Bfm Murugan Mcqs

8/10/2019 Bfm Murugan Mcqs

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MODULE-C1.The value of a derivative is determined by _____.a. the value of the underlyingb. notional principal amountc. FIMMDAd. FEDAIAns - a..............................................2.Which of the following is the most popular instrument to hedge interest rate risk?a. exchange rates futuresb. interest rates futuresc. equity prices futuresd. none of theseAns - b..............................................3.Select the incorrect statement.a. The contract size in futures market is USD 1000 and all settlements take place in Dollars.b. The contract size in interest rate futures market is Rs 2 lacs.c. If an exporter needs to hedge receivables of USD 560,700, he would need to buy 561 forward sale

contracts of USD 1000 each, aggregating to USD 561,000. The small difference iscalled basis risk.d. all are correctAns - a..............................................An interest rate swap is shifting of basis of interest rate calculation _____.a. from fixed rate to floating rateb. from floating rate to fixed ratec. fixed floating rate to floating rated. all of theseAns - d..............................................www.jaiibcaiibmocktest.com

www.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442The benchmark rates for term lending for USD are generally _____.a. LIBORb. MIBORc. Fed Rated. MIFORAns - a

..............................................Corporates are also permitted to use MIFOR as benchmark rate. ______ swap is also known as a basis swap.

a. fixed rate to floating rateb. floating rate to fixed ratec. floating rate to floating rated. none of theseAns - c..............................................

______ swap refers to exchange of floating rate in one currency to fixed rate in


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another currency.a. Quantob. Couponc. Swaptionsd. Plain vanillaAns - b..............................................Which of the following cannot participate in the call money market?1. banks (including co-operative banks)2. land development banks3. primary dealers4. financial institutions5. mutual funds playersa. 1, 3 and 4b. 1, 2 and 3www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442c. 2, 3 and 4

d. 2, 4 and 5Ans - d..............................................Interest rates prevailing in the inter - bank market constitute benchmark ratesbecause ______.a. it does not carry any risk at all.b. it carries a little risk (counterparty risk).c. it is floatingd. none of theseAns - b..............................................Treasury bills are issued by _____ through _____ for maturities of 91 days, 182days and 364 days for

pre-determined amounts.a. RBI, GOIb. GOI, RBIc. RBI, Exim bankd. GOI, Exim bankAns - b..............................................Which of the following T-bills are issued fornightly on Wednesday preceding reporting Friday.a. 91 days T-billb. 182 days T-billc. 364 days T-billd. both b and c

Ans - c..............................................Swaps (IRS - Interest Rate Swap) which collapse at a knock-out level of market rates and swap with builtinoptions are known as _____ swaps.a. Quantob. Couponwww.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS


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- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442c. Swaptionsd. Plain vanillaAns - c..............................................If the strike price is more than the forward rate in case of a put option, the option is known to be ____.a. ATMb. ITMc. OTMd. none of theseAns - b..............................................The difference between spot rate and forward rate (interest rate differential) is _____ the ____ rate forlow-interest yielding currency and this is known as forward _______.a. added to, spot, premiumb. added to, forward, premiumc. subtracted from, spot, discountd. subtracted from, forward, discount

Ans - a..............................................For forward discount, the interest rate differential is ____ from the ____ ratefor high-interest yieldingcurrency.a. added to, spotb. added to, forwardc. subtracted from, spotd. subtracted from, forwardAns - c..............................................Futures related to interest rates are known as _____.a. currency futures

b. bond futureswww.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442c. stock/index futuresd. none of theseAns - b..............................................

Futures related to equity prices are known as _____.a. currency futuresb. bond futuresc. stock/index futuresd. none of theseAns - c..............................................Select the correct statement:a. The combination of forward and swap transactions is called a spot.b. The combination of spot and swap transactions is called a forward.


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c. The combination of spot and forward transactions is called a swap.d. None of theseAns - c..............................................

____ swap refers to paying interest in home currency at rates applicable to a foreign currency.a. Quantob. Couponc. Swaptionsd. Plain vanillaAns - a..............................................Select the incorrect statement:a. FRA (Forward Rate Agreement) is for a single payment in future.b. IRS covers a series of periodical interest payments.c. The floating rate of interest is always linked to a benchmark rate.d. The fixed rate of interest is always linked to a benchmark rate.Ans - dwww.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial Management

[email protected], [email protected], 09994452442A combination of two forward transactions is called a _______.a. spotb. forwardc. swapd. none of theseAns - c..............................................Select the correct statement:a. Interest arbitrage exists only when one of the currencies exchanged is fullyconvertible.b. No interest arbitrage exists between free currencies as the forward premium /

discount equalsinterest rate differentials.c. The swap is used to widen the mismatch between currency and interest rate.d. both b and cAns - b..............................................A treasury transaction with a customer is known as ____.a. Merchant banking businessb. Trading businessc. Investment businessd. Commercial bankingAns - a..............................................

