1.Currently is trading at the rate of $1.6880. The Interest on bonds is 4% p.a.

is expected
to trade at $1.6911 after a year. If a US investor invests $10,000 in bonds for a period of one
year, is return on investment is _______________________.
Select one
a.0.04821 b.0.04909 c.0.04729 d.0.5131 (DOUBT)

2. In todays world, international trade is dominated by transactions between affiliated parties.

False

3. The federal funds rate

Select one:
a. Is inversely related to the prime rate
b. Is a prime policy target of the Fed charges on overnight loans to commercial bamks
c. Is the rate the Fed charges on overnight loans to commercial loans
d. Is the rate commercial banks use as a benchmark for evaluating their largest borrowers

4. The initial sale of a security is in the ________ market, while subsequent trading in the
security is in the _________ market.
a. Spot,futures
b. Money,capital
c.Primary,Secondary
d.Secondary,Primary

5. Typical fee charged for private banking services is likely to be

Select:
a. More than 5%
b. None of the listed
c. Nothing these services are free
d. Less than 5%.

6. The amount of money that banks can lend is directly affected by the reserve requirement
set by the central bank.
True

7. Stock Split is a type of _________ Corporate Action

a.Optional b.Voluntary c.Mandatory with options d.Mandatory

8. Which of the following is not a top 10 US Bank?

a.Wells Fargo b.Citigroup c.JP Morgan Chase d.Lloyds TSB

9. Owners equity at the beginning of the year $42000.During the year, the owner
contributed $12,000 additionally towards capital and withdrew $6000 for his personal use. If the
firm had a net profit of $12000 for the year, what was the owner s equity at the end of this year?
a.$66000 b.$60000 c.$48000 d.$540000

10. Due to the changes in macroeconomic policies, primary lending rate changes from 7%
to 8%.Select all that are true
a.Bond prices will go up leading to increase in wealth.
b.It is an incentive to spend rather than save
c.It leads to increase in mortgage interest payments
d.It increases the cost of borrowing

11. The treasury asset liability management(ALM) group assesses asset-liability risk and all
banks have ALM committees comprised of senior managers to address the risk . Duration
analysis looks at weighted average maturity of cash flows to compare assets and liabilities.
True
12. Securitization refers to the conversion of liquid assets to liquid assets by converting
longer duration cash flows into shorter duration ones. In this context, which of the following
is\are true with respect to benefits of securitization
Select:
a. Securitization enables the originator to take advantage of more profitable
investment oppurtunities with the revenue generated through it.
b. Securitized debt is more expensive than other forms of funding.
c. Securitization improves asset management and is an effective means of diversifying
credit task.
d. The investor is benefitted since the security he buys is of a good quality debt.

13. Which of the following are the functions of a Relationship manager in a retail bank?
a.All the listed options b.Account maintainence c. New product opening d.Product sales
14. _________ leverage the postal network with a broad distribution arm to provide banking
sales and service to its customers
Select:
a.Credit Union b.Postal Savings bank c.Savings bank d.Private banks

15.What is the common advantage of leasing?

a. lower cost of items purchased
b.lower chance of overspending
c.using the asset without need for purchase
d.less impulse buying

16. Which is NOT a type of corporate bond

a.Sub ordinated debentures b.T-Bills c.Unsecured bonds d.Secured bonds

17.The BSE is a large primary financial market in which the initial issuer receives the proceeds
for the sale of securities.
True
18. Banks borrow in call money market to meet SLR(Statutory Liquid Ratio) which they should
maintain in liquid assets
True

19.ADR stands for:

a.American Depository receipts b.American Demand Receivables c.American demand of
Russian bonds d.American Dollar Receivables

20.Number of stages in loan syndication are.

a.1
b.4
c.3
d.2

21. At 7% annual inflation rate, an item costing Rs. 100 today. would cost Rs
after three years.
a. 122.5
b. 118
C. 120
d. 124.5

