(eivab$ese saring risk wit tird part&

128. 5undamenta$ differen(e between fa(toring and forfeiting $ies in

a transferring te (redit risk to te tird part& 5a(torb remova$ of (ontingent $iabi$ities from ba$an(e seet( term of te (ontra(t vi4*, sort, medium or $ong termdH difference in the risk $rofiles of the recei/a!lese te stru(turing of te (ontra(t wit te tird part&

12N. An Asian Importer wants to pur(ase ma(iner& tat e is unwi$$ing or unab$e to pa& for in(as unti$ tat ma(iner& begins to generate in(ome* At te same time, te eporter wantsimmediate pa&ment in fu$$ in order to meet is on/going business (ommitments* Oi( of tefo$$owing so$utions best suit te situationP

a Bi$$ #is(ountingb 5a(toringcH :orfaiting

d Letter of !redite !onsignment

124. Oi( of te fo$$owing metods of pa&ment is most risk& to te 'e$$erPa #o(umentar& !o$$e(tion!H *$en Acco"nt( Letter of !reditd !ounter tradee !as in Advan(e

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157. Oi( of te fo$$owing are disadvantages of using L! Letter of !reditPa 2ime (onsumingb !ost$&( 'pe(ifi( and BindingdH >eals with doc"ments and not with $rod"ctse !redit Line tied up*

156. B9L stands for a Bi$$ of Letter b BankerCs 9verdraft Limit( Bank of Londond Bi$$ of LeasingeH Bill of Lading

153. BA52 stands for a Bankers A((eptan(e for 5a(toring 2ransa(tions!H Bankers Association for :oreign rade( Bankers A((eptan(e for 5oreign transa(tionsd Bankers Asso(iation for 5orfaiting @ 5a(toring transa(tione Bankers asso(iation for 5a(toring 2rade*

151. Bi$$ of Lading isa a (ontra(t between Importer and <porter for transportation of goodsb a re(eipt issued b& importer to eporter for goods re(eived for transportationcH a contract !etween a carrier and a shi$$er for the trans$ortation of goodsd A re(eipt issued b& eporter to importer for goods de$ivered*e None of te $isted options

36C) 5oreign !redit Insuran(e 6nderwriters and Brokers isa) A (o$$e(tion of banking institutions, dedi(ated to promoting Ameri(an eports,

internationa$ trade, and finan(e and investment between 6*'* firms and teir trading partners b) A forum for ana$&sis, dis(ussion and a(tion among internationa$ finan(ia$ professiona$s

on a wide range of topi(s affe(ting internationa$ trade and finan(e, in($uding $egis$ative"regu$ator&issues*

c A for"m to ins"re re$ayment of e0$ort credit against non$ayment d"e to$olitical andCor commercial ca"ses

d) A forum to set up a trade finan(e database wit a grant from te 6*'* #epartment of!ommer(e


365) An Asian Bu&er entered into dea$ wit 'wedis <porting (ompan& on open a((ount terms*2e Asian Bu&er obtained -) da&s (redit, (a$(u$ated from te date of te invoi(e* 2e va$ue of teorder was 6'# 8)), ))) and te goods were dispat(ed and invoi(ed b& te 'wedis <porteron te 8.t Ju$& 0))* 2e pa&ment from Asia was due on te 8.t 'ept 0))* 2e pa&menteventua$$& arrived on te 8.t Nov 0)), over two monts $ate $eading to interest $oss for two

monts \ 1Y* However if (onfirmed Letter of (redit ad been re%uired, wat wou$d ave beente eporter benefitP iven tat te !onfirmation 5ee @ A((eptan(e !ommission is 8*.Y ea(,Negotiation 5ee of 78.), and oter administration epenses of about 7-)*

a) 78,0)) b) 78,K))c) 7K8)# <447e) 70.)

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366) Oi( of te fo$$owing (ombinations o$ds truePa) Oire transfer? more (ost$& tan oter pa&ment a$ternatives! :oreign %hecks 9sef"l when informationCdoc"mentation m"st accom$any

$aymentc) !ommer(ia$ $etter of (redit? Improves app$i(antCs (redit fa(i$itiesd) 'tandb& $etter of (redit? $ess (ost$& tan do(umentar& (o$$e(tione) #o(umentar& (o$$e(tion? stri(t (omp$ian(e ru$es app$&

367) 'tandb& $etter of (redit is [[[[[[[[[[ se(ure tan do(umentar& (o$$e(tion and (eapertan [[[[[[[[[[[[[[[[[[

a) Less? open a((ount b) More? do(umentar& (o$$e(tionc More commercial letter of creditd) Less? (ommer(ia$ $etter of (redite) None of te $isted 9ptions

368) Banker a((eptan(es are [[[[[[[[[[[[[[[[ (redit investment (reated b& [[[[[[[[[[[and used for finan(ing imports, eports and domesti( sipping

a) Long term? finan(ia$ firms b) Long term? non/finan(ia$ firmsc Short term nonfinancial firmsd) 'ort term? finan(ia$ firmse) Medium terms? banks

364) #is(ounting metod for $ong term a((ount re(eivab$es on non/re(ourse basis is termed asa) 5a(toring b) Leasing

c :orfaitingd) Bi$$ dis(ountinge) None of te $isted 9ptions

370) #ue #i$igen(e is performed toa Assess the risk b) erformed b& te bu&er c) erformed on te se$$er d) <e(uted after (ontra(t is signede) A$$ of te $isted options

371) Oi( of te fo$$owing metods e$iminate (ountr& risk and (ommer(ia$ risk upon(onfirmationP

a) Ba(k to ba(k Letter of !redit b) 'tandb& Letter of !reditc) #o(umentar& !o$$e(tiond) Letter of !redite Both Stand!y Letter of %redit & Letter of %redit

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b) 'pot 5ore (ontra(tc *$tionsd) 5orward 5ore (ontra(te) Bot !ross (urren(& swap and 9ptions

374) 9n 9(tober 8., AB! Limited enters in to a /mont forward (ontra(t wit Bank A forde$ivering 6'# 0)*) mi$$ion at INR -*.) "6'#, wi$e te spot rate is INR -*0)"6'#*'ubse%uent$&, 6'# depre(iates to INR K*)."6'# b& te end of monts* Assuming tis as astand/a$one dea$, wi( of te fo$$owing is true

a) Bank A $oses mone& in te dea$! AB% Limited loses money in the dealc) 2ere is insuffi(ient information to answer te %uestiond) Loss"ain depends on forward rate at te end of montse) Neiter part& $oses mone& in te dea$

380) Bank A as signifi(ant investments in 8)/&ear treasur& bonds at a (oupon rate of *1Y andBank B as signifi(ant investments in 8)/&ear treasur& bonds at a (oupon rate of .*0Y* Oen

market &ie$d for 8)/&ear treasur& bonds start moving upwards from te (urrent $eve$ of .*)Y,a) Bot banks see an in(rease in portfo$io va$ue b) Bank A portfo$io va$ue in(reases wi$e Bank BCs de(reasec) Bank B portfo$io va$ue de(reases wi$e Bank ACs in(rease# Both !anks see a decrease in $ortfolio /al"ee) Insuffi(ient information for answering te %uestion

381) A (orporate as on books a ./&ear f$oating rate $oan at LIB9R0Y* 'uppose interest ratesare anti(ipated to rise in te near term* 2e (orporate sou$d idea$$&

a) Retain te f$oating rate $oan! %on/ert to fi0ed rate loan immediatelyc) Oait for te interest rates to rise and ten go for a fres fied rate $oan to repa& te o$d

$oand) Oait for te interest rates to rise and ten go for a fres f$oating rate $oan to repa& te

o$d $oane) None of te $isted 9ptions

382) Assume &poteti(a$$& tat Bank A as edged a $ong position in . &ear government bondswit a sort position in &ear government notes* Oen te &ie$d (urve steepens

a Bank A stands to lose money b) Bank A stands to gain mone&c) #epends on interest rates of te instrumentsd) Insuffi(ient information


383) A finan(ia$ entit& VGW Ltd borrows ./&ear mone& from Bank A at LIB9R0*0.Y and $endste mone& to a (orporate borrower AB! Ltd at ./&ear 2/bi$$ rate 0*))Y* VGW Ltd is eposed tote fo$$owing risk

a) Repri(ing risk! Basis riskc) Gie$d (urve risk

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d) o$iti(a$ riske) None of te $isted 9ptions

38C) AB! Ltd in 6' as to make an import pa&ment of <uro 0* mi$$ion after monts* Marketfee$s tat <uro wi$$ appre(iate against te 6' do$$ar in te near term owever te fina$ rate wou$ddepend on te resu$ts of te 6' presidentia$ e$e(tions wi( wou$d be appening after 8 mont*rima fa(ie, AB! Ltd sou$d go for

a) /mont forward pur(ase of <uro b) ur(ase of a /mont <uro futurec P"rchase a 1month %all o$tion on the E"rod) 'e$$ a /mont put option on te <uroe) /mont forward sa$e of <uro

385) Assume tat <uro"6'# is %uoting at 8*0K-")*0+8 and B"6'# is at 8*+81.")*+0))*Oat wou$d be te (ross (urren(& rate for <uro"BP

a) 8*0K-")*+0)) b) )*-K1")*-+)0

c 7.5N2C7.5N57..d) 8*0+8")*+81.e) None of te $isted 9ptions

386) Assume tat INR"6'# is %uoting at .*.")*- and <uro"6'# is at 8*0K-")*0+8* Oatwou$d be te (ross (urren(& rate for <uro"INRP

a) ..*0")*.-. b) -*))")*)8-c) .-*+1")*.08# 25.28N8C7.561N..e) None of te $isted 9ptions

387) Oi( of te fo$$owing is a va$id fore risk management strateg&Pa) ur(ase a put option on a (urren(& wi( is anti(ipated to appre(iate! P"rchase a call o$tion on a c"rrency which is antici$ated to a$$reciatec) 'e$$ a (a$$ option on a (urren(& wi( is anti(ipated to appre(iated) Bot ur(ase a put option on a (urren(& wi( is anti(ipated to appre(iate and

ur(ase a (a$$ option on a (urren(& wi( is anti(ipated to appre(iatee) Bot ur(ase a put option on a (urren(& wi( is anti(ipated to appre(iate and 'e$$ a

(a$$ option on a (urren(& wi( is anti(ipated to appre(iate

388) 2e 6'#"INR spot rate is .*.")*- and te /mont forward premium %uote is )*)0")*)*Oat is te forward rate app$i(ab$eP

a) .*K".*0 b) .*K"."-c 2.18C2.7d) .*1".*+e) None of te $isted 9ptions

384) Oi( of te fo$$owing is true teoreti(a$$&Pa) As interest rates in India rise, forward premium for 6'#"INR rise

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b) As interest rates in India rise, forward premium for 6'#"INR fa$$c) As interest rates in India fa$$, forward premium for 6'#"INR fa$$# Both As interest rates in ndia rise) forward $remi"m for 9S>CR rise and As

interest rates in ndia fall) forward $remi"m for 9S>CR falle) None of te $isted 9ptions

340) Oi( of te fo$$owing is (orre(tPa) 'waps are not derivative instruments b) 'waption is a (ombination of a swap and an optionc) 'waps (an be used for (overing interest rate risk and fore risk# Both Swa$tion is a com!ination of a swa$ and an o$tion and Swa$s can !e

"sed for co/ering interest rate risk and fore0 riske) None of te $isted 9ptions

341) I!I!I Bank as an a((ount wit !ase Manattan for sett$ing fore transa(tions* 'u( ana((ount is (a$$ed

a ostro acco"nt of %% Bank

b) ostro a((ount of I!I!I Bankc) !orrespondent ostro a((ountd) Bot ostro a((ount of I!I!I Bank and !orrespondent ostro a((ounte) None of te $isted 9ptions

342) !as management te(ni%ues in($udea) oo$ing b) Nettingc) 'wapping# Both Pooling and ettinge) oo$ing, Netting and 'wapping

343) !e%ue Lo(k bo refers toa) 2e main metod of (o$$e(tions management b) 2e main metod of pa&ments managementc) <$e(troni( 5inds transfer d) Bot 2e main metod of (o$$e(tions management and <$e(troni( 5inds transfer e) None of te $isted 9ptions

34C) 2e fo$$owing appens in 4ero/ba$an(e stru(turea) !as ba$an(es are poo$ed to a (entra$ a((ount! %ash !alances of s"r$l"s acco"nts are "se to to$ "$ deficit acco"ntsc) !as ba$an(es are made 4ero in surp$us a((ounts

d) A$$ of te $isted optionse) None of te $isted 9ptions

345) A$$ of te fo$$owing are pa&ment modes e(epta) <52 b) !e%uec) #ebit to a((ount troug #ebit (ard# Lock!o0

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346) A traditiona$ (as management s&stem takes (are of te fo$$owing e(epta) oo$ing (o$$e(tions to one (entra$ a((ount b) <$e(troni( bi$$ presentment and pa&ment

c %ash f"nding for $"rchase of ca$ital e?"i$mentd) Netting re(eipts and pa&ments g$oba$$&e) roviding (ustomi4ed MI' for (as f$ow monitoring

347) A!H pa&ments are usua$$& used for a) Large va$ue, sing$e transfers! Small /al"e) $eriodic transfersc) 2ransfers to distant partiesd) A$$ of te $isted optionse) None of te $isted 9ptions

348) 2e fo$$owing parties (an a(t as ($earing membersa) Nationa$ Banks b) Regiona$ banksc) !orporates# ational Banks and Regional Bankse) Nationa$ Banks, Regiona$ Banks and !orporates

344) In R2', te fo$$owing is truea) A$$ members need to maintain a (entra$ a((ount wit te noda$ agen(& b) 'ett$ements are done at a transa(tion $eve$c) 'ett$ements are done on a bat( mode# Both All mem!ers need to maintain a central acco"nt with the nodal agency

and Settlements are done at a transaction le/ele) A$$ members need to maintain a (entra$ a((ount wit te noda$ agen(&, 'ett$ements

are done at a transa(tion $eve$ and 'ett$ements are done on a bat( mode

C00) A traditiona$ end/of/da& sett$ement pro(ess resu$ts in te fo$$owing risks e(epta) !redit risk b) Interest rate riskc) 9perationa$ risk# Systemic riske) None of te $isted 9ptions

C01) !ontinuous Linked 'ett$ement is app$i(ab$e toa) #omesti( (as pa&ment b) #omesti( (o$$e(tionsc) <$e(troni( 5unds 2ransfer # nternational fore0 transferse) A$$ of te $isted options

C02) !ontinuous Linked 'ett$ement removes wi( of te fo$$owing risks primari$&

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a) <(ange risk! em$oral riskc) !ountr& riskd) A$$ of tesee) None of te $isted 9ptions

C03) 2reasur& @ (as Management takes (are of a$$ of te fo$$owing e(epta) Li%uidit& risk b) Interest rate riskc) 5ore risk# %redit risk of cor$orate !orrowerse) None of te $isted 9ptions

C0C) Asset Managers uses wi( of te fo$$owing prin(ip$es"approa(esa) '(reens and 5i$ters b) !apita$ reservations

c) A$ternatives investments# All of the listed o$tionse) None of te $isted 9ptions

C05) 2e differen(e between private banking and asset management $ies ina) Investment management te(ni%ues b) 2&pe of returns promisedc y$e of in/estorsd) <tensive Resear( te(ni%uese) Bot Investment management te(ni%ues and <tensive Resear( te(ni%ues

C06) 2e fo$$owing ma3or p$a&ers provide asset management servi(esa) 6B' b) Aberdeen Asset Managementc) J Morgan !ase# All of the listed o$tionse) None of te $isted 9ptions

C07) A(tive Approa( to Asset Management refers toa) #iversifi(ation to minimi4e risk and maimi4e return! S"ccessf"l market timingc) Invest in a sing$e $ine of assetsd) Bot #iversifi(ation to minimi4e risk and maimi4e return and 'u((essfu$ market

timinge) Bot #iversifi(ation to minimi4e risk and maimi4e return and Invest in a sing$e $ine of

assets

C08) 2e pi$osop& tat Tif pri(es go up, te& tend to keep going up, is known asa) !ontrarians Investing b) Market 2imingc Moment"m n/esting

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C15) 2e (omponents invo$ved in te (ost of portfo$io ee(ution area) Bid/ask 'pread b) I$$i%uidit&c) 2a impa(t# All of the listed o$tions

e) 9n$& Bid/ask 'pread and 2a impa(t

C16) 2e dimensions to portfo$io ee(ution (ou$d bea) !ost of ee(ution b) 2rading speedc) ortfo$io Risk Management# All of the listed o$tionse) Bot !ost of ee(ution and trading speed

C17) DMomentum investingF wou$d refer toa) 5o$$ow fundamenta$ finan(ia$ ratios to make de(isions

b) Invest in ig dividend &ie$d sto(ksc :ollowing charts and indicators to traded) !reate portfo$io simi$ar to indee) 2r& best to market

C18) 2e performan(e of an internationa$$& diversified portfo$io ma& be affe(ted b&a) (urren(& se$e(tion b) (ountr& se$e(tionc) sto(k se$e(tion# All of the listed o$tionse) None of te $isted 9ptions

C14) In te $ong run, diversif&ing into internationa$ markets is most $ike$& to benefit 6*'* investorsa) 6nder a$$ 6* '* market (onditions* b) Oen 6*'* markets are performing we$$*c +hen 9.S. markets are $erforming $oorly.d) 6nder no (ir(umstan(es*e) 9n$& wen (urren(& risk is edged*

C20) Oen an investor adds internationa$ sto(ks to er portfo$ioa) it wi$$ raise er risk re$ative to te risk se wou$d fa(e 3ust o$ding 6*'* sto(ks* b) se needs to seek professiona$ management be(ause se doesnUt ave a((ess to

internationa$ sto(ks on er own*

c) se wi$$ in(rease er epe(ted return, but must a$so take on more risk*d) it wi$$ ave no signifi(ant impa(t on eiter te risk or te return of er portfo$io*e she can red"ce its risk relati/e to the risk she wo"ld face U"st holding 9.S.

stocks.

C21) D!ontrarian InvestingF refers to investing on te basis of a Market correction d"e to accelerated mo/ement b) 'ing$e dire(tion market movement Bu$$ or Bear run

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c) Market timing for greater gainsd) Momentum Investinge) None of te $isted 9ptions

C22) S#onUt put a$$ &our eggs in one basketS is a prase used to des(ribe wi( of te fo$$owingP

a) risk averse! di/ersificationc) risk"return tradeoffd) time va$ue of mone&e) budgeting

C23) B& a$ternative investments oter tan debt and e%uit&, wat are te investment avenuesfor a asset managerP

a) Hedge funds b) 5uturesc) 'avings bank a((ountsd) A$$ of te $isted optionse Both @edge f"nds and :"t"res

C2C) Bid/Ask spread refers toa) #ifferen(e in pri(e between bu&ing one asset and anoter simi$ar one b) #ifferen(e in opinion between te se$$er and bu&er on te pri(e of an assetc >ifference !etween the !"ying and selling $rice of the same assetd) Bot #ifferen(e in pri(e between bu&ing one asset and anoter simi$ar one and

#ifferen(e in opinion between te se$$er and bu&er on te pri(e of an assete) None of te $isted 9ptions

C25) Oi( of te fo$$owing statements (on(erning (orre$ation (oeffi(ients is are (orre(tP

I* A (orre$ation (oeffi(ient of /8 for te returns of two se(urities wou$d indi(ate tat bot of temsou$d be (arefu$$& (onsidered for in($usion in a portfo$io sin(e maimum risk redu(tion (ou$d bea(ieved b& in($uding bot* II* 2e returns of se(urit& B wou$d in(rease +Y if te returns of se(urit& A in(reased +Y if te(orre$ation (oeffi(ient for te returns of te two se(urities was 8*

a) I on$& b) II on$&c Both and d) Neiter I or IIe) None of te $isted 9ptions

C26) Bever$& #rake as two sto(ks wit a (orre$ation (oeffi(ient of 4ero* Oi( of te fo$$owing is

truePa) 2ese sto(ks are we$$ diversified be(ause as one sto(k appre(iates in va$ue, te oter

de(reases* b) 2ese sto(ks are we$$ diversified be(ause te& wi$$ move in unison*c) 2ese sto(ks are not we$$ diversified be(ause te& move in unison*# hese stocks will mo/e inde$endently of each other.e) None of te $isted options*

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C27) Oi( of te fo$$owing are ma3or (ategories of investmentsPa) !as or (as e%uiva$ents su( as mone& market funds b) 'to(ksc) Bondsd) Rea$ <state in($uding Rea$ <state Investment 2rusts

e All of the listed o$tions

C28) A ver& effe(tive wa& to emp$o& a passive strateg& is toa n/est in an inde0ed $ortfolio b) Bu& a$$ 'to(ks on te indec) Invest mone& in a bankd) Bu& few se(urities wi( ref$e(t te indee) Bot Invest mone& in a bank and Bu& few se(urities wi( ref$e(t te inde

C24) Risk redu(tion #iversifi(ation in a sto(k portfo$io (an be a(ieved b&a) Investing in a few $ess risk& sto(ks

! n/esting is as many stocks on the inde0 as $ossi!lec) Bu&ing an option to edge risk on a$$ sto(ks in portfo$iod) Investing in an inde optione) None of te $isted 9ptions

C30) A bu&/and/o$d strateg& wou$d be wit te aim of a) Redu(ing 2ransa(tion (osts b) Redu(e (osts invo$ved in (onstant resear(ing of sto(ksc) Oait ti$$ te investors ob3e(tive is met# All of the listed o$tionse) Bot Redu(e (osts invo$ved in (onstant resear(ing of sto(ks and Oait ti$$ te

investors ob3e(tive is met

C31) 2e derivatives market provide te asset manager a too$ toa) In(rease trading speed b) Redu(e (ost of ee(utionc @edge $ortfolio risksd) Bot In(rease trading speed and Redu(e (ost of ee(utione) Bot Redu(e (ost of ee(ution and Hedge portfo$io risks

C32) Oi( of te fo$$owing statements (on(erning diversifi(ation is are (orre(tP I* 'tudies suggest a portfo$io of 8)) or more different (ommon sto(ks is needed to substantia$$&redu(e uns&stemati( risk*

II* 2e ke& to effe(tive risk redu(tion troug diversifi(ation is (ombining assets wose returnssow negative, $ow, or no (orre$ation over time* III* 'e(urit& ana$&sis wi$$ permit investors to (onsistent$& earn returns superior to te market*

a) I on$& b) I and II on$&c) I and III on$&# and onlye) I, II, and II

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C33) Bottom/6p approa( wou$d invo$vea) Bui$ding (ountr&/b&/(ountr& fore(asting mode$s b) a$idating te fore(asting mode$s and investing in portfo$io of ig &ie$d (ountriesc Selecting few scri$ts) forecasting their $erformance and in/esting !ased on the

forecastsd) Bot Bui$ding (ountr&/b&/(ountr& fore(asting mode$s and a$idating te fore(asting

mode$s and investing in portfo$io of ig &ie$d (ountriese) Bot a$idating te fore(asting mode$s and investing in portfo$io of ig &ie$d (ountries

and 'e$e(ting few s(ripts, fore(asting teir performan(e and investing based on te fore(asts

C3C) 6nderwriting in Investment banking stands for a) ro(ess of understanding te risks and return profi$e for investment portfo$io! G"arantees the ca$ital iss"e and making good for any shortfallc) ro(essed of getting te sortfa$$ insured from an insuran(e (ompan&d) A$$ of te $isted optionse) None of te $isted 9ptions

C35) 2e pro(ess of THiring of te Lead ManagersC in te (ase of I9 is referred to asa) Red Herring b) Road/sowc) Investment Manager !ontestd) Advisor !onteste Bea"ty %ontest

C36) 2e top tier investment banks are <V!<2a) 'a$omon 'mit Barne&! Sallie Mae

c) !redit 'uisse 5irst Bostond) 6B'e) None of te $isted 9ptions

C37) 2e D!inese Oa$$F in an investment bank refers toa) 2e separation of Lega$ and Marketing b) 2e separation of 'a$es and 2radingc he se$aration of %or$orate :inance and Researchd) 2e separation of 'enior Management and Brokerse) 2e separation of 6nderwriting and 'a$es

C38) '&ndi(ate in Investment banking refers to a$$ <(epta) Hub of te investment banking wee$ b) #etermination of a$$o(ation of bondsc Merger and Ac?"isition ad/isoryd) 5a(i$itating p$a(ing of se(urities in pub$i( offeringe) None of te $isted 9ptions

C34) 'a$es fun(tion in Investment banking takes te form of

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a) Retai$ Broker b) Institutiona$ 'a$es ersonc) rivate ($ient servi(e representative# All of the listed o$tionse) None of te $isted 9ptions

CC0) 2e <!Ns $ike Instinet offer after te market trading fa(i$ities* 2e&a) Invo$ve 'to(k <(ange Brokers b) #onCt Invo$ve 'to(k <(ange Brokersc) A$so (a$$ed as D5ourt MarketF# Both n/ol/e Stock E0change Brokers and Also called as D:o"rth Markete) Bot #onCt Invo$ve 'to(k <(ange Brokers and A$so (a$$ed as D5ourt MarketF

CC1) D'pe(ia$istF in broking par$an(e refers to onea S$ecialies in one or few stocks and offer !"y as well as sell ?"otes b) <mp$o&ee of sto(k e(ange

c) 'pe(ia$i4es in a$$ e%uitiesd) 9n$& person autori4ed to bu& or se$$ a parti(u$ar sto(ke) !arges (ommission for trades

CC2) D#ea$erF in broking par$an(e refers to onea) <mp$o&ee of sto(k e(ange b) Mat(es (ustomer orders wit oter brokersc Acts as a DPrinci$al and e0ec"tes trades for hisCher $ersonal acco"ntd) 9n$& person autori4ed to bu& or se$$ a parti(u$ar sto(ke) !arges (ommission for trades

CC3) 2e $atest %uote for IBM is 7 1)* A D'top 9rderF to se$$ IBM at 7 +. meansa he order will get released only when the Market Price hits < N2 b) 2e sto(k wi$$ get so$d immediate$& at !urrent Market ri(e but not $ess tan 7 +.c) 2e sto(k wi$$ get so$d immediate$& at !urrent Market ri(e but not $ess tan 7 1)d) 2e order wi$$ get re$eased immediate$& and te sto(k wi$$ get so$d between 7 +. / 7 1)e) 2e order wi$$ get re$eased at 7 +. as a $imit order at 7 1)

CCC) 2e $atest %uote for IBM is 7 1)* A D'top Limit 9rderF to se$$ IBM at 7 +. stop @ 7 +K $imitmeans

a) 2e sto(k wi$$ get so$d immediate$& at !urrent Market ri(e but not $ess tan 7 +. b) 2e sto(k wi$$ get so$d immediate$& at !urrent Market ri(e but not $ess tan 7 +Kc) 2e order wi$$ get re$eased immediate$& and te sto(k wi$$ get so$d between 7 +. / 7 +K

d) 2e order wi$$ get re$eased on$& wen te Market ri(e its 7 +. as a Market 9rder e he order will get released at < N2 as a limit order at < N8

2. 2e differen(e between D5i$$ or Ei$$F and DA$$ or NoneF order isa D5i$$ or Ei$$F a$$ows mu$tip$e trades!H DAll or one can !e a Good ill %ancelled order ( 2e& are s&non&msd D5i$$ or Ei$$F (an be va$id ti$$ end of da&e D5i$$ or Ei$$F a$$ows partia$ ee(ution

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CC6) 2e %uote for !2'H in NA'#A; was 7 * 2e best bu&er was at 7 0*. and te best se$$er at 7 *.* How mu( is te bid/ask spread

a) 7)*.) b) 7)*.)c <6.77d) 78*))e) 7+-

CC7) D5igurationF in brokerage industr& meansa Monetary /al"e of a transaction b) Number of sares bougt"so$dc) 'ett$ement detai$sd) a&ment instrument detai$se) #ividend pa&ab$e"re(eivab$e

CC8) Movement of se(urities and funds witin a brokerage firm is done b&

a) Margin #epartment! %ashiering de$artmentc) !orporate A(tions teamd) ur(ase and 'a$ese) A((ounting #epartment

CC4) !2'H as announ(ed a sto(k sp$it of sares for 8 sare* 2e re(ord date for te same is#e( 81, 0))* 2e o$der wi$$ be e$igib$e for te bonus on$& if e o$ds te sares as of ($ose ofbusiness on

a Van 76) 3771 b) #e( 81, 0))

c) #e( 8+, 0))d) #e( 0), 0))e) #e( 8, 0))

C50) A brokerage or ana$&st report wi$$ (ontain a$$ of te fo$$owing e(eptPa) #etai$ed des(ription of te (ompan&, and its industr&* b) 9pinion on w& te ana$&st be$ieves te (ompan& wi$$ su((eed or fai$*c Recommendations to !"y) sell) or hold the com$any.d) 2arget pri(e or performan(e predi(tion for te sto(k in a &ear*e) 2ra(k re(ord of te ana$&st writing te report*

C51) #ow Jones Industria$ Average #JIA and Bomba& 'to(k <(ange Inde 'ense area Both are Price +eighted b) Bot are a$ue Oeigtedc) #JIA is a$ue Oeigted @ 'ense is ri(e Oeigtedd) #JIA is ri(e Oeigted @ 'ense is a$ue Oeigtede) None of te $isted options

C52) A Da$ue Oeigted IndeF as sto(ks in

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a) <%ua$ proportion b) <a( sto(k in proportion to its intrinsi( va$uec) <a( sto(k in proportion to its free f$oatd) <a( sto(k in proportion to its e%uit& (apita$e Each stock in $ro$ortion to its market /al"e

21. !onsider an inde wit on$& sto(ks'to(k A 0 mi$$ion sares Market ri(e 7 .)'to(k B mi$$ion sares Market ri(e 7 )'to(k ! + mi$$ion sares Market ri(e 7 )2e Oeigtage for 'to(k A in a$ue Oeigted Inde is

a 8*8Y!H 37=( *Yd .)Ye 8*--Y

C5C) 2e 52'< 5ootsie Inde ref$e(ts sare pri(es in

a London b) <uropec) Asiad) Ameri(ase) Austra$ia

C55) Oi( e%uit& se(urities provide for te domesti( trading of foreign sto(kPa) <urodo$$ars! American >e$ository Recei$tsc) 5oreign sto(ksd) 'ter$ing sarese) Internationa$ e%uities

C56) In genera$, ow fre%uent$& do (ompanies de($are !as #ividendsPa Ann"al b) Ha$f Gear$&c) ;uarter$&d) Mont$&e) Irregu$ar

C57) Oat wou$d appen to !onvertib$e referred 'to(k if te under$&ing (ommon sto(keperien(ed a 0 for 8 sto(k sp$itP

a) !onversion pri(e wou$d be redu(ed, and te number of (onvertib$e sares wou$d

in(rease* b) !onversion pri(e wou$d be redu(ed, and te number of (onvertib$e sares remain te

samec %on/ersion $rice remains the same) and the n"m!er of con/erti!le shares

wo"ld increased) No impa(te) !onversion pri(e wou$d be in(reased, and te number of (onvertib$e sares wou$d

in(rease

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C58) Oat date represents te announ(ement b& te board of dire(tors tat a dividend wi$$ bepaidP

a) Book !$osure date b) Re(ord #atec >eclaration >ated) #ividend datee) a&ment #ate

C54) If te pa&ab$e date is 5rida&, #e(ember -, and te re(ord date is Monda& Jan 80, wen iste </#ividend #ateP

a) #e(ember b) #e(ember -c) Januar& 80d) Januar& 8)e Van"ary N

C60) Oi( term refers to se(urities tat are so$d b& te issuer to investors

a) 'e(ondar& 9ffering b) 9utrigt 'a$ec Primary *fferingd) 'e$e(t 'a$ee) None of te $isted 9ptions

C61) Oen are sareo$ders of re(ord determined for dividend purposes

a) rimar& 9ffering b) 'e(ondar& 9fferingc) 9utrigt 'a$e

d) 'e$e(t 'a$ee one of the listed *$tions

C62) If a sto(k trades on Oednesda&, Ma& 0, wen wi$$ Regu$ar 'ett$ement o((ur in 6' marketsPa May 1 b) Ma& c) Ma& .d) Ma& Ke) Ma& +

C63) !onsider an inde wit on$& sto(ks

'to(k A 0 mi$$ion sares Market ri(e 7 .)'to(k B mi$$ion sares Market ri(e 7 )'to(k ! + mi$$ion sares Market ri(e 7 )2e Oeigtage for 'to(k A in ri(e Oeigted Inde is

a) 8*8Y b) 0)Yc) *Yd) .)Y

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e 6.55=

C6C) A$$ of tese are different t&pes of brokerage a((ounts e(eptPa) Margin A((ount! ostro Acco"nt

c) !as A((ountd) IRA A((ounte) ower of Attorne& A((ount

C65) 2e NG'< is an eamp$e of a) rimar& Market! Secondary Marketc) 92! Marketd) 5ourt Markete) None of te $isted 9ptions

C66) Oat is te ke& regu$ator& autorit& over te Ameri(an se(urities industr&Pa) 5edera$ Reserve b) 5#I!c) #2!!d) A'Ae Sec"rities E0change %ommission

C67) If a (ompan& announ(es a 0 for 8 'to(k #ividend, wat wi$$ appen to te pri(e and number of sares outstanding on te e/date

a) ri(e wi$$ go down b& .)Y wi$e sares outstanding wou$d doub$e! Price will go down !y 27= while shares o"tstanding wo"ld remain the samec) ri(e wi$$ remain te same wi$e sares outstanding wou$d doub$ed) ri(e and sares outstanding wou$d doub$ee) ri(e and sares outstanding wou$d remain te same

C68) Oat is te term for previous$& issued sto(k tat as been re/ pur(ased b& te issuer in tese(ondar& marketP

a reas"ry Stock b) referen(e 'to(kc) romoter 'to(kd) 2rade ab$e 'to(ke) Non voting 'to(k

C64) If a (orporate bond wi( pa&s its (oupon on Apri$ 8 and 9(tober 8 is traded on Oed, June8), ow man& da&s of a((rued interest does te bu&er owe te se$$erP

a) )! 87 daysc) K8 da&sd) K da&se) K. da&s

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C70) Oat is te <ffe(tive Gie$d for a bond trading at a dis(ountPa) Less tan interest indi(ated in te bond b) 'ame as interest indi(ated in te bondc More than interest indicated in the !ondd) No re$ationsip between te interest and effe(tive &ie$d


C71) Oat se(urities do not re%uire proof of ownersip to re(eive interest or prin(ipa$ pa&mentsPa) Bearer bonds! Registered Sec"ritiesc) 6nregistered 'e(uritiesd) Oarrantse) #ebentures

C72) Oo is at risk during a best efforts underwritingPa) Investor

b) 6nderwriter c ss"er d) 'to(k <(angese) 'e(urities <(ange !ommission

C73) Oen must 2! orders be re(onfirmedPa) <nd of ever& da& b) <nd of ever& weekc) <nd of ever& montd) <nd of ever& %uarter e End of A$ril and *cto!er

C7C) Oat is te term for te differen(e between bid and askPa) #ifferen(e! S$readc) rofitd) ;uotee) None of te $isted 9ptions

C75) Oat is te 2ird MarketPa) NA'#A;! *%c) NG'<d) Instinete) None of te $isted 9ptions

C76) Oat is te term for a broker"dea$er tat maintains an inventor& of sto(k and disseminates%uotes on tat sto(k to oter broker"dea$ersP

a) Issuer b) Investor c) 6nderwriter

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d) 'to(k <(angese Market Maker

C77) D!orporate A(tionF refers toa) A$$ (ompan& announ(ements

b) A$$ sto(k e(ange announ(ementsc >i/idendsCStock S$litsd) New investmentse) None of te $isted options

C78) #ow Jones Industria$ Average #JIA asa) A$$ (ompanies $isted at NG'<! 17 large com$anies listed at (SEc) 2op 8)Y of NG'<d) 2op 8)Y of NA'#A;e) ) $arge (ompanies $isted at NA'#A;

C74) DInsidersF of te (ompan& (annot se$$ an& sares for a spe(ified period of time, tis is knownas

a) Ho$ding eriod b) B$a(kout eriodc) Bu& @ Ho$d eriodd) Book !$osure eriode one of the listed *$tions

N7. In a DRigtsF offering of sares, wi( of te fo$$owing is usedPa 5irm (ommitment!H Stand !y "nderwriting( Best <fforts underwritingd 9utrigt 'a$ese None of te $isted 9ptions

N6. 2e D5ourt MarketF refers toa NA'#A;b 92!( NG'<dH nstinete None of te $isted 9ptions

C82) 2e (oming togeter of #aim$er A of erman& and !r&s$er of 6' to form #aim$er!r&s$er (an be termed as

a) !r&s$er a(%uiring #aim$er b) Merger of #aim$er @ !r&s$er to form a new (ompan&c) An informa$ arrangement between te two (ompanies to manufa(ture and se$$ ea(

oterCs produ(ts# >aimler ac?"iring %hrysler e) A te(ni(a$ (o$$aboration

C83) Oat is a meant b& a bu& $imit at -P

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a) Bu& at ea(t$& - brokerage b) Bu& ri(e Brokerage ea(t$& e%ua$ to -c B"y at 5 or lower !rokeraged) Bu& ri(e Brokerage e%ua$ to or $ower tan -e) None of te $isted 9ptions

C8C) Oi( of te fo$$owing risks need to be managed wi$e $ending se(uritiesa) 5oreign e(ange risk b) Li%uidit& riskc %redit riskd) <%uit& riske) A$$ of te $isted options

C85) #eve$opment of investment ob3e(tives and investment po$i(& fa$$s under te purviewa) 5und Administration b) Asset A$$o(ation

c) !omp$ian(e reportingd) Investment Manager 6niversee Asset Lia!ility Analysis

C86) '(roederCs L! present$& as 'tate 'treet as its (ustodian* 2e& wou$d $ike to move teassets to J Morgan !ase as te new (ustodian be(ause of better pri(ing and servi(es* Oi(of te fo$$owing teams in JM! wi$$ and$e tis (angeP

a) A((ount Management! ransition Managementc) Brokerage 'ervi(esd) Administratione) 2reasur&

C87) !ore !ustod& 'ervi(es performs te fo$$owing fun(tions e(epta) ri(e se(urities positions b) Re(ord Eeepingc :id"ciary and com$liance monitoringd) Reporting servi(ese) ro(esses (orporate a(tions

C88) D2ransition ManagementF under te purview of trading servi(es e$pa) Mu$ti/(urren(& (o$$atera$ management and reporting! Brokerage to minimie costs and ma0imie efficiency

c) Institutiona$ investors redu(e teir trading (ostsd) 'etting brokerage ratese) None of te $isted options

C84) Oi( of te fo$$owing trading servi(es provide institutiona$ investors redu(e teir trading(osts

a) 'to(k repur(ase program b) 2ransition management

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c %ommission reca$t"red) Bot 0 and e) None of te $isted 9ptions

C40) DA$ternate InvestmentsF refer to

a) #iversifi(ation from e%uit& into debt b) Investment into non/regu$ar asset (ategoriesc) 5ore tradingd) Arbitraginge one of the listed *$tions

C41) !orporate A(tions are (ommuni(ated to te ($ients b& (ustodians usinga) M2 8.)00 b) M2 .)00c) M2 0))8d) M2 811

e one of the listed *$tions

C42) Oi( one of te fo$$owing is N92 an DA$ternate AssetFa) #istressed debt b) rivate <%uit&c) enture 5unds# BM stocke) LB9s

C43) DIn(ome ro(essingF team of a (ustodian takes (are of:a) 'to(k sp$its b) 2rade ro(essingc Glo!al income and $ayments on d"e datesd) 'ett$ementse) !$earing

C4C) Asset/Liabi$it& ana$&sis resu$ts ina) #etermining e(ess of assets over $iabi$ities b) <stimating 5uture e(onomi( wea$tc) <ffe(t of return vo$ati$it&# Both 3 and 1e) 2erm mismat( of assets and $iabi$ities

C45) Oi( of te fo$$owing servi(es doesnCt fa$$ under te purview of 2radingPa) 5oreign e(ange b) 2ransition managementc) !ommission recapture# Local f"nd ser/icinge) !as @ sort term investment

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C46) Oi( of te fo$$owing servi(es doesnCt fa$$ under te purview of 2radingPa) erforman(e management b) Investor management universec) !as pro3e(tion# %ash & short term management

e) 5und administration

C47) 5und administration (overs te administrative and $ega$ servi(es to meet te needs of tefund* Oi( of te fo$$owing items are not (overedP

a) 5und #eve$opment b) ortfo$io eva$uationc) 2ransfer agen(&# %or$orate Stock Re$"rchasee) 5idu(iar& and (omp$ian(e monitoring

C48) 2ransition management is a s&stemati(, (ontro$$ed pro(ess tat uti$i4es a$$ avai$ab$e sour(esof $i%uidit& to simu$taneous$& [[[[[[[[[[[[[ and [[[[[[[[[[[[[

a) Minimi4e risk? maimi4e profits b) Maimi4e $i%uidit&? minimi4e riskc Minimie cost ma0imie efficiencyd) Minimi4e $i%uidit&? maimi4e effi(ien(&e) None of te $isted 9ptions