Security dealers deals with the following market _____.a. Primary marketb. Secondary marketc. Open marketd. OTCAns - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS


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- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Which act relating to foreign exchange has replaced earlier one ?a. Foreign Exchange Management Actb. Foreign Exchange Regulation Actc. Both the aboved. None of theseAns - a..............................................What is the important operational feature of integrated treasury ?a. Having a common dealing roomb. Having a common Mid/back officesc. Looking for interest arbitrage across currency markets and be in a position to shift swiftly, aplacement in Rupee denominated commercial paper to lending in USD in global interbank market andalso being to source funds in global markets and swap the funds into domestic currency or vice versa,depending on market opportunitiesd. All the aboveAns - d

..............................................Globalization refers to ______.a. Full convertibility of all currencies in the worldb. Removal of all trade barriers in the worldc. The process of integrating domestic market with global markets, characterized by free capital flowsand minimum regulatory interventiond. Fixed rate of exchange for all currencies of the worldAns - c..............................................In the call money (a money market instrument), funds borrowed by banks need to be repaid ____.a. on the same day

b. on the next working dayc. within a fortnightd. within a yearAns - b..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442

In the notice money (a money market instrument), funds borrowed by banks need to be repaid ____.a. on the same dayb. on the next working dayc. within a fortnightd. within a yearAns - c..............................................In the term money (a money market instrument), funds borrowed by banks need to be repaid ____.


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a. on the same dayb. on the next working dayc. within a fortnightd. within a yearAns - d..............................................

______ rates indicate liquidity available in the inter-bank market.a. call moneyb. notice moneyc. term moneyd. all of theseAns - a..............................................The wisely used benchmark rate for floating rate debt paper as well as for OIS (Overnight Interest rateSwaps) is ______.a. LIBORb. O/N MIBORc. both of thesed. none of theseAns - b..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.com

Facebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442If the strike price is less than the forward rate in case of a put option, the option is known to be ____.a. ATMb. ITMc. OTMd. none of theseAns - c

..............................................Derivates refer to _____ price.a. pastb. presentc. futured. none of theseAns - c..............................................The minimum amount for which CP is to be issued is Rs ____.a. 1 lacb. 2 lacsc. 5 lacsd. 10 lacs

Ans - c..............................................The value of derivative depends on ______ market.a. spotb. forwardc. TOMd. readyAns - a..............................................www.jaiibcaiibmocktest.com


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www.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Which of the following is not true regarding OTC?a. It is a derivative product that can be directly negotiated and obtained fromauthorized banks andinvestment institutions.b. It is mostly used for hedging underlying risks.c. Settlement is mostly by physical delivery.d. No counter party risk at all.Ans - d..............................................Which of the following is not true regarding ETD (Exchange Traded Derivatives)?a. Forward contracts traded on only organized future exchanges are known as future contracts.b. It is mostly used for trading and speculation.c. Counter party risk is not present.d. Price is quoted by the bank, as the pricing is not transparent.Ans - d..............................................

Purchase or sale of an asset or a currency, not for an end-use but only for resale or repurchase of thesame asset with a profit is known as _______.a. leverageb. hedgingc. speculationd. carryAns - c..............................................Trading in currency and interest rate derivatives is restricted to _______.a. individualsb. authorised banksc. corporates

d. none of theseAns - b..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442There are basically three kinds of derivatives. Which of the following is not one of them?

a. forward contractsb. futuresc. optionsd. swapsAns - b..............................................A contract to deliver foreign currency on a future date at a fixed exchange rate is known as ______.a. forward contractsb. futures


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c. optionsd. swapsAns - a..............................................European type option can be exercised ______.a. any time before the expiry periodb. any time after the expiry periodc. on the expiry dated. none of theseAns - c..............................................Which of the following statements regarding CP is not correct?a. CP is a negotiable instrument.b. CP is issued in the form of a promissory note.c. Banks can invest in CP if it is issued in demat formd. CP, being a tradable instrument, carries liquidity risk.Ans - d..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial Management

[email protected], [email protected], 09994452442If the strike price is same as the spot price of the currency, the option is known to be _____.a. ATM (at the money)b. ITM (in the money)c. OTM (out of money)d. none of theseAns - a..............................................The seller agrees to deliver to the buyer a specified security / currency or commodity on a specifieddate, at a fixed price in _______.

a. forward contractsb. futuresc. optionsd. swapsAns - b..............................................An exchange of cash flow is ______.a. forward contractsb. futuresc. optionsd. swapsAns - d..............................................