22. In Sept 2008, following the subprime mortgage crisis, the biggest financial loss observed was
bankruptcy of Lehman Brothers.
It carried the assets of S691.1 billion. Who should be the first losers in such events?
a. Common stock holders
b. Long term creditors
C. Preferred stock holders
23 An American Mutual Fund company invested USS 4 million in Bombay Stock Exchange on
31.12.2007 when
the BSE Sensex was at 20,286.99 points. The company on 02.05.2008 observed that its portfolio
was
depreciated by 20% when the BSE Sensex touched 16,244.54 points. If the company decided to
withdraw the investment from
India, what would be the net Marked out of 1.00 increase or decrease in his investment in
terms of dollar?
Rs. per S spot rates are quoted as:
On 31.12.2007 : 41.30/41.33
On 02.05.2009 : 40.18/40.32
a. 745550.15
b. 10029006.09
c. 10015196.02
d. 708412.15 (doubt)

24. Who is arranger / lead manager?

a. One who arranges syndicated loan
b. One who arrange borrower
c. One who arrange syndicated borrower
d. One who arranges loan

25.When a bank receives a deposit, its liabilities and reserves increase by the amount of the loan.
State True or False.
True

26. Participation of less number of banks reduces the risk of lead bank? State True or False
False
27 Which of the following inventory valuation methods shows higher profits during a period of
rising prices?
a. LIFO (Last In First Out)
b. Weighted Average
C. Simple Average
d.FIFO (First In First Out)

28. 25% of the working capital gap would have to be funded by sources while the rest 75% can
be funded through
and overdraft limits.
a. short term, long term
b. debt, equity
C. Equity, debt
d. long term, short term

29. is a value-added service provided by custodian banks to its customers, whereby surplus cash
in customers' accounts is effectively invested in short-term investment funds to generate
additional returns.
a. Short term cash service
b. Cash returns service
c. Cash Sweep
d. Short term money

30. A T -bill maturing in 'n days can be purchased from the market at the current price of
Rs.98.60. On maturity, the annualized
yield to the investor will be 5.68%. The T -bill matures in
a. 14 days
b. 364 days
c.182 days
d. 91 days

31. In a typical trade cycle on an exchange, identify the missing step in this sequence:
Decision to trade -> Order placement ->Order Matching -> Trade clearing -> Trade settlement
a. Netting
b. Trade matching
c. Trade affirmation
d. Trade confirmation

32. 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 buyers order.
a. Documentary collection
b. Back to Back LC
c. Cash in advance
d. Standby LC

33. The total assets of a business are $90,250 and outside liabilities are $34,120. Reserves and
surplus stands
at $12,500. Then,
the amount of owners' equity is
a. $68630
b. $56130
C. $60120
d. $43630

34. Risk Management is a function of

a. Mid Office
b. Front Office
C. Back Office
d. Specialists

35. Theoretically losses incurred due to short selling is

a. Could be either depending on nature of shares bought
b. Could be either depending on number of shares bought
c. Limited
d. Unlimited

36. Jet Airways and Citibank have tied up to offer this type of credit card. What type of card is
it?
a. Smart Card
b. Gift Card
C. Affinity Card
d. Co Branded card

37. When there are risky assets and a risk -free asset available, investors can achieve the best
combinations of risk and return by
holding:
a. Some combination of the efficient portfolios of risky assets
b. The market portfolio
c. Some combination of the risk -free asset and the market portfolio of risky assets

38. ABC corporation is a large client of BankNew. BankNew extends a loan to XYZ corporation
which is a
supplier of ABC. This is
a. Bill Discounting
b. Working Capital Loan
c. Asset Securitization Loan
d. Dealer / supplier Loan

39. Which of the following are the part(s) of commodity markets?

I.Agricultural Market II.Metal market III.Energy Market
Select one:
a.II and III b.I and II c.I and III d.all I,II,III

40. Consider an open ended loan account where max limit allowed is 2000. The margin is 20%
and asset value is $3000.
What is the drawing power from the account.
a.2200 b.2000 c.1600 d.2400

41. Fourth market refers to

Select one:
a. The trading of exchange listed securities between institutions on a private over the
counter computer network rather than over a recognized exchange such as the New York
stock exchange(NYSE) or NASDAQ
b. A negotiated market without a physical location where transactions are done via
telecommunications
c. Exchanges where an auction method is used at a physical location
d. Where listed securities are traded OTC(over the counter) and broker/dealers acting as
market makers offer an alternative on the exchange itself.