C44) 'e(urities $ending eperts spe(ia$i4es in market information and negotiation ski$$s to provideprofitabi$it& to te $ender wi$e managing

a) !redit risk b) Li%uidit& riskc) Interest rate risk

d) Bot !redit risk and Li%uidit& Riske Both %redit risk and nterest Rate Risk

500) In te (ase of se(urities $ending servi(es, te D2ird part& intermediariesFa) !ondu(t transa(tions dire(t$& wit te $ender and borrower b) spe(ia$i4e in parti(u$ar t&pes of se(urities $oanedc target clients that are dissatisfied with the $erformance of their c"stody !anksd) be(ome a prin(ipa$ to te transa(tione) Bot !ondu(t transa(tions dire(t$& wit te $ender and borrower and

501) In te (ase of se(urities $ending servi(es, te DOo$esa$e intermediariesF

a) (ondu(t transa(tions dire(t$& wit te $ender and borrower b) spe(ia$i4e in parti(u$ar t&pes of se(urities $oanedc) target ($ients tat are dissatisfied wit te performan(e of teir (ustod& banksd) be(oming a prin(ipa$ to te transa(tione Both cond"ct transactions directly with the lender and !orrower & !ecoming a

$rinci$al to the transaction

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502) [[[[[[[[[[[[[[ for se(urities $ending, wi( bring $enders and borrowers togeter, ma&e$iminate [[[[[[[[[[[[[[[

a) Oo$esa$e intermediaries? Ni(e intermediaries! nternet a"ction systems c"stodian and third $arty intermediariesc) !ustodian and tird part& intermediaries: Ni(e intermediariesd) Ni(e intermediaries? (ustodian and tird part& intermediariese) Internet au(tion s&stems? Ni(e intermediaries

503) D9ffsoreF se(urities $ending markets re%uireda) te sett$ement of se(urities $ending transa(tions on te books of $oba$ (ustodians b) te sett$ement of se(urities $ending transa(tions on te books of domesti( (ustodiansc the settlement of sec"rities lending transactions on the !ooks of foreign s"!

c"stodiansd) te sett$ement of se(urities $ending transa(tions on te books of foreign sub domesti(

(ustodianse) None of te $isted 9ptions

50C) 2e reason for te deve$opment of DoffsoreF se(urities $ending isa) 6nfavorab$e ta treatment b) Assorted se(urities restri(tionsc) Lega$ities of transa(tion# All of the listed o$tionse) None of te $isted 9ptions

505) D#istressed debtF refer toa) distressed state of market for debts"$oans b) $oan"debt tat as be(ome wat($ist or impairedc cor$orate !onds of com$anies that ha/e filed for !ankr"$tcy


506) Besides providing (ore (ustod& servi(es, te g$oba$ (ustodian t&pi(a$$& provides wi( of tefo$$owing servi(esP

a) 5oreign e(ange transa(tions b) 5utures @ 9ptions !$earing and <e(utionc) 2a re($aims pro(essingd) Bot 5oreign e(ange transa(tions and 5utures @ 9ptions !$earing and <e(utione Both :oreign e0change transactions & a0 reclaims $rocessing

507) Oen an entit& is ab$e to (ontro$ a ma3orit& of sares b& using borrowed mone&, it is (a$$eda) !orporate sto(k repur(ase! Le/eraged !"yo"tc) !orporate $endingd) Busted takeover e) Management bu&out

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508) ManagersU returns are ana$&4ed using a market fa(tor/based performan(e ana$&sis mode$tat a$$ows us to (reate a((urate manager peer groups based on market eposures, wat is it(a$$ed as

a) 5inan(ia$ reporting b) In(ome pro(essingc n/estment manager "ni/ersed) Investment manager portfo$ioe) None of te $isted 9ptions

504) Oat is one of te best investment strategies to prote(t an investor from vo$ati$it&Pa) Hedging b) Market timingc) Insuran(e# >i/ersificatione) None of te $isted 9ptions

510) 'tandard @ oorUs and Mood&Us are (ompanies tat wou$d be eamp$es of

a Stock!rokers b) se(urities e(angesc) sto(k regu$ationsd) investorUs servi(ese) sto(k underwriter

511) 2e most readi$& avai$ab$e sour(e of information for an investor a) te dai$& newspaper b) government pub$i(ationsc) (orporate reportsd) investor news$etters

e !"siness $eriodicals

512) In te (ase of 'ing$e remium #eferred Annuities '#A,a) remium is an asset for te bank b) remium is a $iabi$it& for te (ustomer c) #eferred annuities are an asset for te bankd) #eferred annuities are $iabi$it& for te (ustomer e one of the listed *$tions

513) Asset a$$o(ation pro(ess generatea) Lowest possib$e risk

b) Higest possib$e returnsc Meet $lanned o!Uecti/esd) A$$ of abovee) None of above

51C) 'OI52 is aa) roprietar& network interfa(e b) 9pen standard network interfa(e

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c) Message based network interfa(e# Both *$en standard network interface & Message !ased network interfacee Bot roprietar& network interfa(e @ Message based network interfa(e

262. !omp$ian(e reportingaH Pro/ides e0ce$tion!ased information

b rovides standard temp$ate based information( Hig$igts potentia$ vio$ations for interna$ regu$ationsd A$$ of te $isted optionse None of te $isted 9ptions

265. !omp$ian(e reporting (overs a$$ of te fo$$owing servi(es <V!<2a Hedging and gearing reportsb Oeigted average ana$&ti(s( roibited investmentsdH S"s$icio"s acti/ity re$ortse 'aring o$ding restri(tions

268. !ustod& ($ientsU trade instru(tions are t&pi(a$$& (ommuni(ated using

a 'OI52 networkb 5<#OIR<( !HI'd !$earingeH one of the listed *$tions

518) 2a pro(essing investor servi(es in($udea) make re($amations for ($ient a((ounts b) pursue ta re$ief at te sour(ec) manage ($ientsU investment/re$ated ta issues# All of the listed o$tionse) None of te $isted 9ptions

514) [[[[[[[[[[[[[, te $argest dis(ount brokerage ouse, uses te Internet to de$iver botig/te( and ig/tou( servi(es to its ($ients

a) !ar$es '(wab b) Brown @ (ompan&, J Morgan !asec) Ameritrade# All of the listed o$tionse) None of te $isted 9ptions

520) rivate <%uit&a Re?"ires /ery large in/estment b) ;uoted on te sto(k marketc) Listed on sto(k e(anged) A$$ of te $isted optionse) None of te $isted 9ptions

521) Asset A$$o(ation invo$vesa) DImmuni4ationF te(ni%ues b) 6se of options

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c) 6se of emerging market e%uitiesd) 6se of venture fundse All of the listed o$tions

522) #oes Asset A$$o(ation e$p redu(e te investment riskP

a) No / It on$& maimi4es return b) It in(reases riskc (esd) It in(reases (oi(e No impa(t on riske) None of te $isted 9ptions

523) 'ervi(es $ike te sett$ement, safekeeping, and reporting of (ustomersC marketab$e se(uritiesand (as are provided b& [[[[[[[[[[[[[[[[[

a %"stodian b) Broker c) Investment bankd) 5und Administrator e) #ea$er

52C) Asset A$$o(ation in an investment po$i(& is designed to meet te re%uired rate of return* If teinvestment ob3e(tive is Denerate as mu( in(ome as possib$eF* Oi( of te fo$$owing asseta$$o(ation strateg& wou$d be suitab$e for te above ob3e(tiveP

a) Invest in ig %ua$it& bonds b) Invest in sares of rapid$& growing (ompaniesc) Investment in bot sares and bonds# n/est in lower ?"ality !ondse) None of te $isted 9ptions

525) !ustod& as an industr& is going troug a period of massive (ange* Oat do &ou tink arete ma3or driver"s (anging te wa& te business is doneP

a) In(reasing regu$ation and transparen(& b) Infrastru(ture rapid$& (anging towards tigt (ost base and automated trade workf$owsc) #isintegration of te $oba$ (ustod& market# ncreasing reg"lation and trans$arency and nfrastr"ct"re ra$idly changing

towards tight cost !ase and a"tomated trade workflowse) A$$ of te $isted options

526) 'arbanes/9$e& A(t (omprises of a) 'e(tion )8 seek to improve ob3e(tivit& of resear( b& re(ommending ru$es

b) 'e(tion 0)8 spe(ifies enan(ed finan(ia$ dis($osuresc) 'e(tion .)8 proibits non audit servi(esd) a$$ of te $isted optionse one of the listed *$tions

527) 5edera$ (ommuni(ation priva(& $aw featuresa) 2ree tiered s&stem

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b) proibits e$e(troni( eavesdropping on te$epone (onversations, fa(e/to/fa(e(onversations, or (omputer and oter forms of e$e(troni( (ommuni(ations

c) priva(& prote(tion (overs te$epone re(ords, e/mai$ e$d in tird part& storage# All of the listed o$tionse) None of te $isted 9ptions

528) Oi( of te fo$$owing finan(ia$ institutions are (overed under te Anti/mone& $aundering,6' atriot A(t

a) 'e(urities brokers and dea$ers b) Mutua$ 5undsc) Banks and 2rust (ompanies# All of the listed o$tionse) None of te $isted 9ptions

524) 2e 6' atriot a(t dea$s wit te fo$$owing mone& $aundering (rimea) ro(eeds from foreign (rimes of vio$en(e and po$iti(a$ (orruption b) ro(eeds from (&ber (rime

c) !ounterfeiting# All of the listed o$tionse) None of te $isted 9ptions

530) !e(k08 providesa) 5u$$& automated #a& 8 pro(essing b) #e(reased (o$$e(tion f$oat due to faster ($earing pro(essc %om$ressed $rocessing windows to ena!le later !ranch c"toff timesd) 9n$& private$&/e$d (ompanies tat are ead%uartered in te 6*'*e) None of te $isted 9ptions

531) 2e 6' atriot A(t doesnCt a$$ows for a) 6' enfor(ement of foreign forfeiture orders b) 'ei4ure of (orrespondent a((ounts e$d in 6*'* finan(ia$ institutions for foreign banksc) !onfis(ation of propert& $o(ated in 6' for (rimes (ommitted in vio$ation of foreign $awsd) A$$ of te $isted optionse one of the listed *$tions

532) 6nder te new ru$es, an a((ounting firm tat does an audit is proibited from providingman& oter a((ounting servi(es* Oi( of te fo$$owing is spe(ifi(a$$& permitted under 'arbanes/9$e&P

a) Broker or dea$er, investment adviser, or investment banking servi(es

b) 5inan(ia$ Information '&stems #esign and Imp$ementationc) Appraisa$ or a$uation 'ervi(es# a0 ser/icese) A$$ of te $isted options

533) Not a$$ possib$e servi(es tat migt be provided b& te auditing firm are epress$& proibitedb& 'arbanes/9$e&* If a non/audit servi(e is not epress$& proibited, te auditing firm ma&provide tat servi(e

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b) Repeated deposits of (as into a finan(ia$ institution 3ust be$ow mandator& reportingtreso$d

c Setting "$ an offshore WshellW cor$oration to WlendW yo"rself money for a newho"se


5C0) 5edera$ autorities atta(k mone& $aundering trouga) Regu$ations b) !rimina$ san(tionsc) 5orfeiture# All of the listed o$tionse) None of te $isted 9ptions

5C1) 2e 6' atriot A(t epands te autorit& of te [[[[[[[[[[[[[[[[ to regu$ate te a(tivitiesof 6*'* finan(ia$ institutions, parti(u$ar$& teir re$ations wit [[[[[[[[[[[[[[and entities

a) 'e(retar& of te 2reasur&? domesti( individua$s

! Secretary of the reas"ry foreign indi/id"alsc) 'e(urities <(ange !orporation? domesti( individua$sd) 'e(urities <(ange !orporation? foreign individua$se) None of te $isted 9ptions

5C2) 'ARs in te (ontet of anti mone& $aunderinga) stands for 'uspi(ious a(tivit& reports b) Needs to be fi$ed b& 'e(urities brokers and dea$ers as we$$ as (ommodit& mer(antsc) Re%uiring businesses, wi( were on$& to report (as transa(tions invo$ving more tan

78,))),))) to te IR' to fi$e# Both stands for s"s$icio"s acti/ity re$orts & eeds to !e filed !y Sec"rities

!rokers and dealers as well as commodity merchantse) A$$ of te $isted options

5C3) Oi( of te fo$$owing regu$ations are not (overed under te 6' atriot a(tPa Enco"raging financial instit"tions and law enforcement agencies to kee$

confidential information concerning s"s$ected money la"ndering and terrorist acti/ities b) roibiting 6*'* finan(ia$ institutions from maintaining (orrespondent a((ounts for

foreign se$$ banksc) <stab$ising minimum new (ustomer identifi(ation standards and re(ord/keepingd) Re%uiring finan(ia$ institutions to maintain anti/mone& $aundering programs wi(

must in($ude at $east a (omp$ian(e offi(er e) None of te $isted 9ptions

5CC) 5orfeiture regu$ation under te 6' patriot a(t a$$owsa $ermits confiscation of any $ro$erty deri/ed from or "sed to facilitate domestic

or international terrorism b) !a$$s for te sei4ure of (orrespondent a((ounts e$d in foreign finan(ia$ institutions for

domesti( banks wo are in turn o$ding forfeitab$e assetsc) ermits foreign enfor(ement of domesti( forfeiture ordersd) A$$ of te $isted options

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5C5) 6' atriot a(t in(orporates te fo$$owing new (rimesa) terrorist atta(ks on mass transportation fa(i$ities b) for bio$ogi(a$ weapons offen(es

c) for fraudu$ent (aritab$e so$i(itation# All of the listed o$tionse) None of te $isted 9ptions

5C6) 5edera$ (ommuni(ations priva(& $aw features a tree tiered s&stem under 6' atriot a(t5irst $eve$: proibits e$e(troni( eavesdropping on te$epone (onversations, fa(e/to/fa(e(onversations, or (omputer and oter forms of e$e(troni( (ommuni(ations'e(ond $eve$: te$epone re(ords, e/mai$ e$d in tird part& storage, and te $ike2ird $eve$: in te (ase of serious (rimina$ (ases, $aw enfor(ement offi(ers ma& seek a (ourt order autori4ing tem to se(ret$& (apture (onversations

Oi( of te above $eve$s are (orre(t$& des(ribedPa) A$$ te $eve$s! :irst & Secondc) 9n$& 'e(ond $eve$d) 'e(ond @ tirde) None of te $isted 9ptions

5C7) Oi( of te fo$$owing institutions are not (overed under te AMR guide$inesPa !redit unionsb 'e(urities brokers and dea$ers( Mutua$ fundsd 5utures (ommissioneH one of the listed *$tions

5C8) 2e !ustomer Identifi(ation program in($udes a$$ of te fo$$owing <V!<2a) !o$$e(ting information b) erif&ing identit&c) !e(king terrorist $istd) Re$ian(e on oter finan(ia$ institutione one of the listed *$tions

24. 5or te (ustomer identifi(ation program, te AMR guide$inesa di(tates wi( forms of identifi(ation do(uments finan(ia$ institutions (an a((eptb finan(ia$ institutions responsib$e for assessing and minimi4ing te risk asso(iated wit

te do(uments( risk based approa( to determine te form of identifi(ation

dH Both financial instit"tions res$onsi!le for assessing and minimiing the riskassociated with the doc"ments and risk !ased a$$roach to determine the form ofidentification

e A$$ of te $isted options

550) Oi( of te fo$$owing risk (ategories are (overed under Base$ II A* Interest riskB* Market risk!* 5oreign e(ange risk

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#* Li%uidit& risk<* !redit risk5* 9perationa$ risk* ;ua$itative risk

a) A, !, 5! E)B):

c) A, B, d) B,#,e) <,!,A

551) 2e dead$ine for te imp$ementation of BA'<L II for a$$ te foreign and finan(ia$ institutionsis

a) #e(ember 0)). b) #e(ember 0))Kc >ecem!er 3775d) #e(ember 0))e) None of te $isted 9ptions

552) 2e aim of Base$ II isa o $romote safety and so"ndness in the financial system !y allocating ca$ital in

organiations to reflect risk more acc"rately b) 2o promote effi(ien(& in te finan(ia$ s&stem b& a$$o(ating (apita$ in organi4ations

effi(ient$& to minimi4e risk and maimi4e returnsc) 2o promote standardi4ation in te finan(ia$ s&stem b& a$$o(ating (apita$ in

organi4ations to obtain optima$ risk return profi$ed) 2o estab$ising a more sopisti(ated framework for banks to measure risk and ensure

suffi(ient (apita$ to (over $osses from market and (redit riske) None of te $isted 9ptions

553) How man& (ountries so far ave signed te new (apita$ a((ord Base$ IIa) 8) b) 10c 667d) 8K-e) 08

55C) Base$ (apita$ a((ord was estab$ised ina) 811+ b) 81K+c 64NN

d) 8110e) None of te $isted 9ptions

556) 2ree pi$$ars of te new (apita$ a((ord, Base$ II, area) ;uantitative? 'upervisor&? enera$ b) ;ua$itative? Market 5or(es? eograpi(c) ;uantitative? 9perationa$? 'upervisor&# "antitati/e "alitati/e Market :orces

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e) ;ua$itative? Mandator&? ;uantitative

557) Base$ (apita$ a((ord was instituted to (oordinate g$oba$ regu$ator& efforts to institute [[[[[[[[[[[[[[[ (apita$ re%uirements to e$iminate te treat posed b& [[[[[[[[[[[[[

a) Maimum? over(apita$i4ed finan(ia$ institutions b) Minimum? over(apita$i4ed banksc) Maimum? under(apita$i4ed finan(ia$ institutions# Minim"m "nderca$italied !ankse) None of te $isted 9ptions

558) 2e D;ua$itativeF pi$$ar of te Base$ II en(ompassesa %a$ital management $rocesses b) 2rading book (angesc) #is($osure re%uirementsd) 9perationa$ riske) !apita$ stru(ture

554) Oi( of te fo$$owing risks as been in(orporated in te new framework for te first timePa *$erational risk b) Market riskc) Interest riskd) <(ange riske) !redit risk

560) Oi( of te fo$$owing metod (an be uti$i4ed for te eva$uation of operationa$ riskPa Basic indicator a$$roach b) Interna$ ratings based approa(c) Advan(ed interna$ rating based approa(d) a$$ of te $isted optionse) None of te $isted 9ptions

561) 6nder te Dstandardi4ed approa(F for (redit risk assessment, banka) A$$o(ates risk weigts to ea( of te assets and off/ba$an(e seet positions b) !a$(u$ates sum of risk/weigted asset va$uesc) Risk weigts depend on te broad (ategor& of borrower d) Risk weigts (an be refined b& referen(e to eterna$ ratingse All of the listed o$tions

562) !apita$ ade%ua(& ratio refers to

a) Amount of bankCs (apita$ epressed as per(entage of te risk weigted (redit eposure b) Amount of bankCs (apita$ epressed as per(entage of te risk weigted (redit eposure

@ operationa$ riskc) Amount of bankCs (apita$ epressed as per(entage of te risk weigted (redit

eposure, @ market risk# Amo"nt of !ankJs ca$ital e0$ressed as $ercentage of the risk weighted credit

e0$os"re) o$erational risk & market riske) None of te $isted 9ptions

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563) 9perationa$ risk resu$ts from inade%uatea) Interna$ pro(esses b) eop$ec) '&stem or from <terna$ events

# All of a!o/ee) None of te $isted 9ptions

56C) 6nder Dstandardi4ed approa(F for operationa$ riska %a$ital charge is calc"lated !y m"lti$lying a !ankJs !road financial indicator !y

a I!etaJ factor b) !apita$ (arge is (a$(u$ated b& mu$tip$&ing a bankCs broad finan(ia$ indi(ator b& a

Ta$paC fa(tor c) !apita$ (arge is (a$(u$ated b& mu$tip$&ing a bankCs broad finan(ia$ indi(ator b& a

TgammaC fa(tor d) 5a(tor (an app$ied for an& bank regard$ess of its (omp$eit& or sopisti(atione) None of te $isted 9ptions

565) 2e Dinterna$ rating based approa(F differs from Dstandardi4ed approa(F for (redit riskassessment, in tat

a) IRB resu$ts in $esser risk sensitivit&! RB "ses di/erse range of risk weightsc) IRB is simp$er approa(d) IRB $eads to $ower (apita$ (argese) A$$ of te $isted options

567) 6'A A2RI92 A(t as been ena(ted in response toa) er& ig profi$e (orporate s(anda$s su( as <nron

! he terroristsJ attacks of Se$tem!er 66) 3776c) rowing (omp$eit&, vo$ati$it&, and interdependen(e among internationa$ finan(ia$

marketsd) Hig ta pa&ers defau$tse) None of te $isted 9ptions

568) In order to imp$ement new (apita$ ade%ua(& framework b& 0))-, banks are p$anning to gofor different approa(es for (redit and operationa$ risks, as spe(ified in te framework, based onits readiness in terms of s&stems and pro(esses* Oat (ou$d be te (a$$enges tat wou$d befa(ed b& tese finan(ia$ institutionsP

a) Avai$abi$it& of istori( data b) '&stem Integration

c) Re/engineer business pro(essd) 9n$& Avai$abi$it& of istori( data and '&stem Integratione All of the listed o$tions

254. Oi( of te fo$$owing benefits (an a((rue to te banks imp$ementing te new (apita$ade%ua(& norms besides redu(ed (apita$ ade%ua(& re%uirementsP

a Better risk based pri(ingb Improved (apita$ a$$o(ation( In(reased (orporate and emerging markets $ending

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dH *nly Better risk !ased $ricing and im$ro/ed ca$ital allocatione A$$ of te $isted options

570) 2e migration to !e(k08 environment re%uires substantia$ investment in imaging, storageand image e(ange te(no$og&* 'ome of tese investments (an be avoided b& outsour(ingsome of tese pro(esses to tird part& A' 'o$utions* Oi( of te fo$$owing fa(tors are $ike$& to

inf$uen(e te de(isions of te banks to outsour(e or notPa) !apa(it& p$anning b) 'e(urit& Ana$&sisc) TA' I'C pro(ess ana$&sis# All of the listed o$tionse) None of te $isted options

571) Oi( of te fo$$owing a(tivities (an invite te app$i(ation of Anti Mone& Launderingguide$inesP

a) ur(ase or sa$e of same good b) Mu$tip$e transfer of mone&c) #epositing (as in big amounts# *nly P"rchase or sale of same good and M"lti$le transfer of moneye) 9n$& Mu$tip$e transfers of mone& and #epositing (as in big amounts

572) Oi( of te fo$$owing metods, parameters used, for measuring (redit risk is more re$iab$ewi$e pro(essing (redit app$i(ation, assume tat te (a$(u$ation engine a$$o(ate e%ua$ weigtageto different fa(tors:

a) Metod A! Method Bc) Metod !d) Metod #e) Bot Metod A and Metod #

281. Assume tat &ou ave a o$ding in IBM 'to(k wort 78) mi$$ion* Gou ave (a$(u$ated testandard deviation '# of (ange over one da& in IBM is 7 )*0)*2erefore for te entire position, '# of (ange over 8 da& = 70)),)))he S> of change o/er 67 days ; <377)777 T X67H ; <513)252e 11Y aR over 8) da&s = 0* -0,.- = 78,K,-08

1) 'a: is a measure of PPPPPPPPP *,QB)

2) <xpand 'a: Va("e at ?is% 3) 1est method for 'a: PPPPPPPPPPPPPPP'ariance co-'ariance modelC) :ate of nflation :O-5) !heck2,6) #i$uidity7) 8! and 81 differences8) hedge3syndicate4) 1ack to 1ack #!

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10) <lectronic

S >0 >&TST <D$PS

,( 9hich of the following is "7 a settlement ethod for 1ank #oansa) Sec"rities ?epositor'

!) 6ub-articipationc) Assignment#) articipatione) reclosure

2( 7ax and insurance remiums !ollected as part of #oan repayment are handledthrough which of the following type of account?

a) 8A7 account

!) utual fund accountc) scro, acco"nt

#) &ixed despoait

0( 9hat is the difference between 1anker’s acceptance and sight drafta) an% can raise f"n#s !' se((ing the acceptance

!) 6ight drafts are negotiable instrumentsc) 1anker’s acceptance reduces bank’s leading capacity#) one of the listed "ptionse) 1anker’s acceptance demands immediate payment

B( :ed herring prospectus is issued during PPPPPPPPPPPPPPP a) 9hen a di'ided is declared!) oat-Ac$uisitionc) 8uring 6ecuriti>ation#) <"ring a IP-

e) A merger

5( 9hich of the following is "7 a banking ser'ice?a) :etail 1anking!) ri'ate 1ankingc) Stoc% ar%et reg"(ation

#) !orporate 1ankinge) !onsumer #ending

Q( 9ho among the following offers pri'ate banking ser'ices?a) 1ank of ew-ork elon!) 1ank "nec) &(( of the (iste# options

#) =16

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e) !redit 6uisse

( :am deposits +,// in JK 1ank( uMa takes a loan of + ,// from JK 1ank( 9hichof the following is most likely to happen?

a) 1ank is charging 0% interest to uMa and paying 5% interest to :am

!) an% giing 3K interest to ?a an# Ta%e 5K interest fro P"Hac) XXXXXXX(#) XXXXXXXX

.( 1ank A1! interest rate on deposits is (0/% and its interest rate on loans is 4(25%durXXXXXX( &ind the spread for 1ank A1!?

a) /(!) /(c) #) /(

4.32 Q 8.17 ; 6.42

4( f a bank gets a deposit of +5///3 assuming reser'e re$uirement*!::) of ,/%3 and it!irculate through 2 more banks3 leading to which of the following money multipereffect?

a) one!) t creaXXXXXXXX((c) t creaXXXXXXXX((#) t creaXXXXXXXX((e) t creaXXXXXXXX(((

Sol"tion

!RR !as Reserve Ratio*

#eposit 8)Y Reserve Loaned 9ut8 .))) .)) .))0 .)) .) ).) ).) ). -.

An initial de$osit of <2777 has created a reser/e of <6122) and loan of <63642.

,/( 9hat does a !A## option gi'e the buyer?a) 7he right3 but not the obligation3 to sell

!) 7he "bligation to sellc) 7he right and obligation to buy#) 7he obligation to buye) The right= !"t not the o!(igation= to !"'

P"t *$tions he right) !"t not the o!ligation) to sell

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,,( 9hat is the purpose of rebalancinga) 7o keep in'estments in line with original in'estment strategy!) 7o aximi>e the portfolio return by effecti'ely timing the marketc) &(( of the (iste# options

#) :eallocation of assets classes to gain competiti'e ad'antage

,2( 9hich two risks of a financial institution may bring gains as well as losses?a) !redit risk and interest rate risk !) !redit risk and foreign exchange riskc) >i;"i#it' ris% an# cre#it ris%

#) one of the listed optionse) nterest rate risk and foreign exchange risk

,0( nstitution speciali>ing transactions of mortgage loans for =6 banks area) ;ennie ae and indymac!) 9ennie $ae E annie $ae

c) XXXXXXXXXX#) XXXXXXXXXX

:annie Mae and Ginnie Mae are e0am$les of instit"tions s$ecialiing insec"ritisation transactions of mortgage loans for 9S !anks.

:reddie Mac) Ginnie Maes & :annie Mae 5edera$ Nationa$ Mortgage Asso(iation5NMA or 5annie Mae, overnment Nationa$ Mortgage Asso(iation NMA or innie Maeand 5edera$ Home Loan Mortgage !orporation 5HLM! or 5reddie Ma( are a$$ Sse(ondar&market $endersS*

,B( Assuming a B% annual inflation rate3 in how many years will the purchasing power of +,3/// be cut in half?

a) 18 /ears

!) ,Q earsc) 2/ ears#) ,2 earse) 2B ears

,5( 7he term G6ettlement cycle refers to which of the following options?a) tie perio# !et,een the #ate on ,hich the tra#e is eec"te# an# the

#ate ,hen the tra#e is sett(e#

!) 7ime period between the date on which an in'estor first makes the decisionto enter a trade and the date when the trade is settled(

c) 7ime period between the date on which the trade is cleared and the datewhen the trade is settled(

#) one of the listed option are correct

,Q( 9hen is a bank failure more likely to occur?a) !apital ade$uacy ratio is increased!) !ash :eser'e ratio is increased

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c) 1ank increases its e$uity capital#) @apita( a#e;"ac' ratio is re#"ce#

e) 1ank holds more short-term riskless securities

,( ;8: stand for which of the following option?

a) ;old 8eposit :eport!) ;lobal 8epository :ecei'ablesc) ;lobal 8eposit :eport#) 9(o!a( <epositar' ?eceipt e) ;lobal 8eri'ati'es :eport

,.( f the entry load is 2% and the AE is :s ,/3 then how much the in'estor will ha'e to pay for ,// units?

a) ?s) 1020

b( :s ,5//c( :s( ,2//

d( :s( .//

NA Net Asset a$ue*,/I*2L,//S,/))S,// O,/2/

,4( After a buyer and a seller enter into a trade agreement3 who initiates the issues of #!?a) one of the listed "ptions!) "'er’s !an%

c) 6eller #) Ad'ising bank e) 6eller’s bank

2/( f a financial instrument has a 5/% chance of paying 2/% and a 5/% chance of paying Q/% percent( 9hat would be the expected return?

a) 0)C

!) /(2c) /(5#) /(.

= .)"8))0)"8)) .)"8))-)"8)) = )*

2,( 8oes a pure play in'estment bank accept deposits?a) .o

!) "nly during "c) es#) es 3 if it is belowe) one of the listed "ption

22( 9hich of the following is a corporate action?a) 8eclaring 8i'idend!) &(( of the (iste# options

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c) :ights issue#) C Ae) 6tock 6plit

20( n a typical credit card transaction processing cycle3 which of the following is

F 7he issuer and ac$uirer route authori>ation through the AssociationF ssuer transfers funds to the Ac$uirer a( only b( 1oth and c( onlyd( one of the listed options&ns,er: I E II

2B( !hoose the correct order of occurrence of the following acti'itiesa) 7rade execution3 7rade matching3 7rade clearance3 7rade confirmation3

7rade 6ettlement!) 7rade execution3 7rade matching3 7rade confirmation3 7rade clearance3

7rade 6ettlement

c) Tra#e atching= Tra#e eec"tion= Tra#e confiration= Tra#e c(earance=Tra#e Sett(eent

#) 7rade execution3 7rade confirmation3 7rade matching3 7rade clearance37rade 6ettlement

25( &rom the gi'en options the ser'ice*s) that can be categori>ed under AXXXXXX((F !orporate Action processing

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F income rocessinga( XXXXXXXXXXXXX b( XXXXXXXXXXXXXc( XXXXXXXXXXXXXd( XXXXXXXXXXXXX

2Q( 7here are 5 participants A3 13 !3 83 < in a 25 =68 syndicated loan and A is thelead m has agreed to pay /(B% *+,3//3///) participant fee( How much each participant will share in participant fee?

a) +,3//3/// will be recei'ed e'ery time money is withdrawn!) +,3//3/// will be recei'ed e'ery monthc) +,3//3/// will be recei'ed affront#) +,3//3/// will be charged towards undrawn portione) one of the listed "ptions

2( 9hich of the following are "7 the benefits of using credit deri'ati'es?

a) Increasing the cre#it (iit of a corporate!) !redit deri'ati'es can be used both to di'ersity their credit risk exposuresand free up capital from regulatory constraints

c) !redit deri'ati'es can be used to create positions that can otherwise notestablished in the case market

#) !redit deri'ati'es can be used either to take on more risk or to a'oid *hedge)it

2.( 7he counterparty in a futures contracts trade isa) The change

!) 1anksc) 7he buyer and 6eller #) 7he brokers whoXXXXXXXXXe) ;o'ernment

24( 9hat is "7!?a) -er The @o"nter

!) (XXXXXXXXXc) XXXXXXXXX(#) XXXXXXXXX(e) XXXXXXXXX(

0/( All the following statement concerning =(6 ;o'ernmernt securities are !orrect<J!<7

a) Treas"r' notes hae at"rit' #ates "p to 10 'ears

!) 7reasury bonds ha'e maturity dates up to 0/ yearsc) 7reasury bills ha'e a greater interest rate risk than either 7reasury bill#) 7reasury bills ha'e their interest paid in lump sum at maturity(

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0,( nterest rate spread is e$ual to?a) !apital :ate N 1ase :ate!) 1ase :ate N !urrent :atec) !urrent :ate#) @"rrent ?ate ase ?ate

e) one of #isted "ptions

02( =ni'ersal banks pro'ide commercial banking as well as in'estment bank ser'icesunder one head ( 6tate 7rue or &alse

a) Tr"e

!) &alse

00( 8i'idend declaration is an example of a) @orporate &ction

!) ( XXXXXXXXXc) ( XXXXXXXXX

#) ( XXXXXXXXX

0B( E6A in'ol'ed in which of the following?F ro'ide the interchange systems to transfer data and funds between membersF 6et credit limitsF ssue credit cards

a) I -n('

b( onlyc( C d( 3 C

05( "n a trading day at the 6<3 a broker undertakes the following tradesF1uy ,2/ 8<## shares for + ,/(// each6ell / 8<## shares for + ,/(5/ each1uy 2// !6!" shares for + 2/(// each6ell 2/ 8<## shares for + ,,(// each6ell 5/ !6!" shares for + 2/(5/ each6ell ,/ 8<## shares for + 4(// each;i'en that a net settlement system is being used( &ind out the net position of the broker

a) 8ell / 6hares to gi'e out3 !isco 4/ shares to recei'e3 +03/// to pay out tothe exchange

!) 8ell 2/ 6hares to pay out3 !isco ,5/ shares to recei'e 3 +03./ to pay out tothe exchange

c) <e(( 20 Shares to receie= @isco 150 shares to receie = 3=130 to pa' o"t

to the echange

#) one of the listed "ptionse) 8ell ,5/ shares to recei'e3 !isco 2/ shares to recei'e3 +0,0/ to recei'e from

the exchange

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Sol"tion

Sock B"yCSell "antity Price Amo"nt#<LL Bu& 80) 78)*)) 80))#<LL 'e$$ K) 78)*.) K.!I'!9 Bu& 0)) 70)*)) )))

#<LL 'e$$ 0) 788*)) 00)!I'!9 'e$$ .) 70)*.) 8)0.#<LL 'e$$ 8) 71*)) 1)otal 1617H

Net position for #<LL: 80) K)/0)/8) = 0)Net position for !I'!9: 0)) .) = 8.)'o e(ange wi$$ need to de$iver 0) #<LL @ 8.) !I'!9 sares to te broker*2is was wat e(ange owes to broker*

'o te broker as to pa& 78) on$& and e gets 0) #<LL @ K) !I'!9 sares from tee(ange*

0Q( n syndicate loan3 borrowers will be charged e'en if they don’t utili>e the committedfuXXXXXXXXX

a) Tr"e

!) &alse

0( nflation represents which of the following option?a) EerXXXXXXXXX!) Increase in priceFFFFXXXXXc) <coXXXXXXXXX#) !urrXXXXXXXXXe) 8ecXXXXXXXXX

0.( #oan 6er'icing starts after underwriting state 7rue or &alsea) Tr"e

!) &alse

04( All of the following in'estments are examples of Gdebt in'estments <xcepta) !ash Ealue!) 9o(#

c) !ertificate ofXXXXXXXXX#) !ompany 1onde) &ixed Annuity

B/( 9hat is a credit union?a) "perated for the purpose of promoting thrift!) ro'iding other financial ser'ices to its membersc) ro'iding credit at reasonable rate#) A cooperati'e financial institution that is owned and controlled be) &(( of the (iste# -ptions

B,( !oming together of 1 and ellon is an example of PPPPPPPPPPPPPPPPPP

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a) 1rokerage!) 7akeo'er c) Ac$uisition#) $erger

e) All of the listed options

B2( ! in the context of anti money launderinga) :e$uiring businesses3 which were only to report cash transactions in'ol'ing

more than +,3///3/// to the :6 to file!) 6tands for 6uspicious acti'ity reportsc) Stan#s for c"stoer i#entification progra

#) e) eeds to be filled by 6ecurities brokers and dealers as well as commodity

merchantsf) All of the listed "ptions

B0( 9hich among the following is a key feature of letter of credit?a) All of the listed options!) "pportunity to recei'e payment in ad'ance of the due datec) 1asis for de'ising proper currency hedging strategy and opportunity to

recei'e payment in ad'ance of the due date#) <istri!"tes ris% !et,een !"'er an# se((er

e) 1asis for de'ising proper currency hedging strategy

BB( &ind out the one which does "7 come under the retail banking 6er'icea) ersonal #oan!) 7ransfer &undc) @re#it Serices

#) <lectronic 7ransfer

B5( How would you categori>e account acti'ity alerts in mobile banking?a) Account information!) Transactions

c) n'estment#) 6upport

BQ( ooling and repackaging of cash-flow-producing financial assets into securities3which are then sold to in'estors is called PPPPPPPPPPPP

a) #e'eraging!) Sec"ritization

c) nitial ublic "ffer #) 6hort 6ellinge) one of the listed options

B( An in'estor indulging in short selling on a share expects the share price to decrease(6tate 7rue or &alse

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a) Tr"e

!) &alse

B.( ;< shares are currently selling for +,5(// each( ou bought 2// shares one year agoat +,2 and recei'ed di'idend payments of +2 per share( 9hat was your total capital

gain this year?a) Q//!) B//c) 1000

#) one of the listed optionse) 2//

'o$ution:

0))8. 0))0 0))80 = 6777

B4( 6ecurities with an original maturity of lesser than ,-year are traded on money

markets( 6tate 7rue or &alsea) Tr"e

!) &alse

5/( 1ank a based in =6 pro'ides safe keeping ser'ices for securities to its =6 clients( talso has clients in &rance and 1elgium and pro'ides securities safe keeping ser'icesto these clients through banks ! C 8 respecti'ely( 9hich best describes bank A?

a) 6econdary custodian!) 9(o!a( @"sto#ian

c) 6ub !ustodian#) one of the listed "ptions

e) ain !ustodian

5,( n 7rade &inance3 9hich of the following factors are considered while choosing madeof financing?

a) 7ime frame3 cost of financing3 1uyer trade associates!) ;o'ernment ;uarantee rogram3 6eller referencec) one of the listed options#) porter’s "n#= ?is% actors= @ost of financing= Tie frae

52( !ompany A1! has a gross profit of +5////( 7he operating expenses amounts to+,////( 7he interest on loans a'ailed amounts to +5/// and the taxes to be paid

amounts to +5///( !alculate the <6 if there are total of 2//// shares(a) 2(5!) 2c) ,(25#) 1)5

Sol"tion

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*$erating ncome ; Gross Profit *$erating E0$enses

EPS Earnings Per ShareH = *$erating ncome Q nterest on Loan Q a0es PaidH C "m!er of shares

= .))))/8))))/.)))/.))) " 0)))) = 6.2

50( etting reduces the number of settlements needed by more than 45% state 7rue or&alse

a) Tr"e

!) &alse

5B( 7he !omponents to determine the rate of exchange in a &orward !ontract area) !ross !urrency :ate and forward rateXX!) @"rrent Spot ?ate an# or,ar# rate aFF

c) !urrent 6pot :ate3 amount of currencyXX#) &orward rate adMustment and amount XX

55( High-et worth indi'iduals generally ha'e PPPPPPPPPPPPPPPPPPPP(a) .et ,orth greater than 500=000

!) Household income greater than +5//3///c) arket capitali>ation more than +2//3///#) Household income of maximum +5/3///XX

5Q( roduct de'elopment in sales and marketing refers to which of the following option?a) <ee(oping an# #ifferentiating #eposits= (oans etc

!) roducts that are bought using online payment such as e-commencec) All of the listed "ptions#) dentifying products such as 6A3 "racle for the bank e) !ollateral e(g( !ars in case of car loans3 houses in case of mortgXX

5( 9hich of the following methods of payment is most risky to the 1uyer?a) "pen Account!) 8ocumentary !ollectionc) #etter of !redit#) !ounter tradee) @ash in a#ance

Metods of pa&ment is most risk& to te 'e$$er 9pen A((ount

5.( on a trading day at the 6<3 a broker undertakes the following trades1uy ,// 1 shares for +,,(// each6ell 5/ 1 shares for +,/(5/ each1uy ,// 6&7 shares for +2/(// each6ell 2/ 1 shares for +,,(// each6ell ,/ 6&7 shares for +2/(5/ each6ell 0/ 1 shares for +4(// each

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How much did the broker pay out to the exchange in total in case of *a) grosssettlement *b) et settlement system?

a) one of the #isted "ption!) *a) +,../ *b)+ 0,//c) *a) +,3./ *b) / for 13 +,45 for 6&7

#) a 0 for I$= 1745 for $ST ! 1880e) *a) +0,// *b) +,../

Sol"tion

Sock B"yCSell "antity Price Amo"ntIBM Bu& 8)) 788*)) 88))IBM 'e$$ .) 78)*.) .0.M'52 Bu& 8)) 70)*)) 0)))IBM 'e$$ 0) 788*)) 00)M'52 'e$$ 8) 70)*.) 0).IBM 'e$$ ) 71*)) 0K)otal 6NN7H

Net position for IBM: 8)) .)/0)/) = )Net position for M'52: 8)) 8) = 1)'o broker wou$d not re(eive an& IBM sares from te e(ange as e so$d a$$ te sarestat e bougt during te da&* But e(ange wi$$ need to de$iver 1) M'52 sares to tebroker*2is was wat e(ange owes to broker*

'o te broker as to pa& 78++) on$& and e gets 1) M'52 sares from te e(ange

) for IBM, 78,K1. for M'52,

It is wort understanding tat, we ave some markets were sett$ement appens on agross basis, meaning no netting is done and a$$ te transa(tions need to be sett$edindividua$$&* 2is is preva$ent in 5ied In(ome markets in te 6' and te sett$ementme(anism is known as Real ime Gross Settlement RGSH. age No 8+8 in B5'#5

54( How much will be the ,% legal fee on 0/ =68a) /(/0!) 0/c) one of listed "ption#) 3$

e) /(0

Q/( 7he arrangement fee paid by the borrower will be paid toFa) &acility manager L agent!) <'ery participant expect lead manager c) *i(( !e retaine# !' (ea# anager

#) =nderwriting bank e) <'ery participant

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Q,( n a securities lending transaction3 if the buyer of securities pro'ides cash ascollateral3 then the seller of securities has to pro'ide the buyer with a interest amountfor the cash( 9hat is this interest amount called?

a) :ebate rate

!) @o((atera( Interestc) nterest :ate#) one of the listed "ptionse) :eturn :ate

Q2( !orporate #oans are(a) e'er unsecured!) e'er securedc) Always secured#) Always unsecurede) Sec"re# or "nsec"re#

Q0( 9ho is a underwriting 1ank?a) an% ,hich "n#er,rites a IP-not s"r sh# ! thz

!) 1ank which commits supply of funds in a syndicated loanc) 1ank which does not insures a loan#) 1ank which underwrites a insurancee) 1ank which insures a loan

QB( 7he amount owed by a company to suppliers in the next one year will be categori>edunder PPPPPPPPPPPPPPPPPP

a) Annual liabilities!) 8eferred #iabilitiesc) Accrued #iabilities#) @"rrent >ia!i(ities

Q5( 9hat is a mutual fund?a) A pool of funds used to purchase securities on behalf of in'estors!) A collecti'e in'estment 'ehiclec) &(( of the (iste# options

#) A portfolio of stocks3 bonds and other securities

QQ( 7he Ad'ising bank is used as a trusted bridge between the PPPPPPPPPPPP and PPPPPPPPPPPPP when they do not ha'e an acti'e relationship

a) :eimbursing bankD beneficiary bank !) ssuing bankD !onfirming bank c) mporterD <xporter #) &pp(icant !an%N eneficiar' !an% Iss"ing !an%N eneficiar' !an%

e) 1eneficiary bankD :eimbursing bank

Q( 9hich of the following debt instrument in'ol'es lowest risk?