Select the incorrect statement.a. The currency carrying higher rate of interest is always at a discount.b. Domestic interest rate of Rupee is generally lower than interest rate of USD, hence Rupee is at adiscount to Dollar.c. Forward rate of USD / INR is higher than spot rate, or Dollar on a forward date is worth more rupessthan today.d. Interest rate of EURO is higher than interest rate of USD, hence forward EURO is at a discount to USD.


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Ans - b..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Holder of a forwarded contract can not get the benefit of market rate, if it isbetter than the contractedrate, on the date of utilization, which is a disadvantage known as _____.a. hedgingb. forward optionsc. opportunity costd. none of theseAns - c..............................................Which of these gives a right to the holder to buy an underlying product (currency / bonds /commodities) at a prefixed rate on a specified future date.a. call optionb. put option

c. either of thesed. both of theseAns - a..............................................The prefixed rate on which the call options or put options are executed is known as ______.a. spotb. cost pricec. strike priced. none of theseAns - c..............................................All the exchange rates quoted on the screen or in print are for mentioned unless

otherwise _____.a. Forward transactionsb. Cash transactionsc. Spot transactionsd. Tom transactionsAns - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial Management

[email protected], [email protected], 09994452442Absorption of liquidity, by RBI, is done through _____ from / to banks under a _

____ transaction.a. borrowing, repob. borrowing, reverse repoc. lending, repod. lending, reverse repoAns - b..............................................


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In repo transaction, banks ____ from / to RBI.a. lendb. borrowc. do nothingd. none of theseAns - b..............................................While the exposure limits are generally left to the banks discretion, RBI has imposed which ceiling oftotal business in a year with individual brokers.a. 2%b. 5%c. 10%d. 15%Ans - b..............................................Indexed return on CP is used as a benchmark rate for _____ - term advances.a. shortb. midc. longd. all of theseAns - a..............................................www.jaiibcaiibmocktest.com

www.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Protection of risk in a transaction usually through derivatives product is called ______.a. insuranceb. swapc. hedged. arbitrage

Ans - c..............................................According to the mode of settlement, options are divided into ____ types.a. 2b. 3c. 4d. 5Ans - a..............................................An American type option can be exercised ______.a. any time before the expiry periodb. any time after the expiry periodc. on the expiry date

d. none of theseAns - b..............................................If the strike price is more than the forward rate in case of a call option, theoption is known to be ____.a. ATMb. ITMc. OTMd. none of theseAns - c


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..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Treasury essentially deals with _____ term funds flow.a. shortb. midc. longd. none of theseAns - a..............................................Short term funds flow have maturity _____.a. more than 6 months but less than 1 yearb. less than 1 yearc. more than 1 year but less than 2 yearsd. none of theseAns - b..............................................Rupee is convertible on current account as well as capital account owing to the

relaxations allowed byRBI in the area of ____.1. FDI2. ECB3. ODIa. both 1 and 2b. both 2 and 3c. both 3 and 1d. all of theseAns - d..............................................If the strike price is same as the forward rate on the start date, the option is known to be _____.

a. ATM (at the money)b. ITM (in the money)c. OTM (out of money)d. none of theseAns - awww.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442

A contract where the buyer has a right but no obligation to exercise the contract is known as _____.a. forward contractsb. futuresc. optionsd. swapsAns - c..............................................The benefit accruing to traders who play in different markets, simultaneously -profits accrue, as


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markets are imperfect, is known as ______.a. leverageb. arbitragec. derivatived. swapAns - b..............................................Treasury uses a variety of money market instruments to optimize return on funds. Which of thefollowing is not a money market instrument?a. Treasury billsb. CBLOc. Corporate debt paperd. Certificate of depositAns - c..............................................The transactions of treasury with customers are known as ______ business.a. investmentb. tradingc. merchantd. retailAns - c..............................................www.jaiibcaiibmocktest.com

www.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Which of the following is not an activity of treasury?a. forex operationsb. trading and risk managementc. investment and fund managementd. none of theseAns - d

..............................................In respect of the three distinct roles the treasury is expected to play, which of the following is managedby the treasury for its internal risk management?a. ALM bookb. Trading bookc. Merchant bookd. Investment bookAns - a..............................................Which of the following is not a macro-economic factor?a. GDP growth rateb. stock markets and commodity markets

c. relative inflationd. none of theseAns - d..............................................RBI has permitted banks to borrow and invest through their overseas correspondents, in foreigncurrency subject to a ceiling of ____ % of their _____ capital, or USD ___ million, whichever is higher.a. 25, Tier - I, 1b. 25, TIer - II, 5


