Consolidated Dumps

BANKING AND FINANCE SERVICE QB
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?
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
d. All of the listed options
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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 _____________________________

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
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 his investments. 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
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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
e. All of the listed options
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 a small 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
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d. Cash Re-service Ratio

e. Cash Reserve Risk
22 1 Marks
The term CLS stands for
Answer:
-a. Cautious Linked Settlement
b. Continuous Linked Settlement
c. Competitive Linked Settlement
d. 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
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
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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 Loan
d. 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. Dispersement
e. 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
c. small; small
d. larger; small
e. Either small; larger or larger; small
32 1 Marks
Bid-Ask spread refers to ________________________________.
Answer: a.difference in price between buying one asset and another similar one
b. difference in opinion between the seller and buyer on the price of an asset
-c. difference between the buying and selling price of the same asset
d. both difference in price between buying one asset and another similar one and difference in opinion between the
seller and buyer on the price of an asset
33 1 Marks
The process in which a privately held company offers its shares to public for the first time is known as?
a. Public Offering
b. Corporate Action
c. Underwriting
-d. Initial Public Offering
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34 3 Marks
Not all possible services that might be provided by the auditing firm are expressly prohibited by Sarbanes-Oxley. If a
non-audit service is not expressly prohibited, the auditing firm may provide that service
___________________________
Answer:
a. If no one on the board objects.
-b. If the audit committee gives its prior approval.
c. Only in an emergency and only if the company being audited has not been able to find another accounting firm to
provide this service after making a good-faith effort.
d. Without any prohibitions or pre-conditions whatsoever.
e. None of the listed Options.
35 1 Marks
The performance of an internationally diversified portfolio may be affected by ________________________.
Answer:
a. currency selection
b. country selection
c. stock selection
-d. All of the listed options
36 1 Marks
Primary markets ____________________
Answer:
a. are markets in which primary goods and service, i.e. raw materials are traded.
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
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Inflation represents which of the following?

Answer:
-a. Increase in prices
b. Decrease in prices
c. Very high change in prices
d. Economic crisis
e. Currency crisis
41 1 Marks
Financial intermediaries exist because small investors cannot efficiently ________________________.
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 Clause
c. 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?
Answer:
a. Money Policy
b. Money Market
c. Money Multiplier Effect
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-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.
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?
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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 ____________________________________.

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.
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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:
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 businesses and 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 seller
c. 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 Lending
e. 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 System
e. 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
e. ATM facility
74 Warrants are the combination of which of these instruments?

Answer:
-a. Equities and Call Options
b. Call and Put Options
c. Equities and Futures
d. Cash and Call Options
e. Put Options and Swaps
75 1 Marks
Core Custody Services performs the following functions except ________________________.
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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:
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:
Page 12 of 73
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 __________________.

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 Agreement
e. Forfeited Rate Agreement
89 Which of the following is not associated with debt?

Answer:
a. Corporate Bonds
b. Debentures
-c. Shares
d. Loans
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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
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 income
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 at 11:30 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:
a. Face value of the bond
b. Maturity duration of the bond
c. Credit rating of the bond
-d. Interest paid to the bondholders
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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. DAX
e. 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
You purchased a share of stock for $20. One year later you received $1 as dividend and sold the share for
$29. What was your holding period return
45%
5%
50%
40%
None of the listed options
If Bank of New York has found errors in settlement of transactions with some of its customers, as there is
some mistake in some of its systems. This would be classified as
Liquidity Risk
Market Risk
Credit Risk
Country Risk
Operational Risk
Risk is best measured when looked at

At a Macro level
At the lowest possible level
At a sub-macro level
At organizational level
At country level
Page 15 of 73
What would be the most accurate VaR estimation method?

Monte Carlo Simulation
Historical Simulation
Variance-Covariance Matrix
Cannot Say
Analytical Methods
If a financial instrument has a 35 percent chance of paying 29 percent and a 65 percent chance of paying -
13 percent, it expected return would be simple {0.35 * 0.29+0.65 * (-0.13)}
0.008
0.036
0.053
0.017
-0.029
The term "risk averse" means that

An individual refuses to take risks.
Most investors and businessmen seek risk.
An individual will seek to avoid risk or be compensated with a higher return.
Only investment proposals with no risk should be accepted.
Both An individual refuses to take risks and Only investment proposals with no risk should be accepted
Money Multiplier effect would imply

An increase in the total money lent out into the system
An increase in the total money in the bank reserves in the system
A decrease in the total money in the bank reserves in the system
Both An increase in the total money lent out into the system and an increase in the total money in
the bank reserves.
Both An increase in the total money lent out into the system and a decrease in the total money in the bank
reserves in the system
Which of the following is NOT a function of the bank?

Ensure super-normal returns to its small depositors
Channelize Savings
Provide credit facilities to borrower
Provide investment avenues to investors
Facilitate the trade and commerce dealings
If a bank gets a deposit of $100, assuming a reserve requirement (CRR) of 10%, and that it circulates
through 2 more banks, leading to the following money multiplier effect
create a reserve of $10
loan of $244
create reserve of $19
loan of $171
None of the listed Options
If the Limit = $1500, margin = 20% and Asset Value = $2000 then Drawing Power for an Open ended loan is
equal to
$1,500
$1,200
$1,600
$900
Page 16 of 73
Freddie Mac, Ginnie Maes & Fannie Mae are?

Marketing institutions selling home loans
Lenders to the banks for home loan bought by retail customers
Regulatory bodies governing home loan market in US
Primarily asset management companies
Which of the following is not involved in a credit card transaction?

Independent sales organization
Merchant
Payment gateway
Associations
Who checks for the credit limit of the card before approving the transaction?
Payment processor
Acquiring banks
Payment gateway
Issuing bank
One should have the Time Deposits if one is looking for?

Quick, convenient and, frequent-access to the money
A high rate of interest
Guaranteed rate of interest
Low fee
EFTA stands for

Electronic Funds Trading Act
Electronic Financial Transfer Act
Electronic Funds Transfer Act
Electronic Fee Transfer Act
Electronic Funds Telecommunication Act
The Federal Reserve offers financial services to banks and the U.S. government for all of the following
reasons except to
make a profit
promote competition
foster innovation
promote efficiency in the payments system
CHIPS stand for

Clearing House for International Payments Settlement
Clearing House for Interbank Payment System
Clearing Head of Interbank Payment Settlement
Clearing Head of international Payment Settlement
Clearing House for Interbank Payment Settlement
The process flow in a Private banking firm goes as

Servicing Specialist => Client Representative => Middle Office => Back Office
Client Representative => Servicing Specialist => Middle Office => Back Office
Client Representative => Servicing Specialist => Back Office => Middle Office
Middle Office => Back Office => Servicing Specialist => Client Representative
Client Representative => Middle Office => Servicing Specialist => Back Office
Which of the following roles and responsibilities are correctly stated?

Page 17 of 73
Services Provider; Tax Services

Middle Office; Statements & Advices
Front Office; Client Reporting
Back Office: Risk Management
Middle Office; Custodial Services
The below stated responsibilities are carried out by which of the following players. Cash Services/Client
Reporting/Statements & Advices/Domestic & Global Settlements
Services Provider
Client Representative
Back office
Front Office
Middle Office
Private banking offers “structured lending” that provides

Customized asset-based credit solutions
Long-term liquidity to clients
Advice-led credit solutions
Credit solutions to High Net worth individuals
All of the listed options
Financial planning involves all EXCEPT

Cash flow management
Retirement planning
Risk management
Tax planning
Portfolio management
Loan can take many of the following basic forms EXCEPT

Overdrafts
Bills and promissory notes
Corporate bonds
Advances
Credit line
If a fund purchases a loan in the Primary, they also use another word for that. Which term is used to indicate
the initial group of lenders (Primary Lenders)?
Allocation
Syndicate
Secondary
Assignment
Which of the following is not a credit derivative?

Credit linked Notes.
Total return swaps.
Credit default swap.
Currency swap.
Which of the following is not a secured loan?

Equity Loans
Secured Loans with Savings
Equity Lines of Credit
Personal Loans
Car Loan
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Which if the following is true in the case of sight draft?

Buyer can refuse to take the delivery
Quality of the Good is guaranteed
Buyer is expected to make the payment after specified credit days
Payments made based on only bill of lading
The basic four parties involved in any transaction using LC (Letter of Credit) are the following EXCEPT
Issuing Bank
Reimbursement Bank
Seller
Beneficiary’s Bank
Buyer
Which of the following is the safest type of letter of credit from seller point of view?
Confirmed Letter of Credit
Irrevocable Letter of Credit
Red Clause
Standby Letter of Credit
Revolving Letter of Credit
Which of the following methods of payment is most risky to the Seller?

Documentary Collection
Open Account
Letter of Credit
Counter trade
Cash in Advance
BOL stands for

Bill of Letter
Banker’s Overdraft Limit
Bank of London
Bill of Leasing
Bill of Lading
BAFT stands for

Bankers Acceptance for Factoring Transactions
Bankers Association for Foreign Trade
Bankers Acceptance for Foreign transactions
Bankers Association for Forfaiting & Factoring transaction
Bankers association for Factoring Trade
Bill of Lading is
a contract between Importer and Exporter for transportation of goods
a receipt issued by importer to exporter for goods received for transportation
a contract between a carrier and a shipper for the transportation of goods
A receipt issued by exporter to importer for goods delivered.
None of the listed options
Which of the following methods eliminate country risk and commercial risk upon confirmation?
Back to back Letter of Credit
Standby Letter of Credit
Documentary Collection
Letter of Credit
Both Standby Letter of Credit & Letter of Credit
The following are interest rate risk management instruments EXCEPT?

Interest rate swap
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Forward rate agreement

Swaption
Interest rate guarantee
All of the following are payment modes except

EFT
Cheque
Debit to account through Debit card
Lockbox
Which of the following are principles used by an asset manager?

Diversification
Screens and Filters
Capital preservation
Only Diversification and Screens and Filters
The process of ‘Hiring of the Lead Managers’ in the case of IPO is referred to as
Red Herring
Road-show
Investment Manager Contest
Advisor Contest
Beauty Contest
Syndicate in Investment banking refers to all Except

Hub of the investment banking wheel
Determination of allocation of bonds
Merger and Acquisition advisory
Facilitating placing of securities in public offering
The difference between “Fill or Kill” and “All or None” order is

“Fill or Kill” allows multiple trades
“All or None” can be a Good Till Cancelled order
They are synonyms
“Fill or Kill” can be valid till end of day
“Fill or Kill” allows partial execution
The NYSE is an example of

Primary Market
Secondary Market
OTC Market
Fourth Market
What is the term for the difference between bid and ask?
Difference
Spread
Profit
Quote
What is the Third Market?