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a) unis!) Wunk 1ondsc) !orporate bonds#) 7reasury 1illse) arkee 1onds

Q.( &ollowing are the types of market risks excepta) !urrency :isk !) !ommodity :isk c) nterest :ate :isk #) @re#it ?is%

e) <$uity :isk

Q4( 9hen the !entral 1ank of a country decides to change the interest rates3 it is amanifestation of which of the following?

a) oney olicy

!) oney akingc) oney arket#) XXXXXX(e) XXXXXX(

/( n terms of computation3 which of the following is the fastest method for calculatingEa:?

a) All would take e$ual time if done using a software!) Variance@oariance $atri

c) orte carlo 6imulation#) Historical 6imulatione) A combination of orte !arlo and Historical 6imulation

,( A1! co( wants to identity the best way for making salary credits to its huge employee base( !an you select the best option?

a) aper !hecks!) &"toate# @(earing o"se

c) !ash#) !ontactless ayments

2( n a economy where inflation is B%3 future 'alue of ,// units of money after 2 yearwould be which of the following option?

a) <xactly ,/.!) one of the listed optionsc) <xactly ,//#) Around :s( ,/Be) 108)16

Sol"tion

5 = 8 in = 8))8)*)0 = 8)+*8-

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4( 7he share price of a company may drop considerably from its current le'els( n thisscenario3 what type of risk are the in'estors facing?

a) arket :isk !) 1usiness :isk c) @re#it ?is%

#) !ompany :isk e) #i$uidity :isk

./( &rom the following options3 find what type of risks that a software export companymay face?

a) "perational :isk !) It can face a(( the ris%s

c) #egal :isk #) !urrency :isk e) !redit :isk

.,( 7he &ederal funds ratea) s the rate commercial banks use as a benchmark for e'aluating their largest borrowers

!) s in'ersely related to the prime ratec) one of the listed "ptions#) s a primary policy target of the &ed in conducting monetary policye) s the rate the &ed charges on o'ernight loans to commercial banks

.2( A bank has a portfolio of +5/ million worth of loans out of which it wants to sell +2/million worth of loan to another financial institution( 9hat is this process called?

a) e(# for Sa(e >oans

!) 7rading #oansc) Accrual #oans#) =ndrawn #oane) !ommitted #oans

.0( ou purchased a stock for +B/( "ne year later you recei'ed +2 as di'idend and soldthe share for +B.( How much is the return of holding period?

a) 5/ percentage!) B5 percentagec) ,/ percentage#) 25 percentage

e) one of the listed options

.B( oney laundering refers to which of the following option?a) All of the listed options!) <xtending loans to corporatec) 6hort term borrowing C placements#) @onerting the profits fro criina( actiities into (egitiate f"n#s

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.5( 1anks are financial institutions that are licensed to accept deposits and issue loans(6tate 7rue or &alse

a) Tr"e

!) &alse

.Q( n &" mode of 6ettlement3 there is no simultaneous exchange of securities and payment 6tate 7rue or &alsea) Tr"e

!) &alse

.( 7he type of loan in which spread 'arities o'er the life of the loan is called PPPPPPPPPPP(

a) ositi'e spread loan!) &ixed rate loanc) 6emi-fixed rate loan#) egati'e spread loan

e) (oating rate (oan

..( 9hich of the following combination holds true?a) wire transfer3 more costly than other payment alternati'es!) commercial letter of credit3 mpro'es applicant’s credit facilitiesc) &oreign !hecks ot useful for cross border trade#) 8ocumentary collection3 6trict compliance rules applye) 6tandby letter of credit3 less costly than documentary collection

.4( 9hich of the following type of loan re$uires the amount of interest that would beearned on the amount of interest paid upfront by the borrower?

a) 8emand loan!) Tr"e #isco"nte# >oan

c) !apitali>ed loan#) Amorti>ed loane) 8iscounted loan

4/( 9hich of the following is not a deri'ati'e?a) on#s

!) &uturesc) "ptions#) 6wapse) &orwards

4,( 7A: stands for which of the following options?a) 7erm Assets :eform rogram!) one of the #isted optionsc) 7erm Assets :elief rogram#) Tro"!(e# &ssets ?e(ief Progra

e) 7roubled Assets :eform rogram

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42( f the #imit O +2///3 argin O 2/% and Asset 'alue O +2///3 then 8rawing owerfor an "pen ended loan is e$ual to

a) 22//!) 2///

c) 1600#) 2B//e) one of the listed options

Sol"tion

Limit L ma outstanding a$$owedMargin M per(entage of $imit tat (an be drawn

Asset va$ue A va$ue of under$&ing asset#rawing ower # / $ower of L and 8/MA

>P ; 67.37HT3777 ; 6577

40( !ustomer’s usually interact extensi'ely with the bank’s mid and back offices( 6tate7rue or &alse

a) 7rue!) a(se

4B( n ormal 8istribution 44% confidence inter'al corresponds to PPPPPPPPPP a) 2)33 S#

!) ,(Q5 6dc) ,(4Q sd#) 0 6de) , 6d

45( At the end of an acti'e trading day3 a broker sees that he has a net position in Qsecurities3 and owes the system some money( How many settlement transactions willtake place at the end of the settlement cycle?

a) Q any 5 as transfer of securities and , as securities-'ersus-cash!) .either the n"!er of sec"rities nor the n"!er of cash tranactions can

!e #eterine#

c) 3 Q as transfers of securities and , as transfer of cash#) Q3 all Q as securities-'erus-cashe) , as transfer of cash3 but the number of transactions for securities cannot be

determined(

4Q( A person purchases a share at +5/( After 2 years3 the price is at +5 and he decides tosell the share at that price( 9hat is the annuali>ed return that the person has earned?

a) /(QQQ!) /(0000c) /(5#) 0)22C7

e) one of the listed options

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4( 9hich of the following operations cannot be done on a #! *#etter of !redit)?a) urchase!) 8iscountc) Acceptance

#) .one of the >iste# options

4.( 9hich of the following are in'ol'ed in the retail brokerage business in =6?a) &reddie ae!) <-7radec) ;innie ae#) 6allie aee) e#era( ?esere

44( 9hich of the following methods eliminate county risk and commercial risk uponconfirmation?

a) 1ack to back #etter of !redit( 8ocumentary collection!) 8ocumentary !ollection3 #etter of !reditc) #etter of !redit3 1ack to back #etter of credit#) Stan#!' >etter of cre#it= >etter @re#it

e) 8ocumentary !ollection3 6tand by letter of !redit

,//( All of the following are 'alid means for a custody client to communicate tradeinstructions to its custodian3 <J!<7

a) 69&7 networks!) &<89:<c) 1y &ax#) ' Te(ephone

,/,( 6E meansa) 6ecurity urpose 'ehicle!) one of the listed optionsc) 6ecuriti>ed planning Eehicle#) 6pecial principal 'ehiclee) Specia( p"rpose ehic(e

,/2( E stands for a) .et Present Va("e

!) ew resent Ealuec) o resent Ealue#) et ast Ealue

,/0( 6A offers in'estors a customi>ed approach to in'esting( :ather than a generic product( 6tate 7rue or &alse

a) 7rue!) a(se

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,/B( f total 6pread on underwriting is + 5///// and anager’s fee is +,/////( 9hatis the amount which will be disturbed in the syndicate?

a) !annot be determined!) Q/////

c) C00000#) ,/////e) 5/////

,/5( An in'estor has multiple in'estment options yielding 'arious dollar returns at'arious points of time3 while he is comfortable with a return of J% p(a( 9hichmethod should he use to compare the 'arious in'estments?

a) <xternal :ate of :eturn!) !ompound nterestc) 6imple nterest#) nternal :ate of :eturn

e) .et present a("e

,/Q( n case of Auto finance3 monthly lease payments are usually lower than monthlyloan payments because of which reason?

a) !ustomer is paying only for depreciation!) !ustomer is paying only for &eesc) All of the listed "ptions#) !ustomer is paying only for 7axese) @"stoer is pa'ing on(' for ?ent @harges

,/( n <lectronic !heck !on'ersion *<!!)( 9hat happens once the check is processed?

a) 7he customer can present a check to a store cashier !) The c"stoer signs a receipt a"thorizing the store to present the chec%

to the !an% e(ectronica((' an# #eposit the f"n#s into the !an% acco"nt

c) :ecei'e !ash immediately#) All of the #isted options

issing uestion

,( 9hich of the following represents the correct hierarchy of corporate ratings *highest

to lowest)?

a) &&&= &&R= = <

b( AAA3 AA-3 83 111c( 83!313Ad( 83 AA-3 13 AAAe( AAA3 AAI3 83 AA-

utual funds can not in'est in

a) on#

b( <$uity

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c( 6hared( one

2( 7here are fi'e participant A3 13 !3 83 < and A is a manager( rofit is 5///// andoperating charges is ,/////( 7hen how the profit will be distributed among all?

&ns: 20000

0( 7he initial sale of the security is in the XXXmarket3 while subse$uent trading in the

security is in the XX(( market

a( 6pot3 futures b( 8ebt 3 <$uityc) Priar' = Secon#ar'

d( oney3 !apital

B( Among which is ssuer as well as Ac$uirera) &e

b( 7-sysc( <la'ond( &ront 8ata !ompany

1 Page 5

State TG 'imp$e interest is (a$(u$ated on$& on te beginning prin(ipa$*2 Page 6 :LA* here will !e three ?"estions !ased on this form"la 2e re$ationsip between te R rea$ rate of interest, N nomina$ rate of interest


*ne ?"estion on f"t"re /al"e 2e formu$a for 5uture a$ue is: 5 = 8 in



5) Page 10 N of a pro3e(t:•

In(reases wit in(rease in future (as inf$ows for a given initia$ out$a&• #e(reases wit in(rease in initia$ out$a& for a given set of future (as inf$ows• #e(reases wit in(rease in re%uired rate of return

6 Page 1C

?ea# a(( the t'pe of sec"rities an# their s"! parts

7 Page 15

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T'pes of sec"re# !on#s)(ortgage Aonds are se(ured b& rea$ estate owned b& te issuer *+uipment Trust 0ertificates are se(ured b& e%uipment owned and used in te issuers businessCollateral Trust Bonds are se(ured b& a portfo$io of non/issuer se(urities* usua$$& 6*'*overnment se(urities


1 age 8- +hat are ero co"$on !onds-Weros generate no periodi( interest pa&ments but te& are issued at a dis(ount from fa(e va$ue*

8) age 8K%ommercial $a$er

An unse(ured, sort/term $oan issued b& a (orporation, t&pi(a$$& for finan(ing a((ounts re(eivab$eand inventories*

88 age 81+hat is meant !y Preferred stock -referen(e sares (arr& a stated dividend and te& do not usua$$& ave voting rigts


8 age 0)+arrantsOarrants are (a$$ options variants of e%uit&*

8 age 0)+hat are deri/ati/es-

A derivative is a produ(t wose va$ue is derived from te va$ue of an under$&ing asset, inde or referen(e rate*

8. age 08:orward contract

A forward (ontra(t is an agreement to bu& or se$$ an asset of a spe(ified %uantit& at a (ertainfuture time for a (ertain pri(e* No (as is e(anged wen te (ontra(t is entered into*:"t"res contract

A futures (ontra(t is an agreement between two parties to bu& or se$$ an asset at a (ertain time inte future at a (ertain pri(e* Inde futures are a$$ futures (ontra(ts were te under$&ing is te

sto(k inde and e$ps a trader to take a view on te market as a wo$e*

8- page082wo %uestions wi$$ (ome:@edging invo$ves prote(ting an eisting asset position from future adverse pri(e movements* Inorder to edge a position, a market p$a&er needs to take an e%ua$ and opposite position in tefutures market to te one e$d in te (as market*Ar!itrage: An arbitrageur is basi(a$$& risk averse* He enters into tose (ontra(ts were e (anearn risk $ess profits* Oen markets are imperfe(t, bu&ing in one market and simu$taneous$&se$$ing in oter market gives risk $ess profit* Arbitrageurs are a$wa&s in te $ook out for su(

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imperfe(tions*

8K age 00+hich is not a o$tion-%all *$tionsP"t *$tionsL<A'Swa$s9i$ futures Answer

8+ age 08 Oat is (a$$ and put optionP

81 age 00%"rrency Swa$ invo$ves te e(ange of prin(ipa$ and interest in one (urren(& for te same inanoter (urren(&*

0) age0.Oat are primar& and se(ondar& marketsP

08 age 0-Oi( is not a sto(k marketP2e important sto(k e(anges are as fo$$ows:• New Gork 'to(k <(ange NG'<• Nationa$ Asso(iation of 'e(urities #ea$ers Automated ;uotations NA'#A;• London 'to(k <(ange L'<• Bomba& 'to(k <(ange B'<,• Nationa$ 'to(k <(ange of India N'<

9ne wi$$ be differentQ

00 age 0K

Oat is te name of (entra$ bank in Ameri(aP5edera$ Reserve

0 age 0KOat wi$$ aven if market rates go upPBond pri(e wi$$ fa$$QIe Bond pri(e is inverse$& proportiona$ to market interest rates





0K age )

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Oat do u mean b& portfo$io management s&stemP2ese s&stems a$$ow te investment managers to (oose te instruments to invest in, based onte re%uirements or inputs su( as amount to be invested, epe(ted returns, duration or tenureof investment, risk to$eran(e et(* and ana$&sis of pri(e and oter data on te instruments andissuers

V"st read %ha$ter :inancial Statements only 6 ?"estion can comeOOOO

0+ age 1Oat is not a fun(tion of (entra$ bankPRead a$$ te fun(tions of (entra$ bankQ

Answer/ 2o appoint some governor

01 age .)2ere wi$$ two or tree %uestions from !RR**Oat do u mean b& !RR !as Reserve Ratio*2ere wi$$ be two numeri(a$s a$soQ**'ame from book eamp$eP

) age .0

Read te ser/ices offering !y !anks

8 age .Oat is $ass/'teaga$$ A(t P$ass/'teaga$$ A(t of 81, (reated a !inese wa$$ between (ommer(ia$ banking and se(uritiesbusinesses in 6'* 2at a(t was intended to address te per(eived (auses of bank fai$ures duringte reat #epression of 8101*

0age .KRead tis page (arefu$$& ** tree %uestions wi$$ (omeQ%hecking Acco"nts;ui(k, (onvenient and, fre%uent/a((ess to te mone&*

'ome banks pa& interest wi$e man& do not*

Money Market >e$osit Acco"ntsa&s a iger rate of interest tan a (e(king or savings a((ountMM#As often re%uire a iger minimum ba$an(e to start earning interest

Sa/ings Acco"nt A$$ows making witdrawa$s, but (e(ks writing fa(i$it& is not tere*Number of witdrawa$s or transfers one (an make on te a((ount ea( mont is $imited*

ime >e$osits %ertificates of >e$ositHG"aranteed rate of interest for a term or $engt of time spe(ified b& te a((ount o$der*2e rate of interest is often iger tan savings or an& oter a((ount

Basic or o :rill Banking Acco"nts!e(king a((ounts, but wit a $imit on te number of (e(ks one (an write and te number of deposits and witdrawa$s one (an makeInterest is genera$$& not paid*

age -)+hat are the ways of Money ransfer-• !e%ues"!e(ks

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o Bearer !e(kso A((ount a&ee !e(kso 2rave$ersC !e(kso Bankers !e(ks• #ebit !ards• #emand #rafts• Automated !$earing House A!H• 'tanding Instru(tions• <$e(troni( 2ransfer

age -8


. age -

Read se(tion Lost or Stolen AM or >e!it %ardsIf unautori4ed use o((urs before reporting, te $iabi$it& of te (ustomer varies depending on tede$a& in reporting te $oss to te (ard issuer*• Oitin two business da&s Liabi$it& $imited to 7.) for unautori4ed use*• Between 0 / -) da&s Liabi$it& $imited to 7.)) be(ause of an unautori4ed transfer*• If te $oss is not reported witin -) da&s, te $iabi$it& as no $imits*

- page -


K page -./--

Read toroug$&** 'ome of te %uestions wereOat is 5edwireP5edwire is an e$e(troni( transfer s&stem deve$oped and maintained b& te 5edera$ Reserve'&stem* 2e s&stem (onne(ts 5edera$ Reserve Banks and Bran(es, te 2reasur& and oter government agen(ies

5u$$ form of !HI'P!$earing House Interbank a&ments '&stem

Oat is 'OI52P2e 'o(iet& for Oor$dwide Interbank 5inan(ia$ 2e$e(ommuni(ation 'OI52 runs a wor$dwide

network b& wi( messages (on(erning finan(ia$ transa(tions are e(anged among banks andoter finan(ia$ institutions


+ age -1Read toroug$&**Oi( is non se(ure $oanP

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Answer: ersona$ $oan

A"to loans ha/e nterest rate is lower as com$ared to Personal loansO

14H Page 87 ,,im$

*ne ?"estion ie n"merical atleast on O(* Limit L ma outstanding a$$owedd* Margin M per(entage of $imit tat (an be drawne* Asset va$ue A va$ue of under$&ing assetf* #rawing ower # / $ower of L and 8/MA

here will !e atleast 3 ?"estions on difference !etween Lease and @ire..Lease• 2wo main t&pes operating, finan(ia$• 2e 5inan(ier owns te asset*• #epre(iation is ($aimed b& te finan(ier*• 2a dedu(tion (an be ($aimed for te fu$$ va$ue of te renta$ paid*• 5inan(ier takes (are of maintenan(e, insuran(e et(*

@ire P"rchase• 2e asset is owned b& te finan(ier*• #epre(iation (an be ($aimed b& te borrower*• 2a dedu(tion (an be ($aimed on$& to te etent of te interest repa&ment*


one will !e e0tra gi/enO

6HPage 83+hat is :loating Rate of nterest-2e rate of interest is $inked to one of te rates prevai$ing in te market, for eamp$e it (an be$inked to PLR Prime Lending Rate or LB*R London nter!ank *ffered RateH.

3H Page 81Oat is !o$$ar and 'preadP'pread= (urrent rate base rate!o$$ar = (ap/f$oor

age K%harge y$es• $edge go$d, bank as possession• H&pote(ation vei($e, borrower as possession

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• Lien against bank deposits• Assignment insuran(e po$i(ies, rigts get transferred to bank• 'ares / periodi( drawing power (a$(u$ation• Mortgage immovab$e propert&

age K-

+hat are :reddie Mac) Ginnie Maes & :annie Mae-5edera$ Nationa$ Mortgage Asso(iation 5NMA or 5annie Mae, overnment Nationa$ Mortgage


.age K-/KK Read auto $oans and student $oans P on$& one two %uestion wi$$ (omeP


O& te& are given b& banksP!orporate $oans areprovided b& banks for various purposes $ike new pro3e(ts, (apa(it& epansionor p$ant moderni4ation, dai$& (as f$ow re%uirements working (apita$ et(*

Interest is usua$$& paid on te dis!"rsed amo"nt of the loan.

K page +!redit ratingsRating $eve$s migt var& from AAAigest, AA, AA/ to defau$t ratings $ike #*

+ age +Oat do u mean b& Lines of !reditP2ese are sort term $oans san(tioned for a fied va$idit& period, a$$owing te (orporate to drawte $oan as and wen re%uired witin te va$idit& period and repa& te $oan after a (ertain periodrepa&ment period* Interest is eiter repa&ab$e in (ertain interva$s or in one bu$$et insta$$ment atte end of te repa&ment period

1 age +.


Read page +/+. topi(s $itt$e bitQ*

.) page +-Oat is te ($assifi(ation of $oans:Loans are ($assified and a((ounted for as fo$$ows:Accr"alYLoans@eldforsale*rading

26H $age N8

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Atleast two ?"estions will come from credit deri/ati/es!redit derivatives are finan(ia$ (ontra(ts tat transfer (redit risk from one part& to anoter,fa(i$itating greater effi(ien(& in te pri(ing and distribution of (redit risk among market p$a&ers*

In market par$an(e, te (orporate bond investor in tis eamp$e is the !"yer of $rotection, tedea$ers the $rotection seller , and te issuer of te (orporate bond is (a$$ed te reference entity

9ses of %redit >eri/ati/es

23H Page N4>efinition of treas"ry ser/ices and its f"nctions-

21H Page 47+hat do " mean !y:orward Rate Agreement :RAH A (ontra(t tat determines te rate of interest,or (urren(& e(ange rate, to be paid, or re(eived, on an ob$igation beginning at a somefuture start date* It is a$so referred to as 5uture Rate Agreement*nterest Rate Swa$ RS / A dea$ between banks or (ompanies were borrowers swit(f$oating/rate $oans for fied rate $oans in anoter (ountr&* 2ese (an be eiter te sameor different (urren(ies* 2e motive ma& be te (ompetitive advantage of one (ompan& to

ave a((ess to $ower fied rates tan anoter (ompan&* 2e oter (ompan& ma& be(ompetitive$& p$a(ed to ave a((ess to $ower f$oating rates* A swap wou$d be benefi(ia$to bot* 2e swap is measured b& its notiona$ prin(ipa$*

2H $age 46+hat do " mean !y %MS-%ash Management Ser/ices / !M' is a servi(e provided b& banks to its (orporate ($ients for a fee to redu(e te f$oat on (o$$e(tions and to ease te bu$k pa&ment transa(tions of te($ient* 2e tree e$ements of !M' are: Recei/a!les Management



25H Page 4*ne n"merical on• INR"6'# %uote: .*0-"*- ere, )*)8 is te sma$$est (ount, referred to as one TpipC• <6R"6'# %uote: 8*0.+"*0-8 ere, )*)))8 is te sma$$est (ount, referred to as one TpipCOi$e te derived (ross (urren(& rate wou$d be:INR"<uro %uote: .*0-8*0-8" .*-8*0.+ = .-*)"*.8

>efinitions of• ostro 9ur"m& a((ount wit &ou: !urrent a((ount maintained b& one bank wit anoter bank abroad in te $atterCs ome (urren(&• ,ostro 2eir a((ount wit me"us: !urrent a((ount maintained in te ome (urren(& b& onebank in te name of anoter bank based abroad


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Read to$ic S$ot and :orward :oreign E0change %ontracts

28H Page 42+hich are the inter!anks


2NH Page 48Read %MS f"nctions..

24H Page 44+hat do " mean !y lock !o0 ser/ice-

57H Page 44677+hat is $ooling and netting -

56H $age 677+hat is ew Act %heck 36-

53H$age 673+hat is RGS-

51H$age 671Read what is A%@-

5H$age 67+hat are risk factors choosing the mode of financing-%osts

ime frameRisk factorsGo/t g"rantee $rogramsE0$orters f"nds

52H$age 672+hat is B*L-:"ll form of B*L-

55H $age 672PA(ME ME@*>S!as in advan(e• Letter of (redit

• #o(umentar& (o$$e(tion• 9pen a((ount or (redit• !ounter/trade or Barter

-K page 8)- Advantages or disadvantages of L! (ommer(ia$ $etter of (redit in (e(k bo %uestion

-+page 8)Kfour parties are invo$ved in an& transa(tion using an L!:

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6. B"yer or A$$licant3. ss"ing !ank1. BeneficiaryJs !ank. Beneficiary or Seller

-1page 8)+Read te steps**

K) page 88) positive$& (ome2e stand!y L% is $ike a bank guarantee* It is not used as te primar& pa&ment metod but as afai$ safe metod or guarantee for $ong/term pro3e(ts*



>rafts A draft sometimes (a$$ed a bi$$ of e(ange

Read sigt draft and 2ime #rafts toroug$&**

K0 page 888*PE A%%*92is (an be a /ery risky metod for te se$$er, un$ess e as a $ong and favorab$e re$ationsipwit te bu&er or te bu&er as an e(e$$ent (redit rating*

K page 88

5u$$ form of BA52P

K page 88two %uestions wi$$ at $east (ome from te tab$e:ERA*AL PA(ME SR9MES %*MPARS* %@AR

K.age 88KOat are (ip (ardsP

K- page 881Oat are te ke& a(tivities in (redit (ard marketP $s $earn wi( (omes under wi( (ategor&**

KKpage 80)

Oat are issuing anf a(%uiring servi(esP

K+ page 808 A (ard Asso(iation>o ot Pro/ide hese :"nctions• 'e(urit&"Risk management this f"nction is $ro/ided) it is odd one o"t• Issue (ards• 'et (redit $imits• 'et (ard fees

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• 'et interest rates• 'o$i(it mer(ants• 'et dis(ount rates

K1 page 800

9n$& read te fun(tions $itt$e bitQ

+) page 80Krivate Banking (overs banking servi(es, in($uding lending and in/estment managementtr"eH

n/estment Management and Ad/ice A ($ient re$ationsip Manager understands te ($ientCs $i%uidit&, (apita$ and investment needs* Hestrives to deve$op an integrated approa( to manage ($ient investments and (apita$ marketstrading* A((ess to spe(ia$ist advi(e and etensive resear( is a ke& feature of private banking*Selfdirected or nondiscretionary: 2is is $arge$& investment advisor& in wi( te bank offersinvestment re(ommendations based on te !$ientCs approva$* 2e ($ient ma& (oose to ignoretis*>iscretionary: In tis (ase, te bankCs portfo$io managers make investment de(isions on bea$f

of te (ustomer*

N6H $age 63N634%*MM* PR,AE BAKG PR*>9%SPersonal n/estment %om$anies P%sHPaya!le hro"gh Acco"nt PAH@edge :"nds


N1H$age 611In a(ieving te above goa$s, an Investment Manager uses te fo$$owing approa(es"prin(ip$es:• Asset Mi0• nternational >i/ersification• ScreensC:ilters*• %a$ital $reser/ation• Alternati/e n/estments

NH $age 612615Acti/e /s $assi/e a$$roach

o$ >own A$$roach /s Bottom 9$ A$$roach

N2H $age 6182ere are tree dimensions to portfo$io ee(ution:%ost of e0ec"tionrading s$eedPortfolio Risk Management


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N8H $age 66+hat do " mean !y A,-

Some of the leading com$anies that offer m"t"al f"nds are:• 5ide$it& Investments•

angaurd• IN #ire(t• Me$$on

NNH $age 63>ifference !etween SMA and M"t"al :"nds-Ad/antages and disad/antages of SMA-

N4H $age 61


47H $age 6N3 ?"estionsS(>%AE2e ub of te investment banking wee$, s&ndi(ate provides a vita$ $ink between sa$espeop$eand (orporate finan(e* '&ndi(ate eists to fa(i$itate te p$a(ing of se(urities in a pub$i( offering, akno(k/down drag/out affair between and among bu&ers of offerings and te investment banksmanaging te pro(ess* In a (orporate or muni(ipa$ debt dea$, s&ndi(ate a$so determines tea$$o(ation of bonds*

46H $age 6N64:"ll form of P*- +hat it is-

An initia$ pub$i( offering I9 is te pro(ess b& wi( a $ri/ate com$any transforms itse$f into a$"!lic com$any*tis wi$$ (ome

2e I9 pro(ess (onsists of tese tree ma3or pases:@iring the Managers>"e >iligence and >raftingMarketing


41H $age 6279>ER+RG6nderwriters earn t&pes of 6nderwriting 'pread:• Manager's fee / 2e $ead underwriter re(eives tis fee on a$$ se(urities so$d*• 9nderwriter's Allowance is te tota$ spread minus te ManagerUs fee* 2is fee is sared b&s&ndi(ate members based on te t&pe of s&ndi(ate a((ount*• %oncession / It is t&pi(a$$& te $argest part of te spread and is paid to te broker"dea$er tata(tua$$& took te ($ientCs order*

;uestion: wi( is te $argest part of spreadP Answer : (on(ession

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Oat is 92!P


An individua$ firm (ou$d a(t as a broker on one trade and a dea$er on anoter* Oen a(ting as abroker, te firm is taking (ustomer orders and a(ting as teir agent to bu& or se$$ te se(urit&* 5or tis servi(e, te broker (arges a (ommission* A firm a(ting as a dea$er is te a(tua$ bu&er or se$$er, taking te oter side of a trade* 2e pri(e at wi( market makers wi$$ bu& or se$$ aparti(u$ar se(urit& is known as the Bid or Ask Price*

1- page 8.*rder y$es Based on ,ol"meH:ill or Kill :*KH 2e order must be immediate$& fi$$ed in one trade or (an(e$ed (omp$ete$&*All or one A*H 2e entire order must be fi$$ed or (an(e$ed (omp$ete$&, but un$ike 59E, A9N(an remain good ti$$ (an(e$$ed*mmediate or %ancel *%H must immediate$& be fi$$ed for as mu( of te order as possib$e inone trade, wit te remainder being (an(e$$ed*

Market ot @eld order Q 2e f$oor broker as te dis(retion (on(erning time and pri(e* A ke&point is tat Market Not He$d orders are never on te 'pe(ia$istUs Book*


1Kpage 8-)

2e important markets and te indi(es used are presented be$ow:6' #iversified market #ow Jones Industria$ Average #ow6' 2e(no$og& NA'#A; 8))6E London 5inan(ia$ 2imes 'to(k <(ange Inde 52'<erman& 5rankfurt #AV5ran(e aris !A!

'wit4er$and Wuri( 'MIJapan 2ok&o NikkeiHong Eong Hang 'eng'ingapore 'trait 2imes Inde '2I

1+ page 8-'ee VL seet sure tree %uestione wi$$ (ome from risk%redit risk is te possibi$it& of $oss as a resu$t of defau$t, su( as wen a (ustomer defau$ts on a$oan, or more genera$$&, an& t&pe of finan(ia$ (ontra(t*Li?"idity risk is te possibi$it& tat a firm wi$$ be unab$e to generate funds to meet (ontra(tua$

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ob$igations as te& fa$$ due**$erational risk is te possibi$it& of $oss resu$ting from errors in instru(ting pa&ments or sett$ingtransa(tions*Legal risk is te possibi$it& of $oss wen a (ontra(t (annot be enfor(ed // for eamp$e, be(ausete (ustomer ad no autorit& to enter into te (ontra(t or te (ontra(t turns out to beunenfor(eab$e in a bankrupt(&*Market risk is te possibi$it& of $oss over a given period of time re$ated to un(ertain movements inmarket fa(tors, su( as interest rates, (urren(ies, e%uities, and (ommodities*

11 page 8-MEAS9RG RSKS2e probability monetary impact

8)) page 8-Oat is varP


Assume tat &ou ave a o$ding in IBM 'to(k wort 78) mi$$ion* Gou ave (a$(u$ated testandard deviation '# of (ange over one da& in IBM is 7 )*0)*2erefore for te entire position, '# of (ange over 8 da& = 70)),)))2e '# of (ange over 8) da&s = 70)),))) X8) = 7-0,.-2e 11Y aR over 8) da&s = 0* -0,.- = 78,K,-088)0 page 8-.Oat is monto/(ar$oP

Ans: A simu$ation te(ni%ue

8) page 8--4ariance-0ovariance method it is te (omputationa$$& fastest metod known toda&*

Oi( is te best AR metodP Ans/ !ant sa&

8) page 8--MAAGG RSKS2ere are mu$tip$e strategies to manage risks* 'ome of te (ommon$& fo$$owed ones are:8* #iversifi(ation0* Hedging or Insuran(e* 'etting Risk Limits* Ignore te riskZ

Some common ?"estions

6H+hich is the !est market - ew (ork

3H which is not a f"nction of $ri/ate !ank-Ans to $rint notes

1H Re$ian(e Industries Limited, India wou$d $ike to raise mone& in NG'< for epanding itsoperations in te domesti( market India* 2e se(urities issued wou$d be

American >e$ository Recei$t

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Gou pur(ased a sare of sto(k for 70)* 9ne &ear $ater &ou re(eived 78 as dividend and so$d tesare for 701* Oat was &our o$ding period return.Y.Y27=)Y None of te $isted options

Bank of Ameri(a (arges a $ower rate of interest to Lo(keed Martin tan to enera$ <$e(tri(*2is (an be attributed to $ower [[[[[[[[ risk from Lo(keed as (ompared to < for Bank of

Ameri(a Market Risk %redit Risk Li%uidit& Risk Lega$ Risk None of Above

If Bank of New Gork as found errors in sett$ement of transa(tions wit some of its (ustomers, astere is some mistake in some of its s&stems* 2is wou$d be ($assified as Li%uidit& Risk Market Risk !redit Risk !ountr& Risk *$erational Risk

Risk is best measured wen $ooked at At a Ma(ro $eve$ At the lowest $ossi!le le/el At a sub/ma(ro $eve$ At organi4ationa$ $eve$ At (ountr& $eve$

Oat wou$d be te most a((urate aR estimation metodP Monte !ar$o 'imu$ation Histori(a$ 'imu$ation arian(e/!ovarian(e Matri %annot Say Ana$&ti(a$ Metods

If a finan(ia$ instrument as a . per(ent (an(e of pa&ing 01 per(ent and a -. per(ent (an(eof pa&ing / 8 per(ent, it epe(ted return wou$d be simp$e ])*. )*01)*-. /)*8^)*))+)*)-)*).