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c. 50, TIer - I, 10d. 50, TIer - II, 10Ans - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442The difference between 'buy' and 'sell' rates is known as ______.a. swapb. spreadc. derivatived. leverageAns - b..............................................Banks generally do not maintain a stock of foreign currency for the purpose of merchant business. Theresidual position of the bank at the end of the day - overbought or oversold - is known as _____ positionand it involves _______ risk.

a. open, marketb. open, exchangec. closed, fundingd. open, liquidityAns - b..............................................The most important and well pronounced risk in treasury isa. Credit riskb. Liquidity riskc. Market riskd. Embedded option riskAns - c..............................................

The following limits in treasury are meant for controlling market riska. Counter party interbank exposure limitsb. Settlement and pre-settlement limitsc. Intra-day, overnight open position limit and stop loss limitsd. Overseas borrowing limit prescribed by RBIAns - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial Management

[email protected], [email protected], 09994452442Value at risk( VaR) is a statistical measure to capturea. Actual loss in portfoliob. Probable loss in a portfolio within a time horizon at a given confidence levelc. Loss or profit in a trading activityd. Operational risk in treasuryAns - b..............................................


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Treasury uses derivatives _____.a. to manage risks including ALM (Assets Liabilities Management) riskb. to cater to the requirements of the corporate customersc. to trade, i.e., to take a trading position in derivative products.d. all of theseAns - d..............................................Which of these is not a product of financial markets?a. foreign exchangeb. bondsc. equitiesd. none of theseAns - d..............................................Yield and price of a bond movea. In inverse proportion c. In unrelated fashionb. In direct proportiond. As determined by bond issuerIn inverse proportionAns - a..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS

- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442The value of a derivative is determined bya. The value of the underlyingc. FIMMDAb. Notional principal amountd. FEDAIAns - a..............................................When currency is bought, the treasury is said to _____.

a. go shortb. go longc. leveraged. none of theseAns - b..............................................The salient feature of convertible bond is _____.a. Conversion of physical bonds into demat formb. Option to convert the bond in to equity on a fixed date or during a fixed period and the price is predeterminedc. Automatic reinvestment in another bond on maturityd. Absence of couponAns - b

..............................................Integrated Treasury in Banking set up refers to ______.a. Computerization of all bank branchesb. Computerization of all treasury operationsc. Centralization of all back office operations of forex branchesd. Integration of money market, securities market and foreign exchange operationsAns - d..............................................www.jaiibcaiibmocktest.com


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www.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442RTGS has been fully activated by RBI from Where the settlements are on basis rather than day endsettlement of cheques in clearing house.a. August 2003, net, grossb. October 2004, gross, netc. October 2004, net, grossd. August 2004, gross, netAns - b..............................................The following institutions facilitate delivery vs. payment(DVP)for secondary market deals in equity anddebt papera. IDRBTb. NDSc. NSDL and CSDLd. NEFTAns - c

..............................................For ensuring effective risk control, RBI expects banks to facilitate functionalsegregation betweena. Their Head office branchesb. Treasury and Head officec. Front office and IT departmentd. Front office, Mid office and back officeAns - d..............................................The exemptions from DTL include:a. time depositsb. foreign outward remittances in transitc. transactions in CBLO with CCIL

d. overseas borrowingsAns - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Which of the following institutions facilitate DVP (delivery v/s payment) for secondary market deals in

equity and debt paper?a. IDRBTb. NDSc. NSDL and CSDLd. NEFTAns - c..............................................In respect of the three distinct roles the treasury is expected to play, which of the following is managedby the treasury for its client - related currency and derivative transactions?


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a. ALM bookb. Trading bookc. Merchant bookd. Investment bookAns - c..............................................Potential loss in loan assets is known as ______ risk.a. creditb. marketc. liquidityd. operationalAns - a..............................................