42. If financial instrument has a 20% chance of paying 80% and a 80% chance of paying 50%
what would be the expected return?
a.0.56 b.0.44 c.0.28 d.0.2

43. The coupon rate on a bond depends on which of the following option?
a.Market interest areas b.Prevailing economic conditions c.Credit Raising of the issuer
d.All the listed options
44.An investor indulging in short selling on share expects the share price to decrease.
True

45. Unsecured loans are often displayed in the Balance Sheet of a company. Which of the
following items should not appear under this heading
a.Fixed deposits from public
b.Loans and advances from subsidiaries
c.Sinking fund
d.Short term loans and advances from banks

46. An investment that earns compound interest is the same as the one that earns simple interest
at the effective yield,
False

47.Company A has higher credit than company B. What does this mean
a.Both are equally risky
b.Company B is more risky
c.There is no relation between credit rating and risk
d.Company A is more risky

48. What is a class of deposits which can be placed with a bank for a specified period of time
called?
a.Term deposit b.Savings Deposit c.Demand Deposit d.None of the listed

49.Pick the odd one out

a.Agency loans b.Interest only loans c.FHA loans d.VA loans

50.A standard and poors bond rating of D refers to:

a.High quality investment grade bonds
b.Junk bonds c.Corporate bonds d.Government bonds only

51.The money bank receives as deposits becomes as banks

a.Asset b.Profit c.Liability d.Loss

52.In rolling settlement trades are aggregated for a period of time

False

53.The process of conversion of liquid assets to liquid assets by converting longer duration cash
flows into shorter duration ones also traded as security is known as __________
Select:
a.Backwardation b.Securitization c.Swaption d.Conversion

54.With reference to settlement FOP stands for:

a.Fixed order payment b.Frequently offered payment c.Free order payment
d.Free of payment

55.Select one or more options which are true about Public Deposits
a.Any deposit repayable on demand or on notice can be accepted by a company
b.A company for meeting its short time requirements of funds,may accept or renew deposits for
less than 3 months(doubt)
c.The max maturity period for the deposits cannot exceed 60 months

56. A clearing system in which payment instructions between banks are processed and settled
individually and continuously throughout the day is called:
a.RGTS b.Automated Clearing House c.Clearing Services d.Continuous Linked
Settlement

57. Check 21 Act facilitates

a.Netting a pooling of checks at day end
b.Netting of checks at day end
c. Netting a substitution of checks at day end
d.Check truncation and creation of substitute check

58. If the NAV of the mutual fund scheme is $9.1678 per unit and unauthorized initial issue
expenses is $0.2768 per unit, the redemption price per unit of mutual fund scheme is
___________
a.8.851 b.9.4446 c.9.6446 d.8.891

59.Select one or more options for this case.

Third -party guarantees, a form of external credit enhancement for asset -backed securities and it
protects against losses up to a particular fixed level. Such external credit enhancement technique
is available in the form of:
Select one or more:
a. Corporate guarantee
b.Letter of credit
c.Over Collateralization
d.Bond insurance

60.Supplier or Dealer loans refers to which of the following option?