7.768/)*)01

2e term Srisk averseS means tat

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An individua$ refuses to take risks* Most investors and businessmen seek risk* An indi/id"al will seek to a/oid risk or !e com$ensated with a higher ret"rn* 9n$& investment proposa$s wit no risk sou$d be a((epted*Bot An individua$ refuses to take risks and 9n$& investment proposa$s wit no risk sou$d bea((epted

!RR stands for wi( of te fo$$owing %ash Reser/e Ratio !ommon Reserve Ratio !as Refund Ratio !as Re/servi(e Ratio !as Reserve Risk

Mone& Mu$tip$ier effe(t wou$d imp$& An in(rease in te tota$ mone& $ent out into te s&stem An in(rease in te tota$ mone& in te bank reserves in te s&stem A de(rease in te tota$ mone& in te bank reserves in te s&stem Both An increase in the total money lent o"t into the system and An increase in the totalmoney in the !ank reser/es in the system Bot An in(rease in te tota$ mone& $ent out into te s&stem and a de(rease in te tota$ mone& inte bank reserves in te s&stem

Oi( of te fo$$owing is N92 a fun(tion of te bankP Ens"re s"$ernormal ret"rns to its small de$ositors !anne$i4e 'avings rovide (redit fa(i$ities to borrowerrovide investment avenues to investors

5a(i$itate te trade and (ommer(e dea$ings

Oi( of te fo$$owing is asso(iated wit te purpose of regu$ating finan(ia$ institutionsP2o provide stabi$it& of te mone& supp$&2o serve (ertain so(ia$ ob3e(tives

o $re/ent fail"re of any financial instit"tion 2o offset te mora$ a4ard in(entives provided b& deposit insuran(e and oter guarantees* Bot 2o serve (ertain so(ia$ ob3e(tives and 2o offset te mora$ a4ard in(entives provided b&deposit insuran(e and oter guarantees

2e (entra$ bank in te 6' is (a$$ed :ederal Reser/e 5edera$ Reserve Board Reserve Bank of 6nited 'tates !entra$ Bank of 6nited 'tates Reserve Bank of Ameri(a

If a bank gets a deposit of 78)), assuming a reserve re%uirement !RR of 8)Y, and tat it

(ir(u$ates troug 0 more banks, $eading to te fo$$owing mone& mu$tip$ier effe(t (reate a reserve of 78) loan of <3 (reate reserve of 781 $oan of 78K8None of te $isted 9ptions

If te Limit = 78.)), margin = 0)Y and Asset a$ue = 70))) ten #rawing ower for an 9penended $oan is e%ua$ to

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78,.))78,0))78,-))71))None of te $isted 9ptions

Oi( of te fo$$owing is te most profitab$e for !redit !ard !ompan&P !ustomers wo a$wa&s pa& in time !ustomers wo never pa& %"stomers who defa"lt !"t finally $aya$$ of te $isted options


Interest rate spread is e%ua$ toP %"rrent rate Q Base rate !urrent rate 5$oor Base rate 5$oor !ap !urrent rateNone of te $isted 9ptions

5reddie Ma(, innie Maes @ 5annie Mae areP Marketing institutions se$$ing ome $oansLenders to the !anks for home loan !o"ght !y retail c"stomers

Regu$ator& bodies governing ome $oan market in 6'rimari$& asset management (ompanies


Oi( of te fo$$owing is not invo$ved in a (redit (ard transa(tionP Independent sa$es organi4ationMer(ant

a&ment gatewa& Associations


Oo (e(ks for te (redit $imit of te (ard before approving te transa(tionP a&ment pro(essor A(%uiring banks a&ment gatewa& ss"ing !ankNone of te $isted 9ptions

Oi( is not a banking a((ountP !e(king A((ounts Mone& Market #eposit A((ounts >emat Acco"nt

2ime #epositsNone of te $isted 9ptions

9ne sou$d ave te 2ime #eposits if one is $ooking forP ;ui(k, (onvenient and, fre%uent/a((ess to te mone&

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A ig rate of interest G"aranteed rate of interest Low feeNone of te $isted 9ptions

<52A stands for<$e(troni( 5unds 2rading A(t


<$e(troni( 5ee 2ransfer A(t <$e(troni( 5unds 2e$e(ommuni(ation A(t

2e 5edera$ Reserve offers finan(ia$ servi(es to banks and te 6*'* government for a$$ of tefo$$owing reasons e(ept to make a $rofit promote (ompetition foster innovation promote effi(ien(& in te pa&ments s&stemNone of te $isted 9ptions

!HI' stand for !$earing House for Internationa$ a&ments 'ett$ement %learing @o"se for nter!ank Payment System !$earing Head of Interbank a&ment 'ett$ement !$earing Head of internationa$ a&ment 'ett$ement !$earing House for Interbank a&ment 'ett$ement

2e pro(ess f$ow in a rivate banking firm goes as 'ervi(ing 'pe(ia$ist => !$ient Representative => Midd$e 9ffi(e => Ba(k 9ffi(e %lient Re$resentati/e ; Ser/icing S$ecialist ; Middle *ffice ; Back *ffice !$ient Representative => 'ervi(ing 'pe(ia$ist => Ba(k 9ffi(e => Midd$e 9ffi(e Midd$e 9ffi(e => Ba(k 9ffi(e => 'ervi(ing 'pe(ia$ist => !$ient Representative

!$ient Representative => Midd$e 9ffi(e => 'ervi(ing 'pe(ia$ist => Ba(k 9ffi(e

Oi( of te fo$$owing ro$es and responsibi$ities are (orre(t$& statedP Ser/ices Pro/ider a0 Ser/ices Midd$e 9ffi(e? 'tatements @ Advi(es 5ront 9ffi(e? !$ient Reporting Ba(k 9ffi(e: Risk Management Midd$e 9ffi(e? !ustodia$ 'ervi(es

2e be$ow stated responsibi$ities are (arried out b& wi( of te fo$$owing p$a&ers* !as'ervi(es"!$ient Reporting"'tatements @ Advi(es"#omesti( @ $oba$ 'ett$ements 'ervi(es rovider !$ient Representative

Back office 5ront 9ffi(e Midd$e 9ffi(e

rivate banking offers Dstru(tured $endingF tat provides !ustomi4ed asset/based (redit so$utions

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Long/term $i%uidit& to ($ients Advi(e/$ed (redit so$utions %redit sol"tions to @igh et worth indi/id"als


5inan(ia$ p$anning invo$ves a$$ <V!<2 !as f$ow management Retirement p$anning Risk management 2a p$anning Portfolio management

Loan (an take man& of te fo$$owing basi( forms <V!<2 9verdrafts Bi$$s and promissor& notes %or$orate !onds Advan(es!redit $ine

If a fund pur(ases a $oan in te rimar&, te& a$so use anoter word for tat* Oi( term is used

to indi(ate te initia$ group of $enders rimar& LendersP A$$o(ation Syndicate 'e(ondar& AssignmentNone of te $isted 9ptions

Oi( of te fo$$owing is not a (redit derivativeP !redit $inked Notes* 2ota$ return swaps*!redit defau$t swap*

%"rrency swa$*


Oi( of te fo$$owing is not a se(ured $oanP <%uit& Loans 'e(ured Loans wit 'avings <%uit& Lines of !redit Personal Loans !ar Loan

Oi( if te fo$$owing is true in te (ase of sigt draftP B"yer can ref"se to take the deli/ery ;ua$it& of te ood is guaranteed

Bu&er is epe(ted to make te pa&ment after spe(ified (redit da&s a&ments made based on on$& bi$$ of $adingNone of te $isted 9ptions

2e basi( four parties invo$ved in an& transa(tion using L! Letter of !redit are te fo$$owing<V!<2

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Issuing Bank Reim!"rsement Bank'e$$er

Benefi(iar&Cs Bank Bu&er

Oi( of te fo$$owing is te safest t&pe of $etter of (redit from se$$er point of viewP !onfirmed Letter of !redit Irrevo(ab$e Letter of !redit Red !$ause Stand!y Letter of %redit Revo$ving Letter of !redit

Oi( of te fo$$owing metods of pa&ment is most risk& to te 'e$$erP #o(umentar& !o$$e(tion *$en Acco"nt Letter of !redit !ounter trade !as in Advan(e

B9L stands for Bi$$ of Letter BankerCs 9verdraft Limit Bank of London Bi$$ of Leasing Bill of Lading

BA52 stands for Bankers A((eptan(e for 5a(toring 2ransa(tions Bankers Association for :oreign rade Bankers A((eptan(e for 5oreign transa(tions Bankers Asso(iation for 5orfaiting @ 5a(toring transa(tion Bankers asso(iation for 5a(toring 2rade

Bi$$ of Lading is a (ontra(t between Importer and <porter for transportation of goods a re(eipt issued b& importer to eporter for goods re(eived for transportation a contract !etween a carrier and a shi$$er for the trans$ortation of goods A re(eipt issued b& eporter to importer for goods de$ivered* None of te $isted options

Oi( of te fo$$owing metods e$iminate (ountr& risk and (ommer(ia$ risk upon (onfirmationP Ba(k to ba(k Letter of !redit 'tandb& Letter of !redit #o(umentar& !o$$e(tion Letter of !redit

Both Stand!y Letter of %redit & Letter of %redit

2e fo$$owing are interest rate risk management instruments <V!<2P Interest rate swap 5orward rate agreement 'waption nterest rate g"aranteeNone of te $isted 9ptions!as management te(ni%ues in($ude oo$ing

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Netting 'wapping Both Pooling and ettingoo$ing, Netting and 'wapping

A$$ of te fo$$owing are pa&ment modes e(ept <52 !e%ue #ebit to a((ount troug #ebit (ardLock!o0


Oi( of te fo$$owing are prin(ip$es used b& an asset managerP #iversifi(ation '(reens and 5i$ters !apita$ preservationAll of the listed o$tions 9n$& #iversifi(ation and '(reens and 5i$ters

Bid/Ask spread refers to

#ifferen(e in pri(e between bu&ing one asset and anoter simi$ar one #ifferen(e in opinion between te se$$er and bu&er on te pri(e of an asset >ifference !etween the !"ying and selling $rice of the same asset Bot #ifferen(e in pri(e between bu&ing one asset and anoter simi$ar one and #ifferen(e inopinion between te se$$er and bu&er on te pri(e of an assetNone of te $isted 9ptions

2e pro(ess of THiring of te Lead ManagersC in te (ase of I9 is referred to as Red Herring Road/sow Investment Manager !ontest Advisor !ontest Bea"ty %ontest

'&ndi(ate in Investment banking refers to a$$ <(ept Hub of te investment banking wee$ #etermination of a$$o(ation of bonds Merger and Ac?"isition ad/isory 5a(i$itating p$a(ing of se(urities in pub$i( offeringNone of te $isted 9ptions

2e differen(e between D5i$$ or Ei$$F and DA$$ or NoneF order is D5i$$ or Ei$$F a$$ows mu$tip$e tradesDAll or one can !e a Good ill %ancelled order

2e& are s&non&ms D5i$$ or Ei$$F (an be va$id ti$$ end of da&

D5i$$ or Ei$$F a$$ows partia$ ee(ution2e NG'< is an eamp$e of rimar& Market Secondary Market 92! Market 5ourt MarketNone of te $isted 9ptionsOat is te ke& regu$ator& autorit& over te Ameri(an se(urities industr&P 5edera$ Reserve

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5#I! #2!! A'A Sec"rities E0change %ommission

Oat is te term for te differen(e between bid and askP #ifferen(e S$read rofit ;uoteNone of te $isted 9ptions

Oat is te 2ird MarketP NA'#A; *%NG'<


2e D5ourt MarketF refers to

NA'#A; 92!NG'<


!ore !ustod& 'ervi(es performs te fo$$owing fun(tions e(ept ri(e se(urities positions Re(ord Eeeping :id"ciary and com$liance monitoring Reporting servi(es ro(esses (orporate a(tions

'ervi(es $ike te sett$ement, safekeeping, and reporting of (ustomersC marketab$e se(urities and(as are provided b& [[[[[[[[[[[[[[[[[ %"stodian Broker Investment bank 5und Administrator #ea$er

Mone& $aundering refers to Money facilitating criminal offences <tending $oans to (orporate 'ort term borrowing @ p$a(ements


None of te $isted 9ptions5edera$ autorities atta(k mone& $aundering troug Regu$ations !rimina$ san(tions 5orfeitureAll of the listed o$tionsNone of te $isted 9ptions2ree pi$$ars of te new (apita$ a((ord, Base$ II, are ;uantitative? 'upervisor&? enera$

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;ua$itative? Market 5or(es? eograpi( ;uantitative? 9perationa$? 'upervisor& "antitati/e "alitati/e Market :orces ;ua$itative? Mandator&? ;uantitative

!apita$ ade%ua(& ratio refers to Amo"nt of !ankJs ca$ital e0$ressed as $ercentage of the risk weighted credit e0$os"re Amount of bankCs (apita$ epressed as per(entage of te risk weigted (redit eposure @operationa$ risk Amount of bankCs (apita$ epressed as per(entage of te risk weigted (redit eposure, @market risk Amount of bankCs (apita$ epressed as per(entage of te risk weigted (redit eposure,

operationa$ risk @ market riskNone of te $isted 9ptions

#o( 888

6ome pattern $uestionsF,)7he central bank in =6 is calledPPPPPP

e#era( resere

2) 6imple interest is calculated on which of the following!eginning principa( on('

3 An in'estment manager handles all of the following except --------9"aranteeing that the inestor #oesn’t s"ffer a (oss in an' inestent

C ick the odd one outa( :akesh WhunMunwala!) Sachin Ten#"(e%ar

c( 9arren 1uffetd( ;eorge 6oros e eter =Mnah

5) n retail banking the term 8! stands for which of the followingpost #ate# che;"es

Q) A company would pay the interest on what portion of the loan?<is!"rse# ao"nt

) ick the odd one out

a( otes!) Stoc%s

c( 8ebenturesd( 7-1illse( inus

.) A formal3 legal commitment to extend credit up to some maximum amount o'er astated period of time in a description of PPPPPPPP >ine of cre#it

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4) As nominal interest rates increases in the economy the inflation should ideallyIncrease

,/) 9hich of the following is associated with the purpose of regulating financial

institutionTo preent fai("re of an' financia( instit"tion

11 9hat is the maximum maturity for commercial paper? 270 #a's

,2) 7he below stated responsibilities are carried out by which of the following players!ash ser'icesL client reportingL statements C ad'iceL domestic C global settlementsac% office

,0) n a financial instrument has a 2/% chance of paying 2/% C a ./% chance of paying5/%3 its expected return would be CCK

1C 9hich di'ision pro'ides ser'ices to high net ,orth indi'idualPriate !an%ing

,5) 9hich of the following instruments will carry the lowest interest rate

Tnote

16 Oi( of te fo$$owing instruments wi$$ (arr& te igest interest rateP%ommercial Pa$er

1. If an investment pa&s interest at an annua$ rate of .Y per &ear, (ompounded twi(e a &eartan te effe(tive &ie$d $arger tan .*.Y

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a. 2rue b* :alse

. In a 0 wa& %uote for a sare te bid isa. 0Y $ess tan offer !. Less than offer c. More tan offer d. #ependent on dea$erCs ski$$e. <%ua$ to offer

2. Oi( of te fo$$owing is usua$$& not parti(ipant in sto(k marketa. 'ma$$ individua$Cs investors!. %entral !anksc. !ompaniesd. 5inan(ia$ institutions

5. In an a((ount saving simp$e interest from te first &ear is reinvented at te beginning of tese(ond &earP

a. 2rue !. :alse

8. Oi( of te fo$$owing is a not (urrent assetP

a. oods for sa$e inventor&!. erms loansc. !asd. Raw materia$ inventor&e. Re(eivab$es

N. Oi( of te fo$$owing in not a feature of private bankingPa. 'pe(ia$ist advi(e!. Lot of resear(c. %ommercial lendingd. Hig investment in te(no$og&e. 6nderstanding te (apita$ and investment needs*

4. Retai$ $oans are asset produ(t offered b& te banka. r"e b* 5a$se

67. If te pri(e of sare pf (ogni4ant (anges from -. to -) tis (an be attributed to:a. Market risk!. Interest rate riskc. !redit riskd. 9perationa$ riske. Li%uidit& risk

66. A((ount maintained in te ome (urren(& b& one bank is te name of anoter bank basedabroad is (a$$ed as:

a. !urrent a((ount

!. Nostro a((ountc. ,ostro acco"ntd. 5ore a((ounte. 9verseas a((ount

63. Oi( of te fo$$owing is not te sett$ement metod for bank $oansPa. re/($osure!. Assignmentc. arti(ipationd. 'ub parti(ipation

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e. Sec"rities re$ository

61. 2e pro(ess of transferring ob$igation from one part& to anoter is (a$$ed o/ation

6. 2e pur(ase of an& sto(k for immediate de$iver& is a [[ market transa(tion*a. 5utures!. S$otc. 5orwardd. 'to(ke. 9ption

62. In te istori(a$ simu$ation metod of aR (a$(u$ation:a. Return are assumed to be not norma$$& distributed!. o ass"m$tion is made a!o"t the distri!"tionc. Random returns are generated to (a$(u$ate aRd. Return are assumed to be norma$$& distributede. Returns are not re%uired at a$$*

65. Oat appens wen interest rate fa$$:a. Bond $rices increase

b* Bond pri(es de(rease(* Bond pri(es do not (anged* <(onom& goes into def$atione* Interest rate never fa$$, te& a$wa&s go up*

68. If te pri(e of a se(urit& on da& 8@0 is 78)0 and 78)) respe(tive$&* 2e return isa* /0Yb* 0Yc. 6.45=d* er& ige* 8/0Y

6N. If &ou invest 78))) for &ears at KY (ompound interest, ow mu( wi$$ &ou ave at te end

of te &earsPa. <6332b* None of $isted option(* 78)))d* 78)K)e* 780K)

64. 2e trade finan(e te term L! stands for?a* Letter of (ommer(ia$sb* Letter of (redit wortinessc. Letter of creditd* Letter of (ommer(ee* Letter of (omp$aints

37. Oat is need for banks in te so(iet&Pa* 'ma$$ investor are prote(ted, en(e it is a $ow risk investment avenue*b* Banks are in te best position to $end out mone& at (ompetitive(* #epositors are parti(ipant in primar& and se(ondar& markets*d. All of listed o$tions.

36. A is more risk averse investor tan B *terefore*a* 5or te same return, B to$erates $esser risk tan B*b* 5or te same return, A to$erates iger rate of return*

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c. :or the same ret"rn) A tolerates lower rate of ret"rn.d* 5or te same return, A takes iger risk*

33. Li%uidit& issues of (redit (an be addressed b&:/a* 'weep fa(i$it&b* 'tru(tured $ending to ($ientc. Alld* 'ort term (redit fa(i$itiese* 9verdraft

31. Oi( is asso(iated wit purpose of regu$ating finan(ia$ institutionPa* Noneb* 2o provide stabi$it& of mone& supp$&*(* 2o serve (ertain so(ia$ ob3e(tives*d. o $re/ent fail"re of any financial instit"tion.e* 2o offset mora$ a4ard in(entive provided b& deposit insuran(e and oter

guarantees*

3. 5astest metod for (a$(u$ating aR*a* Monte/ !ar$o simu$ation*b* A$$ e%ua$ time wit software*(* ,ariance%o/ariance matri0*d* !ombination of Monte/ !ar$o and Histori(a$ 'imu$ation*

32. Oi( is not banks primar& use for depositsPf* a&ment to emp$o&ersg* None* Investmenti* Loan

U. +ithdrawal

35. If te . bids avai$ab$e for sto(k are -, -., -, -0*. and -- wi( one u wi$$ se$$P /> 55

38. Oen a bank issue a $oan its $iabi$ities @ reserves in(reases b& te amount of te $oan*a* r"e b* 5a$se

3N. If te (orporate isnCt ab$e to raise mone& from te market to pa& off some $oans te risk (anbe refer*

a* Market riskb* Interest rate risk(* !ommodit& riskd* 9perationa$ riske. Li?"idity risk

34. 9n te trading da& at te NG'< a broker undertakes te fo$$owing trades Bu& 8)) IBM sares for 78)*)) ea(

'e$$ .) IBM sares for 78)*.) ea( Bu& 8)) M5'2 sare for 70)*)) ea(

'e$$ 0) IBM sares 788 ea( 'e$$ 8) M5'2 sare at 0)*.) ea( 'e$$ ) IBM sares for 1*)) ea(

How mu( did te broker pa& out to te e(ange in tota$ in (ase of i ross sett$ements&stem ii Net 'ett$ement '&stemP

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a* i 78K+) ii 7)))b* i ) for IBM, 78K1. for M'52 ii 78K+)*c. iH <1777 iiH <68N7d* Nonee* i 78K+) ii ) for IBM, 78K1. for M'52

17. 6' eport and <urope import agree to (arr& out te transa(tion of goods word 78)))))under a (onfirmed term L! wit a maturit& date of -) da&s from te time of sipment* 2ea((eptan(e (ommission \ 8*. Y A e%ua$s A 70.))B 7)))! 7))# noneEH <327

16. 9perationa$ risk is defined asP

13. 2e basi( four parties invo$ved in an& transa(tion using L! are te fo$$owing <V!<2 A Issuing Bank B Reim!"rsement Bank ! Benefi(iar& Bank

# 'e$$er< Bu&er

11. Oi$e providing se(urit& $ending servi(es to its ($ients, wi( risk wi$$ a (ustodian ave tomanage for its ($ientsP

A Li%uidit& riskB Bot !redit risk and interest rate risk! Interest rate risk# !redit risk

EH Both credit risk and li?"idity risk*

1. If te pri(e of se(urities on da& 8 and 0 are 78)) and 78)0 respe(tive$& *Returns is A A ver& ig

B 3! /8# /0

< 8

12. 5o$$owing are te $ist of risk tat !ogni4ant fa(es at organi4ationa$ $eve$ A !urren(& riskB Attrition! !redit risk

# All of the a!o/e < rote(tive $egis$ation b& 6'"6E

15. Oi( of te fo$$owing is not a (ore private banking fun(tionP A !$ient managementBH >e$osit Mo!iliation! Investment ana$&sis and advi(e# Resear(

< 'a$es and Marketing

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B #o(uments! &si(a$ instrument $ike (e(k and draft>H Electronic data files< !as

. Oat sou$d one use wi$e using (omparing mortgagesPAH APRB None! IRR# N< Rate of interest app$i(ab$e for te $oan

2. Oi( one of te fo$$owing is not offered b& investment banking division of a bankPAH learning ser/icesB TNone! Merger and A(%uisition# a$uation of firm< 6nderwriting and distribution of e%uit& issues*

5. If tota$ spread on underwriting is 7.))))) and manager fee is 78)))))* Oat is te amountwi( wi$$ be distributed in te s&ndi(ateP

A .)))))B 8)))))%H 77777# -)))))EH %an not !e determined

8. HL sares are (urrent$& se$$ing for 70. ea(* Gou bougt 0)) sares one &ear ago at 70ea( and re(eived dividend pa&ment as 78*.) per sare wat was tota$ do$$ar (apita$ gain tis&ear

A 0))BH 277! None# ))< ))

N. 2e brokerage firm is regu$ated b& A 'tate regu$arit& agen(&BH SE%! Industr& wide 'R9# A$$ of te $isted option

4. i(k odd one out

a. >ematb* ersona$ $oan(* Noned* Hire ur(asee* Auto $oans

27. I deposited 8)) in a bank *Bank $oan out 1) out of it to someone e$se, wo ten invest temone& in setting u a new fa(tor&* 2is pro(ess is (a$$ed

A Monetar& po$i(&B None

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%H Money m"lti$lier effect# rofit making tenden(& of a bank< 5is(a$ po$i(&

26. !apita$ ade%ua(& ratio refers to A Amount of bank (apita$ epressed as Y of te risk weigted (redit eposure @ market

risk*B Amount of bank (apita$ epressed as Y of te risk weigted (redit eposure! Amount of bank (apita$ epressed as Y of te risk weigted (redit eposure @ operationa$

risk*>H Amo"nt of !ank ca$ital e0$ressed as = of the risk weighted credit e0$os"re

o$erational risk & market risk.< None

23. Oi( of te fo$$owing is not a treasur& management s&stemP5 !a$&pso 'ummitH Oa$$ street s&stemI 5ront arena

VH :le0 c"!e

21. '&ndi(ate e$ps in a$$ of te fo$$owing a(tivit& but< Managing $arge bond issues5 Raising uge mone& from te bank Managing $arge (apita$ raising a(tH Managing (onf$i(t between investment banks*H P* distri!"tion.

2. A$$ of te fo$$owing statements (on(erning 6' govt se(urities are (orre(t <V!<2AH reas"ry !ills ha/e their interest $aid in a l"m$ s"m at mat"rityB None

! 2reasur& bi$$s ave greater interest risk tan eiter treasur& bond or treasur& note# 2reasur& note as maturit& dates up to 8) &rs< 2reasur& bonds ave maturit& dates up to ) &rs

22. In defined benefit p$an te benefit is epressed as [[[[[[[[ and in defined (ontribution p$ante benefit is epressed as an [[[[[[[[

A A((ount ba$an(e , Annuit&B Annuit& , Annuit&! A((ount ba$an(e , A((ount ba$an(e# NoneEH Ann"ity ) Acco"nt !alance

25. Oat is te term used to indi(ate te arrangement of LAR< borrowing for a (orporate b& agroup as $endersB none%H Syndicate# A$$o(ation< Assignment5 'e(ondar&

28. !ard asso(iate provide wi( of te fo$$owing servi(e

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A issue (ardB 'et (redit $imits! 'et interest rates# 'et (ard feesEH Sec"rityC Risk management

2N. In an internationa$ se(urities transa(tion, wi( of te fo$$owing parti(ipant wi$$ not beinvo$vedP5 $oba$ (ustodian , domesti( sub (ustodian , depositor& in foreign (ountr& and sometime

sto(k e(ange in foreign (ountr& #epositor& in foreign (ountr&H $oba$ !ustodianH stock e0change in foreign co"ntryJ domesti( sub (ustodian

24. An insurer undertakes an ana$&sis of a portfo$io of insuran(e po$i(& b& ep$oring s(enarios forte pat fo$$owed b& swap rates, po$i(& surrender rates, mortgage prepa&ment rates for temortgage ba(ked se(urit& in te portfo$io, wat is tis pro(ess (a$$edP

A !as pro3e(tionB Investment manages universe! Asset a$$o(ation# 5und administrationEH Asset C lia!ilities analysis

57. 2rade finan(e e$ps inAH :acilitating international transactionB 5a(i$itating intra (ompan& transa(tion! 5a(i$itating internationa$ transa(tion , (orporate $ending and sett$ing up of new fa(tories# 5a(i$itating (orporate $ending< 5a(i$itating setting up of new fa(tories

56. A (oi(e %uote is A a pri(e at wi( a firm is read& to bu& or se$$B Oen bid is e%ua$ to offer! Oen te firm as a (oi(e of de(iding te se(urities to take>H a $rice at which a firm is ready to !"y or sell it also means when !id is e?"al to

offer

53. Oi( of te fo$$owing is $ike$& to ave te igest interest rateP A - mont deposit of min ba$an(e of 78)))B mont deposit of min ba$an(e of 7)))! 80 mont deposit of min ba$an(e of 78)))>H one< - mont deposit of min ba$an(e of 70)))

-8* If 8 da& aR is 78 mi$$ion, 1 da& aR isAH <1mnBH 7*.mn%H 71mn>H 7*mnEH 78mn

51. If a bank gets a deposit of 78))) assuming a !RR of 8)Y and tat it (ir(u$ates troug 0more banks, $eading to te fo$$owing mone& mu$tip$ier effe(t

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AH Loan of <314B Loan of 78K8)! None# !reate a reserve of 78))< !reate a reserve of 781)

5. Oi( among te fo$$owing is an investment (ompan& tat poo$s mone& from unit o$ders andinvest in a variet& of se(urit&PAH M"t"al :"ndB Mortgage !ompan&! None# 'to(k <(ange

52. Gou pur(ased a sto(k for 7)* 8 &ear $ater &ou re(eived 70 as #ividend* Gou so$d it at 7+*Oat is &our returnPa* .Yb* 8)Yc. 32=d* .)Ye* None

55. A forma$ Lega$ (ommitment to etend (redit to some ma amount over a stated period of timeis des(ription off* 2rade !reditg* Revo$ving !redit* Agreement Irrevo(ab$e !rediti. Line of %redit

3* Letter of !redit

58. 9dd 8 outa* Oarren Buffetb* eorge 'orosc. Bill Gates

d* Ben raame* eter L&n(

5N. #eve$opment of Investment 9b3e(tive and Investment po$i(& fa$$s under te urview of a* Investment manager 6niverseb* Asset A$$o(ationc. Asset Lia!ility Analysisd* 5und Admine* !omp$ian(e Reporting

54. Interest Rate 'pread is e%ua$ toa. %"rrent rate Q Base Rateb* !ap !urrent Rate

(* !urrent Rate 5$oor d* Base Rate 5$oor

87. Oi( of te fo$$owing fa(tors affe(t te (oi(e of a&ment MetodPf* <porters 5undg. All* overnment uarantee rogrami* 2ime 5rame

3* !ost of 5inan(ing

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84. NA'# is not an 'R9 fore. Listed marketf* 9ver te (ounter marketg* 2ird market* 5ourt market

N7. Hig net wort individua$s genera$$& ave [[[[[[[[[[[[*e* Market (apita$i4ation more tan 70)))))f* A$$g. et worth greater than <277777* Houseo$d in(ome of ma 7.)))) &ear*

N6. Oi( is true about retai$ bankingPe* 2e business fo(uses on sma$$ no* of ig net wort individua$s*f* 2e business fo(uses on sma$$ and medium enterprises*g. he !"siness foc"ses on large no. of indi/id"als.* 2e business fo(uses on $arge no* of (orporation bodies*

N3. 9ffer is pri(e at wi( a firmf* 2rades in se(urities

g* ;uotes to its bets (ustomer * Intends to bu&i. ntends to sell

3* ;uotes wen it does not want to trade*N1. 'e(urities wit origina$ maturit& greater tan 8 &ear are traded on mone& market*

!. 2rue !. :alse

N. Oi( is not a banking servi(ePe. Stock marketf* Retai$ bankingg* !orporate banking* !ustomer $ending

N2. Oi( is truePe* 5inan(er owns te asset bot in (ase of TLeaseC and Tire ur(aseC*f* 2a dedu(tion (ab be ($aimed from te fu$$ va$ue of te renta$ paid in (ase of $easeg* A$$h. >e$reciation is claimed !y the financer in lease and not in case of hire $"rchase.

N5. Bank a based in 6' provides safe keeping servi(es for se(urities to its 6' ($ients* It a$so as($ients in 5ran(e and Be$gium and provides se(urities safe keeping servi(es to tese ($ientstroug banks ! @ # respe(tive$&* Oi( best des(ribes bank APf. Glo!al c"stodian)g* None* Main (ustodiani* 'ub (ustodian

3* 'e(ondar& (ustodianN8. A$$ fo$$owing statements re$ating to Bonds are (orre(t e(ept*

# Bonds se$$ at a dis(ount wen !oupon Rate is $ess tan Market Interest rate*EH one5 Bond is debt instrument giving issues*

NN. Oi( of te fo$$owing t&pe of $oan re%uires te amount of interest tat wou$d be earned onte $oan to be paid upfront b& te borrowerP5 !apita$i4ed $oan

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2rue #is(ounted $oanH Amorti4ed $oanI #emand $oanVH >isco"nted loan

N4. Oo are invo$ved in te preparation of prospe(tus of I9P5 !ommer(ia$ bankersGH n/estment BankersH NoneI !ompan& ManagementJ !ompan& Management and Investment Bankers

47. Bankers A((eptan(e differs from 'igt #raft in tat5 Bankers A((eptan(e redu(es $ending (apa(it& 'igt #rafts are negotiab$e instrumentsH Bankers A((eptan(e demands immediate pa&ment*I NoneVH Banks can raise f"nds !y selling acce$tance.

46. !$ients of a private banker are genera$$& not segregated on te basis of

5 Investib$e assets Lo(ationH AgeI Net wortVH ame

43. 2e initia$ sa$e of te se(urit& is in te QQQmarket, wi$e subse%uent trading in te se(urit&is in te QQ** market5 'pot, futures #ebt , <%uit&@H Primary ) SecondaryI Mone&, !apita$J 'e(ondar&, rimar&

41. 6nder wat (ategor& (an servi(es $ike asset"$iabi$it& ana$&sis, asset a$$o(ation, (aspro3e(tion, (omp$ian(e reporting, fund administration, investment Management universe et(*provided b& an institution (an be ($assifiedP:H n/estment Management Asset 'ervi(ingH NoneI 2radingJ Investor 'ervi(es*

4. !I in te (ontet of anti/mone& $aundering is< A$$5 'tands for 'uspi(ious A(tivit& ReportsGH %"stomer dentification Program

H Re%uiring Businesses, wi( were on$& to report (as transa(tions invo$ving more tan8*)),)))P

42. 9n a trading da& at a sto(k e(ange a broker undertakes te fo$$ trades:Bu& 8)) IBM sares for 8)7 ea('e$$ .) IBM sares for 8)*. 7ea(Bu& 8)) M'52 sares for 0)7 ea('e$$ 0) IBM sares for 887 ea('e$$ 8) M'52 sares for 0)*. ea('e$$ ) 8bm sares for 17 ea(

8/10/2019 BFS L0 ques


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* Hig Leveraging* Hig 'pe(u$ation

671. 2e trade terms D8."0 net )Findi(ates tat [[[[[* Marks: f. 0Y dis(ount is offered if pa&ment is made witin 8. da&s*g.62= disco"nt is offered if $ayment is made within 3 days the $ayment sho"ld

howe/er !e made in 17 days.h.)Y dis(ount is offered if pa&ment is made before 8. of te mont*i. 8.Y dis(ount is offered if pa&ment is made between 0 @ ) da&s?

U. 8.Y dis(ount is offered if pa&ment is made witin ) da&s*

67. A bank is re%uired to o$d reverses at $east e%ua$ to a pre/s(ribed fra(tion of its tota$ deposit$iabi$ities*b*2rue b* 5a$se

672. Oat term is used to des(ribe an L! tat remains va$id for &ears tereb& e$iminating te(ost of separate L!Cs for ea( transa(tion wit a regu$ar ($ientPf* Irrevo(ab$e L!

g*None*Red ($ausei. Re/ol/ing L%

3* <vergreen ($ause

675. Oo appoints investment manager to manage a benefit p$anPf* $an sponsor g*$an administrator h.:"nd tr"steei * None

3* overnment

678. A (ompan& wou$d pa& te interest on wat portion of $oanP

f* !ommitted amountg*<iter disbursed or (ommitted $oan*6nused amount of $oani. >is!"rsed amo"nt

3* None

67N. In te e(ange on a parti(u$ar trading tere is a bu& market order for 8)) !2'H saresand two se$$ market orders for .) and ) !2'H sares ea(, (an te bu& order be mat(edagainst te two se$$ orders*d*Gese*Nof. (es) !"t if $rices on the !"y & sell side match.

674. If te $imit = 70))), margin = 0)Y and asset va$ue = 70))) ten drawing power for an openended $oan is e%ua$ toPf* Noneg.>rawing $ower ; <6577*700))i* 70))

3* 70)))

667. Risk (annot be mitigated b&f* 'etting risk $imits

8/10/2019 BFS L0 ques


g*Hedging*#iversifi(ationi. Ar!itrage

3* Insuran(e

666. A fied in(ome ana$&st wi$$ ana$&4e a$$ butf* Muni(ipa$ bondsg*Bonds of govt* sponsed enterprise*!orporate bondsi* 6' treasuries

U. Shares

663. In benefit administration wat are te re$ationsips tat eits between te p$anadministrator and te investment manager, and between 2rustee and te investmentmanager*f* Noneg*$an administrator @ trustee bot ave outsour(ed p$an administration as we$$ as fund

management to investment manager *An&i. Plan administrator gi/es in/estment instr"ction to in/estment manager while

tr"stee a$$oints the in/estment manager. 3* 2rustee gives investment instru(tion to investment manager, wi$e p$an administrator

appoints te investment manager*

661. Oi( entit& provides (redit s(ores tat are used b& issuers to pro(ess (ard app$i(ationPf* Issuer pro(essor g*!o$$e(tion agen(&*Issuing banki* Autori4ation engine

U. %redit !"rea".

66. !I stands for wi( of te fo$$owingPf* !onso$idated ri(e inde

g*!onsumer popu$arit& inde*!onsumer produ(t indei. %ons"mer $rice inde0

3* None

662. A bank de(ides to san(tion on$& 8)Y of te $oan sougt b& a (ompan&* 2e (ompan& goesand p$edges etra assets wit te bank and te bank ten agree to san(tion .)Y of te$oan sougt* 2e (ompan& as indu$ged in te pro(ess of f* !redit s(oringg*!redit in(rease*!redit in(rementationi* !redit revision

U. %redit enhancement.

665. 5V spot dea$ assumes maturit& of ow man& business da&s aeadPf g.i 8

UH 3

668. Oi( of te fo$$owing is best aR estimation Mode$PeMonte/ !ar$o

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f Histori(a$gH ,ariance%o/ariancearian(e/!ovarian(e and Monte/ !ar$o

66N. Oi( of tem represent (ompan& is in(orporated in 6'APe$(f tegLtdhH nc

664. Oi( of te fa(tors affe(t te (oi(e of pa&ment metodsPf ovt* guarantee rogramg2ime framehH Alli !ost of finan(ing

3 <porter fund*

637. 9rgani4ation $eve$ risk appetite is determined b&:f Risk management

g5ront offi(eBa(k offi(ei 2rade

UH Board of director

636. Risk management is fun(tion of:f 2radersgBa(k offi(e'pe(ia$isti 5ront offi(e

UH Mid office

633. ure$& (ompetitive finan(ia$ markets are not (ara(teri4ed b&

eHGo/t. reg"lationf Man& tradersg5u$$ info!ost effe(tive trading

631. N92 p$a&er in t&pi(a$ trade (&($e?f !ustodian bankg!$earing bank!$earing member i 2rading member

UH Reg"lator

63. 9n(e s&ndi(ate as so$d a$$ oter trades parti(ipant, sub parti(ipant and assignment are(onsidered trade in wat marketPf rimar&gH Secondaryarti(ipanti 92!

3 Inde

632. ;uestion re$ated to $rice weighted inde0P5.>VA

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K*Hangseng+*<A5< inde1*NA'#A; (omposite inde8)* '@ .))

635. In defined (ontribution retirement p$an *2a se$tered annuities fa$$ under se(tion of [[[[[[[[[<RI'A71!)8k)8b)kNone

638. In benefits administration, trustee and p$an administrator submit (omp$ian(e reportto[[[[[[ wi( in turn %ua$ifies te p$an*arti(ipantone answer is R9SHovernmentInvestment manager 'ponsor

63N. 5u$$ form of A#R Answer: American >e$ository Recei$ts

634. ;uestion re$ated to BA'<L II Answer: %a$ital ade?"acy

617. Oat is interest rate (arged on asset based $oanP Answer: he interest rate charged is lower than $ersonal loans

616. ;uestion re$ated to (redit derivatives as wi( of te fo$$owing fun(tion is not done b& (reditderivatives

Answer: Answer was someting as ransfer to o/er the co"nter

613. ;uestion re$ated to (redit derivatives it was fi$$ up te b$anksP <a(t$& donCt remember te%uestion"

Answer: option aving DRAS:ER

611. ;uestion re$ated to nondiscretionary n/estment Management Answer: te bank offers investment re(ommendations based on te !$ientCs approva$*

61. ;uestion aving few options $ike In(ome ro(essing, 2a Information 'ervi(es, !as'weep

Answer: ASSE SER,%G 612. ;uestion re$ated to 6nderwritingP

9ptions:.*6nderwriting 'pread-*ub$i( 9ffering ri(e 9,K*Lead or Managing 6nderwriter is te 6nderwriting Agreement*not sure about itN.All

BFS L0

1 Which of the following are not the benefits of using Credit derivatives?

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a. A increasing the credit limit of the corporateb. Credit derivatives can be used to create positions that can otherwise not

easily be established in the cash marketc. Credit derivates can be used either to take on more risk or to avoid (hedge) it

d. Credit derivatives can be used both to diversify their credit risk exposures andfree up capital from regulatory constraints

. What is !"C?

a. !n the counterb. options on the counter

c. operating the companyd. over the counter

e. #one of the listed options

$. %n active approach& 'sset allocation is more influenced by which of the followingoption?

a. value of %nvestment

b. Market Viewsc. #one of the listed options

d. %nvestors risk preferences

. ' person purchase a share *+,.,,& after years& the price is at *-+ and he

decides to sell the share at that price. What is the annualied return that theperson has earned?

a. ,.+b. ,.$$$$

c. 0.!!"#d. ,.-


+. 'n open end fund with 1,&,,, units outstanding had the total assets of /s. 1,&

,,, and the liabilities of /s. +&,,,. Calculate the funds #'0 per unit.a. /s. 1,b. /s. 1

c. $s. %.&d. /s. 1.+

. roduct development in sales and marketing refers to which of the following

optionsa. Collateral e.g. cars in case of car loans& houses in case of mortgages

b. roducts that are bought using online payment such as e2commercec. 3eveloping and differentiating deposits& loans& etc


e. %dentifying products such as 4'& !racle for the 5ank

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-. ' bank has portfolio of *+, million worth of loans out of which it wants to sell *,million worth of loan to another financial institution& what is this process called?

a. 'ccrual loanb. 6ndrawn loan

c. "rading 7oansd. Committed 1oans

e. 'eld for sale loans

8. "rading occurs between clearing and settlement. 4tate true of falsea. (rue

b. false

9. Which of the following are examples of emerging payments?a. All of the listed options

b. 3igital Cashc. roximity payments

d. :5

1,. %n defined benefits plan& the benefit is expressed as an ;;;;;;;;;;; and in

defined contributions plans& the benefit is expressed as an ;;;;;;;;;;a. account balance& annuityb. account balance& account balance

c. annuit)* account balancesd. annuity& annuity

11. 7oan 4erving starts after underwriting. 4tate true or false

a. (rueb. <alse

1.'n investor has multiple investment options yielding various dollar returns at

various points of time& while he is comfortable with a return of => p.a. Which

method should he use to compare the various investments?a. Compound %nterestb. :xternal rate of return

c. #et present valued. Simple +nterest

e. %nternal rate of return

1$./am deposits *1,, in =@ 5ank. uAa takes a loan of a >1,, from =@ bank.Which of the following is most likely to happen?

a. 5ank is charging $> interest to uAa and paying +> interest to /amb. 5ank is paying +> interest to /am and charging +> interest to uAa

c. #one of the listed options

d. 5ank is paying $> interest to uAa and charging +> interest to /am

e. Bank is charging &, interest to -ua and pa)ing /, interest to $am

1.'t the end of the trade cycle& the trades are ;;;;;;;; to determine theobligation of the trading members to deliver securitiesBfunds as per

settlement schedulea. rossed

b. Aggregatedc. #etted

d. !ffset

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1+. rinciple2 4trip and Coupon24trips are used in reference to ;;;;;;;;;

a. 4wapsb. Bonds

c. <uturesd. :Duity

e. <orwards

1.What is the difference between bankers acceptance and single drafta. one of the listed options

b. 5ankers acceptance demands immediate paymentc. 4ingle draft are negotiable instruments

d. 5ankers acceptance reduces banks lending capacitye. 5ank can raise funds by selling the acceptance

1-.'n institutional investor holds +,,,, Eicrosoft shares. ' custodian does the

safe keeping on the investor behalf. 3uring this period& Eicrosoft announces

dividend. 5ased on this scenario which is the correct option from the followinga. "he dividend amount will be processed by the custodian and credited

to the institutional investor accountb. #one of the listed optionsc. 5ecause the assets are with the custodian the dividend amount will be

credited to the custodian accountd. (he custodian and the investor share a part of the dividend

18.Which of the following is a type of underwriting spread

a. 6nderwriters allowanceb. Eanagers fee

c. #one of the listed optionsd. Concession

e. All of the listed options

19.' custodian has different types of assets under its custody and those assetsearn returns to the original investor in various forms. What are the type of

returns that can be taxed?%. 3ividend

%%. %nterest%%%. Capital ain

+V. All of the listed options

a. %%% onlyb. % only

c. %% only

d. 5oth % and %%

e. +V

,.' company '5C has a gross profit of *+,,,,. "he operating expenses amountto *1,,,,. "he interest on loans availed amounts to *+,,, and the taxes to

be paid amount to *+,,,. Calculate the :4 if there are total of ,,,, sharesa. .+

b. 1.+c. !

d. 1.+

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1.Coming together of 5# and Eellon is an example of ;;;;;;;;;;;;

a. 'll of the listed optionsb. Merger

c. 'cDuisitiond. "akeover

e. 5rokerage

.Which of the following is #!" a "! 1, 64 bank?a. 5ank of 'merica

b. F Eorgan Chasec. Well <argo

d. Citigroupe. Llo)ds (SB

$. %nterest rate spread eDual to?

a. 1urrent $ate2 Base $ateb. Current /ate2<loor

c. 5ase /ate G <loord. #one of the listed optionse. Cap2 Current /ate

. Which are true in a H5asic or #o fill CheckingI 'ccount?

