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CAIIB-BFM-RECOLLECTED QUESTIONS FROM DEC 2013

Recollected - Dec 2013
-----------------------------

Which one of the following is the nodal agency designated by government of india to manage the Export Marketing Fund (EmF)?

a. Exim Bank
b. Export promotion councils of respective commodities
c. Ministry of finance
d. Export Council guarantee corporations

Ans - a
.............................................

Quantitative disclosures in respect of capital requirements for market risk in trading book not include ?

a. Foreign Exchange Risk
b. Interest rate risk
c. Securitisation expousures
d. Equity position Risk

Ans - c
.............................................

A bank borrows US $ for 03 months @ 2.5% and swaps the same in the INR for 03 months for deployment in CPs @ 5.5%. The 03 Months premium on US $ is 0.75% the margin generated by the bank in the transaction is ......

a. 3%
b. 2.25%
c. 5.5%
d. Non of these

Ans - b

= 5.5-2.5=3
= 3*.75
= 2.25%
.............................................

The main purpose of capital adequacy norms is to ensure that a bank has sufficient capital to ......

a. Provide loans
b. Repay its depositors
c. Provide a stable resources to absorb any losses arising from the risks in its business
d. Have adequate infrastructure of its on

Ans - c
.............................................

A bank holds stocks of a company ’A’ and wants to protect the downside risk on it may ......

a. Take a long position in the stock futures
b. Take a short position in the stock futures
c. Purchase call option on the stock
d. Sell put option

Ans - d
.............................................

A 91 day T-bill with remaining maturity of 73 days is priced at Rs 99. What is the yield?

a. 5%
b. 5.05%
c. 4.95%
d. 5.20%

Ans - 2 (100-Price)*365*100 / (price * no of days to maturity)

Wherein;

P – Purchase price
D – Days to maturity

Day Count: For Treasury Bills, D = [actual number of days to maturity/365]
in this case price is 99 and days to maturity are 73 so answer would be

(100-99)*365*100 / ( 99*73)=5.05 ans
.............................................

On a 5 point scale (very high,high,average,modete & Low),probability of occurrence of an activity has been estimated at an average level. Potential financial impact is estimated at an high level, given that the impect of internal control is 40% what is the estimated level of operational level?

a. Very high to high
b. High to average
c. Average to moderate
d. Moderate to Low

Ans - d
.............................................

Market risk in treasury can be controlled by ......

a. Overnight limit alone
b. Gap limit only
c. Counter party limit only
d. Both a and b

Ans - d
.............................................

A bank identified 4 asets(a,b,c and d) with a view to reduce risk. it has to choose one of them Which one of the following criteria would be most relevant for the purpose?

a. Risk capital required for each assests
b. Return on risk capital vis-à-vis that for the portfolio
c. Correlation of assets with the portfolio
d. Income earmed on assets

Ans - c
.............................................

Losses from failed transaction processing is classified under ‘Event Type Classification as ......

a. Business Disruptions and System failure
b. Execution,Delivery and process Management
c. Clients, products and Business Practices
d. None of the above

Ans - b
.............................................

Which one of the following ratio does not take into account risks in banking business?

a. ROC
b. Capital adequacy
c. RORAC
d. RAROC

Ans - a
.............................................

A rating model combines financial ratios using reported accounting instruction and equaty values to forecast the probability of a company enterning bankrupacy with in 12 month period. This model is known as ......

a. Altman,s Z score model
b. Credit metrics model
c. Credit risk model
d. None of the Above

Ans - a
.............................................

Interest income of a bank does not include ......

a. Profit on sale of investments
b. Interest on balances with RBI
c. Interst on bills discounted
d. Interest on car loans

Ans - a
.............................................

Components of portfolio risk are ......

a. Dafault risk and systematic risk
b. Down-gradation risk and concentration risk
c. Concentration risk and intrinsic risk
d. Default risk and down-gradation risk

Ans - c
.............................................

Loans against balances held in FCNR(B) account can be permitted up to ......

a. Rs 50 lakh with 35% margin
b. Rs 100 lakh with 35% margin
c. US $ 1 MIO without any margin
d. Any amount subject to usual margin requirements.

Ans - d

Banks can from 12.10.2012 grant loan against these depsoits without any limits subjuect to usual margin requirements
.............................................

Who advices the weekly average rates for FCNR(B) deposits to the ADR ......

a. Forex Association of india
b. FEDAI
c. EXIM Bank
d. RBI

Ans - b
.............................................

YTM of a bond depends upon ......

a. Coupon rate and market value only
b. Market value and residual maturity only
c. Residual matuarity and coupon rate only
d. Coupon rate market value and residual matuarity

Ans - b
.............................................

Export packing Credit is normally computed on the basis of ......

a. FOB value of Export
b. CIF value of export
c. CFR value of export
d. C & I value of export

Ans - a
.............................................

A bank in Mumbai quotes a FRA on 10th March 6*9 FRA at MIBOR 5.15-5.25 What is the settlement date matuarity date of the FRA

a. 10th Dec : 10th Dec
b. 10th Sep : 10th Dec
c. 10Th Sep : 10th Sep
d. 10th Dec : 10th Sep

Ans - b
.............................................

Which approaches are used for measueing and managing funding requirement ?

i) stock approach
ii) Standered approached
iii) Flow approach
iv) Quantitatives approach

a. i) and iii) only
b. ii) and iv) only
c. ii) and iii) only
d. i) and iv) only

Ans - a
.............................................

IF the YTM is 6% and the coupon rate of 7% is payable semi-annually the value of the bond to be ......
(PVIFA (3%,14)=11.296, PVIF (3%,14)=.661

a. Rs 1451.72
b. Rs 1056.36
c. Rs 1112.84
d. Non of above

Ans : bond valuation=i (PVIFAkd,n) + F (PVIFkd,n) = 70*11.296+1000*.661=790.72+661=1451.72 ANS
.............................................

Based on the information given below, answer THE BELOW QUESTIONS
The forex daelar of KBC Bank sold GBP 20000 in the interbank market @83.7500 in cover of import TT recorted by one of their branches. Subsequently it was detected that the transaction had erroneously reported twice by the branch and hence the sale had to be cancelled the interest rate at the time of cancellation was 1GBP=83.6875 /83.7275.
ONE month forward rate: 1 GBP =83.7300/83.7700
Brokerage of Rs. 1000 for each sale as well as purchase transaction is payable.

What is the amount received in the original sale transaction by the dealar?

a. Rs 16,75,400
b. Rs 16,73,750
c. Rs 16,74,000
d. Rs 16,74,550

Which rate would be applied for cancellation?

a. Bill Selling
b. Bill buying
c. TT selling
d. TT Buying

How much has to be paid to the dealer at the time of cancellation?

a. Rs 16,74,550
b. Rs 16,74,600
c. Rs 16,75,550
d. Rs 16,73,750

How much is the loss/gain on cancellation of GBP sale by the dealer?

a. Rs 1550 loos
b. Rs 1550 Gain
c. Rs 1000 Gain
d. No profit no loss
.............................................


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