NASDAQ
OTC
Page 20 of 73
NYSE
Instinet
The “Fourth Market” refers to

NASDAQ
OTC
NYSE
Instinet
Core Custody Services performs the following functions except

Price securities positions
Record Keeping
Fiduciary and compliance monitoring
Reporting services
Processes corporate actions
Money laundering refers to

Money facilitating criminal offences
Extending loans to corporate
Short term borrowing & placements
Federal authorities attack money laundering through

Regulations
Criminal sanctions
Forfeiture
Three pillars of the new capital accord, Basel II, are

Quantitative; Supervisory; General
Qualitative; Market Forces; Geographic
Quantitative; Operational; Supervisory
Quantitative; Qualitative; Market Forces
Qualitative; Mandatory; Quantitative
Capital adequacy ratio refers to

Amount of bank’s capital expressed as percentage of the risk weighted credit exposure
Amount of bank’s capital expressed as percentage of the risk weighted credit exposure & operational risk
Amount of bank’s capital expressed as percentage of the risk weighted credit exposure, & market risk
Amount of bank’s capital expressed as percentage of the risk weighted credit exposure, operational risk &
market risk
2) Simple interest is calculated on which of the following

beginning principal only
3) An investment manager handles all of the following except --------

Guaranteeing that the investor doesn’t suffer a loss in any investment
5) In retail banking the term PDC stands for which of the following
post dated cheques
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6) A company would pay the interest on what portion of the loan?

Disbursed amount
7) Pick the odd one out

a. Notes
b. Stocks
c. Debentures
d. T-Bills
e. Minus
8) A formal, legal commitment to extend credit up to some maximum amount over a stated period
of time in a description of ________ Line of credit
9) As nominal interest rates increases in the economy the inflation should ideally
Increase
11) What is the maximum maturity for commercial paper? 270 days
13) In a financial instrument has a 20% chance of paying 20% & a 80% chance of paying 50%, its
expected return would be 44%
15) Which of the following instruments will carry the lowest interest rate
T-note
16) Which of the following instruments will carry the highest interest rate?
Commercial Paper
1. Preferred stock dividends are paid
a) Each year on a contractual basis, but before common dividends

b) After common dividends are paid.
c) Before interest is paid on debt.
d) If declared by the board of directors.
e) After both interest and common dividends are paid
2. Collateral is
a) A form of loan
b) Asset put up as security
4) Expansion for CPI

Ans is consumer price indices
6) Which term is not include in banking

a) Investment banking
b) Public banking
c) Private banking
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d) Retail banking
8) Basel capital accord was instituted to coordinate global regulatory efforts to institute
_______________ capital requirements to eliminate the threat posed by _____________
Ans is Minimum; undercapitalized banks
9) Does Asset Allocation help reduce the investment risk?
a) yes
b) No - It only maximizes return
c) It increases risk
d) It increases choice – No impact on risk
10) Dow Jones Industrial Average (DJIA) and Bombay Stock Exchange Index (Sensex) are
Ans is price weighted index
12) The money multiplier is 1 if the cash reserve is

a) less than 100%
b) more than 100%
c) none of the options
d) zero
e) 100
13) Currency reflects

a) Economy of the country
b) gdp of the country
c) Political situation of the country
d) cpi of the country
I think the ans is a
14) Is the interest earned by simple interest and compound interest same say true or false
The ans is false
15 In the simple interest the interest is also accumulate for the next year calculation
Ans is false
17 Assume that you have a holding in IBM Stock worth 100000. You have calculated the
standard deviation (SD) of change over ten day in IBM
Ans We have to take the square root for 10 and we have to multiply with 100000.
18. The fastest method for calculating risk is

Ans: variance covariance method.
19. Monte-Carlo Simulation

It is a simulation technique.
20. Asset/Liability Analysis,Asset Allocation, Asset Manager Solutions ,Cash Projection,

Compliance Reporting, Securities Lending, Fund Administration, Information, Products & Services,
Investment Manager Universe, Local Fund Servicing
These terms are related with
Ans is Investment Management
Page 23 of 73
21 Buy/Sell Quantity Sock Price

10:00 Buy 100 IBM $10.00
10:30 Sell 50 IBM $10.50
11:00 Buy 100 MSFT $20.00
11:30 Sell 20 IBM $11.00
12:00 Sell 10 MSFT $20.50
3:30 Sell 30 IBM $9.00
What the broker purchase and what he sold is equal
Say yes or no
22. Buy/Sell Quantity Sock Price

10:00 Buy 100 IBM $10.00
10:30 Sell 50 IBM $10.50
11:00 Buy 100 MSFT $20.00
11:30 Sell 20 IBM $11.00
12:00 Sell 10 MSFT $20.50
3:30 Sell 30 IBM $9.00
Calculate the net profit and gross profit.
23. Expansion for OTC
Ans is over the counter.
24. Defined contribution plans have gained popularity because

Ans: employers have begun to ask their employees to share responsibility for their retirement.
25. Monetary losses resulting from inadequate or failed internal processes, people, and systems or from
external events. The events characterize the inherent risks in doing business.This risk is known as
Ans is operational risk
26 IRD in check 21 act is

Ans is Image Replacement Document
29 largest part of the spread and is paid to the broker/dealer that

actually took the client’s order is known as
Ans : Concession
27 share A is more volatile than share B The risk associated with Share A
Ans is more
30The total spread is 400000.The managers fee is 100000.The underwriter’s allowance is

Ans is 400000-100000=300000
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
d. Amount of bank’s capital expressed as percentage of the risk weighted credit exposure, operational risk &
market risk
1. If an investment pays interest at an annual rate of 5% per year, compounded twice a year
than the effective yield larger than 5.5%
a. True b. False
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2. In a 2 way quote for a share the bid is

a. 2% less than offer
b. Less than offer
c. More than offer
d. Dependent on dealer’s skill
e. Equal to offer
3. Which of the following is usually not participant in stock market

a. Small individual’s investors
b. Central banks
c. Companies
d. Financial institutions
4. In an account saving simple interest from the first year is reinvented at the beginning of
the second year?
a. True b. False
5. Which of the following is a not current asset?

a. Goods for sale inventory
b. Terms loans
c. Cash
d. Raw material inventory
e. Receivables
6. Which of the following in not a feature of private banking?

a. Specialist advice
b. Lot of research
c. Commercial lending
d. High investment in technology
e. Understanding the capital and investment needs.
7. Retail loans are asset product offered by the bank

a. True b. False
8. If the price of share pf cognizant changes from 65 to 60 this can be attributed to:
a. Market risk
b. Interest rate risk
c. Credit risk
d. Operational risk
e. Liquidity risk
9. Account maintained in the home currency by one bank in the name of another bank
based abroad is called as:
a. Current account
b. Nostro account
c. Vostro account
d. Forex account
e. Overseas account
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10. Which of the following is not the settlement method for bank loans?
a. Pre-closure
b. Assignment
c. Participation
d. Sub participation
e. Securities repository
11. The process of transferring obligation from one party to another is called
Ans:Novation
12. The purchase of any stock for immediate delivery is a __ market transaction.
a. Futures
b. Spot
c. Forward
d. Stock
e. Option
13. In the historical simulation method of VaR calculation:

a. Return are assumed to be not normally distributed
b. No assumption is made about the distribution
c. Random returns are generated to calculate VaR
d. Return are assumed to be normally distributed
e. Returns are not required at all.
14. What happens when interest rate fall:

a. Bond prices increase
b. Bond prices decrease
c. Bond prices do not change
d. Economy goes into deflation
e. Interest rate never fall, they always go up.
15. If the price of a security on day 1&2 is $102 and $100 respectively. The return is
a. -2%
b. 2%
c. -1.96%
d. Very high
e. 1-2%
16. If you invest $1000 for 3 years at 7% compound interest, how much will you have at the
end of the 3 years?
a. $1225
b. None of listed option
c. $1000
d. $1070
e. $1270
18. What is need for banks in the society?

a. Small investor are protected, hence it is a low risk investment avenue.
b. Banks are in the best position to lend out money at competitive
c. Depositors are participant in primary and secondary markets.
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d. All of listed options.
19. A is more risk averse investor than B .therefore.

a. For the same return, B tolerates lesser risk than B.
b. For the same return, A tolerates higher rate of return.
c. For the same return, A tolerates lower rate of return.
d. For the same return, A takes higher risk.
20. Liquidity issues of credit can be addressed by:-

a. Sweep facility
b. Structured lending to client
c. All
d. Short term credit facilities
e. Overdraft
22. Fastest method for calculating VaR.

a. Monte- Carlo simulation.
b. All equal time with software.
c. Variance-Covariance matrix.
d. Combination of Monte- Carlo and Historical Simulation.
23. Which is not banks primary use for deposits?

a. Payment to employers
b. None
c. Investment
d. Loan
e. Withdrawal
24. If the 5 bids available for stock are 64, 65, 63, 62.5 and 66 which one u will sell? -> 66
25. When a bank issue a loan its liabilities & reserves increases by the amount of the loan.
a. True b. False
26. If the corporate isn’t able to raise money from the market to pay off some loans the risk
can be refer.
a. Market risk
b. Interest rate risk
c. Commodity risk
d. Operational risk
e. Liquidity risk
27. On the trading day at the NYSE a broker undertakes the following trades
Buy 100 IBM shares for $10.00 each
Sell 50 IBM shares for $10.50 each
Buy 100 MFST share for $20.00 each
Sell 20 IBM shares $11 each
Sell 10 MFST share at 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 (i) Gross settlement
system (ii) Net Settlement System?
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a. (i) $1780 (ii) $3000

b. (i) 0 for IBM, $1795 for MSFT (ii) $1780.
c. (i) $3000 (ii) $1780
d. None
e. (i) $1780 (ii) 0 for IBM, $1795 for MSFT
28. US export and Europe import agree to carry out the transaction of goods word $100000
under a confirmed term LC with a maturity date of 60 days from the time of shipment. The
acceptance commission @ 1.5 % PA equals
A) $2500
B) $3000
C) $300
D) none
E) $250
29. Operational risk is defined as?

