A. A Increasing The Credit Limit of The Corporate: Bfs L0
A. A Increasing The Credit Limit of The Corporate: Bfs L0
A. A Increasing The Credit Limit of The Corporate: Bfs L0
1 Which of the following are not the benefits of using Credit derivatives?
a. A increasing the credit limit of the corporate
b. Credit derivatives can be used to create positions that can otherwise not
easily be established in the cash market
c. 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 and
free up capital from regulatory constraints
2. What is OTC?
a. On the counter
b. options on the counter
c. operating the company
d. over the counter
e. None of the listed options
4. A person purchase a share @ $50.00, after 2 years, the price is at $75 and he
decides to sell the share at that price. What is the annualized return that the person
has earned.
a. 0.5
b. 0.3333
c. 0.2247
d. 0.6667
e. None of the listed options
5. An open end fund with 10,000 units outstanding had the total assets of Rs. 120,
000 and the liabilities of Rs. 25,000. Calculate the funds NAV per unit.
a. Rs. 10
b. Rs. 12
c. Rs. 9.5
d. Rs. 14.5
12. An investor has multiple investment options yielding various dollar returns at
various points of time, while he is comfortable with a return of X% p.a. Which
method should he use to compare the various investments?
a. Compound Interest
b. External rate of return
c. Net present value
d. Simple Interest
e. Internal rate of return
13. Ram deposits $100 in XYZ Bank. Puja takes a loan of a %100 from XYZ bank.
Which of the following is most likely to happen?
a. Bank is charging 3% interest to Puja and paying 5% interest to Ram
b. Bank is paying 5% interest to Ram and charging 5% interest to Puja
c. None of the listed options
d. Bank is paying 3% interest to Puja and charging 5% interest to Ram
e. Bank is charging 5% interest to Puja and paying 3% interest to Ram
14. At the end of the trade cycle, the trades are ________ to determine the
obligation of the trading members to deliver securities/funds as per
settlement schedule
a. Grossed
b. Aggregated
c. Netted
d. Offset
15. Principle- Strip and Coupon-Strips are used in reference to _________
a. Swaps
b. Bonds
c. Futures
d. Equity
e. Forwards
16. What is the difference between bankers acceptance and single draft
a. None of the listed options (Not sure)
b. Bankers acceptance demands immediate payment
c. Single draft are negotiable instruments
d. Bankers acceptance reduces banks lending capacity
e. Bank can raise funds by selling the acceptance
17. An institutional investor holds 50000 Microsoft shares. A custodian does the
safe keeping on the investor behalf. During this period, Microsoft announces
dividend. Based on this scenario which is the correct option from the following
a. The dividend amount will be processed by the custodian and credited
to the institutional investor account
b. None of the listed options
c. Because the assets are with the custodian the dividend amount will be
credited to the custodian account
d. The custodian and the investor share a part of the dividend
19. A custodian has different types of assets under its custody and those assets
earn returns to the original investor in various forms. What are the type of
returns that can be taxed?
I. Dividend
II. Interest
III. Capital Gain
IV. All of the listed options
a. III only
b. I only
c. II only
d. Both I and II
e. IV
20. A company ABC has a gross profit of $50000. The operating expenses amount
to $10000. The interest on loans availed amounts to $5000 and the taxes to
be paid amount to $5000. Calculate the EPS if there are total of 20000 shares
a. 2.5
b. 1.25
c. 2
d. 1.5
21. Coming together of BNY and Mellon is an example of ____________
a. All of the listed options
b. Merger
c. Acquisition
d. Takeover
e. Brokerage
25. In 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 taxes
c. Customer is only paying for Fees
d. All of the listed options
e. Customer is only paying for rent charges
30. The advising bank is used as trusted bridge between the _______ and ______
when they do not have an active relationship
a. Applicant bank, Beneficiary bank
b. Importer, Exporter
c. Beneficiary Bank, Reimbursing bank
d. (answer not in above 3 options) confirm
32. Tax and insurance premiums collected as part of loan repayment are handled
through which of the following type of account
a. Escrow account
b. Fixed Deposit
c. DMAT Account
d. Mutual Account
33. Which of the following risks for the investor is associated with corporate bonds
but NOT U. S. Treasury Securities?
a. Interest rate risk
b. Reinvestment Risk
c. Credit Rating Risk
d. Default Risk
e. None of the listed options
34. On a trading day, at the NYSE, a broker undertakes the following trades
Buy 100 IBM shares for $11.00 each
Sell 50 IBM shares for $10.50 each
Buy 100 MSFT share for $20.00 each
Sell 20 IBM shares for $11.00 each
Sell 10 MSFT shares for $20.50 each
Sell 30 IBM 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?