Select one:
a. A short term loan provided by banks to suppliers and dealers of large companies
b. All of the listed options
c. Immediate loans to the suppliers and dealers of the corporate at higher rate of interest.
d. Long term loans to the suppliers and dealers by the banks

61.In case of auto finance, monthly lease payments are usually lower than monthly loan
payments because of which reason?
Select one:
a. Customer is Paying only for Rent Charges
b. Customer is Paying only for Taxes
c. Customer is Paying only for depreciation
d. All of the listed Options

62.Securities Settlement is a function of

Select one:
a. Specialists
b. Front Office
c. Mid Office
d. Back Office

63.The process of creating buffer against the potential loss of non -performing loans is called:
Select one:
a. Loan classifying
b. Loan Provisioning
c. Loan monitoring
d. Loan buffering

64.is an intangible possession which enables a business to continue to earn a profit that is in
excess of the normal rate earned by other businesses of similar type.
Select one:
a. Goodwill
b. Share capital
c. Receivables
d. Connections

65.On July 27, 2013, Mrs. Roma goes long on a gold futures contract. Size of the contract is 100
ounces, initial margin is $20,500 per contract and maintenance margin is $18,000 per contract.
On August 5,2013, opening margin balance was $19,500, and futures closes at $872.5. If the
previous day's close was $903.4, the margin call will be
Select one:
a. $5488
b. $6995
c. $2560
d. $4090(doubt)

66.AB Marketing Company is considering investing in a new project. The project will need an
initial investment of $1,200,000 and will generate $600,000 (after-tax) cash flows for three
years. Calculate
the NPV for the project if the cost of capital is 15%.
Select one:
a. 182354
b.175293
c. 125695
d. 169935
67. statement 1: There are two basic types of corporate stocks and both of them have ownership
and voting rights.
Statement 2: These two basic types of stocks are common stocks and preferred stocks.
Select one:
a. Only statement 2 is true.
b.Both statements are true
c. Both statements are false
d. Only statement
1 is true
68.You are bullish on Reliance stock, the current market price is 505 INR per share. You have
50,000 INR with you which you can invest. Now you borrow another 50,000 INR from your
brokerage banker at an interest rate of 9% per annum and invest all 1,00,000 INR in Reliance
stock.
What is your return on investment if Reliance stock price rises to INR 600 per share in 1 year.
(ignore any dividend declared)
Select one:
a. 0.2862
b. 0.1881
C. 0.2545
d. 0.3762

69.What does Single Euro Payments Area (SEPA) do?

Select one:
a. Applicable to direct debits, credit and debit cards
b. Removes differences in intra and cross border payments
c. Creates a single payment market
d. All of the listed options

70.The following are the exchange rates quoted in New York:

USD/INR: 60.29 / 60.95
EUR/USD: 1.3870 / 1.3895
The synthetic quotes of INR per EUR are (EUR/INR =):
Select one:
a. 83.77/84.53
b. 83.62/84.69
C. 83.85/84.69

71.Portfolio accounting activity is performed by which of the following option?

Select one:
a. None of the listed Options
b. Middle office of an investment firm
c. Back office of an investment firm
d. Front office of an investment firm
72.A person purchases a share at $12.5. After 4 years, the price is at $57.5 and he decides to sell
the share at that price. What is the absolute return that the person has earned?
Select one:
a. 0.36
b. 0.7826
c.3.6
d. 0.4645

73. Expand CNS:

Select one:
a. Clearing Net Settlement Flag question
b. Continuous Net Settlement
c. Company's Net Securities
d. Continuous Netting of Securities

74.Which of the following is an unidentifiable intangible that increases the earning capacity of
any company listed on exchange?
Select one:
a.Patents
b.Copyrights
c.Goodwill
d.Licenses

75.The Process of conversion of illiquid assets to liquid assests by converting longer duration
cash flows into shorter duration ones also traded as security is known as _____

Select one:
a.Conversion
b.Backwardation
c.Swaption
d.Securitization

76.Select all that options which are true regarding risk exposure in money making instruments?
a.As the maturity of money market instruments is short ,these instruments are not exposed to
reinvestment
risk
b.compared to long term securities ,money market instruments have minimal inflation risk
c.All the money market instruments are considered risk free.