fail because of weakness in people, processes, systems or external events.
30. The basic four parties involved in any transaction using LC are the following EXCEPT
A) Issuing Bank
B) Reimbursement Bank
C) Beneficiary Bank
D) Seller
E) Buyer
31. While providing security lending services to its clients which risk will a custodian have to
manage for its clients
A) Liquidity risk
B) Both Credit risk and interest rate risk
C) Interest rate risk
D) Credit risk
E) Both credit risk and liquidity risk.
32. If the price of securities on day 1 and 2 are $100 and $102 respectively .Returns is
A) A very high
B) 2
C) -1
D) -2
E) 1
33. Following are the list of risk that Cognizant faces at organizational level
A) Currency risk
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B) Attrition
C) Credit risk
D) All of the above
E) Protective legislation by US/UK
34. Which of the following is not a core private banking function?
A) Client management
B) Deposit Mobilization
C) Investment analysis and advice
D) Research
E) Sales and Marketing
35. A mutual fund with investment objective of achieving high capital growth approaches
investor services firm for advice. The firm advices the mutual fund to invest 80% of the fund
in govt debt and 20% in equity. The allocation towards debt advised by the firm
A) Cannot be determined
B) is too high
C) Is about right
D) is too low
36. Which of the following operations can be done on a LC?
A) All the listed option

B) Acceptance
C) Negotiate
D) Purchase
E) Discount
37. Who among the following is most likely to be a private banking client of a bank?
A) A fresh engineer in his first job at cognizant

B) Tiger Woods
C) Any of the above
D) A cricket player who has never played national / international cricket
E) A manager at a manufacturing plant.
38. Which of the following method eliminate country risk and commercial risk upon
confirmation?
A) Documentary collection
B) Back to back LC
C) LC
D) Standby LC
E) Both standby LC and LC
42. The act of the loan amount being handed over to the borrower by the bank is known as
disbursement. State TRUE or FALSE -> TRUE
Page 29 of 73
39) On the trading day at the NYSE a broker undertakes the following trades
Buy 100 IBM shares for $10.00 each
Sell 50 IBM shares for $10.50 each
Buy 100 MFST share for $20.00 each
Sell 20 IBM shares $11 each
Sell 10 MFST share at 20.50 each
Sell 30 IBM 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) IBM no exchange of shares ; MFST 90 shares to receive ; $1780 to pay out to the
exchange
B) None of these
C) IBM no exchange of shares ; MFST 90 share to receive ; $3000 to pay out to exchange
D) IBM 70 shares to given out ; MFST 90 shares to receive ; $3000 to pat out to exchange
E) IBM no exchange of shares ; MFST 90 share to receive ; $1780 receive from the exchange
40. ACH transaction involves the transmission of _________

A) All of the listed option
B) Documents
C) Physical instrument like check and draft
D) Electronic data files
E) Cash
41. What should one use while using comparing mortgages?

A) APR
B) None
C) IRR
D) NPV
E) Rate of interest applicable for the loan
43. Which one of the following is not offered by investment banking division of a bank?
A) learning services
B) ‘None
C) Merger and Acquisition
D) Valuation of firm
E) Underwriting and distribution of equity issues.
44. If total spread on underwriting is $500000 and manager fee is $100000. What is the
amount which will be distributed in the syndicate?
A) 500000
B) 100000
C) 400000
D) 600000
E) Can not be determined
Page 30 of 73
45. HPPL shares are currently selling for $25 each. You bought 200 shares one year ago at
$24 each and received dividend payment as $1.50 per share what was total dollar capital gain
this year
A) 200
B) 500
C) None
D) 300
E) 400
46. The brokerage firm is regulated by

A) State regularity agency
B) SEC
C) Industry wide SRO
D) All of the listed option
47) Pick odd one out

a. Demat
b. Personal loan
c. None
d. Hire Purchase
e. Auto loans
48. I deposited 100 in a bank .Bank loan out 90 out of it to someone else, who then invest the
money in setting u a new factory. This process is called
A) Monetary policy
B) None
C) Money multiplier effect
D) Profit making tendency of a bank
E) Fiscal policy
50. Which of the following is not a treasury management system?

A) Calypso
B) Summit
C) Wall street system
D) Front arena
E) Flex cube
51. Syndicate helps in all of the following activity but

A) Managing large bond issues
B) Raising huge money from the bank
C) Managing large capital raising act
D) Managing conflict between investment banks.
E) IPO distribution.
52. All of the following statements concerning US govt securities are correct EXCEPT
A) Treasury bills have their interest paid in a lump sum at maturity
B) None
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C) Treasury bills have greater interest risk than either treasury bond or treasury note
D) Treasury note has maturity dates up to 10 yrs
E) Treasury bonds have maturity dates up to 30 yrs
53. In defined benefit plan the benefit is expressed as ________ and in defined contribution
plan the benefit is expressed as an ________
A) Account balance , Annuity

B) Annuity , Annuity
C) Account balance , Account balance
D) None
E) Annuity , Account balance
54. What is the term used to indicate the arrangement of LARGE borrowing for a corporate
by a group as lenders
A) none
B) Syndicate
C) Allocation
D) Assignment
E) Secondary
55. Card associate provide which of the following service

A) issue card
B) Set credit limits
C) Set interest rates
D) Set card fees
E) Security/ Risk management
56. in an international securities transaction, which of the following participant will not be
involved
A) Global custodian , domestic sub custodian , depository in foreign country and sometime
stock exchange in foreign country
B) Depository in foreign country
C) Global Custodian
D) stock exchange in foreign country
E) domestic sub custodian
57. An insurer undertakes an analysis of a portfolio of insurance policy by exploring

scenarios for the path followed by swap rates, policy surrender rates, mortgage prepayment
rates for the mortgage backed security in the portfolio, what is this process called
A) Cash projection
B) Investment manages universe
C) Asset allocation
D) Fund administration
E) Asset / liabilities analysis
58 Trade finance helps in

A) Facilitating international transaction
Page 32 of 73
B) Facilitating intra company transaction

C) Facilitating international transaction , corporate lending and settling up of new factories
D) Facilitating corporate lending
E) Facilitating setting up of new factories
59. A choice quote is

A) a price at which a firm is ready to buy or sell
B) When bid is equal to offer
C) When the firm has a choice of deciding the securities to take
D) a price at which a firm is ready to buy or sell it also means when bid is equal to offer
60. Which of the following is likely to have the highest interest rate?
A) 6 month deposit of min balance of $1000
B) 3 month deposit of min balance of $4000
C) 12 month deposit of min balance of $1000
D) None
E) 6 month deposit of min balance of $2000
61. If 1 day VaR is $1 million, 9 day Var is

A) $3mn
B) $4.5 mn
C) $9mn
D) $4.4mn
E) $1mn
62. If a bank gets a deposit of $1000 assuming a CRR of 10% and that it circulates through 2
more banks, leading to the following money multiplier effect
A) Loan of $2439
B) Loan of $1710
C) None
D) Create a reserve of $100
E) Create a reserve of $190
63. Which among the following is an investment company that pools money from unit holders
and invest in a variety of security?
A) Mutual Fund
B) Mortgage Company
C) None
D) Stock Exchange
64. You purchased a stock for $40. 1 year later you received $2 as Dividend. You sold it at
$48. What is your return?
a. 45%
b. 10%
c. 25%
d. 50%
e. None
65. A formal Legal commitment to extend credit to some max amount over a state period of
time is description of
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a. Trade Credit
b. Revolving Credit
c. Agreement Irrevocable Credit
d. Line of Credit
e. Letter of Credit
66. Odd 1 out

a. Warren Buffet
b. George Soros
c. Bill Gates
d. Ben Graham
e. Peter Lynch
67. Development of Investment Objective and Investment policy falls under the Purview of
a. Investment manager Universe
b. Asset Allocation
c. Asset Liability Analysis
d. Fund Admin
e. Compliance Reporting
68. Interest Rate Spread is equal to
a. Current rate – Base Rate
b. Cap – Current Rate
c. Current Rate – Floor
d. Base Rate – Floor
69. Which of the following factors affect the choice of Payment Method?
a. Exporters Fund
b. All
c. Government Guarantee Program
d. Time Frame
e. Cost of Financing
70. The NYSE is a large financial market in which the initial issue receives the proceeds for
the Sale of securities.
a. True b. False
71. Which of the following trading services reduces the trading cost for institutional
investors?
a. Stock Repurchase Program
b. Transition Management
c. Transition Management & Commission Recapture
d. Commission Recapture
e. None
72. A CALL option on futures gives the buyer

a. the obligation to buy a futures contract
b. the obligation to sell a futures contract
c. the right & obligation to buy a futures contract
d. the right but not the obligation to buy a futures contract
e. the right but not the obligation to sell a futures contract
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73. Which is not an example of Option?

a. Call Option
b. Swaption
c. Leaps
d. Oil Futures
e. Put Options
74. Some banks pay interest on Checking A/c while many do not.
a. True
b. False
75. The advising bank is called as trusted bridge between the ___________ & __________
when they do not have active relationship. Options wrong
a. Beneficiary Bank & Reimbursing Bank
b. Importer Exporter
c. Reimbursing Bank & Beneficiary Bank
d. Issuing Bank & Confirming Bank
The advising bank is used as a trusted bridge between the applicant’s/issuing bank and the
beneficiary’s bank when they do not have an active relationship.
76. Which of the following according to you has resulted in defining contribution plans
gaining popularity over defined benefit plans
a. DC plans fix the monthly contribution from the employee making his financial planning
easier.
b. DC plans are seen by employees as investment which to accumulate retirement income.
c. All
d. Employer increasing wants employees to share responsibility for retirement
77. ________is typically largest part of spread and is paid to broker\dealer or that actually
took clients order
a. Salary
b. Manager fee
c. Wage
d. Concession
e. Underwriter
78. NASD is not an SRO for

a. Listed market
b. Over the counter market
c. Third market
d. Fourth market
79. High net worth individuals generally have ____________.

a. Market capitalization more than $200000
b. All
c. Net worth greater than $500000
d. Household income of max $50000 year.
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80. Which is true about retail banking?

a. The business focuses on small no. of high net worth individuals.
b. The business focuses on small and medium enterprises.
c. The business focuses on large no. of individuals.
d. The business focuses on large no. of corporation bodies.
81. Offer is price at which a firm

a. Trades in securities
b. Quotes to its bets customer
c. Intends to buy
d. Intends to sell
e. Quotes when it does not want to trade.
82. Securities with original maturity greater than 1 year are traded on money market.
a. True b. False
83. Which is not a banking service?
a. Stock market
b. Retail banking
c. Corporate banking
d. Customer lending
84. Which is true?
a. Financer owns the asset both in case of ‘Lease’ and ‘hire Purchase’.
b. Tax deduction cab be claimed fro the full value of the rental paid in case of lease
c. All
d. Depreciation in claimed by the financer in lease and not in case of hire purchase.
85. Bank a based in 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 & D respectively. Which best describes bank A?
a. Global custodian
b. None
c. Main custodian
d. Sub custodian
e. Secondary custodian
86. All following statements relating to Bonds are correct except.