_______ is the variability of the price, upward or downward.a. swapb. dealc. volatilityd. durationAns - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB DISCUSSION

[email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442The TOD (today) and TOM (tomorrow) rates are generally quoted at a discount to the _____ rate.a. swapb. forwardc. spotd. repoAns - c..............................................Volatility of exchange rates arises in case of ______.

a. currencyb. securitiesc. rupee accountd. all of theseAns - a..............................................If the strike price is less than the forward rate in case of a call option, theoption is known to be ____.a. ATMb. ITMc. OTMd. none of theseAns - b

..............................................An option without any conditionality is called a ______.a. stock optionb. plain vanilla optionc. zero cost optiond. barrier optionAns - b..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.com


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Facebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442A convertible option may give the bond-holder option of converting the debt into equity on specifiedterms. Such options are called ______ and have a direct effect on pricing of the bond.a. stock optionb. plain vanilla optionc. embedded optiond. barrier optionAns - c..............................................Futures related to exchange rates are known as _____.a. currency futuresb. bond futuresc. stock/index futuresd. none of theseAns - a..............................................Volatility of interest rates arises in case of ______.

a. currencyb. securitiesc. rupee accountd. all of theseAns - b..............................................Which part of treasury performs the confirmation, accounting and settlement of the deals?a. front officeb. mid officec. back officed. top officeAns - c

..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442The exchange rates for forward sale or forward purchase are quoted ______.a. todayb. tomorrowc. third day from today

d. none of theseAns - a..............................................The risk in treasury activity is known as ______ risk.a. creditb. marketc. liquidityd. operationalAns - b..............................................


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[email protected], [email protected], 09994452442Select the incorrect statement:a. The rate of discount at which the present value equals the market price of abond is known as YTM(Yield To Maturity).b. Duration is a weighted average measure of life of a bond, where the time of receipt of a cash flow isweighted by the future value of the cash flow.c. MD (Modified Duration) indicates price sensitivity of a bond per unit of change in the yield levels.d. Difference in the duration of assets and duration of liabilities is expressed as duration gap and isuseful for macro-hedging of balance sheet risk.Ans - b..............................................The benchmark rates for overnight lending for USD are generally _____.a. LIBORb. MIBORc. Fed Rated. MIFORAns - c..............................................

_____ settlement takes place on the third day (two working days from trade days).

a. swapb. forwardc. spotd. repoAns - a..............................................If an asset is highly sensitive to interest rate changes, and if we have a viewthat rates are likely to rise,what should we do?a. enter into swapb. enter into forward rate contractc. enter into option contractd. none of these

Ans - a..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Which of the following is not a component of market risk?a. currencyb. liquidity

c. interest rated. priceAns - d..............................................Bonds are governed by ______.a. Law of Contractb. BR Actc. Company Lawd. none of theseAns - a


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..............................................Which of the following statements regarding CD is not correct?a. CD is not a negotiable instrument.b. CD bears higher interest rate than deposits in the bank.c. CD attracts stamp duty.d. CD is issued in demat form or as promissory notes.Ans - a..............................................In respect of the three distinct roles the treasury is expected to play, which of the following is managedby the treasury for managing its proprietary positions?a. ALM bookb. Trading bookc. Merchant bookd. Investment bookAns - b..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial Managementwww.jaiibcaiibmocktest.com

[email protected], [email protected], 09994452442What is the limit up to which an individual is permitted to remit overseas without the approval of RBI?a. USD 100000b. USD 200000c. USD 500000d. There is no such limitAns - b..............................................The level of SLR to be maintained is mentioned in _____.a. RBI Act 1934b. BR Act 1949c. Companies Act 1956

d. NI Act 1885Ans - b..............................................Select the incorrect pair:a. excess of liquidity - lead to inflation and reduction in money supplyb. shortage of liquidity - lead to high interest rate and exchange ratec. absorption of liquidity by RBI - increase in CRR and SLR requirementd. none of theseAns - d..............................................Which of the following components is exempted from DTL calculation?a. Foreign outward remittances in transitb. Net inter-bank borrowings / deposits with maturity not exceeding 14 days (cal

l/notice money liability)c. demand and time depositsd. overseas borrowingsAns - b..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442


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Bank Financial [email protected], [email protected], 09994452442Exchange rate risk can be avoided by entering into a _______.a. swapb. forward rate contractc. option contractd. either b or cAns - d..............................................In India, market for currency futures commenced ina. August 2008b. August 1993c. The market yet to commence operationsd. The currency futures markets were existing for a long time but were lying dormant August 2008Ans - a..............................................Liquidity risk is reflected asa. Maturity mismatch, cash inflow and outflowb. Total cash held, receipts and paymentsc. Committed lines, lines utilized and unutilizedd. NPAs, total assets and performing loansAns - a

..............................................In a rising interest rate scenario, the risk of erosion of Nil is on account ofa. Advances with floating rate of interest and deposits with fixed rate of interestb. Deposits with floating rates and advances with fixed ratesc. Deposits with floating rates and advances with floating ratesd. Deposits with fixed rates and advances with fixed ratesAns - b..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB DISCUSSION