77.With reference to settlement, FOP stands for :

a.Frequently offered Payment
b.Free of Payment
c.Free Order Payment
d.Fixed Order Payment

78.Which of the following are characteristics of savings Accounts?

a.Accountholder can make deposits & withdrawals but has limited check writing capacity
b.Funds deposited are generally for savings
c.provides interest income to customers
d.All of the listed options

79.An investor in short selling on a share expects the share price to decrease State TRUE or
FALSE.
a.TRUE
80.The present book value of an asset of a company $950,120.The company has charged
depreciation at the rate
of 10% under straight line method for the last 3 years.The original cost of the asset was
________.
a.$1357314
b.$1488256
c.$1324915
d.$1264610

81.Which of the following are the functions of a relationship manager in Retail Bank?

a.All the listed

b.Product Sales
c.New Account Opening
d.Account Maintenance

82.If an investment pays interest at an annual rate of r% per year, compounded twice a year ,then
what is the effective yield?
a.less than r%
b.equal to r%
c.greater than r%
d.all the listed

83.Role of the Syndicate is to

a.Monitor bank regulations
b.Participate in swaps
c.Place securities in a public offering
d.Issue Derivatives
84.Arrangement fee is also called______.
a.Pracipium
b.participatum
c.preacipium
d.praecipium

85.Which of the following accounts appear(s) in the balance sheet of a business?

a. stock at the beginning of the financial year
b.interest received
c.prepaid rent
d.stock at the end of the financial year

86.Hedge Funds can use the following investment Strategies

a.All the Listed
b.Short Selling
c.Credit Arbitage
d.Short Bias

87.Which of the following is true for stock Markets ?

a.Stock Markets are always self regulated
b.Stock Markets facilitate secondary buying and selling of shares
c.Stock Markets are never fair
d.There can be only one Stock market in a country.

88.Which of the following items should be deducted from the gross profit to arrive at the net
profit for calculation of Managerial Remuneration?
a.Any tax notified by the Central Government as being in the nature of tax on excess or
abnormal profit.
b.Any compensation ,damages or payments made voluntarily
c.Bad debt,written-off or adjusted during the year
d.Interest on unsecured loans and advances(ANS)

89.Which one the following is the key information required for wire transfer?
a.SWIFT and /or ABA number
b.Invoice Number
c.LC Number
d.Receiving bank telephone number

90.Open Ended Loan allow borrower to borrow additional amount subject to the maximum
amount less than a set value .State True or False
a.True

91.The role of the stock exchange in the traded cycle ends with the execution of the trade and the
trade data being passed to the clearing house. State True or False.
a.True

92.Some debentures issued have a call feature attached to them ,which provides an option to the
issuing company to redeem debentures at a specified price before the maturity date. Select
all that are true with respect to call price of debentures.
a.The call price is minimum at the start of the effective call option period.
b.The Call price declines step-Wise towards the face value as the call date approaches the
maturity date.
c.The call price is not dependent on maturity date.

93.Generally,If Bond X had a lower rating than Bond Y ,The yield on Bond X would be:
a.Volatile
b.same as that of Bond Y
c.Higher than that of Bond Y
d.Lower than that of Bond Y

94.As the credit rating increases from D to AAA, the offer loan becomes ____ risky and ensures
____ return.
a.more,lower
b.more,higher
c.less,higher
d.less,lower

95.Equity Research report contains which of the following option?

a.Only company analysis
b.None of the Listed options
c.Company analysis, industry analysis as well as analysis of competitors
d.company analysis as well as industry analysis

96. Alpha Export and Beta Import agree to carry out the transaction, goods worth $1,000,000
under a confirmed term Letter of Credit with a maturity date of 90 days from the time of
shipment. The Acceptance commission @1.5% pa equals. Calculate the acceptance commission.
ans:3750

97. The type of private equity financing provided to companies for full fledged manufacturing,
operations and sales is all called Start up stage financing.
State true or false.
ans: true

98. Which one of the following portfolio is more risky?

ans: 80% equity, 20% debt
99. When a Bank goes to the Fed to borrow funds, the interest rate charged by the Fed is known
as:
ans: discount rate