A) Bonds sell at a discount when Coupon Rate is less than Market Interest rate.
B) None
C) Bond is debt instrument giving issues.
87. Which of the following type of loan requires the amount of interest that would be
earned on the loan to be paid upfront by the borrower?
A) Capitalized loan
B) True Discounted loan
C) Amortized loan
D) Demand loan
E) Discounted loan
88. Who are involved in the preparation of prospectus of IPO?

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A) Commercial bankers
B) Investment Bankers
C) None
D) Company Management
E) Company Management and Investment Bankers
89. Bankers Acceptance differs from Sight Draft in that

A) Bankers Acceptance reduces lending capacity
B) Sight Drafts are negotiable instruments
C) Bankers Acceptance demands immediate payment.
D) None
E) Banks can raise funds by selling acceptance.
90. Clients of a private banker are generally not segregated on the basis of
A) Investible assets
B) Location
C) Age
D) Net worth
E) Name
91. The initial sale of the security is in the ………market, while subsequent trading in the
security is in the …….. market
A) Spot, futures
B) Debt , Equity
C) Primary , Secondary
D) Money, Capital
E) Secondary, Primary
92. Under what category can services like asset/liability analysis, asset allocation, cash
projection, compliance reporting, fund administration, investment Management
universe etc. provided by an institution can be classified?
A) Investment Management
B) Asset Servicing
C) None
D) Trading
E) Investor Services.
93. CIP in the context of anti-money laundering is

A) All
B) Stands for Suspicious Activity Reports
C) Customer Identification Program
D) Requiring Businesses, which were only to report cash transactions involving more than
1.00,000?
94. On a trading day at a stock exchange a broker undertakes the foll trades:
Buy 100 IBM shares for 10$ each
Sell 50 IBM shares for 10.5 $each
Buy 100 MSFT shares for 20$ each
Sell 20 IBM shares for 11$ each
Sell 10 MSFT shares for 20.5 each
Sell 30 1bm shares for 9$ each
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At the end of the day, the broker owes 1780 to the exchange while exchange owes him 90
shares of MSFT. Is it possible?
A) Yes under RTGS
B) No
C) Yes under net-settlement system
95. Dow Jones industrial average is made of

A) 30 stocks
B) 20 stocks
C) 40 stocks
D) 10 stocks
E) 50 stocks
96. Which risks bring gain and losses?

A) Interest rate and foreign exchange
B) Liquidity and credit
C) Credit and Interest rate
D) Credit and Foreign exchange
E) All
97. Find the future value of $1200 invested at 5.25 % per annum payable annually after 6
months? Marks: 2
1. 1345.1
2. 1243.1
3. 1231.1
4. None
5. 1235
98. Investor services like brokerage, cash management and short term investments,
commission re-capture, foreign exchange transactions, transaction management etc.
can be classified under ____ group of services. Marks: 1.
1. Trading
2. Investment Management
3. Investor service
4. None
5. Asset Servicing
102 What are the risks associated with the Hedge funds? Marks: 3
1. All of the above
2. High exposures in derivatives
3. High Leveraging
4. High Speculation
103. The trade terms “15/2 net 30”indicates that _____. Marks: 3
a. 2% discount is offered if payment is made within 15 days.
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b. 15% discount is offered if payment is made within 2 days; the payment should
however be made in 30 days.
c. 30% discount is offered if payment is made before 15 of the month.
d. 15% discount is offered if payment is made between 2 & 30 days;
e. 15% discount is offered if payment is made within 30 days.
104. A bank is required to hold reverses at least equal to a pre-scribed fraction of its total
deposit liabilities.
a. True b. False
106 Who appoints investment manager to manage a benefit plan?

a. Plan sponsor
b. Plan administrator
c. Fund trustee
d. None
e. Government
107 A company would pay the interest on what portion of loan?

a. Committed amount
b. Either disbursed or committed loan
c. Unused amount of loan
d. Disbursed amount
e. None
108 In the exchange on a particular trading there is a buy market order for 100 CTSH shares
and two sell market orders for 50 and 40 CTSH shares each, can the buy order be matched
against the two sell orders.
a. Yes
b. No
c. Yes, but if prices on the buy & sell side match.
109 If the limit = $2000, margin = 20% and asset value = $2000 then drawing power for an
open ended loan is equal to?
a. None
b. $1600
c. $2200
d. $2400
e. $2000
110 Risk cannot be migrated by
a. Setting risk limits
b. Hedging
c. Diversification
d. Arbitrage
e. Insurance
111 A fixed income analyst will analyze all but

a. Municipal bonds
b. Bonds of govt. sponsed enterprise
c. Corporate bonds
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d. US treasuries
e. Shares
112 In benefit administration what are the relationships that exists between the plan
administrator and the investment manager, and between Trustee and the investment
manager.
a. None
b. Plan administrator & trustee both have outsourced plan administration as well as fund
management to investment manager
c. Any
d. Plan administrator gives investment instruction to investment manager while trustee
appoints the investment manager.
e. Trustee gives investment instruction to investment manager, while plan administrator
appoints the investment manager.
113 Which entity provides credit scores that are used by issuers to process card application?
a. Issuer processor
b. Collection agency
c. Issuing bank
d. Authorization engine
e. Credit bureau.
114 CPI stands for which of the following?

a. Consolidated Price index
b. Consument popularity index
c. Consumer product index
d. Consumer price index
e. None
115 A bank decides to sanction only 10% of the loan sought by a company. The company goes
and pledges extra assets with the bank and the bank then agree to sanction 50% of the loan
sought. The company has indulged in the process of
a. Credit scoring
b. Credit increase
c. Credit incrementation
d. Credit revision
e. Credit enhancement.
116 FX spot deal assumes maturity of how many business days ahead ?
a) 4
b) 5
c) 3
d) 1
e) 2
117 Which of the following is best VaR estimation Model?

a) Monte- Carlo
b) Historical
c) Variance-Covariance
d) Variance-Covariance and Monte- Carlo
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118 Which of them represent company is incorporated in USA?

a) Plc
b) Pte
c) Ltd
d) Inc
120 Organization level risk appetite is determined by:

a) Risk management
b) Front office
c) Back office
d) Trade
e) Board of director
121 Risk management is function of:

a) Traders
b) Back office
c) Specialist
d) Front office
e) Mid office
122 Purely competitive financial market is not characterized by

a) Govt. regulation
b) Many traders
c) Full info
d) Cost effective trading
123 NOT player in typical trade cycle;

a) Custodian bank
b) Clearing bank
c) Clearing member
d) Trading member
e) Regulator
124 Once syndicate has sold all other trades participant, sub participant and assignment are
considered trade in what market?
a) Primary
b) Secondary
c) Participant
d) OTC
e) Index
125 Question relates to price weighted index?

1. DJIA
2. Hangseng
3. EAFE index
4. NASDAQ composite index
5. S&P 500
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126 In defined contribution retirement plan .Tax sheltered annuities fall under section of
_________ERISA
403b
401k
401b
403k
None
126 In benefits administration, trustee and plan administrator submit compliance report
to______ which in turn qualifies the plan.
Participant
None (answer is TRUST)
Government
Investment manager
Sponsor
127 Full form of ADR

Answer: American Depository Receipts
128 Question related to BASEL II

Answer: Capital adequacy
129 What is interest rate charged on asset based loan?

Answer: The interest rate charged is lower than personal loans
130 Question related to credit derivatives as which of the following function is not done by credit
derivatives
Answer: Answer was something as Transfer to over the counter
131 Question related to credit derivatives it was fill up the blanks? Exactly don’t remember the
question/
Answer: option having “TRANSFER”
132 Question related to non-discretionary Investment Management
Answer: the bank offers investment recommendations based on the Client’s approval.
133 Question having few options like Income Processing, Tax Information Services, Cash Sweep
Answer: ASSET SERVICING
134 Question related to Underwriting?

Options:
1. Underwriting Spread
2. Public Offering Price (POP),
3. Lead or Managing Underwriter is the Underwriting Agreement.(not sure about it)
4. All
Answer is ALL the listed option
1. Risk Matrices was developed by:- JP Morgan, Bank of California, Credit Suisse, SBI
2. Research analyst may recommend to :- buy, hold and sell
3. Reducing CRR for banks would have impact on:-
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a.Increased money supply

b.Reduced interest rates
c.Reduced money supply in the economy
d.Profitability of firms
e.None
2. Under corporate stock repurchase program
a. Corporate purchase their own shares from shareholders
3. Private banking providing risk management services strives to:-

a. Eliminate risk and maximize returns
b. Eliminate risk without worrying about returns
c. Reduce risk and optimize returns
d. Avoid risk and returns
e. All
4. One would go for bank deposits because

a. Money easily available
b. Interest earned
c. Insurance cover available
d. All
5. From seller’s point of view which method has least risk

a. LC
b. Direct debit
c. Documentary collection
d. Counter trade
e. Cash in advance
6. ABC rated as AA+ and XYZ rated D. Who gets loan from bank
a. Equally unlikely
b. Equally likely
c. ABC
d. XYZ
e. None
7. Which is correct hierarchy of corporate ratings (high to low)?

a. AAA,AA+,BBB,D
8. Inflation- 9%. Future value of 100 units of money after 2 years:

a. 118.8
b. Exactly 100
c. Exactly 200
d. Around 109
e. None
9. Brokerage firms are regulated by

a. SEC
b. Industry wide SROs
c. State regulatory Agency
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d. All
10. Odd man out:-

a. SEC
b. NYSE
c. NASDAQ
d. LSE
e. NSE
11. From investor stand point a debenture issued by excellent company will appear risky than
share of preferred stock issued by excellent company
a. True
b. False
12. Not a feature of private banking:-

a. High investment in technology
b. Lot of research
c. Commercial lending
d. Specialist advice
e. Understanding capital and investment needs
13. Security settlement is function of

a. Specialist
b. Traders
c. Back office
d. Front office
e. Mid office
14. Which of these instruments is not included as part of asset servicing services and the category
“Pricing/ Holdings” Valuation which includes accurate pricing, rating etc.
a. Equities
b. Certificate of participation
c. Government securities
d. Certificate of deposit
e. Services may be provided for all
15. Which of the following is involved in retails brokerage business in US

a. E-trade
b. Charles Schwab
c. Sallie Mae
d. Federal reserve
e. a and b both
16. Measures of performance of an investment portfolio are all of the following except:-
a. Risk adjusted return
b. Style maps score
c. Profit/loss on portfolio
d. Alpha
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e. Up/down market analysis
17. Who insures stocks in stock market

a. Security and exchange commission
b. Federal deposit insurance corporation
c. Us department of treasury
d. None
18. Over the counter market is also called

a. Unlisted market
b. 2nd , unlisted and OTC market
c. Unlisted
d. Super
e. 2nd market
19. Standby letter is _____ secure than documentary collection and cheaper than ____
a. More, commercial LOC
20. Interest rates falls

a. Bond prices increase
b. Bond prices decrease
c. Do not change
d. Economy goes to deflation
21. Rate at which bank purchases US dollars against home currency is :-

a. Bid rate
b. Indirect
c. Direct
d. Cross currency
e. Ask rate
22. Bid price is the price at which the firm