[email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Which of the following T-bills are issued fortnightly on Wednesday preceding non-reporting Friday?a. 91 days T-billb. 182 days T-billc. 364 days T-billd. both b and cAns - b..............................................Commercial papers are short-term debt market paper issued by _____, with a minim

um maturity of ___ and maximum maturity of _____. Select the best combination.a. commercial banks, 1 year, 10 yearsb. RBI, 6 months, 1 yearc. corporates, 7 days, 1 yeard. financial institutions, 1 day, 14 daysAns - c..............................................For currency market to be more liquid, the buy-sell spread should be _____.a. narrower


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[email protected], [email protected], 09994452442In case banks have surplus liquidity, i.e., funds in excess of demand in the money market, they can

_____ securities from / to RBI in exchangeof cash deposit.a. buyb. sellc. do nothing with itd. none of theseAns - a..............................................In India, conventionally, bonds are issued by institutions in _____ sector while debentures by corporatesin _____ sector.a. private, publicb. public, privatec. either of a or bd. none of theseAns - b..............................................Debentures are governed by ______.a. Law of Contractb. BR Actc. Company Law

d. none of theseAns - c..............................................Infusion of liquidity, by RBI, is done through _____ from / to banks under a ___

__ transaction.a. borrowing, repob. borrowing, reverse repoc. lending, repod. lending, reverse repoAns - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.com

Facebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442In reverse repo transaction, banks ____ from / to RBI.a. lendb. borrowc. do nothingd. none of theseAns - a..............................................

The minimum amount for which a CD can be issued is Rs _____.a. 1 lacb. 2 lacsc. 5 lacsd. 10 lacsAns - a..............................................Overnight inter-bank rates (difference between repo and reverse repo rates) should normally movewithin the bandwidth of ____.


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a. 50 bpb. 100 bpc. 150 bpd. 200 bpAns - c..............................................Derivatives can be used to hedge aggregate risks as reflected in the asset-liability mismatches. In thiscase a dynamic management of hedge is necessary' becausea. The risks are dynamicb. New hedging tools arrive in the marketc. The composition of assets and liabilities is always changingd. A close monitoring of hedge is an RBI requirementAns - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442The participants in the derivatives market generally exchange the following agre

ementa. IFEMAb. ICONc. ISDAd. A stamped agreement devised by respective banksAns - c..............................................Credit derivatives segregate from the assets through instruments known as ......and ...... transfer the riskfrom the owner to another person who is in a position to absorb the credit riskfor ......a. The bad assets, NPAs, commissionb. The credit risk, credit default swaps, a fee

c. Income, warrants, considerationd. Good assets, securitization, discountAns - b..............................................The FIs can issue CDs for a period not less than _____ and not exceeding _____ from the date of issue.a. 7 days, 6 monthsb. 15 days, 1 yearc. 1 year, 3 yearsd. 1 year, 5 yearsAns - c..............................................Which of the following T-bills are issued weekly on each Wednesday?

a. 91 days T-billb. 182 days T-billb. 364 days T-billd. both b and cAns - a..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB DISCUSSION


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[email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Which of the following publish(es) benchmark T-bill yields for one week to one year based on residualmaturity of T-bills in circulation?a. RBIb. GOIc. FIMMDA and Reutersd. SEBIAns - c..............................................Which of the following cannot participate in auction of T-bills?a. individualsb. banksc. financial institutionsd. none of theseAns - d..............................................The components of broad money(M3) area. Cash in circulation with the publicb. Cash in currency chests with RBI and Banksc. Credit availed by Central Government from RBI

d. Currency in circulation, demand and time deposits with banks and post officesaving depositsAns - b..............................................The exemptions from DTL includea. Time depositsb. Foreign outward remittances in transitc. Transactions in CBLO with CCILd. Overseas borrowingsAns - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.com

Facebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442The liquidity corridor that RBI uses to control short term interest rates is defined/dictated bya. Repo and reverse repo ratesb. Call money marketc. Bank rated. SLR and CRRAns - a

..............................................Treasury in the normal course will manage _____.a. All funds raised through depositsb. ALM book, Merchant book and Trading bookc. Liquidityd. All deployment of funds through advancesAns - b..............................................Tier ___ capital bonds issued by banks fall under corporate debt paper.a. 1