%. 7imit the number of checks written%%. %nterest paid

%%%. 7imit the number of withdrawals madea. %% and %%%

b. + and +++c. 'll of the listed options

d. % and %%

+. %n case of auto finance& monthly lease payments are usually lower than monthly

loan payments because of which reason?a. Customer is only paying for depreciation

b. Customer is only paying for taxesc. 1ustomer is onl) pa)ing for Fees

d. All of the listed optionse. Customer is only paying for rent charges

. Which of this is a tax heaven?

a. Bermuda

b. 64

c. Fapand. 4ingapore

e. %ndia

8/10/2019 BFS L0 ques


-. 40 meansa. 4pecial principle vehicle

b. 4ecurity purpose vehiclec. Special purpose vehicle

d. none of the listed optione. 4ecuritiJed planning vehicle

8. What does single :6/! payment area (4:') do?

a. Creates a single payment marketb. /emoves differences in intra and cross border payments

c. 'pplicable to direct debits& Credits and credit cardsd. All of the listed options

9. Which of the following is not Core private banking function?

a. /esearchb. %nvestment analysis and advice

c. Client management

d. 3eposit mobiliatione. 4ales and marketing

$,. "he advising bank is used as trusted bridge between the ;;;;;;; and ;;;;;;when they do not have an active relationship

a. 'pplicant bank& 5eneficiary bankb. %mporter& :xporter

c. 5eneficiary 5ank& /eimbursing bankd. Beneficiar) bank and advisor) Bank

(answer not in above $ options) confirm

$1. What is the primary source of incoming for the bank?

a. 3eposits from public

b. rants from central bankc. +nterest incomed. <ees for services


$. "ax and insurance premiums collected as part of loan repayment are handledthrough which of the following type of account

a. 4scrow accountb. <ixed 3eposit

c. 3E'" 'ccountd. Eutual 'ccount

$$. Which of the following risks for the investor is associated with corporate bonds

but #!" 6. 4. "reasury 4ecurities?a. +nterest rate risk

b. /einvestment /iskc. Credit /ating /isk

d. 3efault /iske. #one of the listed options

8/10/2019 BFS L0 ques


$. !n a trading day& at the #4:& a broker undertakes the following trades

5uy 1,, %5E shares for *11.,, each4ell +, %5E shares for *1,.+, each

5uy 1,, E4<" share for *,.,, each4ell , %5E shares for *11.,, each

4ell 1, E4<" shares for *,.+, each4ell $, %5E shares for *9.,, each

Kow much did the broker pay out to the exchange in total in case of (a)

ross settlement system (b) #et settlement system?a. (a) *1-8, (b) , for %5E& *1-9+ for E4<"

b. (a) *188, (b) *$1,,c. (a) *$1,, (b) *188,

d. 5a6 0 for +BM* 78#%& for MSF( 5b6 78#90e. #one of the listed options

$+. #umber of stages in syndicate loans are ;;;;;;;;a.

b. &c. 1d.

e. $

$. %nvestment bank assists in Eergers and acDuisitions through which ofthe following options?

a. All of the listed optionsb. #egotiating between the parties

c. 0aluation of companiesd. 4tructuring the deals

e. :nsuring smooth transactions

$-. "he purpose of Community 3evelopment 5anks (C35) is to serveresidents and spur economic development in low to moderate income

(7E) geographical areas. State (rue of <alse

$8. !n a trading day at exchange& a broker undertakes the following trades5uy ,, Eicrosoft shares for *1,.,, each

4ell 1,, Eicrosoft shares for *1,.+, each5uy 1,, oogle share for *,.,, each

4ell $, Eicrosoft shares for *11.,, each4ell +, oogle shares for *,.+, each

4ell , Eicrosoft shares for *9.,, each

Kow much did the broker pay out to the exchange in total in case of (a)ross settlement system (b) #et settlement system?

a. (a) *,,, (b) *1$+b. (a) *1$+ (b) *$+

c. (a) *, for Eicrosoft& *9-+ for oogle (b) *9-+ for oogle& L, forEicrosoft

d. (a) *1$+ (b) *,,,e. one of the listed options

8/10/2019 BFS L0 ques


$9. What are 4econdary markets defined as?

a. Earket in which securities are resold after they are originally issuedb. Earket where security is sold during %!

c. #one of the listed optionsd. 4ither auction or dealers market are being :(1 market

,. 'nnuities are

a. 3iscounted 7oanb. CapitaliJed 7oan

c. ' loan that is paid in periodic eDuated installments with capitaliJedinterest

d. (rue discounted loane. 'mortiJed loan

1. ;;;;;;;;;; is the legal and professional proceeding in which a lender&

obtains a court order terminations of a borrowers eDuitable right ofredemption

a. Foreclosureb. 4ecuritiJationc. 4ub2rime

d. Credit G<reeJe

. 'll of the following are valid means for a custody client to communicatetrade instructions to its custodian& :=C:"

a. 5y faxb. F43;+$4

c. 5y "elephoned. 4W%<" #etwork

$. %n a nominal "M$ settlement cycle& when is the confirmationBaffirmation completed?a. "rue

b. #one of the listed optionsc. "M

d. "M$e. (<8

. 5ank a base din 64& provides safe keeping services for securities to its

64 clients. %t also has clients in <rance and 5elgium& and providessecurities safe keeping services to these clients through banks C and 3

respectively. Which of the following term best describes 5ank '

a. =lobal 1ustodian

b. 4econdary Custodianc. #one of the listed options

d. Eain Custodiane. 4ub Custodian

8/10/2019 BFS L0 ques


+. %n :lectronic Check conversion (:CC)& what happens once the check isprocessed?

a. "he customer can present a check to a store cashierb. /eceive cash immediately

c. 'll of the listed optionsd. (he customer signs a receipt authoriing the store to present the

check to the bank electronicall) and deposit the funds into thestore>s account

. - ? L statements represent transactions over a period of time

while the balance sheet shows information as of a specific date.4tate "rue of <alse

-. Which two risks of a financial institution may brings gains as well aslosses?

a. liDuidity /isk and Credit /iskb. 1redit $isk and Foreign 4@change $isk

c. Credit /isk and interest rate risk

d. #one of the listed optionse. %nterest rate /isk and <oreign :xchange /isk

8. Which of the following is a corporate action?a. 3eclaring 3ividend

b. All of the listed optionsc. E N '

d. /ights %ssuee. 4tock split

9. #0 stands for

a. #et ast valueb. et -resent value

c. #ew present value

d. #o present value

+,. What are ankee 5onds also known as

a. unk Bondsb. "2 5ills

c. #one of the listed optionsd. Call options

e. 4hares

+1. "he suitable strategy for an investor following active approach is toa. urchase both types of stocks

b. -urchase ndervalued stock and sell overvalued stock

c. 4ell both type of stocks

d. 4ell 6ndervalued stocks and purchase overvalued stock

+. "he risk that a given security or asset cannot be traded Duickly enoughin the market to prevent a loss (or make the reDuired profit) is

a. LiCuidit) $iskb. Credit /isk

c. 5usiness /iskd. <inancial /isk

8/10/2019 BFS L0 ques


+$. Which of the following is not a barter trade or a counter trade?

%. Compensate the seller in the currency buyer likes%%. Compensate the seller through bank draft

%%%. Compensate the seller in the currency 4eller likes+V. 1ompensate the seller in a manner other than transfer of

mone)a. % only

b. %% onlyc. %0 only

d. +* ++* and ++e. %%% only

+. "he components to determine the rate of exchange in a forward

contract area. 1ross currenc) rate and forward rate adustment

b. Current spot rate& amount of currency boughtB4old

c. <orward rate adAustment and amount of currency bought of soldd. Currency spot rate and forward rate adAustment

++. Which of the following are the functions of the relationship manager in aretails bank?

a. #ew account openingb. All of the listed options

c. roduct 4alesd. 'ccount Eaintenance

+. 'n investment strategy that arms to capitaliJe on the continuance of

existing trends in the market is called ;;;;;;;;;;a. -assive +nvesting

b. Eomentum %nvesting

c. Contrarian %nvestingd. "echnical analysis

+-. %f the money multiplier is 1& the reDuired reserve ratio must bea. Dero

b. ,.+c. 1

d. reater than 1,,>

+8. 3uring O1& ,,8 the investment bank ;;;;;;;;; was merged withFEC after it was unable to continue borrowing to finance its operations

a. 7ehman 5rothers

b. 5ear 4teams

c. '%d. <annie2 Eae

e. ;ashington Mutual

+9. 'll of the following are the benefits of netting :=C:"a. $eduction in compliance risk

b. /eduction in the cost of the settlementc. /eduction in the systemic /isk

d. /eduction in the number of deliveries and receipts

8/10/2019 BFS L0 ques


,. Which of the following is not a player in a typical trade cycle?a. Clearing bank

b. "rading Eembersc. Clearing members

d. /egulatore. 1ustodian bank

1. Which of the following operation can not be done on 7C (7etter of

Credit)?a. 'cceptance

b. 3iscountc. one of the listed options

d. urchase

. !n a trading day& at the #4:& a broker undertakes the following trades

5uy 1, 3ell shares for *1,.,, each4ell -, 3ell shares for *1,.+, each

5uy ,, C%4C! share for *,.,, each4ell , 3ell shares for *11.,, each4ell +, C%4C! shares for *,.+, each

4ell 1, 3ell shares for *9.,, each

iven that a net settlement system is being used. <ind out the net positionof the broker at the end of the day

a. 3ell !0 shares to receive* 1+S1: 8&0 shares to receive* 7/8/0 topa) out to the e@change

b. 3ell -, shares to give out& C%4C! 9, shares to receive& *$,,, to payout to the exchange


d. 3ell 1+, shares to receive& C%4C! , shares to receive& *$1$, to receivefrom exchangee. 3ell , shares to pay out& C%4C! 1+, shares to receive& *$-8, to pay

out to exchange

$. ' bank is reDuired to hold reserves at least eDual to a prescribedtraction of its total deposit liabilities is called

a. 47/b. '7E

c. :/d. SA$

. =@ Corporation is a large client of a bank and on a average for a period

it maintains *, million in its bank account. Kowever& "he bank allowsthe authoriJed representatives of =@ to utiliJe the funds up to 1+>

over the balance maintained. "his is example of which of the followingoptions?

a. 6ndrawn 7oanb. 'ccrual 7oan

c. :verdraf td. Keld for sale loans

e. 1ommitted loans

8/10/2019 BFS L0 ques


+. Which of the following methods of payment is most risky to the buyer?a. 1ash in Advance

b. Counter tradec. !pen account

d. 7etter of credite. 3ocumentary collection

. Which of the following is not a example of an option?

a. :il Futuresb. 4waption

c. ut optiond. 7:'4 (7ong term options)

e. Call option

-. %< the point of purchase is *+ and the amount given to the issuer is

*+,. What is the underwriter spread?a. +,

b. #one of the listed optionsc. 1,d. +

e. !

8. ' card holder swipes his card for 643 1,,. Kow much the merchant%. 3educt form the card holder

%%. /eceive from the acDuirer'ssume merchant discount at >

a. %. 643 98 %%. 643 98b. +. S3 800 ++. S3 %9

c. %. 643 1,, %%. 643

d. %. 643 1,, %%. 643 1,,

9. "he counterparty in a futures contract trade is

a. 5anksb. "he buyer and 4eller

c. overnmentd. (he e@change

e. "he brokers who struck the deal

-,. %dentify the odd one outa. "reasury 5ills

b. Commercial papers

c. 5ill of exchange

d. Stockse. "reasury #otes

-1. : shares are currently selling for *1+.,, each. ou bought ,, shares

one year ago *1 and received dividend payments of * per share.What was your total dollar capital gain this year?

a. 1,,,b. +,,


8/10/2019 BFS L0 ques


d. ,,e. ,,

-. <ind out the one which does not come under the retail bank service?

a. (rade financeb. Credit card services

c. :lectronic bankingd. ersonal loans

-$. What does the call option gives buyer?

a. "he right but not call option to buyb. (he right but not the obligation to sell

c. "he obligation to selld. "he right and obligation to buy

e. ;;;;;;;;;;;;;;;

-. "he money the bank receives ad deposits becomes a banks

a. 7iabilityb. 7osses

c. All of the optionsd. 'ssetse. rofit

-+. "rade finance primarily helps in

a. <acilitating intra2company transactionsb. <acilitating setting up of new factories

c. <acilitating inter company transactionsd. <acilitating corporate lending

e. Facilitating international transactions

-. Which of the following is a valid repayment type?

a. 5ullet paymentb. All of the listed optionsc. 4tep down

d. 4tep upe. 5alloon

--. Eost common reason for a corporate seeking a loan from a bank

includes all of the following :=C:"a. -a)ing bonuses to the top e@ecutives

b. 3aily cash flow reDuirementsc. Capacity expansions

d. lain EoderniJation

e. #ew roAects

-8. ;;;;;;;;; are profit of the business that have not been distributed to

the owner as of the balance sheet datea. Share capital

b. ross profitc. /evenue

d. /etained earnings

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-9. (reasur) bills can be transacted and settled on the same date.State true or false.

8,. %f you invest *,, for $ year 8> compound interest. Kow much will

you have at the end of the $ years?

a. #one of the listed optionsb. 8

c. !&!d. -

e. $1,

81. %n trade finance which of the following factors are considered whilechoosing mode of financing?

a. =overnment guarantee program& 4eller preferenceb. 4@porters fund* $isk factors* 1ost of financing* time frame


d. "ime frame& Cost of financing& 5uyers trade associates

8. What is line of credit?a. /evolving credit agreementb. A formal legal commitment to e@tend credit up to ma@imum

amount over a stated period of timec. 4imilar to credit card

d. #one of the listed optionse. %rrevocable credit provided by financial institution

8$. "'/ stands for which of the following options?

a. "roubled assets reform programb. #one of the listed options

c. (roubled asset relief program

d. "erm asset /elief programe. "erm asset reform program

8. "he type of loan in which spread varies over the life of the loan is called ;;;;;;;;

a. ositive spread loanb. Floating rate loan

c. <ixed rate loand. 4emi2 fixed rate loan

e. #egative spread loan

8+. ;;;;;;;;; of a securities trade involves the transfer of the securities

from the seller to the buyer

a. "radingb. Settlement

c. #ettingd. Clearing

8. 5anks are financial inter2mediatory that

a. should not be allowed to open saving accountsb. link depositors to the borrowers

c. 3o not operate efficiently in the financial system

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d. Kelp connect public to the central bankse. 're not reDuired

8-. :xpand C#4

a. Continuous netting of securitiesb. CompanyIs net securities

c. Clearing #et settlementd. 1ontinuous et settlement

88. %f the limitP *,,,& margin P,>& and asset value P*,,,& then

drawing power for an open ended loans is eDual to?a. ,,,

b. 8E00c. ,,

d. ,,e. #one of the listed options

89. %n normal distribution 99> confidence interval corresponds to ;;;;;;;;;

a. 1.9 4db. !.// Sdc. 1 4d

d. 1.+ 4de. $ 4d

9,. An investor indulging in short selling on share e@pects the share

price to decrease. Sate true or false

91. %nflation represents which of the following option

a. %ncrease in price

b. 3ecrease in pricec. 0ery high change in priced. :conomy crises

e. Currency Crises

9. -articipation of more number of banks reduces the risk of leadbank. State true or false

9$. Eoney laundering refers to which of the following option

a. All of the listed options

b. :xtending loans to corporate

c. Converting the profits from common activities into legitimate funds

d. 4hort term borrowing and placements

9. 0%4' is involved in which of the following?%. roviding the interchange the systems to transfer data and funds

between the members%%. 4et credit limits

%%%. %ssue Credit cardsa. both + and ++

b. %%% only

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c. % onlyd. 222222222

9+. Which of the following combinations hold true?

a. Wire "ransfer& more costly than other payment alternativesb. Commercial letter of credit& improves applicants credit facilities

c. <oreign checks& not useful for cross border traded. 3ocumentar) collection* strict compliance rule apply

e. 4tandby letter of credit& less costly than documentary collection

9. "here are + participants '& 5& C& 3& : in a + million 643 syndicatedloan and ' is the lead manager. "he borrower has agreed to pay ,.>

(*1& ,,&,,,) participant with share in participants will share inparticipant fee?

a. *1&,,&,,, will be received every monthb. *1&,,&,,, will be received affront

c. *1&,,& ,,, will be changed towards undrawn portion

d. #one of the listed optionse. *1&,,& ,,, will be received every time money is withdrawn

9-. "he price paid for use of a financial liability and financial asset is called ;;;;;;;;;;;

a. <inancial 'ssetb. -rincipal +nterest

c. %nterestd. <inancial liability

98. %f an invest pays an interest at an annual rate of r > per year&compounded twice a year& then what is the effective yield?

a. 'll of the listed options

b. =reater than r ,c. :Dual to r >d. 7ess than r >

99. 0a/ is measure of ;;;;;;;

a. Market $iskb. 7iDuidity /isk

c. Credit /iskd. 7egal /isk

e. !peration /isk

1,,. :pen ended loan allows the borrower additional amount

subect to the ma@imum amount less than a set value. State true

or false

1,1. %n private banking "' stands for ;;;;;;;

a. payment to automateb. -a)able through account

c. ayable to automated meansd. ay through action

e. ermission to act

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1,. Which of the following is not a derivatives instrument?a. 4Cuit)

b. 4wapsc. !verdraft

d. ut optione. Call option

1,$. 5ank '5C interest rate on deposits is -.$,> and the interest rate on

loans is 9.+> during ,,9. What is the spread for the bank?a. ,.1++

b. ,.,+c. #one of the listed options

d. 0.08%&

1,. %f a bank gets a deposit of *+,,,. 'ssuming a reserve reDuirement of

1,> and that it circulates through more banks& leading to which ofthe following money multiplier effect?

a. +t create a loan of 79&&0

b. #one of the listed optionsc. %t creates a loan of *119+

d. %t creates a reserve of *+,,e. %t create a reserve of *1,,,

1,+. %n a syndicated loan of 1,,E& each participant commit for +> of

loan. 5ut due to exigencies if one participant reduces his shares to >and offers to share eDuality& what will be reserved share of other

participants?

a. ,.$b. ,.c. ,.9

d. ,.$1e. ,.

1,. ou purchased stock for *,. !ne year later you received * as

dividend and sold the share for *8& Kow much is the return of theholding period?

a. + >b. 1, >

c. !& ,

d. +, >


1,-. "he share price of a company may drop considerably from its currentlevel& in this scenario& what type of risk are the investors facing?

a. Company /iskb. 7iDuidity /isk

c. 5usiness /iskd. Market $isk

e. Credit /isk

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1,8. %f / is the real rate of interest& # is the nominal rate of interest and % is

the rate of inflation& thena. $ 2 +

b. /P # Q %c. /P # B %

d. /P # M %

1,9. ' clearing system in which a payment instructions between banks areprocessed and settled individually and continuously through out the day

is calleda. $(=S

b. Clearing 4ervicesc. Continuous linked settlement

d. 'utomated clearing house

e. Collection 4ervices

11,. %f a bank erroneously posts the interest proceeds from a security heldby a investor '& into the account of investor 5& this can be attributed to

a. %nterest rate risk

b. Earket /iskc. 4ecurity /isk

d. :perational $iske. 7iDuidity /isk

111. Which of the following represents the correct hierarchy of corporate

rating (highest to lowest)?a. 3& ''& 5& '

b. AAA* AA<* B* 3

c. '''& ''M& 3& 5&d. '''& ''& 3& 55

11. "he initial sale of security is in the ;;;;; market& while subseDuenttrading in the security is in the market ;;;;;;

a. Eoney& Capitalb. 3ebt& :Duity

c. 4pot& <uturesd. -rimar)* Secondar)

e. 4econdary& primary

11$. urchase of account receivables at a discount is called ;;;;;;;;

a. 5ill of 7a;;;

b. 5ills purchasec. 3iscount

d. <orfeitinge. <actoring

11. %f total spread on underwriting *+,,,,, and managers fee is *1,,,,,&

What is the amount which will be distributed in the syndicatea. +,,,,,

b. "00000

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c. 1,,,,,d. ,,,,,

11+. 3ividend declaration is an example of

a. initial public offeringb. %nvestment banking

c. Eerger and acDuisitiond. 1orporate action

e. rivate banking

11. % deposit *1,, in a bank. 5anks loans out *9, out of it to someoneelse who then invest the money in setting up new factory& what is this

process called?a. rofit making tendencies of the investors

b. 4ub2rime effectc. :conomic boom effect

d. Mone) multiplier effect


11-. "he term Hsettlement cycleI refers to which of the following option?a. "ime period between the date on which the investor first makes the

decision to enter a trade and the date when the trade is settled

b. (ime period between the date on which the trade is e@ecutedand the date on which the trade is settled

c. #one of the listed options are correctd. "ime period between the date on which the trade is cleared and the

date on which the trade is settled

118. %f a finance instrument has +,> chance of paying ,> and +,>chance of paying ,>. What would be the expected return?

a. ,.8

b. ,.+c. 0."d. ,.

119. which of the following is not correct for a personal loan

a. "hey are short term loansb. "he finance is not interested in the intention of the loan

c. #o security reDuiredd. Loan amount is not linked to borrowers repa)ment capacit)


1,. Which of the following is not a measurement techniDue for Credit risk?

a. :'3

b. <%/5c. Basic indicator approach

d. 73e. robability of default

11. Which of the following is a treasury management system?

a. <ront 'renab. innacle

c. <innacle

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d. (S!e. <lex Cube

1. Which of the following is not a settlement method for a bank loans?

a. articipationb. 4ecurities /epository

c. re2closured. 4ub2participation

e. Assignment

1$. Company ' has higher credit rating than company 5& What does thismean?

a. 'll of the listed optionsb. 5oth are eDually risky

c. 1ompan) B is more risk)d. Company ' is more risky

e. "here is no relation between credit rating and risk

1. 1ustomer usuall) interact e@tensivel) with the banks mid and

back office. 4tate true or false.

1+. 4ecured bonds ;;;;;;;

a. are secured b) assets of the issuing compan) and also have a

higher priorit) for repa)ment than unsecured debtb. are only issued by large and financially sound companies

c. are secured by assets of the issuing companyd. have higher priority for repayment than unsecured debt

1. 'fter a buyer and seller enter into a trade agreement& who indicates

the issue of 7C?

a. one of the listed options +ssuing bankb. 5uyerIs bankc. 'dvising 5ank

d. 4ellers banke. 4eller

1-. Which of the following is true for stock market?

a. individual small investors can never make money in stock marketb. stock markets are always self regulated

c. stock markets are never faird. stock market facilitate secondar) bu)ing and selling of the

shares

e. "here can only be one stock market in the country

18. 4ecurities with an original maturity of lesser than one year are traded

on money market. State true or false

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19. <rom the given options identify the service(s) that can be categoriJedunder asset servicing line of the business

%. Corporate 'ction processing%%. %ncoming rocessing

%%%. "ransfer agency services%0. 'll of the listed options

a. % onlyb. both + and ++

c. %%% onlyd. %% only

e. %0

1$,. %dentify the services offered by retail banks

a. All of the listed options

b. 4aving and checking accountsc. ersonal 7oansd. 3ebit Cards

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615. If an investment pa&s interest at an annua$ rate of .Y per &ear, (ompounded twi(e a &ear tan te effe(tive &ie$d $arger tan .*.Y

a. 2rue b* :alse

618. In a 0 wa& %uote for a sare te bid isa. 0Y $ess tan offer !. Less than offer c. More tan offer d. #ependent on dea$erCs ski$$e. <%ua$ to offer

61N. Oi( of te fo$$owing is usua$$& not parti(ipant in sto(k marketa. 'ma$$ individua$Cs investors!. %entral !anksc. !ompaniesd. 5inan(ia$ institutions

614. In an a((ount saving simp$e interest from te first &ear is reinvented at te beginning ofte se(ond &earP

a. 2rue !. :alse

67. Oi( of te fo$$owing is a not (urrent assetPa. oods for sa$e inventor&!. erms loansc. !asd. Raw materia$ inventor&e. Re(eivab$es

66. Oi( of te fo$$owing in not a feature of private bankingPa. 'pe(ia$ist advi(e!. Lot of resear(c. %ommercial lendingd. Hig investment in te(no$og&

e. 6nderstanding te (apita$ and investment needs*

63. Retai$ $oans are asset produ(t offered b& te banka. r"e b* 5a$se

61. If te pri(e of sare pf (ogni4ant (anges from -. to -) tis (an be attributed to:a. Market risk!. Interest rate riskc. !redit riskd. 9perationa$ riske. Li%uidit& risk

6. A((ount maintained in te ome (urren(& b& one bank is te name of anoter bank

based abroad is (a$$ed as:a. !urrent a((ount!. Nostro a((ountc. ,ostro acco"ntd. 5ore a((ounte. 9verseas a((ount

62. Oi( of te fo$$owing is not te sett$ement metod for bank $oansPa. re/($osure!. Assignment

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c. arti(ipationd. 'ub parti(ipatione. Sec"rities re$ository

65. 2e pro(ess of transferring ob$igation from one part& to anoter is (a$$ed o/ation

68. 2e pur(ase of an& sto(k for immediate de$iver& is a [[ market transa(tion*a. 5utures!. S$otc. 5orwardd. 'to(ke. 9ption

6N. In te istori(a$ simu$ation metod of aR (a$(u$ation:a. Return are assumed to be not norma$$& distributed!. o ass"m$tion is made a!o"t the distri!"tionc. Random returns are generated to (a$(u$ate aRd. Return are assumed to be norma$$& distributede. Returns are not re%uired at a$$*

64. Oat appens wen interest rate fa$$:f. Bond $rices increaseg* Bond pri(es de(rease* Bond pri(es do not (angei* <(onom& goes into def$ation

3* Interest rate never fa$$, te& a$wa&s go up*

627. If te pri(e of a se(urit& on da& 8@0 is 78)0 and 78)) respe(tive$&* 2e return isf* /0Yg* 0Yh. 6.45=i* er& ig

3* 8/0Y

626. If &ou invest 78))) for &ears at KY (ompound interest, ow mu( wi$$ &ou ave at teend of te &earsPf. <6332g* None of $isted option* 78)))i* 78)K)

3* 780K)

623. 2e trade finan(e te term L! stands for?f* Letter of (ommer(ia$sg* Letter of (redit wortinessh. Letter of credit

i* Letter of (ommer(e 3* Letter of (omp$aints

621. Oat is need for banks in te so(iet&Pe* 'ma$$ investor are prote(ted, en(e it is a $ow risk investment avenue*f* Banks are in te best position to $end out mone& at (ompetitiveg* #epositors are parti(ipant in primar& and se(ondar& markets*h. All of listed o$tions.

62. A is more risk averse investor tan B *terefore*

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How mu( did te broker pa& out to te e(ange in tota$ in (ase of i ross sett$ements&stem ii Net 'ett$ement '&stemP

a* i 78K+) ii 7)))b* i ) for IBM, 78K1. for M'52 ii 78K+)*c. iH <1777 iiH <68N7d* Nonee* i 78K+) ii ) for IBM, 78K1. for M'52

651. 6' eport and <urope import agree to (arr& out te transa(tion of goods word 78)))))under a (onfirmed term L! wit a maturit& date of -) da&s from te time of sipment* 2ea((eptan(e (ommission \ 8*. Y A e%ua$s5 70.)) 7)))H 7))I noneVH <327

65. 9perationa$ risk is defined asP

652. 2e basi( four parties invo$ved in an& transa(tion using L! are te fo$$owing <V!<2 A Issuing Bank B Reim!"rsement Bank ! Benefi(iar& Bank

# 'e$$er< Bu&er

655. Oi$e providing se(urit& $ending servi(es to its ($ients, wi( risk wi$$ a (ustodian ave tomanage for its ($ientsP

A Li%uidit& riskB Bot !redit risk and interest rate risk

! Interest rate risk# !redit riskEH Both credit risk and li?"idity risk*

658. If te pri(e of se(urities on da& 8 and 0 are 78)) and 78)0 respe(tive$& *Returns is A A ver& ig

B 3! /8# /0

< 8

65N. 5o$$owing are te $ist of risk tat !ogni4ant fa(es at organi4ationa$ $eve$ A !urren(& risk

B Attrition! !redit risk# All of the a!o/e

< rote(tive $egis$ation b& 6'"6E

654. Oi( of te fo$$owing is not a (ore private banking fun(tionP A !$ient managementBH >e$osit Mo!iliation! Investment ana$&sis and advi(e# Resear(

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< 'a$es and Marketing

687. A mutua$ fund wit investment ob3e(tive of a(ieving ig (apita$ growt approa(esinvestor servi(es firm for advi(e* 2e firm advi(es te mutua$ fund to invest +)Y of te fund ingovt debt and 0)Y in e%uit&* 2e a$$o(ation towards debt advised b& te firm

A !annot be determinedBH is too high! Is about rigt

# is too $ow

686. Oi( of te fo$$owing operations (an be done on a L!P

AH All the listed o$tion B A((eptan(e ! Negotiate # ur(ase < #is(ount

683. Oo among te fo$$owing is most $ike$& to be a private banking ($ient of a bankP A A fres engineer in is first 3ob at (ogni4ant

B iger +oods ! An& of te above # A (ri(ket p$a&er wo as never p$a&ed nationa$ " internationa$ (ri(ket

< A manager at a manufa(turing p$ant*

681. Oi( of te fo$$owing metod e$iminate (ountr& risk and (ommer(ia$ risk upon(onfirmationP A >oc"mentary collection B Ba(k to ba(k L!

! L! # 'tandb& L!

< Both stand!y L% and L%

68. 2e a(t of te $oan amount being anded over to te borrower b& te bank is known asdisbursement* 'tate 2R6< or 5AL'<

a. r"e b* 5a$se

682. 9n te trading da& at te NG'< a broker undertakes te fo$$owing trades Bu& 8)) IBM sares for 78)*)) ea(

'e$$ .) IBM sares for 78)*.) ea( Bu& 8)) M5'2 sare for 70)*)) ea(

'e$$ 0) IBM sares 788 ea( 'e$$ 8) M5'2 sare at 0)*.) ea( 'e$$ ) IBM sares for 1*)) ea(

iven tat a net sett$ement s&stem is being used, find out te net position of te broker at teend of te da&

:H BM no e0change of shares M:S 47 shares to recei/e <68N7 to $ay o"t to thee0change

None of teseH IBM no e(ange of sares ? M5'2 1) sare to re(eive ? 7))) to pa& out to e(angeI IBM K) sares to given out ? M5'2 1) sares to re(eive ? 7))) to pat out to e(angeJ IBM no e(ange of sares ? M5'2 1) sare to re(eive ? 78K+) re(eive from te

e(ange

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685. A!H transa(tion invo$ves te transmission of [[[[[[[[[ 5 A$$ of te $isted option #o(umentsH &si(a$ instrument $ike (e(k and draftH Electronic data filesJ !as

688. Oat sou$d one use wi$e using (omparing mortgagesP:H APR NoneH IRRI NJ Rate of interest app$i(ab$e for te $oan

68N. Oi( one of te fo$$owing is not offered b& investment banking division of a bankP:H learning ser/ices TNoneH Merger and A(%uisitionI a$uation of firm

J 6nderwriting and distribution of e%uit& issues*

684. If tota$ spread on underwriting is 7.))))) and manager fee is 78)))))* Oat is teamount wi( wi$$ be distributed in te s&ndi(ateP

5 .))))) 8)))))@H 77777I -)))))VH %an not !e determined

6N7. HL sares are (urrent$& se$$ing for 70. ea(* Gou bougt 0)) sares one &ear ago at

70 ea( and re(eived dividend pa&ment as 78*.) per sare wat was tota$ do$$ar (apita$gain tis &ear

5 0))GH 277H NoneI ))J ))

6N6. 2e brokerage firm is regu$ated b&< 'tate regu$arit& agen(&:H SE% Industr& wide 'R9

H A$$ of te $isted option6N3. i(k odd one out

a. >ematb* ersona$ $oan(* Noned* Hire ur(asee* Auto $oans

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6N1. I deposited 8)) in a bank *Bank $oan out 1) out of it to someone e$se, wo ten invest temone& in setting u a new fa(tor&* 2is pro(ess is (a$$ed5 Monetar& po$i(& None@H Money m"lti$lier effectI rofit making tenden(& of a bankJ 5is(a$ po$i(&

6N. !apita$ ade%ua(& ratio refers to5 Amount of bank (apita$ epressed as Y of te risk weigted (redit eposure @ market

risk* Amount of bank (apita$ epressed as Y of te risk weigted (redit eposureH Amount of bank (apita$ epressed as Y of te risk weigted (redit eposure @ operationa$

risk*H Amo"nt of !ank ca$ital e0$ressed as = of the risk weighted credit e0$os"re

o$erational risk & market risk.J None

6N2. Oi( of te fo$$owing is not a treasur& management s&stemP

E !a$&psoL 'ummitM Oa$$ street s&stemN 5ront arena*H :le0 c"!e

6N5. '&ndi(ate e$ps in a$$ of te fo$$owing a(tivit& butJ Managing $arge bond issuesE Raising uge mone& from te bankL Managing $arge (apita$ raising a(tM Managing (onf$i(t between investment banks*H P* distri!"tion.

6N8. A$$ of te fo$$owing statements (on(erning 6' govt se(urities are (orre(t <V!<2:H reas"ry !ills ha/e their interest $aid in a l"m$ s"m at mat"rity NoneH 2reasur& bi$$s ave greater interest risk tan eiter treasur& bond or treasur& noteI 2reasur& note as maturit& dates up to 8) &rsJ 2reasur& bonds ave maturit& dates up to ) &rs

6NN. In defined benefit p$an te benefit is epressed as [[[[[[[[ and in defined (ontributionp$an te benefit is epressed as an [[[[[[[[

5 A((ount ba$an(e , Annuit& Annuit& , Annuit&

H A((ount ba$an(e , A((ount ba$an(eI NoneVH Ann"ity ) Acco"nt !alance

6N4. Oat is te term used to indi(ate te arrangement of LAR< borrowing for a (orporateb& a group as $enders none@H SyndicateI A$$o(ation

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J AssignmentE 'e(ondar&

647. !ard asso(iate provide wi( of te fo$$owing servi(e5 issue (ard 'et (redit $imitsH 'et interest ratesI 'et (ard feesVH Sec"rityC Risk management

646. In an internationa$ se(urities transa(tion, wi( of te fo$$owing parti(ipant wi$$ not beinvo$vedPE $oba$ (ustodian , domesti( sub (ustodian , depositor& in foreign (ountr& and sometime

sto(k e(ange in foreign (ountr&L #epositor& in foreign (ountr&M $oba$ !ustodianH stock e0change in foreign co"ntry9 domesti( sub (ustodian

643. An insurer undertakes an ana$&sis of a portfo$io of insuran(e po$i(& b& ep$orings(enarios for te pat fo$$owed b& swap rates, po$i(& surrender rates, mortgage prepa&mentrates for te mortgage ba(ked se(urit& in te portfo$io, wat is tis pro(ess (a$$edP5 !as pro3e(tion Investment manages universeH Asset a$$o(ationI 5und administrationVH Asset C lia!ilities analysis

641. 2rade finan(e e$ps in:H :acilitating international transaction 5a(i$itating intra (ompan& transa(tion

H 5a(i$itating internationa$ transa(tion , (orporate $ending and sett$ing up of new fa(toriesI 5a(i$itating (orporate $endingJ 5a(i$itating setting up of new fa(tories

64. A (oi(e %uote is< a pri(e at wi( a firm is read& to bu& or se$$5 Oen bid is e%ua$ to offer Oen te firm as a (oi(e of de(iding te se(urities to take@H a $rice at which a firm is ready to !"y or sell it also means when !id is e?"al to

offer

642. Oi( of te fo$$owing is $ ike$& to ave te igest interest rateP5 - mont deposit of min ba$an(e of 78)))

mont deposit of min ba$an(e of 7)))H 80 mont deposit of min ba$an(e of 78)))H oneJ - mont deposit of min ba$an(e of 70)))

-8* If 8 da& aR is 78 mi$$ion, 1 da& aR is:H <1mnGH 7*.mn@H 71mnH 7*mn

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VH 78mn

645. If a bank gets a deposit of 78))) assuming a !RR of 8)Y and tat it (ir(u$ates troug 0more banks, $eading to te fo$$owing mone& mu$tip$ier effe(t:H Loan of <314 Loan of 78K8)H NoneI !reate a reserve of 78))J !reate a reserve of 781)

648. Oi( among te fo$$owing is an investment (ompan& tat poo$s mone& from unit o$dersand invest in a variet& of se(urit&PEH M"t"al :"nd5 Mortgage !ompan& NoneH 'to(k <(ange

64N. Gou pur(ased a sto(k for 7)* 8 &ear $ater &ou re(eived 70 as #ividend* Gou so$d it at7+* Oat is &our returnPf* .Y

g* 8)Yh. 32=i* .)Y

3* None

644. A forma$ Lega$ (ommitment to etend (redit to some ma amount over a stated period oftime is des(ription ofk* 2rade !redit$* Revo$ving !reditm* Agreement Irrevo(ab$e !reditn. Line of %redito* Letter of !redit

377. 9dd 8 outf* Oarren Buffetg* eorge 'orosh. Bill Gatesi* Ben raam

3* eter L&n(

376. #eve$opment of Investment 9b3e(tive and Investment po$i(& fa$$s under te urview of f* Investment manager 6niverseg* Asset A$$o(ationh. Asset Lia!ility Analysisi* 5und Admin

3* !omp$ian(e Reporting

373. Interest Rate 'pread is e%ua$ toe. %"rrent rate Q Base Ratef* !ap !urrent Rateg* !urrent Rate 5$oor * Base Rate 5$oor

371. Oi( of te fo$$owing fa(tors affe(t te (oi(e of a&ment MetodPk* <porters 5undl. All

8/10/2019 BFS L0 ques


m* overnment uarantee rogramn* 2ime 5rameo* !ost of 5inan(ing

37. 2e NG'< is a $arge finan(ia$ market in wi( te initia$ issue re(eives te pro(eeds forte 'a$e of se(urities*

b* r"e b* 5a$se

372. Oi( of te fo$$owing trading servi(es redu(es te trading (ost for institutiona$ investorsPf* 'to(k Repur(ase rogramg* 2ransition Managementh. ransition Management & %ommission Reca$t"rei* !ommission Re(apture

3* None

375. A !ALL option on futures gives te bu&er f* te ob$igation to bu& a futures (ontra(tg* te ob$igation to se$$ a futures (ontra(t* te rigt @ ob$igation to bu& a futures (ontra(ti. the right !"t not the o!ligation to !"y a f"t"res contract

3* te rigt but not te ob$igation to se$$ a futures (ontra(t

378. Oi( is not an eamp$e of 9ptionPf* !a$$ 9ptiong* 'waption* Leapsi. *il :"t"res

3* ut 9ptions

37N. 'ome banks pa& interest on !e(king A"( wi$e man& do not*

c. r"ed* 5a$se

374. 2e advising bank is (a$$ed as trusted bridge between te [[[[[[[[[[[ @ [[[[[[[[[[wen te& do not ave a(tive re$ationsip* 9ptions wronge* Benefi(iar& Bank @ Reimbursing Bankf* Importer <porter g* Reimbursing Bank @ Benefi(iar& Bankh. A$$licantJs !ank & BeneficiaryJs !ank

367. Oi( of te fo$$owing a((ording to &ou as resu$ted in defining (ontribution p$ans gainingpopu$arit& over defined benefit p$ansi* #! p$ans fi te mont$& (ontribution from te emp$o&ee making is finan(ia$ p$anning

easier* 3* #! p$ans are seen b& emp$o&ees as investment wi( to a((umu$ate retirement in(ome*k. All$* <mp$o&er in(reasing wants emp$o&ees to sare responsibi$it& for retirement

366. [[[[[[[[is t&pi(a$$& $argest part of spread and is paid to broker_dea$er or tat a(tua$$&took ($ients order k* 'a$ar&$* Manager fee

8/10/2019 BFS L0 ques


m* Oagen. %oncessiono* 6nderwriter

363. NA'# is not an 'R9 fori. Listed market

3* 9ver te (ounter marketk* 2ird market$* 5ourt market

361. Hig net wort individua$s genera$$& ave [[[[[[[[[[[[*i* Market (apita$i4ation more tan 70)))))

3* A$$k. et worth greater than <277777$* Houseo$d in(ome of ma 7.)))) &ear*

36. Oi( is true about retai$ bankingPi* 2e business fo(uses on sma$$ no* of ig net wort individua$s*

3* 2e business fo(uses on sma$$ and medium enterprises*k. he !"siness foc"ses on large no. of indi/id"als.

$* 2e business fo(uses on $arge no* of (orporation bodies*

362. 9ffer is pri(e at wi( a firmk* 2rades in se(urities$* ;uotes to its bets (ustomer m* Intends to bu&n. ntends to sello* ;uotes wen it does not want to trade*

365. 'e(urities wit origina$ maturit& greater tan 8 &ear are traded on mone& market*c. 2rue !. :alse

368. Oi( is not a banking servi(ePi. Stock market

3* Retai$ bankingk* !orporate banking$* !ustomer $ending

36N. Oi( is truePi* 5inan(er owns te asset bot in (ase of TLeaseC and Tire ur(aseC*

3* 2a dedu(tion (ab be ($aimed from te fu$$ va$ue of te renta$ paid in (ase of $easek* A$$l. >e$reciation is claimed !y the financer in lease and not in case of hire $"rchase.

364. Bank a based in 6' provides safe keeping servi(es for se(urities to its 6' ($ients* It a$soas ($ients in 5ran(e and Be$gium and provides se(urities safe keeping servi(es to tese($ients troug banks ! @ # respe(tive$&* Oi( best des(ribes bank AP

k. Glo!al c"stodian)$* Nonem* Main (ustodiann* 'ub (ustodiano* 'e(ondar& (ustodian

337. A$$ fo$$owing statements re$ating to Bonds are (orre(t e(ept* Bonds se$$ at a dis(ount wen !oupon Rate is $ess tan Market Interest rate*@H oneI Bond is debt instrument giving issues*

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336. Oi( of te fo$$owing t&pe of $oan re%uires te amount of interest tat wou$d be earnedon te $oan to be paid upfront b& te borrowerPE !apita$i4ed $oanL 2rue #is(ounted $oanM Amorti4ed $oanN #emand $oan*H >isco"nted loan

333. Oo are invo$ved in te preparation of prospe(tus of I9PE !ommer(ia$ bankersLH n/estment BankersM NoneN !ompan& Management9 !ompan& Management and Investment Bankers

331. Bankers A((eptan(e differs from 'igt #raft in tatE Bankers A((eptan(e redu(es $ending (apa(it&L 'igt #rafts are negotiab$e instrumentsM Bankers A((eptan(e demands immediate pa&ment*

N None*H Banks can raise f"nds !y selling acce$tance.