The price at which market makers will buy or sell a particular security.
41 Presence of risk implies

a. Standard deviation of return is 0
b. Uncertainties of final outcome
c. Final wealth is lower
d. Investment gain
23. Odd man out?
a. Equity
b. Stocks
c. Shares
d. Convertible bonds
e. Common stock
24. A bank cannot cover the money demanded by depositor, then it goes out to –
a. Federal reserve bank
25. Institutions involved in benefit administration process, discussing plans
a. Sponsor
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b.Custodian
c.Plan administration
d.Record keeper
e.Participant
26. Which of the following eliminates both country risk and commercial risk?
a. Both standby LOC and LOC
27. When bank goes to the fed to borrow funds then the interest rate charged by fed is known as
a. Prime rate
b. Bond rate
c. Discount rate
d. Federal rate
28. Which will have highest interest rate

a. 3 months deposit with min balance of $4000
b. 12 months -> $1000
c. Cannot determine
d. 6 months -> $2000
e. 6 months -> $1000
29. Odd man out
a. None
b. Auto loans
c. Demat
d. Hire purchase
e. Personal loan
30. when was US PATRICAT ACT passed

a. 2001
31. Risk averse
a. less risk/avoid risk
67. which of the following is online settlement method

a. RTGS
71. Which of the following is true for The Fed funds rate
a. It is cost of borrowing immediately available funds for one day.
72. corporate bonds are

a. always secured
75.if one day var is $ 1M, calculate var for 9 days

a. $3M
76. Which of the following is not a repayment method?
Ans .collateral
79. ATM stands for
1) Automatic Transaction Machine; Almost anytime banking
2) Automated Teller Machine; Remote location transactions
3) Automatic Transaction Machine; Fund transfer between accounts
4) Automated Teller Machine; Direct Deposit
5) Automatic Transaction Machine; Personal Banking
80. A Revocable LC (Letter of Credit)
 can be revoked without the consent of the Exporter
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 can be revoked without the consent of the Exporter’s bank

 can be revoked without the consent of the Importer’s bank
 can’t be revoked with the consent of the Advising bank
 can’t be revoked without the consent of Exporter.
81. Which of the following are disadvantages of using LC (Letter of Credit)?(check box)
a. Time consuming
b. Costly
c. Specific and Binding
d. Deals with documents and not with products
e. Credit Line tied up.
83. Banker acceptances are ________________ credit investment created by ___________ and
used for financing imports, exports and domestic shipping
 Long term; financial firms
 Long term; non-financial firms
 Short term; non-financial firms
 Short term; financial firms
 Medium terms; banks
84. Mutual funds

a. Are less riskier than individual stocks as the fund managers invest in a diversified
portfolio
85. Warrants
a. Warrants are call options – variants of equity. They are usually offered as bonus or sweetener
86. bank are least interested in giving a personal
a. credit scores
b. document verification
87. difference between lease & hire purchase
a. all
88. To compare the cost of different Mortgages deals one should look at the
a. APR
89. securitizing cash flows from future monthly sale of oil explored from its specified offshore
a. asset securtisation
90. not a Treasury Management Systems – Inter-bank
91. pre shipment loans
a. Banks provide Pre-shipment finance - working capital for purchase of raw materials,
processing and packaging of the export commodities.
92. function of A card Association

a. security/risk management
93. funtions of private banking
95. not a Personal Investment Companies and private bank
96. risk associated with hedge funds

97. function of CORPORATE FINANCE
a. all
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98. sales and brokers responds to which department when institution transfer their custody
service from one to another
a. Transition management
99. two questions from Netting and RTGS from pdf at page number 180-181
100. who is at risk in defind benefit
a. employer
101. difference between DB (defined benefit) and DC (defined contribution)
103. Corporate loans are .. Secured or unsecured , secured, unsecured

104. Pick odd one out ..
1) merril lynch
2) george soros
3) bell graham
4) bill gates
5) warren buffet
105. not investment bank
1) bear starter
2) lehmen brothers
3) icici securities
4) goldman sachs
106. newyork, delhi, Jakarta, thimpu … --- > least risk in investing
107. US, india, Pakistan, burma, Bhutan -- > beneficial for loan purpose
109. Which is not the charge type ??

Pledge, hypothecation, lien, collateral
112. Private banking is a fee driven business
114. Open ended loan allow the borrower to borrow additional amount subject to the maximum
amount less then a set value.
1) True
2) False
115. investment bank assists in merger & aqisition..

1) Structure and deals
2) All
3) smooth transaction
4) structure and deals
116. card association do ??
1. Security/Risk management
2. Issue cards
3. Set credit limits
4. Set interest rates
117. which is not a pre shipment loan
1. bill discounting
2. raw material
118. nominal rate – 8% , rate of inflation – 2%, real rate of inflation ???
1. 6%
2. 10%
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119. two way quote for share the bid
120. funding cost goes up due to Hardening interest rate

… Risk ???
121. Federal funds rate: The rate domestic banks charge one another on overnight loans to meet
Federal Reserve requirements. This rate tracks very closely to the discount rate, but is usually
slightly higher.
122 . Warrant is combination of …..

1. equities & futures
2. call & put options
3. call options
123. KYC refers to …

1. checking old account
2. checking sponsors credentials
3. checking of credential of the customer
4. checking of bank credential by the federal bank
124. STP stands for .. Straight Through Processing
125. Price weighted index

Dow Jones Industrial Average
126. involved in IPO prospectus
1. invester banks
2. commercial banks
3. investor banks & corporate management
4. corporate management
5. none
127. 4.8% interest per annum- same as …

1. 0.4% per month & 1.6% per quarter
3. none
Question Bank for
CCP in Fundamentals of Banking
1. Which of the following types does SWIFT belong?

a. Proprietary Network
b. Private Network
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c. Proprietary and Messaging Service

2. A Share Holder has
a. Got ownership
b. Voting Rights
c. All the above
3. If Reliance Industries Limited wants to sell shares in USA, what should they do?
a. Use American Depository Receipt
4. Current account maintained by one bank with another bank abroad in the latter’s home
currency
a. VOSTRO
b. NOSTRO
5. Compound Interest is calculated based on
a. Principal Only
b. Principal and Accumulated Interest
6. What is an Operational Risk?
a. Possibility of loss resulting from errors in instructing payments or settling
transactions.
b. Possibility that a firm will be unable to generate funds to meet contractual
obligations as they fall due.
c. Possibility of loss as a result of default, such as when a customer defaults on a loan,
or more generally, any type of financial contract.
d. Possibility of loss over a given period of time related to uncertain movements in
market factors, such as interest rates, currencies, equities, and commodities.
7. Which of the following is not a possible risk while doing a project in Cognizant?
No idea of the options and the answer
8. ICICI bank in India comes under the category of
a. Private Bank
b. Public Bank
c. Co operative Bank
d. Corporation Bank
9. What are FreddieMac and GinnieMae?
a. Regulatory bodies of Insurance
b. Institutions in Mortgage Markets
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c. Investment Banks
d. Brokerage Firms
10. Losing which of the following cards will have more impact?
a. Credit Card
b. Debit Card
c. Stored Card
d. Gift Voucher
11. If you have 100 units of money and inflation being 5% what is the future value after 1 year?
a. 105
b. 95
c. 90
d. 110
12. If banks increase their cash reserve ratio what will be the impact?
a. Money flow will be more
b. Money flow will be less
c. Reserve amount will be less
d. None of the above
e.
13. Which of the following is not a Retail Bank in India?
a. HSBC
b. ICICI
c. JPMC
d. SCB
14. Central Bank of a country is called as
a. Banker’s Bank
15. Details about 3 tiers of Federal communications privacy law.
16. US Government passed the USA PATRIOT Act in response to
a. November 30, 1982
b. September 11, 2001
c. June 09, 1984
d. August 10, 1984
17. Benefits of Check 21.
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18. SuperDot is used in which Stock Exchange?

a. NYSE
b. BSE
c. FSE
d. LSE
19. FTSE index is used in which stock exchange?
a. New York
b. Bombay
c. London
d. Singapore
20. If the current market price of a share is $90 and you have placed a sell stop order for $85
and Limit order for $87. Which of the following statements is correct?
a. Will be sold immediately but at a price >$87
b. Will be sold immediately but at a price >$85
c. Will be sold but at a price between $85 and $87
21. What are warrants?
22. Pick the odd man out.
a. Stocks
b. Shares
c. Equity
d. Convertible Bonds
e. Common Stocks
23. Define risk in financial terms.
a. Probability of loss
4. What does BAFT stand for

a. Bankers Association For Foreign trade
5. Which of the following are regulatory authorities?

a. SEC
b. SEBI
c. FSA (Financial Security Authority), UK
d. All OF the ABOVE
6. ATM is
a. Banking enabled through a terminal used to make transactions without a
human teller.
7. Where is the initial prospectus filed?
Page 52 of 73
a. SEC
b. BAFT
c .None of the above
10. As per an estimate, netting reduces the number of settlements needed by

a. 60 %
b. 75 %
c. 95 %
d. 50 %
11. SWIFT uses ___________ messaging system

a. 15022
b. 5022
c. 196
d.2000
13. Who starts the process of issuing a LOC
a. Issuer Bank
b. Buyer
c. Seller
d. Beneficiary Bank
14. What is a choice quote?

a. Quote at which one wants to buy or sell
15. Bank is
a. Unregulated and unsafe
b. Regulated and unsafe
c. Unregulated and safe
d. Regulated and safe
16.Bank is a common place

a. For Borrower and depositor
17.Rohit deposits XYZ amount into bank A. Payal borrows XYZ amount from bank A. How will
the bank benefit?
a. Lending rate less than deposit rate.
b. Lending rate greater than deposit rate.
c. Lending rate equal to deposit rate.
d. All of the above
18.Which of the following is more risky

a. An asset with standard deviation 5
b. An asset with standard deviation 4
c. An asset with standard deviation 3
d. An asset with standard deviation 2
e. An asset with standard deviation 1
19. Find the odd man out about Hedge Fund

a. Higher Liquidity higher risk
b. Leverage
c. Speculation
d. Risk aversion
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20. What is GDR?

a. Global Depository Receipt
21. ACH
a. are electronic clearing transactions in which information about debits and
credits are passed across the clearing system through electronic data files
22. Trade finance is used in
a. International trade
23. Intsinet is used in

a. Listed Market
b. Primary Market
c. Secondary Market
d. Third Market
e. Fourth Market
26. Find the odd man out

a. NASDAQ
b. NYSE
c. LSE
d. SEC
28. Retail lending is for

a. Large investors
b. Small and medium investors
c. Financial Institutions
30. Lending money to which of the following country is not risky?