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b. 2c. 3d. none of theseAns - b..............................................RBI pays interest on the cash balances in excess of which of the following to bank, of their NDTL?a. 2%b. 3%c. 5%d. 6%Ans - b..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Ability of a business concern to borrow or build up assets on the basis of a given capital is called ___.a. debt service coverage ratio

b. good willc. reputationd. LeverageAns - d..............................................What are the two reserve requirements that treasury has to comply with?a. PLR and SLRb. CRR and SLRc. Repo and CRRd. VaR and CRRAns - b..............................................The treasury is segragated into three main divisions. Of the three divisions, th

e back office is also knownas _____.a. Dealing roomb. Treasury administrationc. Risk managementd. none of theseAns - b..............................................If only currency is hedged, the type of currency swap would be _____.a. PoS (Principal only Swap)b. CoS (Coupon only Swap)c. P + I Swapd. none of these

Ans - a..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442


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In _____ swap, the borrower has completely eliminated the currency risk and interest rate risk (zerorisk).a. PoS (Principal only Swap)b. CoS (Coupon only Swap)c. P + I Swapd. none of theseAns - c..............................................Forward rates fully reflect interest rate differentials only in _____.a. controlled economiesb. developing economiesc. economies where interest rates are freed. in perfect markets where the currencies are fully convertible and the markets are highly liquidAns - d..............................................The treasury is segragated into three main divisions. Of the three divisions, the mid office is also knownas _____.a. Dealing roomb. Treasury administrationc. Risk managementd. none of these

Ans - c..............................................The treasury is segregated into three main divisions. Of the three divisions, the front office is also knownas _____.a. Dealing roomb. Treasury administrationc. Risk managementd. none of theseAns - a..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.com

Facebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Buying and selling is performed under _____.a. Dealing roomb. Treasury administrationc. Risk managementd. Risk managementAns - a..............................................

Verification and settlement of the deals concluded by the dealers is performed by ______.a. front officeb. Treasury administrationc. Risk managementd. none of theseAns - b..............................................All related book-keeping and submission of periodical returns to RBI is taken care by ____.


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a. Dealing roomb. back officec. Risk managementd. none of theseAns - b..............................................The providing of information to the management (MIS) and to implement risk management systems iscreated by _____.a. Dealing roomb. Treasury administrationc. middle officed. none of theseAns - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Government securities are issued by _____.

a. RBI on behalf of GOIb. GOIc. SEBI on behalf of RBId. CCIL on behalf of GOIAns - a..............................................Bank's investment in government securities are classified in to _____.a. HTM (Held Till Maturity)b. AFS (Available For Sale)c. HFT (Held For Training)d. all of theseAns - d..............................................

Corprate debt paper refers to _____ - term bonds and debentures issued by corporates and FI, whichare tradable.a. shortb. mediumc. longd. both b and cAns - d..............................................Building up large volumes of business on relatively small capital is known as __

___.a. derivativeb. arbitrage

c. swappingd. leveragingAns - d..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial Management


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[email protected], [email protected], 09994452442Buying or selling an asset only for the purpose of making profit from movement of the asset price over aperiod of time is known as ______.a. leveragingb. speculationc. arbitraged. deploymentAns - b..............................................Forward exchange rates are arrived at on the basis of interest rate differentials of two currencies,

_______ from spot exchange rate.a. addedb. deductedc. either of the twod. none of theseAns - c..............................................One of the essential differences between an OTC and an Exchange traded derivative isa. OTC derivatives are cheaper while Exchange traded derivatives are costlyb. OTC derivatives are for customers while Exchange traded derivatives are for b

anksc. In OTC derivatives, counter party risk is prominent, whereas in exchange traded derivatives, counterparty risk is totally absentd. OTC derivatives are for hedging risks whereas Exchange traded derivatives are used for speculationAns - c..............................................In case of free currencies, forward premium or discount is exactly equal to thedifference betweena. Risk-free interest rates of the two currenciesb. Inflation rates in both the countriesc. Spot rate and Tom rate

d. LIBOR and RBI reference rateAns - a..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442A put option is in the money (ITM) ifa. the strike price is less than market price

b. the strike price is more than the market pricec. the market price is equal to the strike priced. a put option can never be in the moneyAns - b..............................................If only interest rate is hedged, the type of currency swap would be _____.a. PoS (Principal only Swap)b. CoS (Coupon only Swap)c. P + I Swapd. none of these


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Ans - b..............................................Nostro accounts are _____.a. accounts meant for reconciliationb. accounts of foreign banks with Indian banksc. current accounts dominated in foreign currency maintained by banks with their correspondent banksin the home country of the currencyd. short term investments with AAA rated foreign banksAns - c..............................................Notice money refers to _____.a. funds placed overnightb. funds placed after giving a notice of placementc. funds placed for periods in excess of 3 months but not exceeding 1 yeard. placement of funds beyond overnight but not exceeding 14 daysAns - d..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial Management