33. !$ients of a private banker are genera$$& not segregated on te basis ofE Investib$e assetsL Lo(ationM AgeN Net wort*H ame

332. 2e initia$ sa$e of te se(urit& is in te QQQmarket, wi$e subse%uent trading in tese(urit& is in te QQ** marketE 'pot, futuresL #ebt , <%uit&

MH Primary ) SecondaryN Mone&, !apita$9 'e(ondar&, rimar&

335. 6nder wat (ategor& (an servi(es $ike asset"$iabi$it& ana$&sis, asset a$$o(ation, (aspro3e(tion, (omp$ian(e reporting, fund administration, investment Management universe et(*provided b& an institution (an be ($assifiedPKH n/estment ManagementL Asset 'ervi(ingM NoneN 2rading9 Investor 'ervi(es*

338. !I in te (ontet of anti/mone& $aundering isI A$$J 'tands for 'uspi(ious A(tivit& ReportsKH %"stomer dentification ProgramL Re%uiring Businesses, wi( were on$& to report (as transa(tions invo$ving more tan

8*)),)))P

33N. 9n a trading da& at a sto(k e(ange a broker undertakes te fo$$ trades:Bu& 8)) IBM sares for 8)7 ea('e$$ .) IBM sares for 8)*. 7ea(

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Bu& 8)) M'52 sares for 0)7 ea('e$$ 0) IBM sares for 887 ea('e$$ 8) M'52 sares for 0)*. ea('e$$ ) 8bm sares for 17 ea(

At te end of te da&, te broker owes 8K+) to te e(ange wi$e e(ange owes im 1)sares of M'52* Is it possib$eP Ges under R2'H NoH (es "nder netsettlement system

334. #ow Jones industria$ average is made of KH 17 stocksL 0) sto(ksM ) sto(ksN 8) sto(ks9 .) sto(ks

317. Oi( is te ke& feature of Letter of !reditP A basis for devising proper (urren(& edging strateg&B #istributes risk between bu&er n se$$ers*

! basis for devising proper (urren(& edging strateg& and opportunit& for re(eiving pa&mentin advan(e of te due date*#H All< 9pportunit& for re(eiving pa&ment in advan(e of te due date*

316. Oi( risks bring gain and $ossesPE Interest rate and foreign e(angeL Li%uidit& and (reditM !redit and Interest rateN !redit and 5oreign e(ange*H All

313. 5ind te future va$ue of 780)) invested at .*0. Y per annum pa&ab$e annua$$& after -

montsP Marks: 0

8* 8.*80* 80*8* 6316.6* None.* 80.

311. Investor servi(es $ike brokerage, (as management and sort term investments,(ommission re/(apture, foreign e(ange transa(tions, transa(tion management et(* (an be($assified under [[[[ group of servi(es* Marks: 8*8. rading0* Investment Management

* Investor servi(e* None.* Asset 'ervi(ing

31. 2e term ! is used in (orporate $ending for [[[[* Marks: 88* !o$$atera$ provision0* !$ient artner * %ommercial Pa$er * !ommodit& ut options.* !redit rovision

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312. Oat are te risks asso(iated wit te Hedge fundsP Marks: 8* All of the a!o/e0* Hig eposures in derivatives* Hig Leveraging* Hig 'pe(u$ation

315. 2e trade terms D8."0 net )Findi(ates tat [[[[[* Marks: k.0Y dis(ount is offered if pa&ment is made witin 8. da&s*l. 62= disco"nt is offered if $ayment is made within 3 days the $ayment sho"ld

howe/er !e made in 17 days.m. )Y dis(ount is offered if pa&ment is made before 8. of te mont*n.8.Y dis(ount is offered if pa&ment is made between 0 @ ) da&s?o.8.Y dis(ount is offered if pa&ment is made witin ) da&s*

318. A bank is re%uired to o$d reverses at $east e%ua$ to a pre/s(ribed fra(tion of its tota$ deposit$iabi$ities*(*2rue b* 5a$se

31N. Oat term is used to des(ribe an L! tat remains va$id for &ears tereb& e$iminating te(ost of separate L!Cs for ea( transa(tion wit a regu$ar ($ientPk*Irrevo(ab$e L!$* Nonem* Red ($ausen.Re/ol/ing L%o*<vergreen ($ause

314. Oo appoints investment manager to manage a benefit p$anPk*$an sponsor $* $an administrator m. :"nd tr"stee

n*Noneo*overnment

37. A (ompan& wou$d pa& te interest on wat portion of $oanPk*!ommitted amount$* <iter disbursed or (ommitted $oanm* 6nused amount of $oann.>is!"rsed amo"nto*None

36. In te e(ange on a parti(u$ar trading tere is a bu& market order for 8)) !2'H saresand two se$$ market orders for .) and ) !2'H sares ea(, (an te bu& order be mat(edagainst te two se$$ orders*

g*Ges*Noi. (es) !"t if $rices on the !"y & sell side match.

33. If te $imit = 70))), margin = 0)Y and asset va$ue = 70))) ten drawing power for an openended $oan is e%ua$ toPk*Nonel. >rawing $ower ; <6577m* 700))n*70))

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o*70)))

31. Risk (annot be mitigated b&k*'etting risk $imits$* Hedgingm* #iversifi(ationn.Ar!itrageo*Insuran(e

3. A fied in(ome ana$&st wi$$ ana$&4e a$$ butk*Muni(ipa$ bonds$* Bonds of govt* sponsed enterprisem* !orporate bondsn*6' treasurieso.Shares

32. In benefit administration wat are te re$ationsips tat eits between te p$anadministrator and te investment manager, and between 2rustee and te investmentmanager*k*None

$* $an administrator @ trustee bot ave outsour(ed p$an administration as we$$ as fundmanagement to investment manager

m* An&n.Plan administrator gi/es in/estment instr"ction to in/estment manager while

tr"stee a$$oints the in/estment manager.o*2rustee gives investment instru(tion to investment manager, wi$e p$an administrator

appoints te investment manager*

35. Oi( entit& provides (redit s(ores tat are used b& issuers to pro(ess (ard app$i(ationPk*Issuer pro(essor $* !o$$e(tion agen(&m* Issuing bankn*Autori4ation engine

o.%redit !"rea".

38. !I stands for wi( of te fo$$owingPk*!onso$idated ri(e inde$* !onsumer popu$arit& indem* !onsumer produ(t inden.%ons"mer $rice inde0o*None

3N. A bank de(ides to san(tion on$& 8)Y of te $oan sougt b& a (ompan&* 2e (ompan& goesand p$edges etra assets wit te bank and te bank ten agree to san(tion .)Y of te$oan sougt* 2e (ompan& as indu$ged in te pro(ess of k*!redit s(oring

$* !redit in(reasem* !redit in(rementationn*!redit revisiono.%redit enhancement.

34. 5V spot dea$ assumes maturit& of ow man& business da&s aeadPk$ .m n8

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oH 3

327. Oi( of te fo$$owing is best aR estimation Mode$Pi Monte/ !ar$o

3 Histori(a$kH,ariance%o/ariance$ arian(e/!ovarian(e and Monte/ !ar$o

326. Oi( of tem represent (ompan& is in(orporated in 6'APi $(

3 tekLtdlH nc

323. Oi( of te fa(tors affe(t te (oi(e of pa&ment metodsPkovt* guarantee rogram$ 2ime framemH Alln!ost of finan(ing

o<porter fund*

321. 9rgani4ation $eve$ risk appetite is determined b&:kRisk management$ 5ront offi(em Ba(k offi(en2radeoH Board of director

32. Risk management is fun(tion of:k2raders$ Ba(k offi(em 'pe(ia$ist

n5ront offi(eoH Mid office

322. ure$& (ompetitive finan(ia$ markets are not (ara(teri4ed b&iH Go/t. reg"lation

3 Man& tradersk5u$$ info$ !ost effe(tive trading

325. N92 p$a&er in t&pi(a$ trade (&($e?k!ustodian bank$ !$earing bank

m !$earing member n2rading member oH Reg"lator

328. 9n(e s&ndi(ate as so$d a$$ oter trades parti(ipant, sub parti(ipant and assignment are(onsidered trade in wat marketPkrimar&lH Secondarym arti(ipantn92!

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oInde

32N. ;uestion re$ated to $rice weighted inde0P66. >VA80* Hangseng8* <A5< inde8* NA'#A; (omposite inde8.* '@ .))

324. In defined (ontribution retirement p$an *2a se$tered annuities fa$$ under se(tion of [[[[[[[[[<RI'A71!)8k)8b)kNone

357. In benefits administration, trustee and p$an administrator submit (omp$ian(e reportto[[[[[[ wi( in turn %ua$ifies te p$an*arti(ipant

one answer is R9SHovernmentInvestment manager 'ponsor

356. 5u$$ form of A#R Answer: American >e$ository Recei$ts

353. ;uestion re$ated to BA'<L II Answer: %a$ital ade?"acy

351. Oat is interest rate (arged on asset based $oanP Answer: he interest rate charged is lower than $ersonal loans

35. ;uestion re$ated to (redit derivatives as wi( of te fo$$owing fun(tion is not done b& (reditderivatives

Answer: Answer was someting as ransfer to o/er the co"nter

352. ;uestion re$ated to (redit derivatives it was fi$$ up te b$anksP <a(t$& donCt remember te%uestion"

Answer: option aving DRAS:ER

355. ;uestion re$ated to nondiscretionary n/estment Management Answer: te bank offers investment re(ommendations based on te !$ientCs approva$*

358. ;uestion aving few options $ike In(ome ro(essing, 2a Information 'ervi(es, !as

'weep Answer: ASSE SER,%G 35N. ;uestion re$ated to 6nderwritingP

9ptions:1*6nderwriting 'pread8)* ub$i( 9ffering ri(e 9,88* Lead or Managing 6nderwriter is te 6nderwriting Agreement*not sure about it63. All

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c( <$ual onthly nstallment

d( <nd onth nstallment

.( 9hat is !?

a) @oercia( Paper

b( !ommercial rofit

4( <xpand <&7(

a) (ectronics "n# Transfer

,/( <xpand !#6(

a) @ontin"o"s >in%e# Sett(eents

,,( 9hich of the following risks are a'oided by !ontinuous #inked 6ettlements?

a) Tepora( ?is%

b( 6patial :isk

c( arket :isk

,2( 9hich of the following locations is not speciali>ed for ri'ate 1anking?

a( 6wit>erland

b( auritius

c) In#ia

d( !ayman slands

,0( 8on’t put all your eggs in the same basket( N 7his is a famous saying insisting

what?

a( Hedging

b( Acti'e aapproach

c) <iersification

,B( !alulate the amount you will recei'e by the end of two years if you ha'e in'ested

:s(5/// at ,/% rate of interest compounded annuallyF

a) 6050

b( Q///

c( 2//

d( 5/5/

,5( 6imple nterest is calculated based on

a) Principa( -n('

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a( !redit !ard

!) <e!it @ar#

c( 6tored !ard

d( ;ift Eoucher

2B( f you ha'e ,// units of money and inflation being 5% what is the future 'alue

after , year?

a( ,/5

!) 45

c( 4/

d( ,,/

25( f banks increase their cash reser'e ratio what will be the impact?*not the same

one but similar)

a( oney flow will be more

!) $one' f(o, ,i(( !e (ess

c( :eser'e amount will be less

d( one of the abo'e

2Q( 9hich of the following is not a bank account?

a( oney arket 8eposit Account

!) <eat &cco"nt

c( !hecking Account

d( 7ime 8eposits

2( <xpand ::(

a) Interna( ?ate of ?et"rn

2.( 9hich of the following is not a :etail 1ank in ndia?

a( H61!

b( !!

c) JP$@

d( 6!1

24( !entral 1ank of a country is called as

a) an%er’s an%

0/( 6er'icing High et worth !lients is called

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a( Asset anagement

!) Priate an%ing

c( :etail 1anking

0,( 7A stands for

a) Pa'a!(e Thro"gh &cco"nt

02( 9hich of the following is not a repayment method?

a( 8irect :eceipt

b( 8irect 8ebit

c( ost 8ated !he$ues

d( 6alary 8eductions

e) .one of the a!oe

00( 8etails about 0 tiers of &ederal communications pri'acy law(

0B( =6 ;o'ernment passed the =6A A7:"7 Act in response to

a( o'ember 0/3 ,4.2

!) Septe!er 11= 2001

c( Wune /43 ,4.B

d( August ,/3 ,4.B

05( 1enefits of !heck 2,(

0Q( 6uper8ot is used in which 6tock <xchange?

a) ./S

b( 16<

c( &6<

d( #6<

0( &76< index is used in which stock exchange?

a( ew ork

b( 1ombay

c) >on#on

d( 6ingapore

0.( f the current market price of a share is +4/ and you ha'e placed a sell stop order

for +.5 and #imit order for +.( 9hich of the following statements is correct?

a( 9ill be sold immediately but at a price Z+.

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b( 9ill be sold immediately but at a price Z+.5

c( 9ill be sold but at a price between +.5 and +.

04( 9hat are warrants?

B/( ick the odd man out(

a( 6tocks

b( 6hares

c( <$uity

#) @onerti!(e on#s

e( !ommon 6tocks

B,( 8efine risk in financial terms(

a( robability of loss

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1. A brokerage or analyst report will contain all of the following except?a. Detailed description of the company, and its industry.

b. Opinion on why the analyst believes the company will succeed or fail.

-c. Recommendations to buy, sell, or hold the company.

d. Target price or performance prediction for the stock in a year.

e. Track record of the analyst writing the report.

2. 2 Marks

One should have the MMDA if one is looking for _______________________.

a. Quick, convenient and, frequent-access to the money

-b. A high rate of interest

c. Guaranteed rate of interest

d. Low fee

e. None of the listed Options

3. 2 Marks ______________ for securities lending, which bring lenders and borrowers together, may

eliminate _______________.

a. Wholesale intermediaries; Niche intermediaries

b. Internet auction systems; custodian and third party intermediaries

c. Custodian and third party intermediaries: Niche intermediaries

d. Niche intermediaries; custodian and third party intermediaries

-e. Internet auction systems; Niche intermediaries

4. 2 Marks

Money laundering can best be described as the process by which

____________________________________________.

-a. money gained from criminal activity is processed so it appears to be gained

from legitimate sources

b. criminals attempt to defraud the government

c. money gained from legitimate sources is hidden to avoid taxes

d. the police attempt to investigate organized crime


5. 3 MarksA U.S. importer who has agreed to pay 1 million Euros to a French exporter

in 60 days decides to wait the full 60 days before paying. The importer is

______________________.

-a. a foreign exchange speculator b. expecting the dollar to depreciate against the Euro

c. a hedger in the foreign exchange market

d. planning to pay a set amount of dollars for the items purchase


6. 1 Marks

The term POP stands for?

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a. Private Offer Price

b. Private Option Price

-c. Public Offer Price

d. Public Option Price

e. Potential Offer Price

7. 1 Marks

Continuous Linked Settlement removes which of the following risks primarily

a. Exchange risk

-b. Temporal risk

c. Country risk



8. 2 Marks

Which of the following is correct with reference to Indian banks?

a. Indian banks are unregulated

b. Saraswat Bank is the largest Indian bank

-c. Reserve Bank of India regulates the Indian banks

d. Indian banks cannot open branches outside of India

e. India's banking system is one of the weakest in the world

9. 1 Marks

EFT stands for _______________.

a. Express Funds Transfer

b. Electrical Funds Transfer

c. Elevated Funds Transfer

d. Emergency Funds Transfer

-e. Electronic Funds Transfer

10. 1 Marks

Banks are financial intermediaries that ____________________.

-a. link lenders (depositors) to borrowers

b. have been in existence now for over 50000 years

c. are not required

d. cause problems as their sales reps keep calling people to buy new products

e. should not be allowed to open Savings Accounts

11Which of the following is not a type of Swap? Answer:a. Currency Swap'

b. Forward Swap

c. Swaption

-d. Interest Rate

12 Forfeiture regulation under the US patriot act allows _____________________________

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Answer: -a. permits confiscation of any property derived from or used to facilitate

domestic or international terrorism

b. Calls for the seizure of correspondent accounts held in foreign financial institutions

for domestic banks who are in turn holding forfeitable assets

c. Permits foreign enforcement of domestic forfeiture orders

d. All of the listed optionse. None of the listed Options

13.Annual Percentage Rate for a loan takes into account the following?

Answer:

a. The interest rate charged

b. When and how often the interest must be paid

c. Other charges such as arrangement fee

d. When and how often these other charges must be paid

-e. All of the listed options

14. A young investor comes to an Investment Consultant and asks him for advice for hisinvestments. He declares that he doesn’t mind the risk but he would definitely like his

money to grow as fast as possible. He would like to invest in a Mutual Fund which

would satisfy these criteria. What would be the consultants choice for his profile?

Answer:

a. Income Fund

b. Liquid Fund

-c. Growth Fund

d. Balanced Fund

e. Bank Deposit

15 ABC corporation is a large client of BankNew and maintains $40 million in cash with

the bank. BankNew however allows authorized representatives off ABC to write checks

up to 10% over the balance maintained. This is an example of

____________________________________.

Answer:

-a. Overdraft

b. Accrual Loan

c. Held for Sale Loans

d. Undrawn Loan

e. Committed Loans

16.Which of the following is associated with the purpose of regulating financial

institutions?

a. To ensure everyone makes money in the market

b. To ensure companies can cheat small investors in buying their securities

-c. To prevent failure of any financial institution

d. To ensure that various government departments can be created for regulation thus

giving employment to many people

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17.Which of the following is true about Retail Banking business?

Answer:

a. The business focuses on small number of high net worth individuals

-b. The business focuses on large number of individuals each of whom may have asmall amount of money to deposit with the Bank

c. The business focuses on large corporate bodies

d. The business focuses on small and medium enterprises

e. The business focuses on giving financial advice to customers to generate maximum

returns on their investments

18. What is the best basis for the comparison of dividend paying stocks with other

investments such as bonds, certificates of deposits etc?

Answer:

a. Interest spread

b. Exchange rate

-c. Interest rate

d. Equity yield

e. Dividend yield

19. Corporate Loans are ___________________________________

Answer:

a. always secured

-b. secured or unsecured

c. never secured

d. always unsecured


20.Services like the settlement, safekeeping, and reporting of customers’ marketable

securities and cash are provided by _________________.

Answer:

-a. Custodian

b. Broker

c. Investment bank

d. Fund Administrator

e. Dealer

21. CRR stands for which of the following? Answer:

-a. Cash Reserve Ratio

b. Common Reserve Ratio

c. Cash Refund Ratio

d. Cash Re-service Ratio

e. Cash Reserve Risk

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22 1 Marks

The term CLS stands for

Answer:

-a. Cautious Linked Settlement

b. Continuous Linked Settlement

c. Competitive Linked Settlementd. Comparitive Linked Settlement

e. Clearing Linked Settlement

23.1 Marks

Which of the following is not a risk management measure?

Answer:

a. Diversification

b. Hedging

c. Insurance

-d. Budgeting

e. All are risk management techniques

24 2 Marks

The quote for CTSH in NASDAQ was $ 43. The best buyer was at $ 42.5 and the best

seller at $ 43.5.</p><p> How much is the bid-ask spread?

Answer:

a. $0.50

b. ($0.50)

-c. $1.00

d. ($1.00)

e. $86

25 1 Marks

The easiest way to calculate IRR is

________________________________________________.

Answer:

a. writing a Java program with 100 FPs

-b. using MS-Excel

c. using a supercomputer

d. using a 2GHz processor

e. writing JCLs running on a powerful Mainframe

26 3 Marks You invest Rs.5000 at 10% p.a. compound interest compounded annually in a bank.

After 2 years, what is the amount you have received from the bank?

Answer:

a. Rs. 12346

b. Rs. 7000

c. Rs. 2346

-d. Rs. 6050

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e. Rs. 7546

27 1 Marks

The central bank in the US is called ________________.

Answer:

-a. Federal Reserve

b. Federal Reserve Board

c. Reserve Bank of United States

d. Central Bank of United States

e. Reserve Bank of America

28 ABC corporation is a large client of BankNew. BankNew extends a loan to XYZ

corporation which is a supplier of ABC. This is an example of _______________________.

Answer:

a. Bill Discounting

-b. Supplier Loan

c. Asset Securitization Loand. Working Capital Loan

e. Revolving Line of Credit

29 2 Marks

The act of a loan amount being handed over to the borrower by the Bank is know as?

Answer:

-a. Disbursement

b. Distribution

c. Displacement

d. Dispersemente. Diversification

30 1 Marks

Momentum investing” would refer to ___________________________.

Answer:

a. follow fundamental financial ratios to make decisions

b. invest in high dividend yield stocks

c. following charts and indicators to trade

d. create portfolio similar to index

-e. try best to market

31 3 Marks

Private clients trade in ____________ volumes and ___________ fees and commissions.

Answer:

-a. larger; larger

b. small; larger

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8/10/2019 BFS L0 ques


b. are markets in which short-term debt is traded.

c. are markets in which claims that have already been issued are sold by one investor to

another.

-d. are markets in which newly issued claims are sold to initial buyers.

e. are markets in which shares are actively traded.

37 3 Marks

What does the ‘Federal Reserve Supervisory Letter’ define private banking as?

Answer:

-a. “personalized services such as money management, financial advice, and

investment services for high net worth clients”

b. “personalized services such as cheque collection and other retail banking services for

high net worth clients”

c. “service provided by private banks to all clients”

d. “personalized services provided by private and public banks to all clients”


38 1 Marks

The term PTA refers to ______________________.

Answer:

a. Permission to Act

b. Payable Through Automated Means

c. Payment To Automate

-d. Payable Through Account


39 1 Marks

The city of Basel is located in which country?

Answer:a. USA

b. India

c. Japan

d. UK

-e. Switzerland

40 1 Marks

Inflation represents which of the following?

Answer:

-a. Increase in prices

b. Decrease in pricesc. Very high change in prices

d. Economic crisis

e. Currency crisis

41 1 Marks

Financial intermediaries exist because small investors cannot efficiently

________________________.

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Answer:

a. gather information

b. advertise for needed investments

c. monitor their portfolios

d. diversify their portfolios


42 1 Marks

Which is not a banking account?

Answer:

a. Checking Accounts

b. Money Market Deposit Accounts

-c. Demat Account

d. Time Deposits


43 1 Marks

Pick the odd one out. Answer:

a. Warren Buffet

b. Peter Lynch

c. George Soros

-d. Sachin Tendulkar

e. Rakesh Jhunjhunwala

44 1 Marks

In a economy where inflation is 5%, future value of 100 units of money after 1 year

would be which of the following?

a. More than 100-b. Less than 100

c. Exactly 100

d. 105, as inflation is 5%


45 2 Marks

What term is used to describe an LC that remains valid for years thereby eliminating

the cost of separate LCs for each transaction with a regular client?

Answer:

-a. Evergreen Clause

b. Red Clausec. Irrevocable LC

d. Transferable LC


46 2 Marks

When the Central Bank of a country decides to change the interest rates, it is a

manifestation of which of the following?

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Answer:

a. Money Policy

b. Money Market

c. Money Multiplier Effect

-d. Monetary Policy

e. Money making

47 3 Marks

Which of the following is not a rating agency?

Answer:

a. S&P

-b. Reserve Bank of India

c. Moody's

d. Fitch

e. Crisil

48 2 Marks

When you deposit $200 in currency into your bank _________________ Answer:

a. its assets decline by $200.

b. its reserves decline by $200.

-c. its liabilities increase by $200.

d. each of the above occur.

e. its assets decline by $200 and its reserves decline by $200.

50 2 Marks

Bank of America charges a lower rate of interest to Lockheed Martin than to General

Electric. This can be attributed to lower ________ risk from Lockheed as compared to GE

for Bank of America. Answer:

a. Market Risk

-b. Credit Risk

c. Liquidity Risk

d. Legal Risk


51 1 Marks

"Don't put all your eggs in one basket" is a phrase used to describe which of

the following?

a. risk averse-b. diversification

c. risk/return tradeoff

d. time value of money

e. budgeting

52 1 Marks

Pick the odd one out.

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Answer:

a. Visa

b. Mastercard

c. Amex

d. Discover

-e. HSBC Bank

53 1 Marks

Which of the following is not likely to be an electronic banking function?

Answer:

a. Direct Debit

b. Standing Order

c. Standing Instruction

-d. Account opening

e. Wire transfer

54 1 Marks

Which division provides services to High Net Worth individuals? Answer:

a. Corporate banking

b. Investment banking

c. Retail banking

-d. Private banking


55 1 Marks

Which term refers to securities that are sold by the issuer to investors?

Answer:

a. Secondary Offering b. Outright Sale

-c. Primary Offering

d. Select Sale


56 2 Marks

A bank that is earning 7% on its earning assets and is paying 4% on its interest-earning

liabilities is said to __________________

Answer:

a. have a negative spread.

b. have a positive GAP position.-c. have a positive spread.

d. will always have positive net earnings.

e. both have a negative spread and will always have positive net earnings.

57 1 Marks

Due Diligence is performed to ____________________________________.

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Answer:

-a. assess the risk

b. performed by the buyer

c. performed on the seller

d. executed after contract is signed


58 1 Marks

______________ preauthorizes banks to pay recurring bills like insurance premium,

utility bills automatically.

a. Pay-by-Phone System

b. EFT

-c. Direct Debit

d. Direct Credit

e. Direct Deposit

59 1 Marks

BankNew has a portfolio of $30 million worth of loans, which it wants to hedge. This is

an example of what kind of drawn loans?

Answer:

a. Accrual Loans

b. Trading Loans

-c. Held for Sale Loans

d. Undrawn Loan

e. Committed Loans

60 3 Marks

Regulatory balance sheet restrictions are designed to _________________ Answer:

a. limit the size of depository institutions.

b. limit risk-taking and to encourage diversification.

c. limit excessive diversification.

d. to promote Universal Banking.

e. encourage high risk-taking by proper diversification.

62 The term CP is used in Corporate Lending for ___________________________.

Answer:

a. Client Partner

b. Credit Provision-c. Commercial Paper

d. Collateral Provision

e. Commodity Put Option

63 1 Marks

“Dealer” in broking parlance refers to which one of the following?

Answer:

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a. Employee of stock exchange

b. Matches customer orders with other brokers

-c. Acts as a “Principal” and executes trades for his/her personal account

d. Only person authorized to buy or sell a particular stock

e. Charges commission for trades

64 1 Marks

Pick the odd one out with respect to Private Banking services.

Answer:

a. Switzerland

b. Luxembourg

c. Caymen Islands

-d. Mumbai

e. Mauritius

65 Why do we need banks?

Answer:

a. Banks are in the best position to lend out money at competitive rates to businessesand individuals

b. Deposits are participants in primary and secondary markets

c. Banks are in the best position to lend out money at competitive rates to businesses

and individuals

d. Small investors are protected, hence it is a low risk investment avenue


66 The key feature of letter of credit is ________________________________________.

Answer:

a. basis for devising proper currency hedging strategy

-b. distributes risk between buyer and sellerc. opportunity to receive payment in advance of the due date

d. basis for devising proper currency hedging strategy and Opportunity to receive

payment in advance of the due date


67 Which of the following is not a function of a Custodian?

Answer:

a. Core Custody

b. Asset Servicing

-c. Corporate Lending

d. Securities Lendinge. Corporate Actions

68 1 Marks

The treasury services department performs all of the following functions EXCEPT

___________________________.

Answer:

a. Research market factors e.g., Interest rate monitoring

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b. Managing corporate collections and payments

c. Managing liquidity and cash position

d. Risk Management services

-e. None of the listed Options

69 1 Marks Which of the following is not covered under retail operations of a Bank?

Answer:

a. Loan for Consumer durables

b. Hire Purchase

-c. Bill Discounting

d. Lease

e. Auto Loans

70 IRR stands for which of the following?

Answer:

a. International Rate of Malaysian Ringit

b. International Rating of Rwanda

-c. Internal Rate of Return

d. Indian Rate of Return

e. International Rate of Return

71 3 Marks

Inter District Settlement Fund is a _____________.

Answer:

-a. Fund Transfer System

b. Electronic Bill Presentment System

c. Settlement Account

d. Booking Systeme. Transaction System

72 Following are the list of risks that Cognizant faces at an organization level EXCEPT

______________________________________.

Answer:

a. Exchange rate fluctuation

b. Protective legislation by U.S/U.K

c. Attrition

d. Payment default

e. Cognizant faces all of the risks mentioned in the listed options

73 1 Marks

Which of the following is not a Retail Banking service?

Answer:

a. Current accounts

b. Savings accounts

c. Cheque book facility

-d. Investment advice

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e. ATM facility

74 Warrants are the combination of which of these instruments?

Answer:

-a. Equities and Call Options

b. Call and Put Optionsc. Equities and Futures

d. Cash and Call Options

e. Put Options and Swaps

75 1 Marks

Core Custody Services performs the following functions except ________________________.

Answer:

a. Price securities positions

b. Record Keeping

-c. NAV calculation

d. Reporting services

e. Processes corporate actions

76 What is the key regulatory authority over the American securities industry?

Answer:

a. Federal Reserve

b. FDIC

c. DTCC

d. ASA

-e. Securities Exchange Commission

77 After a buyer and a seller enter into a trade agreement, who initiates the issue of LC?

Answer:

a. Seller

b. Seller's bank

-c. Buyer's bank

d. Buyer


78 Which of the following is a foreign bank not operating in India as a retail bank?

Answer:

a. Citibank b. HSBC

-c. JP Morgan Chase

d. Standard Chartered

e. ABN Amro

79 Legal risk is the __________________________________________.

Answer:

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a. possibility that you will face legal action

b. loss you could incur when legal action is taken against you

-c. possibility of loss when a contract cannot be enforced

d. possibility of loss from errors in instructing payments or settling transactions


80 The term EMI stands for which of the following?

Answer:

a. Equal Monthly Income

b. Equalised Monetary Installments

c. Equated Money Inflow

d. European Monetary Inflows

-e. Equated Monthly Installments

81 Which of the following are involved in the mortgage business in US?

Answer:

a. Ginnie Mae

b. Fannie Mae

-c. Both Ginnie Mae and Fannie Mae

d. Sallie Mae

e. Federal Reserve

82 In Banking , the term LIBOR stands for?

Answer:

a. Limited Borrowing

b. Limited International Banking Operations

-c. London Interbank Offered Rate

d. Lending to International Borrowers


83 Loss of which of the following type of cards can cause the maximum financial impact

for the customer?

a. Debit Card

-b. ATM Card

c. Stored Card

d. Gift Voucher

e. Any of the listed options

84 Individual investors are most likely to trade securities in ________________________.

Answer:a. Forex market

b. Money Market

-c. Stock Market

d. Mortgage Market

e. New York

85 A share represents __________________.

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Answer:

a. ownership in a company

b. right to vote in important matters of the company

c. an instrument whose value might appreciate in secondary market

d. an instrument which can potentially earn dividends


86 Cash management techniques include ____________________________________.

Answer:

a. Pooling

b. Netting

c. Swapping

-d. Both Pooling and Netting

e. Pooling, Netting and Swapping

87 A very effective way to employ a passive strategy is to _____________________________.

Answer:

a. invest in an indexed portfolio b. buy all Stocks on the index

c. invest money in a bank

-d. buy few securities which reflect the index

e. both invest money in a bank and buy few securities which reflect the index

88 In context of Treasury services, FRA stands for which of the following?

Answer:

a. Frivolous Rate Agreement

-b. Forward Rate Agreement

c. Free Rate Agreement

d. Factored Rate Agreemente. Forfeited Rate Agreement

89 Which of the following is not associated with debt?

Answer:

a. Corporate Bonds

b. Debentures

-c. Shares

d. Loans

e. Government Bonds

90 Electronic banking doesn’t cover the following services. Answer:

a. Pay-by Phone system

b. ATM System

c. Point of Sale system

d. Internet payment

-e. Address check for verification of a loan application

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91 Which kind of an investor should choose to invest in Money Market Securities?

Answer:

-a. Investor looking for capital gains

b. Investor looking for liquidity

c. Arbitrageur

d. Investor looking for regular incomee. None of the listed Options

92 SWIFT is a ______________________.

Answer:

a. Proprietary network interface

b. Open standard network interface

c. Message based network interface

d. Both open standard network interface AND message based network interface

-e. Both proprietary network interface & message based network interface

93 Two Financial Institutions A & B conducted the following transactions over

CHIPS on 30th Jan 2004.A transferred $5m to B at 9:45 AM B transferred $10m to A at11:30 AM A transferred $12m to B at 2PM B transferred $15m to A at 3:30PM Which of

the following holds true?

Answer:

a. At the end of the day, $17m will be transferred to B

b. At the end of the day, $25m will be transferred to A

-c. At the end of the day, $8m will be transferred to A

d. All the transactions would settle individually real-time

e. Both, at the end of the day, $17m will be transferred to B AND at the end of the day,

$25m will be transferred to A

94 Research analysts do all of the following except ____________________.

Answer:

a. Follow stocks

b. Follow bonds

-c. Invest on behalf of the Investment Bank

d. Make buy / sell recommendations

e. Collect and analyse data on stocks and bonds

95 Which of the following is not a repayment method?

Answer:

a. Post dated checks b. Salary deductions

c. Direct receipts

d. Direct debits

-e. All of the listed options are repayment methods

96 Coupon rate on a bond represents which of the following?

Answer:

8/10/2019 BFS L0 ques


a. Face value of the bond

b. Maturity duration of the bond

c. Credit rating of the bond

-d. Interest paid to the bondholders

e. Financial performance of the bond issuer

97 Which of the following is not a characteristic of money markets?

Answer

a. They trade in a central location.

b. They have an active secondary market.

c. They are wholesale markets.

d. They are beyond the reach of small investors.

e. They trade in short term instruments.

98 VaR is used for which of the following?

Answer:

-a. Risk Measurement

b. Risk Mitigation

c. Risk Taking

d. Risk Assumption


99 The Japanese Index is known as?

Answer:

a. Straits Times

-b. Nikkei

c. Footsie

d. DAXe. CAC

100 Which of the following is the most profitable for Credit Card Company?

Answer:

a. Customers who always pay in time

b. Customers who never pay

-c. Customers who default but finally pay



Gou pur(ased a sare of sto(k for 70)* 9ne &ear $ater &ou re(eived 78 as dividend and so$d tesare for 701* Oat was &our o$ding period return.Y.Y27=)Y None of te $isted options

8/10/2019 BFS L0 ques


If Bank of New Gork as found errors in sett$ement of transa(tions wit some of its (ustomers, astere is some mistake in some of its s&stems* 2is wou$d be ($assified as Li%uidit& Risk Market Risk !redit Risk !ountr& Risk *$erational Risk

Risk is best measured wen $ooked at At a Ma(ro $eve$ At the lowest $ossi!le le/el At a sub/ma(ro $eve$ At organi4ationa$ $eve$ At (ountr& $eve$

Oat wou$d be te most a((urate aR estimation metodP Monte !ar$o 'imu$ation

Histori(a$ 'imu$ation arian(e/!ovarian(e Matri %annot Say Ana$&ti(a$ Metods

If a finan(ia$ instrument as a . per(ent (an(e of pa&ing 01 per(ent and a -. per(ent (an(eof pa&ing / 8 per(ent, it epe(ted return wou$d be simp$e ])*. )*01)*-. /)*8^)*))+)*)-)*).7.768/)*)01

2e term Srisk averseS means tat An individua$ refuses to take risks* Most investors and businessmen seek risk* An indi/id"al will seek to a/oid risk or !e com$ensated with a higher ret"rn* 9n$& investment proposa$s wit no risk sou$d be a((epted*Bot An individua$ refuses to take risks and 9n$& investment proposa$s wit no risk sou$d bea((epted

Mone& Mu$tip$ier effe(t wou$d imp$& An in(rease in te tota$ mone& $ent out into te s&stem An in(rease in te tota$ mone& in te bank reserves in te s&stem A de(rease in te tota$ mone& in te bank reserves in te s&stem

Both An increase in the total money lent o"t into the system and an increase in the totalmoney in the !ank reser/es. Bot An in(rease in te tota$ mone& $ent out into te s&stem and a de(rease in te tota$ mone& inte bank reserves in te s&stem

Oi( of te fo$$owing is N92 a fun(tion of te bankP Ens"re s"$ernormal ret"rns to its small de$ositors !anne$i4e 'avings rovide (redit fa(i$ities to borrowerrovide investment avenues to investors

8/10/2019 BFS L0 ques


5a(i$itate te trade and (ommer(e dea$ings

If a bank gets a deposit of 78)), assuming a reserve re%uirement !RR of 8)Y, and tat it(ir(u$ates troug 0 more banks, $eading to te fo$$owing mone& mu$tip$ier effe(t (reate a reserve of 78) loan of <3 (reate reserve of 781 $oan of 78K8None of te $isted 9ptions

If te Limit = 78.)), margin = 0)Y and Asset a$ue = 70))) ten #rawing ower for an 9penended $oan is e%ua$ to<6)27778,0))78,-))71))None of te $isted 9ptions

5reddie Ma(, innie Maes @ 5annie Mae areP Marketing institutions se$$ing ome $oansLenders to the !anks for home loan !o"ght !y retail c"stomers

Regu$ator& bodies governing ome $oan market in 6'rimari$& asset management (ompanies


Oi( of te fo$$owing is not invo$ved in a (redit (ard transa(tionP Independent sa$es organi4ationMer(ant

a&ment gatewa& AssociationsNone of te $isted 9ptions

Oo (e(ks for te (redit $imit of te (ard before approving te transa(tionP a&ment pro(essor A(%uiring banks a&ment gatewa& ss"ing !ankNone of te $isted 9ptions

9ne sou$d ave te 2ime #eposits if one is $ooking forP ;ui(k, (onvenient and, fre%uent/a((ess to te mone& A ig rate of interest

G"aranteed rate of interest Low feeNone of te $isted 9ptions

<52A stands for<$e(troni( 5unds 2rading A(t


<$e(troni( 5ee 2ransfer A(t

8/10/2019 BFS L0 ques


<$e(troni( 5unds 2e$e(ommuni(ation A(t

2e 5edera$ Reserve offers finan(ia$ servi(es to banks and te 6*'* government for a$$ of tefo$$owing reasons e(ept to make a $rofit promote (ompetition foster innovation promote effi(ien(& in te pa&ments s&stemNone of te $isted 9ptions

!HI' stand for !$earing House for Internationa$ a&ments 'ett$ement %learing @o"se for nter!ank Payment System !$earing Head of Interbank a&ment 'ett$ement !$earing Head of internationa$ a&ment 'ett$ement !$earing House for Interbank a&ment 'ett$ement

2e pro(ess f$ow in a rivate banking firm goes as 'ervi(ing 'pe(ia$ist => !$ient Representative => Midd$e 9ffi(e => Ba(k 9ffi(e %lient Re$resentati/e ; Ser/icing S$ecialist ; Middle *ffice ; Back *ffice

!$ient Representative => 'ervi(ing 'pe(ia$ist => Ba(k 9ffi(e => Midd$e 9ffi(e Midd$e 9ffi(e => Ba(k 9ffi(e => 'ervi(ing 'pe(ia$ist => !$ient Representative!$ient Representative => Midd$e 9ffi(e => 'ervi(ing 'pe(ia$ist => Ba(k 9ffi(e

Oi( of te fo$$owing ro$es and responsibi$ities are (orre(t$& statedP Ser/ices Pro/ider a0 Ser/ices Midd$e 9ffi(e? 'tatements @ Advi(es 5ront 9ffi(e? !$ient Reporting Ba(k 9ffi(e: Risk Management Midd$e 9ffi(e? !ustodia$ 'ervi(es

2e be$ow stated responsibi$ities are (arried out b& wi( of te fo$$owing p$a&ers* !as'ervi(es"!$ient Reporting"'tatements @ Advi(es"#omesti( @ $oba$ 'ett$ements

'ervi(es rovider !$ient Representative Back office 5ront 9ffi(e Midd$e 9ffi(e

rivate banking offers Dstru(tured $endingF tat provides !ustomi4ed asset/based (redit so$utions Long/term $i%uidit& to ($ients Advi(e/$ed (redit so$utions %redit sol"tions to @igh et worth indi/id"als


5inan(ia$ p$anning invo$ves a$$ <V!<2 !as f$ow management Retirement p$anning Risk management 2a p$anning Portfolio management

Loan (an take man& of te fo$$owing basi( forms <V!<2 9verdrafts

8/10/2019 BFS L0 ques


Bi$$s and promissor& notes %or$orate !onds Advan(es!redit $ine

If a fund pur(ases a $oan in te rimar&, te& a$so use anoter word for tat* Oi( term is usedto indi(ate te initia$ group of $enders rimar& LendersP A$$o(ation Syndicate 'e(ondar& AssignmentNone of te $isted 9ptions

Oi( of te fo$$owing is not a (redit derivativeP !redit $inked Notes* 2ota$ return swaps*!redit defau$t swap*

%"rrency swa$* A$$ of te $isted options

Oi( of te fo$$owing is not a se(ured $oanP <%uit& Loans 'e(ured Loans wit 'avings <%uit& Lines of !redit Personal Loans !ar Loan

Oi( if te fo$$owing is true in te (ase of sigt draftP B"yer can ref"se to take the deli/ery ;ua$it& of te ood is guaranteed Bu&er is epe(ted to make te pa&ment after spe(ified (redit da&s

a&ments made based on on$& bi$$ of $adingNone of te $isted 9ptions

2e basi( four parties invo$ved in an& transa(tion using L! Letter of !redit are te fo$$owing<V!<2 Issuing Bank Reim!"rsement Bank'e$$er

Benefi(iar&Cs Bank Bu&er

Oi( of te fo$$owing is te safest t&pe of $etter of (redit from se$$er point of viewP

!onfirmed Letter of !redit Irrevo(ab$e Letter of !redit Red !$ause Stand!y Letter of %redit Revo$ving Letter of !redit

Oi( of te fo$$owing metods of pa&ment is most risk& to te 'e$$erP #o(umentar& !o$$e(tion *$en Acco"nt Letter of !redit

8/10/2019 BFS L0 ques


!ounter trade !as in Advan(e

B9L stands for Bi$$ of Letter BankerCs 9verdraft Limit Bank of London Bi$$ of Leasing Bill of Lading

