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Treasury Management

This document contains a model question paper for the treasury management section of the Faculty of Management at Pokhara University. It includes 20 short answer questions in Section A and 6 long descriptive answer questions in Section B. Section C contains a case study about ABC Bank Ltd and questions related to calculating cash reserve requirements, investing in non-delivery forwards to mitigate risk, and calculating potential profits from such investments. The document tests students' understanding of key treasury management concepts like front and back office functions, electronic funds transfers, interest rates, investment factors, legal reserve requirements, currency exchange rates, payment systems, and risk management tools.

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Mukti Shankar Shrestha
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107 views3 pages

Treasury Management

This document contains a model question paper for the treasury management section of the Faculty of Management at Pokhara University. It includes 20 short answer questions in Section A and 6 long descriptive answer questions in Section B. Section C contains a case study about ABC Bank Ltd and questions related to calculating cash reserve requirements, investing in non-delivery forwards to mitigate risk, and calculating potential profits from such investments. The document tests students' understanding of key treasury management concepts like front and back office functions, electronic funds transfers, interest rates, investment factors, legal reserve requirements, currency exchange rates, payment systems, and risk management tools.

Uploaded by

Mukti Shankar Shrestha
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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POKHARA UNIVERSITY

Faculty of Management

Treasury Management

Model Question Paper

Candidates are expected to answer the questions in their own words as far as practicable. The
figures in the margin indicate full marks.

Section A

Attempt all the questions. Give your answer in few lines. (10*2=20)

1. Difference between front office and back office.


2. Define electronic transfer.
3. List down the forces of interest rate.
4. List down the factors affecting choice of investment.
5. What are the legal reserve requirements that banks should comply?
6. Calculate GBP/NPR rate

Bid
Rate Ask Rate
USD/NPR 65.45 65.5
GBP/USD 1.2394 1.2404

7. What do you mean by SWIFT?


8. Briefly explain SLR.
9. How exchange rate is determined by Purchasing Power Parity?
10. Define translation risk exposure.

Section B
Descriptive Answer Questions

Attempt any six questions. (10*6=60)

11. Explain the position of Treasury Department in context of bank. Draw organogram
showing their relevance.
12. Development of payment system has helped the people to do the transaction in holidays
as well. Explain the statement in context of Nepal.
13. The bank manager wants to know what happens when interest rates rise from 10% to
11%. The total asset value is $100 million (loan having maturity of 7 years, investment
having maturity of 3 years and cash and cash equivalent having maturity of zero(, and the
total liability value is $95 million (deposit having maturity of 3 years and borrowing
having maturity of 0.7 years
a) Calculate the Duration of Assets
b) Calculate the duration of Liabilities
c) Calculate the duration Gap

14. Nepal Rastra Bank issues T bills having following terms and conditions.
91 Days T bill with amount NPR 835 Million. You are bidding two bids each of NPR 5
crore at 0.9656% and 1.2346%. Calculate the price at which you bid?

15. The total deposit of a commercial bank two week before is as follow.

Date Total LCY Deposit


3/5/2017 2,246,541,000.00
3/6/2017 2,379,864,000.00
3/7/2017 2,544,678,900.00
3/8/2017 2,734,897,000.00
3/9/2017 2,704,568,700.00
3/10/2017 3,685,696,700.00
3/11/2017 3,685,696,700.00

Looking at the above deposit, find out the following

a) CRR requirement for this coming 14 days,


b) Per day requirement for coming 14 days,
c) Minimum requirement for each day in coming 14 days.
.
16. You are proving discounting USD loan @ 2.5% per annum for USD 500,000/- limit to
your client Neoteric for facilitating import of technological goods from China and
Taiwan. Neoteric is using USD 200,000/- out of the total credit limit for 120 days. How
much is the interest amount for discounting loan? How much amount has to be remitted
by the bank?

17. Compare and contrast between CHIPS and ACH system


Section C
Case/Situation Analysis

18. Read the case situation given below and answer the questions that follow. (20)

ABC Bank Ltd. is the 27th commercial bank established under the Bank & Financial
Institution Act, 2063. The bank's corporate and banking office is located at Sankhamul Marg,
New Baneshwor, Kathmandu. Currently the bank is operating with 40 branches and 1
extension counters and will gradually expand its branch network to provide its service all
over the country. With 836 promoters, the bank is the first licensed commercial bank to have
an initial paid up capital of NPR 2.00 billion. The summary of financials of the bank is as
follow:

Assets Equity and Liabilities


Cash Balance 642,754,000 Borrowing 517,696,161
Balance with Nepal Rastra Bank 2,710,500,389 Deposit 23,628,730,454
Loan Advances and Bills Purchase 24,053,617,025 Share Capital 3,260,444,800
Total 27,406,871,415 Total 27,406,871,415

Banks are required to keep different types of reserves as per Nepal Rastra Bank. Keeping these
reverse will reduce the earing capacity of bank. Now, CFO of the bank look at the financial and
calculate the various things as follow.

a) If the deposit of the bank before 2 weeks NPR 23,608,853,911, calculate the CRR of
the bank for this week.
b) Also calculate per day cash requirement to meet CRR
c) Suppose spot rate USD/NPR = 104.75, find out the maximum amount that can be
invested in Non Delivery Forward (NDF).
d) How to mitigate the risk generate from carrying out NDF
e) Calculate the profit generated from NDF.

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