a. (a) $1780 (b) 0 for IBM, $1795 for MSFT
b. (a) $1880 (b) $3100
c. (a) $3100 (b) $1880
d. (a) 0 for IBM, $1795 for MSFT (b) $1780
e. None of the listed options
How much did the broker pay out to the exchange in total in case of (a)
Gross settlement system (b) Net settlement system?
a. (a) $4000 (b) $1235
b. (a) $1235 (b) $2235
c. (a) $260 for Microsoft, $975 for Google (b) $975 for Google, #260 for
Microsoft
d. (a) $1235 (b) $4000
e. None of the listed options
39. What are Secondary markets defined as?
a. Market in which securities are resold after they are originally issued
b. Market where security is sold during IPO
c. None of the listed options
d. Either auction or dealers market are being OTC market
42. All of the following are valid means for a custody client to communicate
trade instructions to its custodian, EXCEPT
a. By fax
b. FEDWIRE
c. By Telephone
d. SWIFT Network
44. Bank a base din US, provides safe keeping services for securities to its
US clients. It also has clients in France and Belgium, and provides
securities safe keeping services to these clients through banks C and D
respectively. Which of the following term best describes Bank A
a. Global Custodian
b. Secondary Custodian
c. None of the listed options
d. Main Custodian
e. Sub Custodian
45. In Electronic Check conversion (ECC), what happens once the check is
processed?
a. The customer can present a check to a store cashier
b. Receive cash immediately
c. All of the listed options
d. The customer signs a receipt authorizing the store to present the check
to the bank electronically and deposit the funds into the store’s account
46. P & L statements represent transactions over a period of time while the
balance sheet shows information as of a specific date. State True of
False
47. Which two risks of a financial institution may brings gains as well as
losses?
a. liquidity Risk and Credit Risk
b. Credit Risk and Foreign Exchange Risk
c. Credit Risk and interest rate risk
d. None of the listed options
e. Interest rate Risk and Foreign Exchange Risk
52. The risk that a given security or asset cannot be traded quickly enough
in the market to prevent a loss (or make the required profit) is
a. Liquidity Risk
b. Credit Risk
c. Business Risk
d. Financial Risk
53. Which of the following is not a barter trade or a counter trade?
I. Compensate the seller in the currency buyer likes
II. Compensate the seller through bank draft
III. Compensate the seller in the currency Seller likes
IV. Compensate the seller in a manner other than transfer of money
a. I only
b. II only
c. IV only
d. I, II, and II
e. III only
55. Which of the following are the functions of the relationship manager in a
retails bank?
a. New account opening
b. All of the listed options
c. Product Sales
d. Account Maintenance
58. During Q1, 2008 the investment bank _________ was merged with
JPMC after it was unable to continue borrowing to finance its operations
a. Lehman Brothers
b. Bear Steams
c. AIG
d. Fannie- Mae
e. Washington Mutual
62. On a trading day, at the NYSE, a broker undertakes the following trades
Buy 120 Dell shares for $10.00 each
Sell 70 Dell shares for $10.50 each
Buy 200 CISCO share for $20.00 each
Sell 20 Dell shares for $11.00 each
Sell 50 CISCO shares for $20.50 each
Sell 10 Dell shares for $9.00 each
Given that a net settlement system is being used. Find out the net position
of the broker at the end of the day
a. Dell 20 shares to receive, CISCO 150 shares to receive, $3130 to pay
out to the exchange
b. Dell 70 shares to give out, CISCO 90 shares to receive, $3000 to pay
out to the exchange
c. None of the listed options
d. Dell 150 shares to receive, CISCO 20 shares to receive, $3130 to
receive from exchange
e. Dell 20 shares to pay out, CISCO 150 shares to receive, $3780 to pay
out to exchange
67. IF the point of purchase is $52 and the amount given to the issuer is
$50. What is the underwriter spread?
a. 50
b. None of the listed options
c. 102
d. 52
e. 2
68. A card holder swipes his card for USD 100. How much the merchant
I. Deduct form the card holder
II. Receive from the acquirer
Assume merchant discount at 2%
a. I. USD 98 II. USD 98
b. I. USD 100 II. USD 98
c. I. USD 100 II. USD 2
d. I. USD 100 II. USD 100
71. GE shares are currently selling for $15.00 each. You bought 200 shares
one year ago @ $12 and received dividend payments of $2 per share.
What was your total dollar capital gain this year?
a. 1000
b. 500
c. None of the listed options
d. 400
e. 200
72. Find out the one which does not come under the retail bank service?
a. Trade finance
b. Credit card services
c. Electronic banking
d. Personal loans
77. Most common reason for a corporate seeking a loan from a bank
includes all of the following EXCEPT
a. Paying bonuses to the top executives
b. Daily cash flow requirements
c. Capacity expansions
d. Plain Modernization
e. New Projects
78. _________ are profit of the business that have not been distributed to
the owner as of the balance sheet date
a. Share capital
b. Gross profit
c. Revenue
d. Retained earnings
79. Treasury bills can be transacted and settled on the same date. State
true or false.