BA52 stands for Bankers A((eptan(e for 5a(toring 2ransa(tions Bankers Association for :oreign rade Bankers A((eptan(e for 5oreign transa(tions Bankers Asso(iation for 5orfaiting @ 5a(toring transa(tion Bankers asso(iation for 5a(toring 2rade

Bi$$ of Lading is a (ontra(t between Importer and <porter for transportation of goods a re(eipt issued b& importer to eporter for goods re(eived for transportation

a contract !etween a carrier and a shi$$er for the trans$ortation of goods A re(eipt issued b& eporter to importer for goods de$ivered* None of te $isted options

Oi( of te fo$$owing metods e$iminate (ountr& risk and (ommer(ia$ risk upon (onfirmationP Ba(k to ba(k Letter of !redit 'tandb& Letter of !redit #o(umentar& !o$$e(tion Letter of !redit Both Stand!y Letter of %redit & Letter of %redit

2e fo$$owing are interest rate risk management instruments <V!<2P

Interest rate swap 5orward rate agreement 'waption nterest rate g"aranteeNone of te $isted 9ptions

A$$ of te fo$$owing are pa&ment modes e(ept <52 !e%ue #ebit to a((ount troug #ebit (ardLock!o0


Oi( of te fo$$owing are prin(ip$es used b& an asset managerP #iversifi(ation '(reens and 5i$ters !apita$ preservationAll of the listed o$tions 9n$& #iversifi(ation and '(reens and 5i$ters

2e pro(ess of THiring of te Lead ManagersC in te (ase of I9 is referred to as

8/10/2019 BFS L0 ques


Red Herring Road/sow Investment Manager !ontest Advisor !ontest Bea"ty %ontest

'&ndi(ate in Investment banking refers to a$$ <(ept Hub of te investment banking wee$ #etermination of a$$o(ation of bonds Merger and Ac?"isition ad/isory 5a(i$itating p$a(ing of se(urities in pub$i( offeringNone of te $isted 9ptions

2e differen(e between D5i$$ or Ei$$F and DA$$ or NoneF order is D5i$$ or Ei$$F a$$ows mu$tip$e tradesDAll or one can !e a Good ill %ancelled order

2e& are s&non&ms D5i$$ or Ei$$F (an be va$id ti$$ end of da& D5i$$ or Ei$$F a$$ows partia$ ee(ution

2e NG'< is an eamp$e of rimar& Market Secondary Market 92! Market 5ourt MarketNone of te $isted 9ptions

Oat is te term for te differen(e between bid and askP #ifferen(e S$read rofit ;uote


Oat is te 2ird MarketP NA'#A; *%NG'<


2e D5ourt MarketF refers to NA'#A; 92!NG'<


!ore !ustod& 'ervi(es performs te fo$$owing fun(tions e(ept ri(e se(urities positions Re(ord Eeeping :id"ciary and com$liance monitoring Reporting servi(es ro(esses (orporate a(tions

8/10/2019 BFS L0 ques


Mone& $aundering refers to Money facilitating criminal offences <tending $oans to (orporate 'ort term borrowing @ p$a(ements

A$$ of te $isted optionsNone of te $isted 9ptions

5edera$ autorities atta(k mone& $aundering troug Regu$ations !rimina$ san(tions 5orfeitureAll of the listed o$tionsNone of te $isted 9ptions

2ree pi$$ars of te new (apita$ a((ord, Base$ II, are ;uantitative? 'upervisor&? enera$ ;ua$itative? Market 5or(es? eograpi( ;uantitative? 9perationa$? 'upervisor& "antitati/e "alitati/e Market :orces

;ua$itative? Mandator&? ;uantitative

!apita$ ade%ua(& ratio refers to Amo"nt of !ankJs ca$ital e0$ressed as $ercentage of the risk weighted credit e0$os"re Amount of bankCs (apita$ epressed as per(entage of te risk weigted (redit eposure @operationa$ risk Amount of bankCs (apita$ epressed as per(entage of te risk weigted (redit eposure, @market risk Amount of bankCs (apita$ epressed as per(entage of te risk weigted (redit eposure,

operationa$ risk @ market riskNone of te $isted 9ptions

2) 6imple interest is calculated on which of the following!eginning principa( on('

3 An in'estment manager handles all of the following except --------9"aranteeing that the inestor #oesn’t s"ffer a (oss in an' inestent

5) n retail banking the term 8! stands for which of the followingpost #ate# che;"es

Q) A company would pay the interest on what portion of the loan?<is!"rse# ao"nt

) ick the odd one outf( otesg) Stoc%s

h( 8ebenturesi( 7-1ills M( inus

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.) A formal3 legal commitment to extend credit up to some maximum amount o'er astated period of time in a description of PPPPPPPP >ine of cre#it

4) As nominal interest rates increases in the economy the inflation should ideallyIncrease

11 9hat is the maximum maturity for commercial paper? 270 #a's

,0) n a financial instrument has a 2/% chance of paying 2/% C a ./% chance of paying5/%3 its expected return would be CCK

,5) 9hich of the following instruments will carry the lowest interest rate

Tnote

16 Oi( of te fo$$owing instruments wi$$ (arr& te igest interest rateP

%ommercial Pa$er

,( referred stock di'idends are paid

a) <ach year on a contractual basis3 but before common di'idends b) After common di'idends are paid(c) 1efore interest is paid on debt(# If #ec(are# !' the !oar# of #irectors)

e) After both interest and common di'idends are paid

2( !ollateral isa) A form of loan b) &sset p"t "p as sec"rit'

B) <xpansion for !Ans is cons"er price in#ices

Q) 9hich term is not include in bankinga) n'estment banking b P"!(ic !an%ing

c) ri'ate bankingd) :etail banking

.) 1asel capital accord was instituted to coordinate global regulatory efforts to institute PPPPPPPPPPPPPPP capital re$uirements to eliminate the threat posed by PPPPPPPPPPPPP

Ans is inimumD undercapitali>ed banks

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4) 8oes Asset Allocation help reduce the in'estment risk?

a 'es

b) o - t only maximi>es returnc) t increases risk

d) t increases choice N o impact on risk

,/) 8ow Wones ndustrial A'erage *8WA) and 1ombay 6tock <xchange ndex *6ensex)are

Ans is price weighted index

,2) 7he money multiplier is , if the cash reser'e isa) less than ,//% b) more than ,//%c) none of the optionsd) >ero

e) ,//

,0) !urrency reflectsa) <conomy of the country b) gdp of the countryc) olitical situation of the countryd) cpi of the country think the ans is a

,B) s the interest earned by simple interest and compound interest same say true or false7he ans is fa(se

,5 n the simple interest the interest is also accumulate for the next year calculationAns is fa(se

, Assume tat &ou ave a o$ding in IBM 'to(k wort 8)))))* Gou ave (a$(u$ated testandard deviation '# of (ange over ten da& in IBM

Ans Oe ave to take te s%uare root for 8) and we ave to mu$tip$& wit 8)))))*

8+* 2e fastest metod for (a$(u$ating risk is Ans: varian(e (ovarian(e metod*

81* (onte-0arlo 'imulation

It is a simu$ation te(ni%ue*

0)* Asset"Liabi$it& Ana$&sis, Asset A$$o(ation, Asset Manager 'o$utions , !as ro3e(tion, !omp$ian(e Reporting, 'e(urities Lending, 5und Administration, Information, rodu(ts @'ervi(es, ̀Investment Manager 6niverse, ̀ Lo(a$ 5und 'ervi(ing2ese terms are re$ated wit

Ans is Investment Management

08 Bu&"'e$$ ;uantit& 'o(k ri(e

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8):)) Bu& 8)) IBM 78)*))8):) 'e$$ .) IBM 78)*.)88:)) Bu& 8)) M'52 70)*))88:) 'e$$ 0) IBM 788*))80:)) 'e$$ 8) M'52 70)*.):) 'e$$ ) IBM 71*))Oat te broker pur(ase and wat e so$d is e%ua$'a& &es or no

00* Bu&"'e$$ ;uantit& 'o(k ri(e8):)) Bu& 8)) IBM 78)*))8):) 'e$$ .) IBM 78)*.)88:)) Bu& 8)) M'52 70)*))88:) 'e$$ 0) IBM 788*))80:)) 'e$$ 8) M'52 70)*.):) 'e$$ ) IBM 71*))!a$(u$ate te net profit and gross profit*

0* <pansion for 92!

Ans is over te (ounter*

0* #efined (ontribution p$ans ave gained popu$arit& be(ause Ans: emp$o&ers ave begun to ask teir emp$o&ees to sare responsibi$it& for teir retirement*

0.* Monetar& $osses resu$ting from inade%uate or fai$ed interna$ pro(esses, peop$e, and s&stemsor from eterna$ events* 2e events (ara(teri4e te inerent risks in doing business*2is risk isknown as

Ans is operationa$ risk

0- IR# in (e(k 08 a(t is Ans is Image Rep$a(ement #o(ument

01 $argest part of te spread and is paid to te broker"dea$er tata(tua$$& took te ($ientCs order is known as

Ans : !on(ession

0K sare A is more vo$ati$e tan sare B 2e risk asso(iated wit 'are A Ans is more

)2e tota$ spread is )))))*2e managers fee is 8)))))*2e underwriterCsa$$owan(e is

Ans is )))))/8)))))=)))))

61 3 Marks

Capital adequacy ratio refers to ___________________________. Answer:

a. Amount of bank’s capital expressed as percentage of the risk weighted credit

exposure

b. Amount of bank’s capital expressed as percentage of the risk weighted credit

exposure & operational risk

c. Amount of bank’s capital expressed as percentage of the risk weighted credit

exposure, & market risk

8/10/2019 BFS L0 ques


d. Amount of bank’s capital expressed as percentage of the risk weighted credit

exposure, operational risk & market risk


6. If an inestent pa's interest at an ann"a( rate of 5K per 'ear= copo"n#e#t,ice a 'ear than the effectie 'ie(# (arger than 5)5K

a. 7rue b) a(se

354. In a 2 ,a' ;"ote for a share the !i# is

a. 2% less than offer !. >ess than offer

c. ore than offer d. 8ependent on dealer’s skille. <$ual to offer

387. *hich of the fo((o,ing is "s"a((' not participant in stoc% ar%eta. 6mall indi'idual’s in'estors!. @entra( !an%s

c. !ompaniesd. &inancial institutions

386. In an acco"nt saing sip(e interest fro the first 'ear is reinente# at the

!eginning of the secon# 'ear+

a. 7rue b) a(se

383. *hich of the fo((o,ing is a not c"rrent asset+

a.;oods for sale in'entory!. Ters (oans

c. !ashd. :aw material in'entorye. :ecei'ables

381. *hich of the fo((o,ing in not a feat"re of priate !an%ing+

a. 6pecialist ad'ice!. #ot of researchc. @oercia( (en#ing

d. High in'estment in technologye. =nderstanding the capital and in'estment needs(

38. ?etai( (oans are asset pro#"ct offere# !' the !an%

a. Tr"e b( &alse

382. If the price of share pf cognizant changes fro 65 to 60 this can !e attri!"te#

to:

a. $ar%et ris%

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!. nterest rate risk c. !redit risk d. "perational risk e. #i$uidity risk

385. &cco"nt aintaine# in the hoe c"rrenc' !' one !an% in the nae ofanother !an% !ase# a!roa# is ca((e# as:

a. !urrent account!. ostro accountc. Vostro acco"nt

d. &orex accounte. "'erseas account

388. *hich of the fo((o,ing is not the sett(eent etho# for !an% (oans+

a. re-closure!. Assignment

c. articipationd. 6ub participatione. Sec"rities repositor'

38N. The process of transferring o!(igation fro one part' to another is ca((e# Ans:o/ation

384. The p"rchase of an' stoc% for ie#iate #e(ier' is a AA ar%et transaction)

a. &utures!. Spot

c. &orwardd. 6tock e. "ption

3N7. In the historica( si"(ation etho# of Va? ca(c"(ation:

a. :eturn are assumed to be not normally distributed!. .o ass"ption is a#e a!o"t the #istri!"tion

c. :andom returns are generated to calculate Ea: d. :eturn are assumed to be normally distributede. :eturns are not re$uired at all(

1C) *hat happens ,hen interest rate fa((:

a) on# prices increase

b( 1ond prices decreasec( 1ond prices do not changed( <conomy goes into deflatione( nterest rate ne'er fall3 they always go up(

15) If the price of a sec"rit' on #a' 1E2 is 102 an# 100 respectie(') The ret"rn is

a( -2% b( 2%

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c) 1)46K

d( Eery highe( ,-2%

16) If 'o" inest 1000 for 3 'ears at 7K copo"n# interest= ho, "ch ,i(( 'o"

hae at the en# of the 3 'ears+a) 1225

b( one of listed optionc( +,///d( +,//e( +,2/

18) *hat is nee# for !an%s in the societ'+

a( 6mall in'estor are protected3 hence it is a low risk in'estment a'enue( b( 1anks are in the best position to lend out money at competiti'ec( 8epositors are participant in primary and secondary markets(

#) &(( of (iste# options)

14) & is ore ris% aerse inestor than )therefore)

a( &or the same return3 1 tolerates lesser risk than 1( b( &or the same return3 A tolerates higher rate of return(c) or the sae ret"rn= & to(erates (o,er rate of ret"rn)

d( &or the same return3 A takes higher risk(

20) >i;"i#it' iss"es of cre#it can !e a##resse# !':

a( 6weep facility b( 6tructured lending to clientc) &((

d( 6hort term credit facilitiese( "'erdraft

22) astest etho# for ca(c"(ating Va?)

a* onte- !arlo simulation(b* All e$ual time with software(c. Variance@oariance atri)

d* !ombination of onte- !arlo and Historical 6imulation(

23) *hich is not !an%s priar' "se for #eposits+

a( ayment to employers b( onec( n'estmentd( #oane) *ith#ra,a(

2C) If the 5 !i#s aai(a!(e for stoc% are 6C= 65= 63= 62)5 an# 66 ,hich one " ,i(( se((+

U 66

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25) *hen a !an% iss"e a (oan its (ia!i(ities E reseres increases !' the ao"nt of the

(oan)

a* Tr"e b( &alse

26) If the corporate isn’t a!(e to raise one' fro the ar%et to pa' off soe (oansthe ris% can !e refer)

a( arket risk b( nterest rate risk c( !ommodity risk d( "perational risk e) >i;"i#it' ris%

27) -n the tra#ing #a' at the ./S a !ro%er "n#erta%es the fo((o,ing tra#es



"' 100 $ST share for 20)00 eachSe(( 20 I$ shares 11 each



o, "ch #i# the !ro%er pa' o"t to the echange in tota( in case of i 9ross

sett(eent s'ste ii .et Sett(eent S'ste+

a( *i) +,./ *ii) +0/// b( *i) / for 13 +,45 for 6&7 *ii) +,./(c) i 3000 ii 1780

d( onee( *i) +,./ *ii) / for 13 +,45 for 6&7

28) DS eport an# "rope iport agree to carr' o"t the transaction of goo#s ,or#

100000 "n#er a confire# ter >@ ,ith a at"rit' #ate of 60 #a's fro the tie

of shipent) The acceptance coission 1)5 K P& e;"a(s

A) +25//1) +0///!) +0//8) none 250

24) -perationa( ris% is #efine# as+

fail !eca"se of weakness in $eo$le) $rocesses) systems or e0ternal e/ents.

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30) The !asic fo"r parties ino(e# in an' transaction "sing >@ are the fo((o,ing

@PT

A) ssuing 1ank 1) ?ei!"rseent an%

!) 1eneficiary 1ank8) 6eller<) 1uyer

31) *hi(e proi#ing sec"rit' (en#ing serices to its c(ients ,hich ris% ,i(( a

c"sto#ian hae to anage for its c(ients

A) #i$uidity risk1) 1oth !redit risk and interest rate risk!) nterest rate risk8) !redit risk

oth cre#it ris% an# (i;"i#it' ris%)

32) If the price of sec"rities on #a' 1 an# 2 are 100 an# 102 respectie(' )?et"rns

is

A) A 'ery high 2

!) -,8) -2

<) ,

33) o((o,ing are the (ist of ris% that @ognizant faces at organizationa( (ee(

A) !urrency risk1) Attrition!) !redit risk< &(( of the a!oe

<) rotecti'e legislation by =6L=Y

3C) *hich of the fo((o,ing is not a core priate !an%ing f"nction+

A) !lient management <eposit $o!i(ization

!) n'estment analysis and ad'ice8) :esearch

<) 6ales and arketing

35) & "t"a( f"n# ,ith inestent o!Hectie of achieing high capita( gro,th

approaches inestor serices fir for a#ice) The fir a#ices the "t"a( f"n# to

inest 80K of the f"n# in got #e!t an# 20K in e;"it') The a((ocation to,ar#s #e!t

a#ise# !' the fir

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A) !annot be determined is too high

!) s about right 8) is too low

36) *hich of the fo((o,ing operations can !e #one on a >@+

& &(( the (iste# option

1) Acceptance !) egotiate 8) urchase <) 8iscount

37) *ho aong the fo((o,ing is ost (i%e(' to !e a priate !an%ing c(ient of a !an%+

A) A fresh engineer in his first Mob at cogni>ant Tiger *oo#s

!) Any of the abo'e 8) A cricket player who has ne'er played national L international cricket

<) A manager at a manufacturing plant(

38) *hich of the fo((o,ing etho# e(iinate co"ntr' ris% an# coercia( ris% "pon

confiration+

& 8ocumentary collection

1) 1ack to back #! !) #! 8) 6tandby #! oth stan#!' >@ an# >@

C2) The act of the (oan ao"nt !eing han#e# oer to the !orro,er !' the !an% is

%no,n as #is!"rseent) State T?D or &>S U T?D

34 -n the tra#ing #a' at the ./S a !ro%er "n#erta%es the fo((o,ing tra#es



"' 100 $ST share for 20)00 each

Se(( 20 I$ shares 11 each



9ien that a net sett(eent s'ste is !eing "se#= fin# o"t the net position of the

!ro%er at the en# of the #a'

& I$ no echange of shares N $ST 40 shares to receie N 1780 to pa' o"t to

the echange

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1) one of these!) 1 no exchange of shares D &67 4/ share to recei'e D +0/// to pay out to

exchange8) 1 / shares to gi'en out D &67 4/ shares to recei'e D +0/// to pat out to

exchange

<) 1 no exchange of shares D &67 4/ share to recei'e D +,./ recei'e from theexchange

C0) &@ transaction ino(es the transission of AAAAAAAAA

A) All of the listed option1) 8ocuments!) hysical instrument like check and draft< (ectronic #ata fi(es

<) !ash

C1) *hat sho"(# one "se ,hi(e "sing coparing ortgages+

& &P? 1) one!) :: 8) E<) :ate of interest applicable for the loan

C3) *hich one of the fo((o,ing is not offere# !' inestent !an%ing #iision of a

!an%+

& (earning serices

1) @one!) erger and Ac$uisition8) Ealuation of firm<) =nderwriting and distribution of e$uity issues(

CC) If tota( sprea# on "n#er,riting is 500000 an# anager fee is 100000) *hat is

the ao"nt ,hich ,i(( !e #istri!"te# in the s'n#icate+

A) 5/////1) ,/////@ C00000

8) Q/////<) !an not be determined

C5) PP> shares are c"rrent(' se((ing for 25 each) /o" !o"ght 200 shares one 'ear

ago at 2C each an# receie# #ii#en# pa'ent as 1)50 per share ,hat ,as tota(

#o((ar capita( gain this 'ear

A) 2//

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500

!) one8) 0//<) B//

C6) The !ro%erage fir is reg"(ate# !'A) 6tate regularity agency1) 6<!!) ndustry wide 6:"< &(( of the (iste# option

C7 Pic% o## one o"t

f) <eat

g( ersonal loanh( onei( Hire urchase

M( Auto loans

C8) I #eposite# 100 in a !an% )an% (oan o"t 40 o"t of it to soeone e(se= ,ho then

inest the one' in setting " a ne, factor') This process is ca((e#

A) onetary policy1) one@ $one' "(tip(ier effect

8) rofit making tendency of a bank <) &iscal policy

50) *hich of the fo((o,ing is not a treas"r' anageent s'ste+

A) !alypso1) 6ummit!) 9all street system8) &ront arena (e c"!e

51) S'n#icate he(ps in a(( of the fo((o,ing actiit' !"t

A) anaging large bond issues1) :aising huge money from the bank !) anaging large capital raising act8) anaging conflict between in'estment banks( IP- #istri!"tion)

52) &(( of the fo((o,ing stateents concerning DS got sec"rities are correct

@PT

& Treas"r' !i((s hae their interest pai# in a ("p s" at at"rit'

1) one

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!) 7reasury bills ha'e greater interest risk than either treasury bond or treasurynote

8) 7reasury note has maturity dates up to ,/ yrs<) 7reasury bonds ha'e maturity dates up to 0/ yrs

53) In #efine# !enefit p(an the !enefit is epresse# as AAAAAAAA an# in #efine#contri!"tion p(an the !enefit is epresse# as an AAAAAAAA

A) Account balance 3 Annuity1) Annuity 3 Annuity!) Account balance 3 Account balance8) one &nn"it' = &cco"nt !a(ance

5C) *hat is the ter "se# to in#icate the arrangeent of >&?9 !orro,ing for a

corporate !' a gro"p as (en#ersA) none S'n#icate

!) Allocation8) Assignment<) 6econdary

55) @ar# associate proi#e ,hich of the fo((o,ing serice

A) issue card1) 6et credit limits!) 6et interest rates8) 6et card fees Sec"rit'G ?is% anageent

56) in an internationa( sec"rities transaction= ,hich of the fo((o,ing participant ,i((

not !e ino(e#

A) ;lobal custodian 3 domestic sub custodian 3 depository in foreign country andsometime stock exchange in foreign country

1) 8epository in foreign country!) ;lobal !ustodian< stoc% echange in foreign co"ntr'

<) domestic sub custodian

57) &n ins"rer "n#erta%es an ana('sis of a portfo(io of ins"rance po(ic' !' ep(oring

scenarios for the path fo((o,e# !' s,ap rates= po(ic' s"rren#er rates= ortgage

prepa'ent rates for the ortgage !ac%e# sec"rit' in the portfo(io= ,hat is this

process ca((e#

A) !ash proMection1) n'estment manages uni'erse

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!) Asset allocation8) &und administration &sset G (ia!i(ities ana('sis

58 Tra#e finance he(ps in

& aci(itating internationa( transaction1) &acilitating intra company transaction!) &acilitating international transaction 3 corporate lending and settling up of new

factories8) &acilitating corporate lending<) &acilitating setting up of new factories

54) & choice ;"ote is

A) a price at which a firm is ready to buy or sell1) 9hen bid is e$ual to offer!) 9hen the firm has a choice of deciding the securities to take

< a price at ,hich a fir is rea#' to !"' or se(( it a(so eans ,hen !i# ise;"a( to offer

60) *hich of the fo((o,ing is (i%e(' to hae the highest interest rate+

A) Q month deposit of min balance of +,///1) 0 month deposit of min balance of +B///!) ,2 month deposit of min balance of +,///< .one

<) Q month deposit of min balance of +2///

61) If 1 #a' Va? is 1 i((ion= 4 #a' Var is

& +3n

+B(5 mn@ +4mn< +B(Bmn +,mn

62) If a !an% gets a #eposit of 1000 ass"ing a @?? of 10K an# that it circ"(ates

thro"gh 2 ore !an%s= (ea#ing to the fo((o,ing one' "(tip(ier effect

& >oan of 2C34

1) #oan of +,,/!) one8) !reate a reser'e of +,//<) !reate a reser'e of +,4/

63) *hich aong the fo((o,ing is an inestent copan' that poo(s one' fro

"nit ho(#ers an# inest in a ariet' of sec"rit'+

& $"t"a( "n#

1) ortgage !ompany!) one

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8) 6tock <xchange

6C) /o" p"rchase# a stoc% for C0) 1 'ear (ater 'o" receie# 2 as <ii#en#) /o" so(#

it at C8) *hat is 'o"r ret"rn+

a( B5%

b( ,/%c) 25K

d( 5/%e( one

65) & fora( >ega( coitent to eten# cre#it to soe a ao"nt oer a state

perio# of tie is #escription of

a( 7rade !redit b( :e'ol'ing !reditc( Agreement rre'ocable !redit#) >ine of @re#it

e( #etter of !redit

66) -## 1 o"t

a( 9arren 1uffet b( ;eorge 6orosc) i(( 9ates

d( 1en ;rahame( eter #ynch

67) <ee(opent of Inestent -!Hectie an# Inestent po(ic' fa((s "n#er the

P"rie, of

a( n'estment manager =ni'erse b( Asset Allocationc) &sset >ia!i(it' &na('sis

d( &und Admine( !ompliance :eporting

68) Interest ?ate Sprea# is e;"a( to

a) @"rrent rate ase ?ate

b( !ap N !urrent :atec( !urrent :ate N &loor d( 1ase :ate N &loor

64) *hich of the fo((o,ing factors affect the choice of Pa'ent $etho#+

a( <xporters &und!) &((

c( ;o'ernment ;uarantee rogramd( 7ime &ramee( !ost of &inancing

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70) The ./S is a (arge financia( ar%et in ,hich the initia( iss"e receies the

procee#s for the Sa(e of sec"rities)

a* Tr"e b( &alse

71) *hich of the fo((o,ing tra#ing serices re#"ces the tra#ing cost for instit"tiona(

inestors+a( 6tock :epurchase rogram b( 7ransition anagementc) Transition $anageent E @oission ?ecapt"re

d( !ommission :ecapturee( one

72) & @&>> option on f"t"res gies the !"'er

a( the obligation to buy a futures contract b( the obligation to sell a futures contractc( the right C obligation to buy a futures contract

#) the right !"t not the o!(igation to !"' a f"t"res contracte( the right but not the obligation to sell a futures contract

73) *hich is not an eap(e of -ption+

a( !all "ption b( 6waptionc( #eaps#) -i( "t"res

e( ut "ptions

7C) Soe !an%s pa' interest on @hec%ing &Gc ,hi(e an' #o not)

a) Tr"e

b( &alse

75) The a#ising !an% is ca((e# as tr"ste# !ri#ge !et,een the AAAAAAAAAAA E

AAAAAAAAAA ,hen the' #o not hae actie re(ationship) -ptions ,rong

a( 1eneficiary 1ank C :eimbursing 1ank b( mporter <xporter c( :eimbursing 1ank C 1eneficiary 1ank d( ssuing 1ank C !onfirming 1ank

he ad/ising !ank is "sed as a tr"sted !ridge !etween the a$$licantJsCiss"ing !ank andthe !eneficiaryJs !ank when they do not ha/e an acti/e relationshi$.

76) *hich of the fo((o,ing accor#ing to 'o" has res"(te# in #efining contri!"tion

p(ans gaining pop"(arit' oer #efine# !enefit p(ans

a( 8! plans fix the monthly contribution from the employee making his financial planning easier(

b( 8! plans are seen by employees as in'estment which to accumulate retirementincome(

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c) &((

d( <mployer increasing wants employees to share responsibility for retirement

77) AAAAAAAAis t'pica((' (argest part of sprea# an# is pai# to !ro%erB#ea(er or that

act"a((' too% c(ients or#er

a( 6alary b( anager feec( 9age#) @oncession

e( =nderwriter

78) .&S< is not an S?- for

a) >iste# ar%et

b( "'er the counter marketc( 7hird marketd( &ourth market

74) igh net ,orth in#ii#"a(s genera((' hae AAAAAAAAAAAA)

a( arket capitali>ation more than +2///// b( Allc) .et ,orth greater than 500000

d( Household income of max +5//// year(

80) *hich is tr"e a!o"t retai( !an%ing+

a( 7he business focuses on small no( of high net worth indi'iduals( b( 7he business focuses on small and medium enterprises(c) The !"siness foc"ses on (arge no) of in#ii#"a(s)

d( 7he business focuses on large no( of corporation bodies(

81) -ffer is price at ,hich a fir

a( 7rades in securities b( uotes to its bets customer c( ntends to buy#) Inten#s to se((

e( uotes when it does not want to trade(

82) Sec"rities ,ith origina( at"rit' greater than 1 'ear are tra#e# on one'

ar%et)

a. 7rue !) a(se

83) *hich is not a !an%ing serice+

a) Stoc% ar%et

b( :etail bankingc( !orporate bankingd( !ustomer lending

8C) *hich is tr"e+

a( &inancer owns the asset both in case of @#ease’ and @hire urchase’(

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b( 7ax deduction cab be claimed fro the full 'alue of the rental paid in case of leasec( All#) <epreciation in c(aie# !' the financer in (ease an# not in case of hire

p"rchase)

85) an% a !ase# in DS proi#es safe %eeping serices for sec"rities to its DS c(ients)It a(so has c(ients in rance an# e(gi" an# proi#es sec"rities safe %eeping

serices to these c(ients thro"gh !an%s @ E < respectie(') *hich !est #escri!es

!an% &+

a) 9(o!a( c"sto#ian

b( onec( ain custodiand( 6ub custodiane( 6econdary custodian

86) &(( fo((o,ing stateents re(ating to on#s are correct ecept)

A) 1onds sell at a discount when !oupon :ate is less than arket nterest rate( .one

!) 1ond is debt instrument gi'ing issues(

87) *hich of the fo((o,ing t'pe of (oan re;"ires the ao"nt of interest that

,o"(# !e earne# on the (oan to !e pai# "pfront !' the !orro,er+

A) !apitali>ed loan1) 7rue 8iscounted loan!) Amorti>ed loan8) 8emand loan <isco"nte# (oan

88) *ho are ino(e# in the preparation of prospect"s of IP-+

A) !ommercial bankers Inestent an%ers

!) one8) !ompany anagement<) !ompany anagement and n'estment 1ankers

84) an%ers &cceptance #iffers fro Sight <raft in that

A) 1ankers Acceptance reduces lending capacity1) 6ight 8rafts are negotiable instruments!) 1ankers Acceptance demands immediate payment(8) one an%s can raise f"n#s !' se((ing acceptance)

40) @(ients of a priate !an%er are genera((' not segregate# on the !asis of

A) n'estible assets1) #ocation!) Age8) et worth

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.ae

41) The initia( sa(e of the sec"rit' is in the FFFar%et= ,hi(e s"!se;"ent

tra#ing in the sec"rit' is in the FF)) ar%et

A) 6pot3 futures

1) 8ebt 3 <$uity@ Priar' = Secon#ar'

8) oney3 !apital<) 6econdary3 rimary

42) Dn#er ,hat categor' can serices (i%e assetG(ia!i(it' ana('sis= asset

a((ocation= cash proHection= cop(iance reporting= f"n# a#inistration=

inestent $anageent "nierse etc) proi#e# !' an instit"tion can !e

c(assifie#+

& Inestent $anageent

1) Asset 6er'icing

!) one8) 7rading<) n'estor 6er'ices(

43) @IP in the contet of antione' (a"n#ering is

A) All1) 6tands for 6uspicious Acti'ity :eports@ @"stoer I#entification Progra

8) :e$uiring 1usinesses3 which were only to report cash transactions in'ol'ing morethan ,(//3///?

4C) -n a tra#ing #a' at a stoc% echange a !ro%er "n#erta%es the fo(( tra#es:

"' 100 I$ shares for 10 each


"' 100 $ST shares for 20 each

Se(( 20 I$ shares for 11 each

Se(( 10 $ST shares for 20)5 each

Se(( 30 1! shares for 4 each

&t the en# of the #a'= the !ro%er o,es 1780 to the echange ,hi(e echange o,es

hi 40 shares of $ST) Is it possi!(e+

A) es under :7;61) o@ /es "n#er netsett(eent s'ste

45) <o, Jones in#"stria( aerage is a#e of

& 30 stoc%s

1) 2/ stocks!) B/ stocks8) ,/ stocks<) 5/ stocks

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46) *hich ris%s !ring gain an# (osses+

A) nterest rate and foreign exchange1) #i$uidity and credit

!) !redit and nterest rate8) !redit and &oreign exchange &((

47) in# the f"t"re a("e of 1200 ineste# at 5)25 K per ann" pa'a!(e

ann"a((' after 6 onths+ $ar%s: 2

,( ,0B5(,2( ,2B0(,3) 1231)1

B( one

5( ,205

48) Inestor serices (i%e !ro%erage= cash anageent an# short ter

inestents= coission recapt"re= foreign echange transactions=

transaction anageent etc) can !e c(assifie# "n#er AAAA gro"p of serices)

$ar%s: 1)

1) Tra#ing

2( n'estment anagement0( n'estor ser'iceB( one5( Asset 6er'icing

102 *hat are the ris%s associate# ,ith the e#ge f"n#s+ $ar%s: 3

,) &(( of the a!oe

2( High exposures in deri'ati'es0( High #e'eragingB( High 6peculation

103) The tra#e ters L15G2 net 30Min#icates that AAAAA) $ar%s: 3

a. 2% discount is offered if payment is made within ,5 days(!. 15K #isco"nt is offere# if pa'ent is a#e ,ithin 2 #a'sN the pa'ent

sho"(# ho,eer !e a#e in 30 #a's)

c. 0/% discount is offered if payment is made before ,5 of the month(d. ,5% discount is offered if payment is made between 2 C 0/ daysDe. ,5% discount is offered if payment is made within 0/ days(

10C) & !an% is re;"ire# to ho(# reerses at (east e;"a( to a prescri!e# fraction of its

tota( #eposit (ia!i(ities)

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a( 7rue b( &alse

106 *ho appoints inestent anager to anage a !enefit p(an+

a( lan sponsor

b( lan administrator c) "n# tr"stee

d( onee( ;o'ernment

107 & copan' ,o"(# pa' the interest on ,hat portion of (oan+

a( !ommitted amount b( <ither disbursed or committed loanc( =nused amount of loan#) <is!"rse# ao"nt

e( one

108 In the echange on a partic"(ar tra#ing there is a !"' ar%et or#er for 100

@TS shares an# t,o se(( ar%et or#ers for 50 an# C0 @TS shares each= can the

!"' or#er !e atche# against the t,o se(( or#ers)

a( es b( oc) /es= !"t if prices on the !"' E se(( si#e atch)

104 If the (iit O 2000= argin O 20K an# asset a("e O 2000 then #ra,ing po,er

for an open en#e# (oan is e;"a( to+

a( one!) 1600

c( +22//d( +2B//e( +2///

110 ?is% cannot !e igrate# !'

a( 6etting risk limits b( Hedgingc( 8i'ersification#) &r!itrage

e( nsurance

111 & fie# incoe ana('st ,i(( ana('ze a(( !"t

a( unicipal bonds b( 1onds of go't( sponsed enterprisec( !orporate bondsd( =6 treasuriese) Shares

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112 In !enefit a#inistration ,hat are the re(ationships that eists !et,een the p(an

a#inistrator an# the inestent anager= an# !et,een Tr"stee an# the inestent

anager)

a( one b( lan administrator C trustee both ha'e outsourced plan administration as well as

fund management to in'estment manager c( Any#) P(an a#inistrator gies inestent instr"ction to inestent anager ,hi(e

tr"stee appoints the inestent anager)

e( 7rustee gi'es in'estment instruction to in'estment manager3 while planadministrator appoints the in'estment manager(

113 *hich entit' proi#es cre#it scores that are "se# !' iss"ers to process car#

app(ication+

a( ssuer processor b( !ollection agency

c( ssuing bank d( Authori>ation enginee) @re#it !"rea")

11C @PI stan#s for ,hich of the fo((o,ing+

a* !onsolidated rice indexb* !onsument popularity index(* !onsumer product indexd. @ons"er price in#e

e* one

115 & !an% #eci#es to sanction on(' 10K of the (oan so"ght !' a copan') The

copan' goes an# p(e#ges etra assets ,ith the !an% an# the !an% then agree to

sanction 50K of the (oan so"ght) The copan' has in#"(ge# in the process of

a( !redit scoring b( !redit increasec( !redit incrementationd( !redit re'isione) @re#it enhanceent)

116 spot #ea( ass"es at"rit' of ho, an' !"siness #a's ahea# +

a) B b) 5c) 0d) ,e 2

117 *hich of the fo((o,ing is !est Va? estiation $o#e(+

a) onte- !arlo b) Historical

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c Variance@oariance

d) Eariance-!o'ariance and onte- !arlo

118 *hich of the represent copan' is incorporate# in DS&+

a) lc b) tec) #td# Inc

120 -rganization (ee( ris% appetite is #eterine# !':

a) :isk management b) &ront officec) 1ack officed) 7radee oar# of #irector

121 ?is% anageent is f"nction of:

a) 7raders! ac% office

c) 6pecialistd) &ront officee $i# office

122 P"re(' copetitie financia( ar%et is not characterize# !'

a) ;o't( regulation b) any tradersc "(( info

d) !ost effecti'e trading

123 .-T p(a'er in t'pica( tra#e c'c(eN

a) !ustodian bank b) !learing bank c) !learing member d) 7rading member e ?eg"(ator

12C -nce s'n#icate has so(# a(( other tra#es participant= s"! participant an#

assignent are consi#ere# tra#e in ,hat ar%et+

a) rimary! Secon#ar'

c) articipantd) "7!e) ndex

125 Q"estion re(ates to price ,eighte# in#e+

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1) <JI&

2( Hangseng0( <A&< indexB( A68A composite index5( 6C 5//

126 In #efine# contri!"tion retireent p(an )Ta she(tere# ann"ities fa(( "n#er

section of AAAAAAAAA?IS&

C03!

B/,k B/,bB/0k one

126 In !enefits a#inistration= tr"stee an# p(an a#inistrator s"!it cop(iance

report toAAAAAA ,hich in t"rn ;"a(ifies the p(an)

articipant one *answer is 7:=67)9oernent

n'estment manager 6ponsor

127 "(( for of &<?

AnswerF &erican <epositor' ?eceipts

128 Q"estion re(ate# to &S> II

AnswerF @apita( a#e;"ac'

124 *hat is interest rate charge# on asset !ase# (oan+

AnswerF he interest rate charged is lower than $ersonal loans

617 "estion related to credit deri/ati/es as which of the following f"nction is not done !ycredit deri/ati/esAnswerF Answer was something as 7ransfer to o'er the counter

616 "estion related to credit deri/ati/es it was fill "$ the !lanks- E0actly donJt remem!er the ?"estionCAnswerF option ha'ing G7:A6&<:

613 "estion related to nondiscretionary n/estment ManagementAnswerF the !an% offers inestent recoen#ations !ase# on the @(ient’s

approa()

611 "estion ha/ing few o$tions like ncome Processing) a0 nformation Ser/ices) %ashSwee$AnswerF &SST [email protected]

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13C Q"estion re(ate# to Dn#er,riting+

-ptions:

8* =nderwriting 6pread0* ublic "ffering rice *")3* Lead or Managing 6nderwriter is te 6nderwriting Agreement*not sure about it* All

&ns,er is &>> the (iste# option

8* :isk atrices was de'eloped byF- JP $organ= 1ank of !alifornia3 !redit 6uisse361

0* :esearch analyst may recommend to F- !"'= ho(# an# se((

* :educing !:: for banks would ha'e impact onF-e. Increase# one' s"pp('

f. :educed interest ratesg. :educed money supply in the economyh. rofitability of firmsi. one

-* =nder corporate stock repurchase programa. @orporate p"rchase their o,n shares fro shareho(#ers

K* ri'ate banking pro'iding risk management ser'ices stri'es toF-a. <liminate risk and maximi>e returnsb. <liminate risk without worrying about returnsc. ?e#"ce ris% an# optiize ret"rns

d. A'oid risk and returnse. All

+* "ne would go for bank deposits becausea. oney easily a'ailableb. nterest earnedc. nsurance co'er a'ailabled. &((

1* &rom seller’s point of 'iew which method has least risk a. #!b. 8irect debitc. 8ocumentary collectiond. !ounter tradee. @ash in a#ance

.)* A1! rated as AAI and JK rated 8( 9ho gets loan from bank a. <$ually unlikelyb. <$ually likelyc. &@

d. JKe. one

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.8* 9hich is correct hierarchy of corporate ratings *high to low)?a. &&&=&&R==<

.0* nflation- 4%( &uture 'alue of ,// units of money after 2 yearsF

a. 118)8b. <xactly ,//c. <xactly 2//d. Around ,/4e. one

.* 1rokerage firms are regulated bya. 6<!b. ndustry wide 6:"sc. 6tate regulatory Agencyd. &((

.* "dd man outF-a. S@

b. 6<c. A68Ad. #6<e. 6<

..* &rom in'estor stand point a debenture issued by excellent company will appearrisky than share of preferred stock issued by excellent company

a. 7rueb. a(se

.-* ot a feature of pri'ate bankingF-a. High in'estment in technologyb. #ot of researchc. @oercia( (en#ing

d. 6pecialist ad'icee. =nderstanding capital and in'estment needs

.K* 6ecurity settlement is function ofa. 6pecialistb. 7radersc. ac% office

d. &ront officee. id office

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.+* 9hich of these instruments is not included as part of asset ser'icing ser'ices andthe category GricingL Holdings Ealuation which includes accurate pricing3 ratingetc(

a. <$uitiesb. !ertificate of participation

c. ;o'ernment securitiesd. !ertificate of deposite. Serices a' !e proi#e# for a((

.1* 9hich of the following is in'ol'ed in retails brokerage business in =6a. <-tradeb. !harles 6chwabc. 6allie aed. &ederal reser'ee. a an# ! !oth

-)* easures of performance of an in'estment portfolio are all of the followingexceptF-a. :isk adMusted returnb. 6tyle maps scorec. rofitLloss on portfoliod. &(pha

e. =pLdown market analysis

-8* 9ho insures stocks in stock marketa. 6ecurity and exchange commissionb. &ederal deposit insurance corporationc. =s department of treasuryd. .one

-0* "'er the counter market is also calleda. =nlisted marketb. 2n# = "n(iste# an# -T@ ar%et

c. =nlistedd. 6uper e. 2nd market

-* 6tandby letter is PPPPP secure than documentary collection and cheaper than PPPP a. $ore= coercia( >-@

-* nterest rates fallsa. on# prices increase

b. 1ond prices decreasec. 8o not changed. <conomy goes to deflation

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-.* :ate at which bank purchases =6 dollars against home currency is F-a. i# rate

b. ndirectc. 8irect

d. !ross currencye. Ask rate

--* 1id price is the price at which the firmThe price at ,hich ar%et a%ers ,i(( !"' or se(( a partic"(ar sec"rit')

B, resence of risk impliesa. 6tandard de'iation of return is /b. Dncertainties of fina( o"tcoe

c. &inal wealth is lower d. n'estment gain

-K* "dd man out?a. <$uityb. 6tocksc. 6haresd. @onerti!(e !on#s

e. !ommon stock -+* A bank cannot co'er the money demanded by depositor3 then it goes out to N

a. e#era( resere !an%

-1* nstitutions in'ol'ed in benefit administration process3 discussing plansa. 6ponsor b. !ustodianc. P(an a#inistration

d. :ecord keeper e. articipant

K)* 9hich of the following eliminates both country risk and commercial risk?a. oth stan#!' >-@ an# >-@

K8* 9hen bank goes to the fed to borrow funds then the interest rate charged by fed isknown as

a. rime rateb. 1ond ratec. <isco"nt rate

d. &ederal rate

K0* 9hich will ha'e highest interest ratea. 0 months deposit with min balance of +B///b. ,2 months -Z +,///c. @annot #eterine

d. Q months -Z +2///e. Q months -Z +,///

K* "dd man out

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a. oneb. Auto loansc. <eat

d. Hire purchasee. ersonal loan

K* when was =6 A7:!A7 A!7 passeda( 2001

K.* :isk a'ersea) (ess ris%Gaoi# ris%

Q( which of the following is online settlement methoda) ?T9S

,( 9hich of the following is true for 7he &ed funds ratea( t is cost of borrowing immediately a'ailable funds for one day(

2( corporate bonds area) a(,a's sec"re#

5(if one day 'ar is + ,3 calculate 'ar for 4 daysa) 3$

Q( 9hich of the following is not a repayment method?Ans (co((atera(

4( &T$ stan#s for

,) Automatic 7ransaction achineD Almost anytime banking2 &"toate# Te((er $achineN ?eote (ocation transactions

0) Automatic 7ransaction achineD &und transfer between accountsB) Automated 7eller achineD 8irect 8eposit5) Automatic 7ransaction achineD ersonal 1anking

./( & ?eoca!(e >@ >etter of @re#it

can !e reo%e# ,itho"t the consent of the porter

can be re'oked without the consent of the <xporter’s bank

can be re'oked without the consent of the mporter’s bank

can’t be re'oked with the consent of the Ad'ising bank

can’t be re'oked without the consent of <xporter(

.,( 9hich of the following are disad'antages of using #! *#etter of !redit)?*check box)a) Tie cons"ing

!) @ost('

c) Specific an# in#ingd( 8eals with documents and not with productse( !redit #ine tied up(

.0( an%er acceptances are AAAAAAAAAAAAAAAA cre#it inestent create# !'