a. US
b. India
c. Pakistan
d. Bangladesh
31. Sweep transfers

a. Excess money from one account into another
b. Money from one persons account into another.
L0 Questions
81. Which of the following are disadvantages of using LC (Letter of Credit)?(check box)
a. Time consuming
b. Costly
c. Specific and Binding
d. Deals with documents and not with products
e. Credit Line tied up.
91. pre shipment loans

a. Banks provide Pre-shipment finance - working capital for purchase of raw materials,
processing and packaging of the export commodities.
92. function of A card Association

Page 54 of 73
a. security/risk management
93. funtions of private banking
95. not a Personal Investment Companies and private bank
96. risk associated with hedge funds

97. function of CORPORATE FINANCE
a. all
98. sales and brokers responds to which department when institution transfer their custody
service from one to another
99. two questions from Netting and RTGS from pdf at page number 180-181
100. who is at risk in defind benefit
a. employer
101. difference between DB (defined benefit) and DC (defined contribution)
103. Corporate loans are .. Secured or unsecured , secured, unsecured

104. Pick odd one out ..
6) merril lynch
7) george soros
8) bell graham
9) bill gates
10) warren buffet
105. not investment bank
5) bear starter
6) lehmen brothers
7) icici securities
8) goldman sachs
106. newyork, delhi, Jakarta, thimpu … --- > least risk in investing
107. US, india, Pakistan, burma, Bhutan -- > beneficial for loan purpose
109. Which is not the charge type ??

Pledge, hypothecation, lien, collateral
113. Purely competitive financial market not characterized by,

1) govt. regulation
2) cost effective trading
3) full information
4) many traders
114. Open ended loan allow the borrower to borrow additional amount subject to the maximum
amount less then a set value.
1) True
2) False
120. funding cost goes up due to Hardening interest rate

… Risk ???
126. involved in IPO prospectus

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6. invester banks
7. commercial banks
8. investor banks & corporate management
9. corporate management
10. none
127. 4.8% interest per annum- same as …

6. none
2. Question related to Underwriting?

Options:
5.Underwriting Spread
6.Public Offering Price (POP),
7.Lead or Managing Underwriter is the Underwriting Agreement.(not sure about it)
8.All
6. Inflation- 8%. Future value of 100 units of money after 2 years:

a. 118.8
b. Exactly 100
c. Exactly 200
d. Around 109
e. None
7. Bid price is the price at which the firm:

The price at which market makers will buy or sell a particular security
8. Sales and brokers responds to which department when institution transfer their custody service from one
to another
9. Who is at risk in defined benefit

a. Employer
2. Salary 50,000, increased to 55000. Inflation rate 20% in 2005. In 2006 what will be the employee’s position
a. Living standard will be down

b. Salary will be increased to 65000
3. Private Banking’s functions 5 options had been given

4. Which is not the Retail banking’s functionality
a. Current Account
b. Credit Card
c. Trade Finance
d. Loans
Page 56 of 73
5. Which one of the following is not done by Retail banking

a. Auto Loan
b. House Loan
c. Hire purchase
d. Lease Loan
6. True or False
a. In hire purchase the m/c will be owned by the customer after the payment period
7. US Patriot Act Question – 2

8. Retail banking customers
a. CORPORATES
b. Banks
9. Allowing to withdraw 20 %extra from Customer A’s account is know as

a. Overdraft(This is my guess)
b. And some options had been given in that
10. A bank is getting deposit from a customer and lending it to other customer. Which is the correct one
a. This is known as Money Multiplier effect(This is my guess)
b. Bank is trying to increase its profit
11. One person is having Rs.100 in hand. Which one of the following is correct
a. Having 100 now in hand is valuable than having the same 100 one year later
b. Both are same
c. Reverse of (a)
12. Odd man out

a. Munis
b. T-Bills
c. T-notes and bonds
d. Stock
13. Who will get the voting rights

a. Common Share holders
b. Preferred share holder
c. Holders of Debt
14. Who will get the money back first in case of default of a company
a. Common Share holders
b. Preferred share holder
c. Holders of Debt
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15. Read something about Arbitrage. 2 questions were there in this
16. Where are we releasing the company’s share First time

a. Primary Market
b. Secondary Market
c. Some other options were there
17. One country (Country name had been given) is doing the business in one currency. Another country is doing
the business in another currency. How did they do the business?
a. Currency swap (My guess)
b. Some other options were also given in that
18. Which is not the Role of Central bank

a. Appointing Finance Minister
b. And some central bank’s role were given
19. Why people are going to portfolio managers

a. They don’t have time to monitor their portfolio
b. They don’t know how to advertise to sell and buy the instruments
c. Their investment is less
d. All of the above (my guess)
20. VAR is used in one of the following

a. Measuring Risk
b. Risk mitigation
c. Risk Analysis
21. Diversification Questions were there. Like Diversifications means one of the following and some options were
given in that
22. Some questions in the following were there
WHAT IS A BANK?
The term ‘Bank’ is used generically to refer to any financial institution that is licensed to accept deposits and issue
credit through loans.
Banks are the backbone of any economy, as all monetary transactions end up touching banks. The main functions of
banks are to:
 Channelize Savings
 Provide credit facilities to borrower
 Provide investment avenues to investors
Page 58 of 73
 Facilitate the trade and commerce dealings

 Provide financial backbone to support economic growth of the country
 Minimize Cash Transactions
 Provide Services
WHY DO WE NEED A BANK?
 They provide a return (pay interest) on our saving

 Safety of principal and interest
 Convenience of being able to write checks and use debit cards
 Raising funds when we need
23. The first bank in the size

a. Citigroup
b. JPMorgan
c. Some other banks had been given
24. Glass-Steagall Act of 1933, created a Chinese wall between commercial banking and securities
businesses
25. Which is not involved in the Open ended loan

a. Limit (L) – max outstanding allowed
b. Margin (M) – percentage of limit that can be drawn
c. Asset value (AV) – value of underlying asset
d. Drawing Power (DP) - lower of L and (1-M)*AV
e. Something else had been given other than the above. That was the answer
26. Acquiring bank is involved in the following

a. Credit Card
b. Something else were also given
27. Read about the Retail Services done by retail banking 2 questions were there in that
28. Which is not coming under EFT? Read all the EFT transfer
29. ACH is meant for what?
a. Large amount in single transfer
b. Small amount in multiple transfers
c. Distant transfer
d. All of the above
e. None of the above
30. Read about Private Banking services.

31. Discretionary means what? The bank’s portfolio managers make investment decisions on behalf
of the customer.
Page 59 of 73
32. Private Client Services is done by which of the following

a. Private Banking
b. Trade Finance
c. Retail Banking
33. What is the difference between Private Banking and Asset Management?
a. Private Banking focuses on retail investors while asset management is targeted towards
institutional investors
34. Passive Investment or some question related to “Passive” was there!!!!
35. The loan a bank is holding to sell it is known as

a. Held For Sale (my guess. The question was like that)
b. Accrual
c. Trading
36. Read Letter Of Credit Thoroughly…

Beneficiary bank, Issuing bank come in Trade Finance
Some important questions:

There will be 1,2,3 marks questions
There will be 121 questions
2) Page 6
INFLATION
There will be three questions based on this formula:-
The relationship between the R (real rate of interest), N (nominal rate of interest)
and I (rate of inflation) is as:
R= N-I.
3) Page 8
One question on future value
The formula for Future Value is:
FV = PV*(1 + i)n
4) Page 8
One question on Intra-year compounding
Question was like this if rate of interest is 4% and compounded quaterley for 4 years then
what is the value of r and t
5) Page 10
NPV of a project:
Increases with increase in future cash inflows for a given initial outlay
Decreases with increase in initial outlay for a given set of future cash inflows
Decreases with increase in required rate of return
6) Page 14
Read all the type of securities and their sub parts
Page 60 of 73
7) Page 15
Types of secured bonds.
Mortgage Bonds are secured by real estate owned by the issuer
Equipment Trust Certificates are secured by equipment owned and used in the issuers business
Collateral Trust Bonds are secured by a portfolio of non-issuer securities. (usually U.S. Government
securities)
8) Page 16
Treasury Securities
Treasury bills issued for one year or less.
Treasury notes have a term of more than one year, but not more than 10 years
Treasury bonds greater than ten years
9) Page 16
What are zero coupon bonds?
Zeros generate no periodic interest payments but they are issued at a discount from face value.
10) Page 17
Commercial paper
An unsecured, short-term loan issued by a corporation, typically for financing accounts receivable
and inventories.
11) Page 19
What is meant by Preferred stock ?
Preference shares carry a stated dividend and they do not usually have voting rights
12) Page 20
American Depository Receipts (ADR)
The purpose of an ADR is to facilitate the domestic trading of a foreign stock.
13) Page 20
Warrants
Warrants are call options – variants of equity.
14) Page 20
What are derivatives?
A derivative is a product whose value is derived from the value of an underlying asset, index or
reference rate.
15) Page 21
Forward contract
A forward contract is an agreement to buy or sell an asset (of a specified quantity) at a certain
future time for a certain price. No cash is exchanged when the contract is entered into.
Futures contract
A futures contract is an agreement between two parties to buy or sell an asset at a certain time in
the future at a certain price. Index futures are all futures contracts where the underlying is the
stock index and helps a trader to take a view on the market as a whole.
16) page21
Two questions will come:
Hedging involves protecting an existing asset position from future adverse price movements. In
order to hedge a position, a market player needs to take an equal and opposite position in the
futures market to the one held in the cash market.
Arbitrage: An arbitrageur is basically risk averse. He enters into those contracts were he can
earn risk less profits. When markets are imperfect, buying in one market and simultaneously
selling in other market gives risk less profit. Arbitrageurs are always in the look out for such
imperfections.
Page 61 of 73
17) Page 22
Which is not a option?
Call Options
Put Options
LEAPS
Swaps
Oil futures( Answer)
18) Page 21
What is call and put option?
19) Page 22
Currency Swap involves the exchange of principal and interest in one currency for the same in
another currency.
20) Page25
What are primary and secondary markets?
21) Page 26
Which is not a stock market?
The important stock exchanges are as follows:
New York Stock Exchange (NYSE)
National Association of Securities Dealers Automated Quotations (NASDAQ)
London Stock Exchange (LSE)
Bombay Stock Exchange (BSE),
National Stock Exchange of India (NSE)
One will be different…
22) Page 27
What is the name of central bank in America?
Federal Reserve
23) Page 27
What will haven if market rates go up?
Bond price will fall…
Ie Bond price is inversely proportional to market interest rates
24)Page 29
What is Money Market?
Money market is for short term financial instruments, usually a day to less than a year.
25) Page 29
What is a repo?
A repo is a contract in which the seller of securities, such as Treasury Bills, agrees to buy them back at a
specified time and price.
26) Page 30
regulator(s) and supervisor(s) forthe financial markets.
Thus India has Securities and Exchange Board of India (SEBI)
and the US has Securities and Exchange Commission (SEC).
27) Page 30
What do u mean by portfolio management system?
These systems allow the investment managers to choose the instruments to invest in, based on
the requirements or inputs such as amount to be invested, expected returns, duration (or tenure)
of investment, risk tolerance etc. and analysis of price and other data on the instruments and
issuers
Page 62 of 73
Just read Chapter Financial Statements only 1 question can come…………
28) Page 49
What is not a function of central bank?
Read all the functions of central bank…
Answer- To appoint some governor
29) Page 50
There will two or three questions from CRR..
What do u mean by CRR (Cash Reserve Ratio).
There will be two numericals also…..
Same from book example?
30) Page 52
Read the services offering by banks
31) Page 54
What is Glass-Steagall Act ?
Glass-Steagall Act of 1933, created a Chinese wall between commercial banking and securities
businesses in US. That act was intended to address the perceived causes of bank failures during
the Great Depression of 1929.
32)Page 57
Read this page carefully .. three questions will come…
Checking Accounts
Quick, convenient and, frequent-access to the money.
Some banks pay interest while many do not.
Money Market Deposit Accounts