80. If you invest $200 for 3 year @ 8% compound interest. How much will
you have at the end of the 3 years?
81. In trade finance which of the following factors are considered while
choosing mode of financing?
a. Government guarantee program, Seller preference
b. Exporters fund, Risk factors, Cost of financing, time frame
c. None of the listed options
d. Time frame, Cost of financing, Buyers trade associates
84. The type of loan in which spread varies over the life of the loan is called
________
a. Positive spread loan
b. Floating rate loan
c. Fixed rate loan
d. Semi- fixed rate loan
e. Negative spread loan
88. If the limit= $2000, margin =20%, and asset value =$2000, then
drawing power for an open ended loans is equal to?
a. 2000
b. 1600
c. 2400
d. 2200
e. None of the listed options
90. An investor indulging in short selling on share expects the share price to
decrease. Sate true or false
a. Increase in price
b. Decrease in price
c. Very high change in price
d. Economy crises
e. Currency Crises
92. Participation of more number of banks reduces the risk of lead bank.
State true or false
97. The price paid for use of a financial liability and financial asset is called
___________
a. Financial Asset
b. Principal Interest
c. Interest
d. Financial liability
100. Open ended loan allows the borrower additional amount subject to the
maximum amount less than a set value. State true or false
a. payment to automate
b. Payable through account
c. Payable to automated means
d. Pay through action
e. Permission to act
102. Which of the following is not a derivatives instrument?
a. Equity
b. Swaps
c. Overdraft
d. Put option
e. Call option
103. Bank ABC interest rate on deposits is 7.30% and the interest rate on
loans is 9.25% during 2009. What is the spread for the bank?
a. 0.1655
b. 0.0225
c. None of the listed options
d. 0.0195
106. You purchased stock for $40. One year later you received $2 as
dividend and sold the share for $48, How much is the return of the
holding period?
a. 45 %
b. 10 %
c. 25 %
d. 50 %
e. None of the listed options
107. The share price of a company may drop considerably from its current
level, in this scenario, what type of risk are the investors facing?
a. Company Risk
b. Liquidity Risk
c. Business Risk
d. Market Risk
e. Credit Risk
108. If R is the real rate of interest, N is the nominal rate of interest and I is
the rate of inflation, then
a. R= N - I
b. R= N * I
c. R= N / I
d. R= N + I
110. If a bank erroneously posts the interest proceeds from a security held
by a investor A, into the account of investor B, this can be attributed to
a. Interest rate risk
b. Market Risk
c. Security Risk
d. Operational Risk
e. Liquidity Risk
112. The initial sale of security is in the _____ market, while subsequent
trading in the security is in the market ______
a. Money, Capital
b. Debt, Equity
c. Spot, Futures
d. Primary, Secondary
e. Secondary, primary
116. I deposit $100 in a bank. Banks loans out $90 out of it to someone
else who then invest the money in setting up new factory, what is this
process called?
a. Profit making tendencies of the investors
b. Sub-Prime effect
c. Economic boom effect
d. Money multiplier effect
e. None of the listed options
117. The term ‘settlement cycle’ refers to which of the following option?
a. Time 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. Time period between the date on which the trade is executed and the
date on which the trade is settled
c. None of the listed options are correct
d. Time period between the date on which the trade is cleared and the
date on which the trade is settled
118. If a finance instrument has 50% chance of paying 20% and 50%
chance of paying 60%. What would be the expected return?
a. 0.8
b. 0.5
c. 0.4
d. 0.2
120. Which of the following is not a measurement technique for Credit risk?
a. EAD
b. FIRB
c. Basic indicator approach
d. LGD
e. Probability of default
123. Company A has higher credit rating than company B, What does this
mean?
a. All of the listed options
b. Both are equally risky
c. Company B is more risky
d. Company A is more risky
e. There is no relation between credit rating and risk
124. Customer usually interact extensively with the banks mid and back
office. State true or false.
a. are secured by assets of the issuing company and also have a higher
priority for repayment than unsecured debt
b. are only issued by large and financially sound companies
c. are secured by assets of the issuing company
d. have higher priority for repayment than unsecured debt
126. After a buyer and seller enter into a trade agreement, who indicates
the issue of LC?
a. None of the listed options
b. Buyer’s bank
c. Advising Bank
d. Sellers bank
e. Seller
128. Securities with an original maturity of lesser than one year are traded
on money market. State true or false
129. From the given options identify the service(s) that can be categorized
under asset servicing line of the business
I. Corporate Action processing
II. Incoming Processing
III. Transfer agency services
IV. All of the listed options
a. I only
b. both I and II
c. III only
d. II only
e. IV