[email protected], [email protected], 09994452442The components of broad money (M3) are:a. cash in circulation with the publicb. cash in currency chests with RBI and banksc. credit availed by central government from RBId. currency in circulation, demand and time deposits with banks and post officesaving depositsAns - b..............................................The liquidity corridor that RBI uses to control short-term interest rates is defined / dictated by _____.a. repo and reverse repo rates

b. call money marketc. bank rated. SLR and CRRAns - a..............................................For ensuring effective risk control, RBI expects banks to facilitate functionalsegregation between

______.a. their head office branchesb. treasury and head officec. front office and IT departmentd. front office, mid office and back officeAns - d

..............................................One of the essential differences between an OTC and an Exchange traded derivative is _____.a. OTC derivatives are cheaper while Exchange traded derivatives are costlyb. OTC derivatives are for customers while Exchange traded derivatives are for banksc. In OTC derivatives, counter party risk is prominent, whereas in Exchange traded derivatives, counterparty risk is totally absentd. OTC derivatives are for hedging risks, whereas Exchange traded derivatives ar


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e used for speculationAns - c..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442In case of free currencies, forward premium or discount is exactly equal to thedifference between

_____.a. risk-free interest rate of the two currenciesb. inflation rate in both the countriesc. Spot rate and Tom rated. LIBOR and RBI reference rateAns - a..............................................A put option is in the money (ITM) if _____.a. the strike price is less than the market priceb. the strike price is more than the market pricec. the strike price is equal to the market price

d. a put option can never be in the moneyAns - b..............................................In India, market for currency futures commenced ina. August 2008b. August 1993c. October 2004d. the market yet to commence operationsAns - a..............................................Liquidity risk is reflected as _____ which is the gap in ____.a. maturiy mismatch, cash inflow and outflowb. total cash held, receipts and payments

c. committed lines, lines utilized and unutilizedd. NPAs, total assets and performing loansAns - a..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442In a rising interest rate scenario, the risk of erosion of NII is on account of

____.a. advances with floating rate of interests and deposits with fixed ROIb. advances with fixed ROI and deposits with floating ROIc. advances with floating ROI and deposits with floating ROId. advances with fixed ROI and deposits with fixed ROIAns - b..............................................The participants in the derivatives market generally exchange the following agreement:a. IFEMA


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b. ICONc. ISDAd. a stamped agreement devised by respective banksAns - c..............................................The valuation of trading positions applying current market value (exchange rates or security prices) as atthe end of the day is known as _____. These valuation rates are provided by FEDAI / FIMMDA.a. speculationb. marked to marketc. DvPd. yield curveAns - b..............................................Currently RBI has extended fixed rate Repo of ___ days to improve liquidty of banks.a. 30b. 60c. 90d. 120Ans - c..............................................www.jaiibcaiibmocktest.com

www.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442RTGS has been fully activated by RBI from _____.a. Aug 2003b. Oct 2004c. Oct 2003d. Aug 2004Ans - b

..............................................CBLO is a _____ market instrument issued by ______.a. foreign exchange, RBIb. money, CCILc. securities, GOId. domestic, SEBIAns - b..............................................Bill rediscounting is done at _____ market rate.a. foreign exchangeb. moneyc. securitiesd. global

Ans - b..............................................Securities issued by governments are referred to as _____ which do not have anycredit risk.a. derivativeb. giltc. demat A/Cd. yieldAns - b..............................................


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www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442Banks maintain their security accounts (exclusively for government securities) with RBI which is knownas _____ account.a. CGLb. SGLc. BGLd. none of theseAns - b..............................................At present, money multiplier moves within a range of 3.5 to 4 times. This moneymultiplier is calculatedas _____.a. M1 * M2b. M2 + M3c. M3 M1d. M4 M2

Ans - c..............................................The level of CRR to be maintained by scheduled banks with RBI is mentioned in __

___.a. RBI Act 1934b. BR Act 1949c. Companies Act 1956d. NI Act 1885Ans - a..............................................LAF (Liquid Adjustment Facility) is used to monitor ____ liquidity in the market.a. day-to-day

b. weeklyc. monthlyd. none of theseAns - a..............................................www.jaiibcaiibmocktest.comwww.jaiibcaiibmocktest.comFacebook Groups - JAIIB CAIIB STUDY MATERIALS- CAIIB [email protected], [email protected], 09994452442Bank Financial [email protected], [email protected], 09994452442

Banks can borrow and lend (under call money) overnight up to a maximum of ____ % and ____ %respectively of their capital funds.a. 10, 25b. 50, 75c. 100, 25d. 100, 50Ans - c..............................................The maximum borrowing on any day is limited to ___ % of capital, and maximum len


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