Pays a higher rate of interest than a checking or savings account
MMDAs often require a higher minimum balance to start earning interest
Savings Account
Allows making withdrawals, but checks writing facility is not there.
Number of withdrawals or transfers one can make on the account each month is limited.
Time Deposits (Certificates of Deposit)

Guaranteed rate of interest for a term or length of time specified by the account holder.
The rate of interest is often higher than savings or any other account
Basic or No Frill Banking Accounts

Checking accounts, but with a limit on the number of checks one can write and the number of
deposits and withdrawals one can make
Interest is generally not paid.
33) Page 60
What are the ways of Money Transfer?
Cheques/Checks
o Bearer Checks
o Account Payee Checks
o Travelers’ Checks
o Bankers Checks
Debit Cards
Demand Drafts
Automated Clearing House (ACH)
Standing Instructions
Page 63 of 73
Electronic Transfer
34)Page 61
What is EFT?
Electronic banking, also known as electronic fund transfer (EFT), uses computer and electronic
technology as a substitute for checks and other paper transactions. EFTs are initiated through
devices like ATM cards or codes that let one to access your account. Many financial institutions
use ATM or debit cards and Personal Identification Numbers (PINs) for this purpose.
35) Page 63
Read section Lost or Stolen ATM or Debit Cards

If unauthorized use occurs before reporting, the liability of the customer varies depending on the
delay in reporting the loss to the card issuer.
Within two business days – Liability limited to $50 for unauthorized use.
Between 2 - 60 days – Liability limited to $500 because of an unauthorized transfer.
If the loss is not reported within 60 days, the liability has no limits.
36) page 64
What is EBPP and its advantages?

ELECTRONIC BILLING PRESENTATION AND PAYMENT
37) page 65-66
Read thoroughly.. Some of the questions were

What is Fedwire?
Fedwire is an electronic transfer system developed and maintained by the Federal Reserve
System. The system connects Federal Reserve Banks and Branches, the Treasury and other
government agencies
What is latest version of SWIFT?

SWIFT 15022
38) Page 69
Read thoroughly..
Which is non secure loan?
Answer: Personal loan
Auto loans have Interest rate is lower as compared to Personal loans…
39) Page 70 VVimp
One question ie numerical atleast on :…

c. Limit (L) – max outstanding allowed
d. Margin (M) – percentage of limit that can be drawn
e. Asset value (AV) – value of underlying asset
f. Drawing Power (DP) - lower of L and (1-M)*AV
There will be atleast 2 questions on difference between Lease and Hire..

Lease
Two main types – operating, financial
The Financier owns the asset.
Depreciation is claimed by the financier.
Tax deduction can be claimed for the full value of the rental paid.
Financier takes care of maintenance, insurance etc.
Page 64 of 73
Hire Purchase
The asset is owned by the financier.
Depreciation can be claimed by the borrower.
Tax deduction can be claimed only to the extent of the interest repayment.
40) Page 71
One question which is not a repayment kind?
Kinds of repayments
o EMI – same installment amount
o Fixed Principal – constant principal, decreasing interest amt
o Step-up – principal amount increases in steps
o Step-down – principal amount decreases in steps
o Balloon – notional amount initially, large last payment
o Bullet – interest payment initially, entire principal at one shot
o Random – schedule & amount of installments undecided
o Special products – combination of above
one will be extra given…
41)Page 72
What is Floating Rate of Interest?
The rate of interest is linked to one of the rates prevailing in the market, for example it can be
linked to PLR (Prime Lending Rate) or LIBOR (London Interbank Offered Rate).
42) Page 73
What is Collar and Spread?
Spread= current rate – base rate
Collar = cap-floor
43) Page 73
Charge Types
Pledge – gold, bank has possession
Hypothecation – vehicle, borrower has possession
Lien – against bank deposits
Assignment – insurance policies, rights get transferred to bank
Shares - periodic drawing power calculation
Mortgage – immovable property
44) Page 76
What are Freddie Mac, Ginnie Maes & Fannie Mae?
Federal National Mortgage Association (FNMA or Fannie Mae), Government National Mortgage
Association (GNMA or Ginnie Mae) and Federal Home Loan Mortgage Corporation (FHLMC or
Freddie Mac) are all "secondary market lenders".
45)Page 76-77
Read auto loans and student loans ? only one two question will come?
46) Page 82
What is the meaning of corporate lending?
Corporate Lending refers to various forms of loans extended by banks to corporate bodies like
proprietorship, partnership, private limited companies or public limited companies.
Why they are given by banks?

Corporate loans areprovided by banks for various purposes like new projects, capacity expansion or plant
modernization, daily cash flow requirements (working capital) etc.
Interest is usually paid on the disbursed amount of the loan.
Page 65 of 73
47) page 83
Credit ratings
Rating levels might vary from AAA(highest), AA+, AA- to default ratings like D.
48) Page 84
What do u mean by Lines of Credit?
These are short term loans sanctioned for a fixed validity period, allowing the corporate to draw
the loan as and when required within the validity period and repay the loan after a certain period
(repayment period). Interest is either repayable in certain intervals or in one bullet installment at
the end of the repayment period
49) Page 85
What do u mean by Commercial Paper?

Commercial Paper (CPs as commonly known) is an instrument by which a corporate borrows
money from banks for short periods of time. A CP binds the corporate to make a payment equal
to the face value of the CP to the issuing bank on a specified due date. In this sense, a CP is like
a short term unsecured loan.
Read page 84-85 topics little bit….
50) page 86
What is the classification of loans:
Loans are classified and accounted for as follows:
Accrual—Loans
Held-for-sale.
Trading
51) page 87
Atleast two questions will come from credit derivatives
Credit derivatives are financial contracts that transfer credit risk from one party to another,
facilitating greater efficiency in the pricing and distribution of credit risk among market players.
In market parlance, the corporate bond investor in this example is the buyer of protection, the dealers the
protection seller, and the issuer of the corporate bond is called the reference entity
Uses of Credit Derivatives
52) Page 89
Definition of treasury services and its functions?
53) Page 90
What do u mean by:
Forward Rate Agreement (FRA) - A contract that determines the rate of interest,
or currency exchange rate, to be paid, or received, on an obligation beginning at a some
future start date. It is also referred to as Future Rate Agreement.
Interest Rate Swap (IRS) - A deal between banks or companies where borrowers switch
floating-rate loans for fixed rate loans in another country. These can be either the same
or different currencies. The motive may be the competitive advantage of one company to
have access to lower fixed rates than another company. The other company may be
competitively placed to have access to lower floating rates. A swap would be beneficial
to both. The swap is measured by its notional principal.
54) page 91
What do u mean by CMS?
Cash Management Services - CMS is a service provided by banks to its corporate clients for
a fee to reduce the float on collections and to ease the bulk payment transactions of the
client. The three elements of CMS are:
Page 66 of 73
Receivables Management
Payables Management
Liquidity Managemet
55) Page 92
What are the causes of interest rate risk?
Repricing risk
Yield curve risk.
Basis risk
Optionality
56) Page 94
One numerical on:
INR/USD quote: 45.26/.36 (here, 0.01 is the smallest count, referred to as one ‘pip’)
EUR/USD quote: 1.2458/.2461 (here, 0.0001 is the smallest count, referred to as one ‘pip’)
While the derived cross currency rate would be:
INR/Euro quote: (45.26*1.2461)/ (45.36*1.2458) = 56.40/.51
Definitions of:
Nostro (Our/my account with you): Current account maintained by one bank with another
bank abroad in the latter’s home currency
Vostro (Their account with me/us): Current account maintained in the home currency by one
bank in the name of another bank based abroad
How many business days are required for spot deal?