AAAAAAAAAAA an# "se# for financing iports= eports an# #oestic shipping

#ong termD financial firms

#ong termD non-financial firms

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Short terN nonfinancia( firs

6hort termD financial firms

edium termsD banks

.B( utual funds

a( Are less riskier than indi'idual stocks as the fund managers in'est in adi'ersified portfolio

.5( *arrants

a( 9arrants are call options N 'ariants of e$uity( 7hey are usually offered as bonus orsweetener .Q( bank are least interested in gi'ing a personal

a( credit scores b( document 'erification

.( difference between lease C hire purchasea( all

..( 7o compare the cost of different ortgages deals one should look at thea) &P?

.4( securiti>ing cash flows from future monthly sale of oil explored from its specifiedoffshorea( asset securtisation4/( not a 7reasury anagement 6ystems N nter-bank 4,( pre shipent (oans

a( 1anks pro'ide re-shipment finance - working capital for purchase of raw materials3 processing and packaging of the export commodities(

42( function of A card Associationa( securityLrisk management

40( funtions of pri'ate banking45( not a Persona( Inestent @opanies an# priate !an%

4Q( risk associated with hedge funds4( function of @-?P-?&T I.&.@

a( all4.( sales and brokers responds to which department when institution transfer theircustody ser'ice from one to another

a( Transition anageent44( two $uestions from etting and :7;6 from pdf at page number ,./-,.,,//( who is at risk in defind benefit

a( employer ,/,( difference between 81 *defined benefit) and 8! *defined contribution)

,/0( !orporate loans are (( Sec"re# or "nsec"re# 3 secured3 unsecured,/B( ick odd one out ((

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,2,( e#era( f"n#s rate: 7he rate domestic banks charge one another on o'ernight loansto meet &ederal :eser'e re$uirements( 7his rate tracks 'ery closely to the discount rate3 but is usually slightly higher(

,22 ( 9arrant is combination of X((

,( e$uities C futures2) ca(( E p"t options

0( call options

,20( Y! refers to X,( checking old account2( checking sponsors credentials3) chec%ing of cre#entia( of the c"stoer

B( checking of bank credential by the federal bank

,2B( 67 stands for (( Straight Thro"gh Processing

,25( rice weighted index>ow Vones nd"strial A/erage

,2Q( in'ol'ed in " prospectus,( in'ester banks2( commercial banks3) inestor !an%s E corporate anageent

B( corporate management5( none

,2( B(.% interest per annum- same as X1) 0)CK per onth E 1)6K per ;"arter

2( /(B% per month C ,(2% per $uarter 0( none

"estion Bank for

%%P in :"ndamentals of Banking

B2( 9hich of the following types does 69&7 belong?

a( roprietary etwork

b( ri'ate etwork

c) Proprietar' an# $essaging Serice

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B0( A 6hare Holder has

a( ;ot ownership

b( Eoting :ights

c) &(( the a!oe

BB( f :eliance ndustries #imited wants to sell shares in =6A3 what should they do?

a) Dse &erican <epositor' ?eceipt

B5( !urrent account maintained by one bank with another bank abroad in the latter’s

home currency

a( E"67:"

!) .-ST?-

BQ( !ompound nterest is calculated based on

a( rincipal "nly

!) Principa( an# &cc""(ate# Interest

B( 9hat is an "perational :isk?

a) Possi!i(it' of (oss res"(ting fro errors in instr"cting pa'ents or

sett(ing transactions)

b( ossibility that a firm will be unable to generate funds to meet contractual

obligations as they fall due(

c( ossibility of loss as a result of default3 such as when a customer defaults

on a loan3 or more generally3 any type of financial contract(

d( ossibility of loss o'er a gi'en period of time related to uncertain

mo'ements in market factors3 such as interest rates3 currencies3 e$uities3

and commodities(

B.( 9hich of the following is not a possible risk while doing a proMect in !ogni>ant?

o idea of the options and the answer

B4( !! bank in ndia comes under the category of

a) Priate an%

b( ublic 1ank

c( !o operati'e 1ank

d( !orporation 1ank

5/( 9hat are &reddieac and ;innieae?

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a( :egulatory bodies of nsurance

!) Instit"tions in $ortgage $ar%ets

c( n'estment 1anks

d( 1rokerage &irms

5,( #osing which of the following cards will ha'e more impact?

a( !redit !ard

!) <e!it @ar#

c( 6tored !ard

d( ;ift Eoucher

52( f you ha'e ,// units of money and inflation being 5% what is the future 'alue

after , year?

a( ,/5

!) 45

c( 4/

d( ,,/

50( f banks increase their cash reser'e ratio what will be the impact?

a( oney flow will be more

!) $one' f(o, ,i(( !e (ess

c( :eser'e amount will be less

d( one of the abo'e

e(

5B( 9hich of the following is not a :etail 1ank in ndia?

a( H61!

b( !!

c) JP$@

d( 6!1

55( !entral 1ank of a country is called as

a) an%er’s an%

5Q( 8etails about 0 tiers of &ederal communications pri'acy law(

5( =6 ;o'ernment passed the =6A A7:"7 Act in response to

8/10/2019 BFS L0 ques


a( o'ember 0/3 ,4.2

!) Septe!er 11= 2001

c( Wune /43 ,4.B

d( August ,/3 ,4.B

5.( 1enefits of !heck 2,(

54( 6uper8ot is used in which 6tock <xchange?

a) ./S

b( 16<

c( &6<

d( #6<

Q/( &76< index is used in which stock exchange?

a( ew ork

b( 1ombay

c) >on#on

d( 6ingapore

Q,( f the current market price of a share is +4/ and you ha'e placed a sell stop order

for +.5 and #imit order for +.( 9hich of the following statements is correct?

a( 9ill be sold immediately but at a price Z+.

b( 9ill be sold immediately but at a price Z+.5

c) *i(( !e so(# !"t at a price !et,een 85 an# 87

Q2( 9hat are warrants?

Q0( ick the odd man out(

a( 6tocks

b( 6hares

c( <$uity

#) @onerti!(e on#s

e( !ommon 6tocks

QB( 8efine risk in financial terms(

a( robability of loss

K-* What does 5'<" stand for

a. Bankers Association For Foreign trade

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KK* Which of the following are regulatory authorities?

a. 4:Cb. 4:5%

c. <4' (<inancial 4ecurity 'uthority)& 6R

d. All :F the AB:V4

. '"E is

a. Banking enabled through a terminal used to make transactionswithout a human teller.

-. Where is the initial prospectus filed? a. S41

b. 5'<" c .#one of the above

1,. 's per an estimate& netting reduces the number of settlements needed bya. , >

b. -+ > c. %& , d. +, >

11. 4W%<" uses ;;;;;;;;;;; messaging system a. 8&0!!

b. +, c. 19

d.,,,

1$. Who starts the process of issuing a 7!C

a. %ssuer 5ankb. Bu)er

c. 4ellerd. 5eneficiary 5ank

1. What is a choice Duote?

a. Ouote at which one wants to buy or sell

1+. 5ank isa. 6nregulated and unsafe

b. /egulated and unsafec. 6nregulated and safe

d. $egulated and safe

1.5ank is a common place

a. For Borrower and depositor

1-./ohit deposits =@ amount into bank '. ayal borrows =@ amount from bank '.Kow will the bank benefit?

a. 7ending rate less than deposit rate.

b. Lending rate greater than deposit rate.c. 7ending rate eDual to deposit rate.

8/10/2019 BFS L0 ques


d. 'll of the above

18.Which of the following is more riskya. An asset with standard deviation &

b. 'n asset with standard deviation c. 'n asset with standard deviation $

d. 'n asset with standard deviation e. 'n asset with standard deviation 1

19. <ind the odd man out about Kedge <unda. 'igher LiCuidit) higher risk

b. 7everagec. 4peculation

d. /isk aversion

,. What is 3/?

a. =lobal 3epositor) $eceipt1. 'CK

a. are electronic clearing transactions in which information about debitsand credits are passed across the clearing s)stem through electronic datafiles. "rade finance is used in a. +nternational trade

$. %ntsinet is used ina. 7isted Earketb. rimary Earketc. 4econdary Earketd. "hird Earkete. Fourth Market

. <ind the odd man outa. #'43'Ob. #4:c. 74:d. S41

8. /etail lending is fora. 7arge investorsb. Small and medium investorsc. <inancial %nstitutions

$,. 7ending money to which of the following country is not risky?

a. S b. %ndia c. akistan d. 5angladesh

$1. 4weep transfersa. 4@cess mone) from one account into anotherb. Eoney from one persons account into another.

8/10/2019 BFS L0 ques


>0 Q"estions

.,( 9hich of the following are disad'antages of using #! *#etter of !redit)?*check box)a) Tie cons"ing

!) @ost('

c( 6pecific and 1indingd( 8eals with documents and not with productse( !redit #ine tied up(

4,( pre shipent (oans

a( 1anks pro'ide re-shipment finance - working capital for purchase of raw materials3 processing and packaging of the export commodities(

42( function of A card Associationa( securityLrisk management

40( funtions of pri'ate banking45( not a Persona( Inestent @opanies an# priate !an%

4Q( risk associated with hedge funds4( function of @-?P-?&T I.&.@

a( all4.( sales and brokers responds to which department when institution transfer theircustody ser'ice from one to another a( Transition anageent

44( two $uestions from etting and :7;6 from pdf at page number ,./-,.,,//( who is at risk in defind benefit

a( employer ,/,( difference between 81 *defined benefit) and 8! *defined contribution)

,/0( !orporate loans are (( 6ecured or unsecured 3 secured3 unsecured,/B( ick odd one out ((

Q) merril lynch) george soros.) bell graham4) bill gates

,/) warren buffet,/5( not in'estment bank

5) bear starterQ) lehmen brothers7 icici sec"rities

.) goldman sachs,/Q( newyork3 delhi3 Wakarta3 thimpu X --- Z least risk in in'esting,/( DS3 india3 akistan3 burma3 1hutan -- Z beneficial for loan purpose

8/10/2019 BFS L0 ques


,/4( *hich is not the charge t'pe ++

ledge3 hypothecation3 lien3 co((atera(

,,0( urely competiti'e financial market not characteri>ed by3

,) go't( regulation2) cost effectie tra#ing 0) full informationB) many traders

,,B( "pen ended loan allow the borrower to borrow additional amount subMect to themaximum amount less then a set 'alue(,) Tr"e

2) &alse

,2/( funding cost goes up due to Hardening interest rateX :isk ???

,2Q( in'ol'ed in " prospectusQ( in'ester banks( commercial banks8) inestor !an%s E corporate anageent

4( corporate management,/( none

,2( B(.% interest per annum- same as XC) 0)CK per onth E 1)6K per ;"arter

5( /(B% per month C ,(2% per $uarter Q( none

3N6. ;uestion re$ated to 6nderwritingP9ptions:

.*6nderwriting 'pread-*ub$i( 9ffering ri(e 9,K*Lead or Managing 6nderwriter is te 6nderwriting Agreement*not sure about itN.All

K+* Inf$ation/ +Y* 5uture va$ue of 8)) units of mone& after 0 &ears:a. 66N.N

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b. <a(t$& 8))c. <a(t$& 0))d. Around 8)1e. None

K1* Bid pri(e is te pri(e at wi( te firm:he $rice at which market makers will !"y or sell a $artic"lar sec"rity

+)* 'a$es and brokers responds to wi( department wen institution transfer teir (ustod& servi(efrom one to anoter

a. ransition management

+8* Oo is at risk in defined !enefita* <mp$o&er

2. 6alary 5/3///3 increased to 55///( nflation rate 2/% in 2//5( n 2//Q what will be the

employee’s position

a( #i'ing standard will be down b( 6alary will be increased to Q5///

0( ri'ate 1anking’s functions 5 options had been gi'enB( 9hich is not the :etail banking’s functionality

a) !urrent Account!) !redit !ardc) 7rade &inance#) #oans

5( 9hich one of the following is not done by :etail bankinga) Auto #oan!) House #oanc) Hire purchase#) #ease #oan

Q( 7rue or &alsea) n hire purchase the mLc will be owned by the customer after the payment period

( =6 atriot Act uestion N 2

.( :etail banking customers

a) !":":A7<6

!) 1anks

4( Allowing to withdraw 2/ %extra from !ustomer A’s account is know as

a) -er#raftThis is ' g"ess

!) And some options had been gi'en in that

,/( A bank is getting deposit from a customer and lending it to other customer( 9hich is the correct

one

8/10/2019 BFS L0 ques


a) This is %no,n as $one' $"(tip(ier effectThis is ' g"ess

!) 1ank is trying to increase its profit

,,( "ne person is ha'ing :s(,// in hand( 9hich one of the following is correct

a) aing 100 no, in han# is a("a!(e than haing the sae 100 one 'ear (ater

!) 1oth are same

c) :e'erse of *a)

,2( "dd man out

a) unis

!) 7-1ills

c) 7-notes and bonds

#) Stoc%

,0( 9ho will get the 'oting rights

a) @oon Share ho(#ers

!) referred share holder

c) Holders of 8ebt

,B( 9ho will get the money back first in case of default of a company

a) !ommon 6hare holders

!) referred share holder

c) o(#ers of <e!t

,5( :ead something about &r!itrage) 2 $uestions were there in this

,Q( 9here are we releasing the company’s share &irst time

a) Priar' $ar%et

!) 6econdary arket

c) 6ome other options were there

,( "ne country *!ountry name had been gi'en) is doing the business in one currency( Another

country is doing the business in another currency( How did they do the business?

a) @"rrenc' s,ap $' g"ess

!) 6ome other options were also gi'en in that

,.( 9hich is not the :ole of !entral bank

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a) &ppointing inance $inister

!) And some central bank’s role were gi'en

,4( 9hy people are going to portfolio managers

a) 7hey don’t ha'e time to monitor their portfolio

!) 7hey don’t know how to ad'ertise to sell and buy the instruments

c) 7heir in'estment is less

#) &(( of the a!oe ' g"ess

2/( EA: is used in one of the following

a) $eas"ring ?is%

!) :isk mitigation

c) :isk Analysis

2,( 8i'ersification uestions were there( #ike 8i'ersifications means one of the following and some

options were gi'en in that

22( 6ome $uestions in the following were there

%&' S ' ',-

7he term @1ank’ is used generically to refer to any financial institution that is licensed to accept depositsand issue credit through loans(

1anks are the backbone of any economy3 as all monetary transactions end up touching banks( 7he mainfunctions of banks are toF

!hanneli>e 6a'ings

ro'ide credit facilities to borrower

ro'ide in'estment a'enues to in'estors

&acilitate the trade and commerce dealings

ro'ide financial backbone to support economic growth of the country

inimi>e !ash 7ransactions

ro'ide 6er'ices

%& / %E EE/ ' ',-

7hey pro'ide a return *pay interest) on our sa'ing

6afety of principal and interest

!on'enience of being able to write checks and use debit cards

:aising funds when we need

20( 7he first bank in the si>e

a) @itigro"p

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!) Worgan

c) 6ome other banks had been gi'en

2B( ;lass-6teagall Act of ,4003 created a !hinese wall between commercial banking and

securities businesses

25( 9hich is not in'ol'ed in the "pen ended loan

a) #imit *#) N max outstanding allowed!) argin *) N percentage of limit that can be drawnc) Asset 'alue *AE) N 'alue of underlying asset#) 8rawing ower *8) - lower of # and *,-)SAEe) Soething e(se ha# !een gien other than the a!oe) That ,as the ans,er

2Q( Ac$uiring bank is in'ol'ed in the following

a) @re#it @ar#

!) 6omething else were also gi'en

2( :ead about the :etail 6er'ices done by retail banking 2 $uestions were there in that

2.( 9hich is not coming under <&7? :ead all the <&7 transfer

24( A!H is meant for what?

a) #arge amount in single transfer

!) 6mall amount in multiple transfers

c) 8istant transfer

#) All of the abo'e

e) one of the abo'e

0/( :ead about ri'ate 1anking ser'ices(

0,( <iscretionar' eans ,hat+ 7he bank’s portfolio managers make in'estment decisions

on behalf of the customer(

02( ri'ate !lient 6er'ices is done by which of the following

a) Priate an%ing

!) 7rade &inance

c) :etail 1anking

00( 9hat is the difference between ri'ate 1anking and Asset anagement?

a) Priate an%ing foc"ses on retai( inestors ,hi(e asset anageent is targete# to,ar#s

instit"tiona( inestors

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0B( assi'e n'estment or some $uestion related to Gassi'e was there[[[[

05( 7he loan a bank is holding to sell it is known as

a) e(# or Sa(e ' g"ess) The ;"estion ,as (i%e that

!) Accrual

c) 7rading

0Q( :ead #etter "f !redit 7horoughlyX

1eneficiary bank3 ssuing bank come in Tra#e inance

Soe iportant ;"estions:

There ,i(( !e 1=2=3 ar%s ;"estions

There ,i(( !e 121 ;"estions

2 Page 6 :LA* here will !e three ?"estions !ased on this form"la 2e re$ationsip between te R rea$ rate of interest, N nomina$ rate of interest


*ne ?"estion on f"t"re /al"e 2e formu$a for 5uture a$ue is:

5 = 8 in



5) Page 10 N of a pro3e(t:• In(reases wit in(rease in future (as inf$ows for a given initia$ out$a&• #e(reases wit in(rease in initia$ out$a& for a given set of future (as inf$ows• #e(reases wit in(rease in re%uired rate of return

6 Page 1C

?ea# a(( the t'pe of sec"rities an# their s"! parts

7 Page 15

T'pes of sec"re# !on#s)(ortgage Aonds are se(ured b& rea$ estate owned b& te issuer *+uipment Trust 0ertificates are se(ured b& e%uipment owned and used in te issuers businessCollateral Trust Bonds are se(ured b& a portfo$io of non/issuer se(urities* usua$$& 6*'*overnment se(urities

8/10/2019 BFS L0 ques



1 age 8- Oat are 4ero (oupon bondsPWeros generate no periodi( interest pa&ments but te& are issued at a dis(ount from fa(e va$ue*

8) age 8K%ommercial $a$er

An unse(ured, sort/term $oan issued b& a (orporation, t&pi(a$$& for finan(ing a((ounts re(eivab$eand inventories*

88 age 81Oat is meant b& referred sto(k Preferen(e sares (arr& a stated dividend and te& do not usua$$& ave voting rigts


8 age 0)+arrantsOarrants are (a$$ options variants of e%uit&*

8 age 0)Oat are derivativesP

A derivative is a produ(t wose va$ue is derived from te va$ue of an under$&ing asset, inde or referen(e rate*

8. age 08:orward contract

A forward (ontra(t is an agreement to bu& or se$$ an asset of a spe(ified %uantit& at a (ertainfuture time for a (ertain pri(e* No (as is e(anged wen te (ontra(t is entered into*:"t"res contract

A futures (ontra(t is an agreement between two parties to bu& or se$$ an asset at a (ertain time inte future at a (ertain pri(e* Inde futures are a$$ futures (ontra(ts were te under$&ing is testo(k inde and e$ps a trader to take a view on te market as a wo$e*

8- page082wo %uestions wi$$ (ome:@edging invo$ves prote(ting an eisting asset position from future adverse pri(e movements* In

order to edge a position, a market p$a&er needs to take an e%ua$ and opposite position in tefutures market to te one e$d in te (as market*Ar!itrage: An arbitrageur is basi(a$$& risk averse* He enters into tose (ontra(ts were e (anearn risk $ess profits* Oen markets are imperfe(t, bu&ing in one market and simu$taneous$&se$$ing in oter market gives risk $ess profit* Arbitrageurs are a$wa&s in te $ook out for su(imperfe(tions*

8K age 00Oi( is not a optionP%all *$tions

8/10/2019 BFS L0 ques


P"t *$tionsL<A'Swa$s9i$ futures Answer

8+ age 08 Oat is (a$$ and put optionP

81 age 00%"rrency Swa$ invo$ves te e(ange of prin(ipa$ and interest in one (urren(& for te same inanoter (urren(&*

0) age0.Oat are primar& and se(ondar& marketsP

08 age 0-Oi( is not a sto(k marketP2e important sto(k e(anges are as fo$$ows:• New Gork 'to(k <(ange NG'<• Nationa$ Asso(iation of 'e(urities #ea$ers Automated ;uotations NA'#A;• London 'to(k <(ange L'<• Bomba& 'to(k <(ange B'<,• Nationa$ 'to(k <(ange of India N'<

9ne wi$$ be differentQ

00 age 0KOat is te name of (entra$ bank in Ameri(aP5edera$ Reserve

0 age 0KOat wi$$ aven if market rates go upP

Bond pri(e wi$$ fa$$QIe Bond pri(e is inverse$& proportiona$ to market interest rates





0K age )Oat do u mean b& portfo$io management s&stemP2ese s&stems a$$ow te investment managers to (oose te instruments to invest in, based onte re%uirements or inputs su( as amount to be invested, epe(ted returns, duration or tenureof investment, risk to$eran(e et(* and ana$&sis of pri(e and oter data on te instruments andissuers

8/10/2019 BFS L0 ques


8/10/2019 BFS L0 ques


• #ebit !ards• #emand #rafts• Automated !$earing House A!H• 'tanding Instru(tions• <$e(troni( 2ransfer

age -8


. age -

Read se(tion Lost or Stolen AM or >e!it %ardsIf unautori4ed use o((urs before reporting, te $iabi$it& of te (ustomer varies depending on tede$a& in reporting te $oss to te (ard issuer*

• Oitin two business da&s Liabi$it& $imited to 7.) for unautori4ed use*• Between 0 / -) da&s Liabi$it& $imited to 7.)) be(ause of an unautori4ed transfer*• If te $oss is not reported witin -) da&s, te $iabi$it& as no $imits*

- page -


K page -./--

Read toroug$&** 'ome of te %uestions wereOat is 5edwireP

5edwire is an e$e(troni( transfer s&stem deve$oped and maintained b& te 5edera$ Reserve'&stem* 2e s&stem (onne(ts 5edera$ Reserve Banks and Bran(es, te 2reasur& and oter government agen(ies


+ age -1Read toroug$&**Oi( is non se(ure $oanP

Answer: ersona$ $oan

A"to loans ha/e nterest rate is lower as com$ared to Personal loansO

14H Page 87 ,,im$

*ne ?"estion ie n"merical atleast on O(* Limit L ma outstanding a$$owedd* Margin M per(entage of $imit tat (an be drawne* Asset va$ue A va$ue of under$&ing assetf* #rawing ower # / $ower of L and 8/MA

8/10/2019 BFS L0 ques


here will !e atleast 3 ?"estions on difference !etween Lease and @ire..Lease• 2wo main t&pes operating, finan(ia$• 2e 5inan(ier owns te asset*• #epre(iation is ($aimed b& te finan(ier*• 2a dedu(tion (an be ($aimed for te fu$$ va$ue of te renta$ paid*• 5inan(ier takes (are of maintenan(e, insuran(e et(*

@ire P"rchase• 2e asset is owned b& te finan(ier*• #epre(iation (an be ($aimed b& te borrower*• 2a dedu(tion (an be ($aimed on$& to te etent of te interest repa&ment*


one will !e e0tra gi/enO

6HPage 83+hat is :loating Rate of nterest-2e rate of interest is $inked to one of te rates prevai$ing in te market, for eamp$e it (an be

$inked to PLR Prime Lending Rate or LB*R London nter!ank *ffered RateH.3H Page 81Oat is !o$$ar and 'preadP'pread= (urrent rate base rate!o$$ar = (ap/f$oor

age K%harge y$es• $edge go$d, bank as possession• H&pote(ation vei($e, borrower as possession• Lien against bank deposits• Assignment insuran(e po$i(ies, rigts get transferred to bank

• 'ares / periodi( drawing power (a$(u$ation• Mortgage immovab$e propert&

age K- +hat are :reddie Mac) Ginnie Maes & :annie Mae-5edera$ Nationa$ Mortgage Asso(iation 5NMA or 5annie Mae, overnment Nationa$ Mortgage


8/10/2019 BFS L0 ques


.age K-/KK Read auto $oans and student $oans P on$& one two %uestion wi$$ (omeP


O& te& are given b& banksP!orporate $oans areprovided b& banks for various purposes $ike new pro3e(ts, (apa(it& epansionor p$ant moderni4ation, dai$& (as f$ow re%uirements working (apita$ et(*

Interest is usua$$& paid on te dis!"rsed amo"nt of the loan.

K page +!redit ratingsRating $eve$s migt var& from AAAigest, AA, AA/ to defau$t ratings $ike #*

+ age +Oat do u mean b& Lines of !reditP

2ese are sort term $oans san(tioned for a fied va$idit& period, a$$owing te (orporate to drawte $oan as and wen re%uired witin te va$idit& period and repa& te $oan after a (ertain periodrepa&ment period* Interest is eiter repa&ab$e in (ertain interva$s or in one bu$$et insta$$ment atte end of te repa&ment period

1 age +.


Read page +/+. topi(s $itt$e bitQ*

.) page +-Oat is te ($assifi(ation of $oans:Loans are ($assified and a((ounted for as fo$$ows:Accr"alYLoans@eldforsale*rading

26H $age N8Atleast two ?"estions will come from credit deri/ati/es!redit derivatives are finan(ia$ (ontra(ts tat transfer (redit risk from one part& to anoter,

fa(i$itating greater effi(ien(& in te pri(ing and distribution of (redit risk among market p$a&ers*In market par$an(e, te (orporate bond investor in tis eamp$e is the !"yer of $rotection, tedea$ers the $rotection seller , and te issuer of te (orporate bond is (a$$ed te reference entity

9ses of %redit >eri/ati/es

23H Page N4>efinition of treas"ry ser/ices and its f"nctions-

8/10/2019 BFS L0 ques


21H Page 47+hat do " mean !y:orward Rate Agreement :RAH A (ontra(t tat determines te rate of interest,or (urren(& e(ange rate, to be paid, or re(eived, on an ob$igation beginning at a somefuture start date* It is a$so referred to as 5uture Rate Agreement*nterest Rate Swa$ RS / A dea$ between banks or (ompanies were borrowers swit(f$oating/rate $oans for fied rate $oans in anoter (ountr&* 2ese (an be eiter te sameor different (urren(ies* 2e motive ma& be te (ompetitive advantage of one (ompan& toave a((ess to $ower fied rates tan anoter (ompan&* 2e oter (ompan& ma& be(ompetitive$& p$a(ed to ave a((ess to $ower f$oating rates* A swap wou$d be benefi(ia$to bot* 2e swap is measured b& its notiona$ prin(ipa$*

2H $age 46+hat do " mean !y %MS-%ash Management Ser/ices / !M' is a servi(e provided b& banks to its (orporate ($ients for a fee to redu(e te f$oat on (o$$e(tions and to ease te bu$k pa&ment transa(tions of te($ient* 2e tree e$ements of !M' are: Recei/a!les Management



25H Page 4*ne n"merical on• INR"6'# %uote: .*0-"*- ere, )*)8 is te sma$$est (ount, referred to as one TpipC• <6R"6'# %uote: 8*0.+"*0-8 ere, )*)))8 is te sma$$est (ount, referred to as one TpipCOi$e te derived (ross (urren(& rate wou$d be:

INR"<uro %uote: .*0-8*0-8" .*-8*0.+ = .-*)"*.8

>efinitions of• ostro 9ur"m& a((ount wit &ou: !urrent a((ount maintained b& one bank wit anoter bank abroad in te $atterCs ome (urren(&• ,ostro 2eir a((ount wit me"us: !urrent a((ount maintained in te ome (urren(& b& onebank in te name of anoter bank based abroad


Read to$ic S$ot and :orward :oreign E0change %ontracts

28H Page 42+hich are the inter!anks


2NH Page 48

8/10/2019 BFS L0 ques


Read %MS f"nctions..

24H Page 44+hat do " mean !y lock !o0 ser/ice-

57H Page 44677+hat is $ooling and netting -

56H $age 677+hat is ew Act %heck 36-

53H$age 673+hat is RGS-

51H$age 671Read what is A%@-

55H $age 672PA(ME ME@*>S!as in advan(e• Letter of (redit• #o(umentar& (o$$e(tion• 9pen a((ount or (redit• !ounter/trade or Barter

-K page 8)- Advantages or disadvantages of L! (ommer(ia$ $etter of (redit in (e(k bo %uestion

-1page 8)+Read te steps**

K) page 88) positive$& (ome2e stand!y L% is $ike a bank guarantee* It is not used as te primar& pa&ment metod but as afai$ safe metod or guarantee for $ong/term pro3e(ts*



>rafts A draft sometimes (a$$ed a bi$$ of e(ange

Read sigt draft and 2ime #rafts toroug$&**

K0 page 888*PE A%%*92is (an be a /ery risky metod for te se$$er, un$ess e as a $ong and favorab$e re$ationsipwit te bu&er or te bu&er as an e(e$$ent (redit rating*

8/10/2019 BFS L0 ques


K page 885u$$ form of BA52P

K page 88two %uestions wi$$ at $east (ome from te tab$e:

ERA*AL PA(ME SR9MES %*MPARS* %@ARK.age 88KOat are (ip (ardsP

K- page 881Oat are te ke& a(tivities in (redit (ard marketP $s $earn wi( (omes under wi( (ategor&**

KKpage 80)Oat are issuing anf a(%uiring servi(esP

K+ page 808 A (ard Asso(iation>o ot Pro/ide hese :"nctions• 'e(urit&"Risk management this f"nction is $ro/ided) it is odd one o"t• Issue (ards• 'et (redit $imits• 'et (ard fees• 'et interest rates• 'o$i(it mer(ants• 'et dis(ount rates

K1 page 8009n$& read te fun(tions $itt$e bitQ

+) page 80Krivate Banking (overs banking servi(es, in($uding lending and in/estment managementtr"eH

n/estment Management and Ad/ice A ($ient re$ationsip Manager understands te ($ientCs $i%uidit&, (apita$ and investment needs* Hestrives to deve$op an integrated approa( to manage ($ient investments and (apita$ marketstrading* A((ess to spe(ia$ist advi(e and etensive resear( is a ke& feature of private banking*Selfdirected or nondiscretionary: 2is is $arge$& investment advisor& in wi( te bank offersinvestment re(ommendations based on te !$ientCs approva$* 2e ($ient ma& (oose to ignoretis*>iscretionary: In tis (ase, te bankCs portfo$io managers make investment de(isions on bea$f of te (ustomer*

N6H $age 63N634%*MM* PR,AE BAKG PR*>9%SPersonal n/estment %om$anies P%sHPaya!le hro"gh Acco"nt PAH@edge :"nds


8/10/2019 BFS L0 ques


NH $age 612615Acti/e /s $assi/e a$$roacho$ >own A$$roach /s Bottom 9$ A$$roach

N2H $age 6182ere are tree dimensions to portfo$io ee(ution:%ost of e0ec"tionrading s$eedPortfolio Risk Management


N8H $age 66+hat do " mean !y A,-

Some of the leading com$anies that offer m"t"al f"nds are:• 5ide$it& Investments• angaurd•

IN #ire(t• Me$$on

NNH $age 63>ifference !etween SMA and M"t"al :"nds-Ad/antages and disad/antages of SMA-

N4H $age 61


47H $age 6N3 ?"estionsS(>%AE2e ub of te investment banking wee$, s&ndi(ate provides a vita$ $ink between sa$espeop$eand (orporate finan(e* '&ndi(ate eists to fa(i$itate te p$a(ing of se(urities in a pub$i( offering, akno(k/down drag/out affair between and among bu&ers of offerings and te investment banksmanaging te pro(ess* In a (orporate or muni(ipa$ debt dea$, s&ndi(ate a$so determines tea$$o(ation of bonds*

46H $age 6N64:"ll form of P*- +hat it is-

An initia$ pub$i( offering I9 is te pro(ess b& wi( a $ri/ate com$any transforms itse$f into a$"!lic com$any*tis wi$$ (ome

2e I9 pro(ess (onsists of tese tree ma3or pases:@iring the Managers>"e >iligence and >raftingMarketing


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41H $age 6279>ER+RG6nderwriters earn t&pes of 6nderwriting 'pread:• Manager's fee / 2e $ead underwriter re(eives tis fee on a$$ se(urities so$d*• 9nderwriter's Allowance is te tota$ spread minus te ManagerUs fee* 2is fee is sared b&s&ndi(ate members based on te t&pe of s&ndi(ate a((ount*

• %oncession / It is t&pi(a$$& te $argest part of te spread and is paid to te broker"dea$er tata(tua$$& took te ($ientCs order*

;uestion: wi( is te $argest part of spreadP Answer : (on(ession






Oat is 92!P


An individua$ firm (ou$d a(t as a broker on one trade and a dea$er on anoter* Oen a(ting as abroker, te firm is taking (ustomer orders and a(ting as teir agent to bu& or se$$ te se(urit&* 5or tis servi(e, te broker (arges a (ommission* A firm a(ting as a dea$er is te a(tua$ bu&er or se$$er, taking te oter side of a trade* 2e pri(e at wi( market makers wi$$ bu& or se$$ aparti(u$ar se(urit& is known as the Bid or Ask Price*

1- page 8.*rder y$es Based on ,ol"meH:ill or Kill :*KH 2e order must be immediate$& fi$$ed in one trade or (an(e$ed (omp$ete$&*All or one A*H 2e entire order must be fi$$ed or (an(e$ed (omp$ete$&, but un$ike 59E, A9N(an remain good ti$$ (an(e$$ed*mmediate or %ancel *%H must immediate$& be fi$$ed for as mu( of te order as possib$e inone trade, wit te remainder being (an(e$$ed*Market ot @eld order Q 2e f$oor broker as te dis(retion (on(erning time and pri(e* A ke&point is tat Market Not He$d orders are never on te 'pe(ia$istUs Book*


1Kpage 8-)

2e important markets and te indi(es used are presented be$ow:6' #iversified market #ow Jones Industria$ Average #ow6' 2e(no$og& NA'#A; 8))6E London 5inan(ia$ 2imes 'to(k <(ange Inde 52'<erman& 5rankfurt #AV5ran(e aris !A!'wit4er$and Wuri( 'MI

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Japan 2ok&o NikkeiHong Eong Hang 'eng'ingapore 'trait 2imes Inde '2I

1+ page 8-'ee VL seet sure tree %uestione wi$$ (ome from risk%redit risk is te possibi$it& of $oss as a resu$t of defau$t, su( as wen a (ustomer defau$ts on a$oan, or more genera$$&, an& t&pe of finan(ia$ (ontra(t*Li?"idity risk is te possibi$it& tat a firm wi$$ be unab$e to generate funds to meet (ontra(tua$ob$igations as te& fa$$ due**$erational risk is te possibi$it& of $oss resu$ting from errors in instru(ting pa&ments or sett$ingtransa(tions*Legal risk is te possibi$it& of $oss wen a (ontra(t (annot be enfor(ed // for eamp$e, be(ausete (ustomer ad no autorit& to enter into te (ontra(t or te (ontra(t turns out to beunenfor(eab$e in a bankrupt(&*Market risk is te possibi$it& of $oss over a given period of time re$ated to un(ertain movements inmarket fa(tors, su( as interest rates, (urren(ies, e%uities, and (ommodities*

11 page 8-MEAS9RG RSKS2e probability monetary impact

8)) page 8-Oat is varP


Assume tat &ou ave a o$ding in IBM 'to(k wort 78) mi$$ion* Gou ave (a$(u$ated testandard deviation '# of (ange over one da& in IBM is 7 )*0)*2erefore for te entire position, '# of (ange over 8 da& = 70)),)))2e '# of (ange over 8) da&s = 70)),))) X8) = 7-0,.-

2e 11Y aR over 8) da&s = 0* -0,.- = 78,K,-088)0 page 8-.Oat is monto/(ar$oP

Ans: A simu$ation te(ni%ue

8) page 8--4ariance-0ovariance method it is te (omputationa$$& fastest metod known toda&*

Oi( is te best AR metodP Ans/ !ant sa&

8) page 8--MAAGG RSKS

2ere are mu$tip$e strategies to manage risks* 'ome of te (ommon$& fo$$owed ones are:8* #iversifi(ation0* Hedging or Insuran(e* 'etting Risk Limits* Ignore te riskZ

8). page 8K)Read tis page**6 sou$d know wat do u mean b& (ore and g$oba$ (ustodianPOat are (ustodian servi(esP

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8)- page 8K0Read in dept AssetCLia!ility Analysis

8)K page 8KKOat is e(angeP

An e(ange is a regu$ated market p$a(e, were bu&ers and se$$ers (ome togeter to e(angewat te& want*

<amp$es: 'to(k <(anges: NG'<, AM<V;ues: Oat is NG'<P

*/er the %o"nter Market9ver 2e !ounter 92! market is different from te e(anges in te sense tat tere is nosing$e p&si(a$ $o(ationNA'#A; is a good eamp$e of 92! market*

8)+ page 8+)/8+82wo tree numeri(a$ wi$$ (ome same as it is as given in IBM sares+hat is clearing- +hat is netting-

8)1 page 8+/8+.2e primar& emp$o&ee benefits are• #efined Benefits• #efined !ontribution• Hea$t and Oe$fare

>efined contri!"tion $lans ha/e gained $o$"larity as em$loyers ha/e !eg"n to ask their em$loyees to share res$onsi!ility for their retirement. he main $"r$ose of a definedcontri!"tion$lan is to $ro/ide an in/estment /ehicle for em$loyees to acc"m"lateretirement income. state tr"e or falseH tr"e

diff betweenDefined Benefit Plan vs Defined Contribution Plan ?

,,/) page ,.Q2e fo$$owing p$ans are designated as defined (ontribution p$ans:• rofit 'aring $ans• !as 9r #eferred Arrangements 9r )8k $ans• 'to(k Bonus $ans And <mp$o&ee 'to(k 9wnersip $ans• 'imp$ified emp$o&ee pensions '<• 2a 'e$tered Annuities 9r )b Arrangements

,,,) page ,.9hat is there is peraby tax check?6"

6A: 8iscrimination testB,5 #755// :<":7;,/54 :eporting:eporting and compliance

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