Answer – two days
Read topic Spot and Forward Foreign Exchange Contracts
57) Page 95
Which are the interbanks:
Front Arena
Summit
Calapso
Wall Street Systems
58) Page 97
Read CMS functions..
59) Page 99
What do u mean by lock box service?
60) Page 99-100

What is pooling and netting ?
61) page 100

What is New Act - Check 21?
62)page 102
What is RGTS?
63)page 103
Read what is ACH?
66) page 105

PAYMENT METHODS
Cash in advance
Page 67 of 73
Letter of credit
Documentary collection
Open account or credit
Counter-trade or Barter
67) page 106

Advantages or disadvantages of LC (commercial letter of credit) in check box question
69)page 108
Read the steps..
70) page 110( positively come)

The standby LC is like a bank guarantee. It is not used as the primary payment method but as a
fail safe method or guarantee for long-term projects.
Back to Back LC allows a seller to use the LC received from his buyer as collateral with the bank
to open his own LC to buy inputs necessary to fill his buyer’s order.
71) page 110

DOCUMENTARY COLLECTION
Documentary collection carries the risk that the buyer will not or cannot pay for the goods upon
receipt of the draft and documents.
Drafts
A draft (sometimes called a bill of exchange)
Read sight draft and Time Drafts thoroughly..
72) page 111

OPEN ACCOUNT
This can be a very risky method for the seller, unless he has a long and favorable relationship with the
buyer or the buyer has an excellent credit rating.
73) page 113

Full form of BAFT?
74) page 114

two questions will at least come from the table:
INTERNATIONAL PAYMENT INSTRUMENTS COMPARISON CHART
75)Page 117
What are chip cards?
76) page 119

What are the key activities in credit card market? Pls learn which comes under which category..
77)page 120
What are issuing anf acquiring services?
78) page 121

A card Association
Do Not Provide These Functions
Security/Risk management( this function is provided, it is odd one out)
Issue cards
Set credit limits
Set card fees
Set interest rates
Page 68 of 73
Solicit merchants
Set discount rates
79) page 122

Only read the functions little bit…
80) page 127

Private Banking covers banking services, including lending and investment management(true)
Investment Management and Advice

A client relationship Manager understands the client’s liquidity, capital and investment needs. He
strives to develop an integrated approach to manage client investments and capital markets
trading. Access to specialist advice and extensive research is a key feature of private banking.
Self-directed or non-discretionary: This is largely investment advisory in which the bank offers
investment recommendations based on the Client’s approval. The client may choose to ignore
this.
Discretionary: In this case, the bank’s portfolio managers make investment decisions on behalf
of the customer.
81) page 128-129

COMMON PRIVATE BANKING PRODUCTS
Personal Investment Companies (PICs)
Payable Through Account (PTA)
Hedge Funds
82) page 131-132

See the diagram and learn all the front office and back office functions? Two questions will atleast
come…
84) page 135-136

Active vs passive approach
Top Down Approach vs Bottom Up Approach
85) page 137

There are three dimensions to portfolio execution:
Cost of execution
Trading speed
Portfolio Risk Management
86) page 139

Read mutual funds ..two questions will atleast come..
87) page 141

What do u mean by NAV?
Some of the leading companies that offer mutual funds are:

Fidelity Investments
Vangaurd
ING Direct
Mellon
88) page 142

Difference between SMA and Mutual Funds?
Advantages and disadvantages of SMA?
89) page 143
Page 69 of 73
What is the name of pension funds?

401k,IRA
90) page 148

2 questions
SYNDICATE
The hub of the investment banking wheel, syndicate provides a vital link between salespeople
and corporate finance. Syndicate exists to facilitate the placing of securities in a public offering, a
knock-down drag-out affair between and among buyers of offerings and the investment banks
managing the process. In a corporate or municipal debt deal, syndicate also determines the
allocation of bonds.
91) page 148-149

Full form of IPO? What it is?
An initial public offering (IPO) is the process by which a private company transforms itself into a
public company.(this will come)
The IPO process consists of these three major phases:

Hiring the Managers
Due Diligence and Drafting
Marketing
92) page 149

What do u mean by THE CHINESE WALL?
93) page 150

UNDERWRITING
Underwriters earn 3 types of Underwriting Spread:
Manager's fee - The lead underwriter receives this fee on all securities sold.
Underwriter's Allowance is the total spread minus the Manager's fee. This fee is shared by
syndicate members based on the type of syndicate account.
Concession - It is typically the largest part of the spread and is paid to the broker/dealer that
actually took the client’s order.
Question: which is the largest part of spread?

Answer : concession
94) page 151

SECONDARY MARKET TRADING
there will three questions atleast come, read it carefully:
Examples: Stock Exchanges: NYSE, AMEX
NASDAQ is a good example of OTC market.
Another name for fourth market: Instinet
What is OTC?
95) page 153

Bid or ask rate:
An individual firm could act as a broker on one trade and a dealer on another. When acting as a
broker, the firm is taking customer orders and acting as their agent to buy or sell the security. For
this service, the broker charges a commission. A firm acting as a dealer is the actual buyer or
seller, taking the other side of a trade. The price at which market makers will buy or sell a
particular security is known as the Bid or Ask Price.
Page 70 of 73
96) page 154

Order Types (Based on Volume)
Fill or Kill (FOK) – The order must be immediately filled in one trade or canceled completely.
All or None (AON) - The entire order must be filled or canceled completely, but unlike FOK, AON
can remain good till cancelled.
Immediate or Cancel (IOC) must immediately be filled for as much of the order as possible in
one trade, with the remainder being cancelled.
Market Not Held order – The floor broker has the discretion concerning time and price. A key
point is that Market Not Held orders are never on the Specialist's Book.
Question: diff between FOK and AON?
97)page 160
The important markets and the indices used are presented below:
US Diversified market Dow Jones Industrial Average (Dow)
US Technology NASDAQ 100
UK (London) Financial Times Stock Exchange Index (FTSE)
Germany (Frankfurt) DAX
France (Paris) CAC
Switzerland (Zurich) SMI
Japan (Tokyo) Nikkei
Hong Kong Hang Seng
Singapore Strait Times Index (STI)
98) page 164

See XL sheet sure three questione will come from risk
Credit risk is the possibility of loss as a result of default, such as when a customer defaults on a
loan, or more generally, any type of financial contract.
Liquidity risk is the possibility that a firm will be unable to generate funds to meet contractual
obligations as they fall due.
Operational risk is the possibility of loss resulting from errors in instructing payments or settling
transactions.
Legal risk is the possibility of loss when a contract cannot be enforced -- for example, because
the customer had no authority to enter into the contract or the contract turns out to be
unenforceable in a bankruptcy.
Market risk is the possibility of loss over a given period of time related to uncertain movements in
market factors, such as interest rates, currencies, equities, and commodities.
99) page 164

MEASURING RISKS
The probability
monetary impact
100) page 164

What is var?
101) page 165

Numerical..
Example VaR Calculation
Assume that you have a holding in IBM Stock worth $10 million. You have calculated the
standard deviation (SD) of change over one day in IBM is $ 0.20.
Therefore for the entire position, SD of change over 1 day = $200,000
The SD of change over 10 days = $200,000 * √(10) = $632,456
The 99% VaR over 10 days = 2.33 * 632,456 = $1,473,621
102) page 165
What is monto-carlo?
Ans: A simulation technique
Page 71 of 73
103) page 166

Variance-Covariance method
it is the computationally fastest method known today.
Which is the best VAR method? Ans- Cant say
104) page 166

MANAGING RISKS
There are multiple strategies to manage risks. Some of the commonly followed ones are:
1. Diversification
2. Hedging or Insurance
3. Setting Risk Limits
4. Ignore the risk!
105) page 170

Read this page..
U should know what do u mean by core and global custodian?
What are custodian services?
106) page 172

Read in depth Asset/Liability Analysis
107) page 177

What is exchange?
An exchange is a regulated market place, where buyers and sellers come together to exchange
what they want.
Examples: Stock Exchanges: NYSE, AMEX

Ques: What is NYSE?
Over the Counter Market

Over The Counter (OTC) market is different from the exchanges in the sense that there is no
single physical location
NASDAQ is a good example of OTC market.
108) page 180-181

Two –three numerical will come same as it is as given in IBM shares
What is clearing? What is netting?
109) page 184-185

The primary employee benefits are
Defined Benefits
Defined Contribution
Health and Welfare
Defined contribution plans have gained popularity as employers have begun to ask their
employees to share responsibility for their retirement. The main purpose of a defined
contributionplan is to provide an investment vehicle for employees to accumulate retirement
income.( state true or false) true
diff between Defined Benefit Plan vs Defined Contribution Plan ?

110) page 186
The following plans are designated as defined contribution plans:
Profit Sharing Plans
Cash Or Deferred Arrangements Or 401(k) Plans
Stock Bonus Plans And Employee Stock Ownership Plans
Simplified employee pensions (SEP)
Tax Sheltered Annuities Or 403(b) Arrangements
Page 72 of 73
111) page 187

What is there is peraby tax check?
SPO
SAR
Discrimination test
415 LIMIT
5500 REPORTING
1059 Reporting
Reporting and compliance
See the diagram..
112) page 188

What are the categories in Health and welfare?
Categories of health and welfare plans
Health Care
o Medical
o Prescription drug
o Behavioral health
o Dental
o Vision
o Long-term care
Disability Income
o Sick leave
o Short-term disability
o Long term disability
Survivor Benefits
o Term life
Some common questions:
1)Which is the best market ? New York
2) which is not a function of private bank?

Ans: to print notes
3) Reliance Industries Limited, India would like to raise money in NYSE for expanding its operations in the
domestic market (India). The securities issued would be
American Depository Receipt
Page 73 of 73

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BANKING AND FINANCE SERVICE QB

1. A brokerage or analyst report will contain all of the following except?

11Which of the following is not a type of Swap?

12 Forfeiture regulation under the US patriot act allows _____________________________

17.Which of the following is true about Retail Banking business?

19. Corporate Loans are ___________________________________

21. CRR stands for which of the following?

d. Cash Re-service Ratio

The central bank in the US is called ________________.

d. Central Bank of United States

Momentum investing” would refer to ___________________________.

Inflation represents which of the following?

-d. Monetary Policy

Due Diligence is performed to ____________________________________.

b. limit risk-taking and to encourage diversification.

62 The term CP is used in Corporate Lending for ___________________________.

65 Why do we need banks?

66 The key feature of letter of credit is ________________________________________.

67 Which of the following is not a function of a Custodian?

b. Managing corporate collections and payments

70 IRR stands for which of the following?

74 Warrants are the combination of which of these instruments?

79 Legal risk is the __________________________________________.

80 The term EMI stands for which of the following?

81 Which of the following are involved in the mortgage business in US?

82 In Banking , the term LIBOR stands for?

84 Individual investors are most likely to trade securities in ________________________.

85 A share represents __________________.

86 Cash management techniques include ____________________________________.

87 A very effective way to employ a passive strategy is to _____________________________.

88 In context of Treasury services, FRA stands for which of the following?

89 Which of the following is not associated with debt?

90 Electronic banking doesn’t cover the following services.

91 Which kind of an investor should choose to invest in Money Market Securities?

94 Research analysts do all of the following except ____________________.

95 Which of the following is not a repayment method?

96 Coupon rate on a bond represents which of the following?

e. Financial performance of the bond issuer

97 Which of the following is not a characteristic of money markets?

98 VaR is used for which of the following?

99 The Japanese Index is known as?

Risk is best measured when looked at

What would be the most accurate VaR estimation method?

The term "risk averse" means that

Money Multiplier effect would imply

Which of the following is NOT a function of the bank?

Freddie Mac, Ginnie Maes & Fannie Mae are?

Which of the following is not involved in a credit card transaction?

One should have the Time Deposits if one is looking for?

EFTA stands for

CHIPS stand for

The process flow in a Private banking firm goes as

Which of the following roles and responsibilities are correctly stated?

Services Provider; Tax Services

Private banking offers “structured lending” that provides

Financial planning involves all EXCEPT

Loan can take many of the following basic forms EXCEPT

Which of the following is not a credit derivative?

Which of the following is not a secured loan?

Which if the following is true in the case of sight draft?