100. What does Single Euro Payments Area (SEPA) do?

ans: all options

101. A loan, often referred to as GPM, is a mortgage with low initial monthly payments which
gradually increase over a specified time. This is _____ type of Mortgage.
ans: Graduated Payment Mortgage

102. Third party guarantees, a form of external credit enhancement for asset backed securities
and it protects against losses up to a particular fixed level. such external credit enhancement
technique is available in the form of:
ans: over collateralization
ans: letter of credit

103. Cash management solutions help corporations to:

I: Manage surpluses and deficits, reduce float on collections
II: Automate collections
III: Outsource collections
IV: all
ans: IV

104. Legal documents will be prepared in the post-closure stage.

ans: false

105. Jet Airways and Citibank have tied up to offer this type of credit card. What type is it?
ans: co-branded card
106. Credit card and Debit card are the same.
ans: false

107. Which of the following services will be provided by a global custodian?

ans: all options

108. In syndicated loan, borrowers will be charged even if they don't utilize the committed funds.
ans: true

110. A subprime loan is a loan given to borrowers that are considered ____ risky, or ______
likely to be able to make their loan payments, in relation to high quality borrowers because of
problems with their credit history.
ans: more, less

111. Identify the wrong statement.

ans: Preference stock investors primarily seek growth over income.

112. In Indian Forex market, the market rates are as under

EUR/INR : 83.05/08
1 month : 06/08
2 months : 12/14
3 months : 22/24
If a bank requires an exchange margin of 2 paise, what should be the rate to be quoted to an
importe who wants to have an option delivery in the second month?
ans: INR 83.24/EUR

113. Which of the following will cause a change in the bid-ask spread?
ans: high market volatility
ans: trading volume
114. Company A has higher credit rating that Company B. What does this mean?
ans: Company B is more risky

115. Which of the following are sources of income for Federal Reserve?
ans: Interest and capital gains on government securities
ans: Interest on loans to businesses

116. _____ are amounts, or goods and services, to be paid or executed, within next one year.
ans: current liabilities

117. In fundamental analysis, the top down approach involved performing in which of the
following sequences?
ans: economic analysis, industry analysis, company analysis

118. Banks borrow in call money market to meet CRR requirement which they should maintain
with the Central Bank.
ans: true

119. Due diligence means

ans: understanding the company's business as well as possible scenarios

120. It is due to diversification of the portfolio, the net systematic risks are reduced to an
insignificant figure.
ans: false

121. At the beginning of a trading day, Mr. Jena is in a long position in the futures market and
his collateral is exactly at the required maintenance margin. If the closing futures price is below
the opening price, what will happen at the end of the other day?
ans: margin will be initiated
122. Which of the following maybe the reason for returning a check?
a. All of the listed options
b. Insufficient funds
c. Improper Details
d. Signature not clear
123. In account period settlement trades are aggregated for a period of time. State true or false
a. True
124. Which of the following is NOT a function of Central Bank?
a. Managing the branches of public bank
b. Stability of the financial system
c. Conducting the nations monetary policy
d. Monitoring foreign currency inflow and outflow
125. Which of the following bonds would have the largest price change when the interest rates
increase? Assume that the bonds each have the same yield to maturity.
a. 15-year maturity,5 % coupon rate
b. 8-year maturity,5% coupon rate
c. 8-year maturity, 10% coupon rate
d. 15-year maturity,10% coupon rate
126. Investment banks perform their main function in the secondary market for securities and
securities brokers and dealers perform theirs in the primary market. Please state it as True or
False.
a. True
b. False
127. In an economy where inflation is 4% future value of 100 units of money after 2 year would
be which of the following options?
Select One:
a. Around Rs.104
b. Exactly 108
c. Exactly 100
d. 108.16
128. 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:
a. Bill Discounting
b. Dealer/ Supplier Loan
c. Asset Securitization Loan
d. Working Capital Loan

129. The real rate of interest of 6 % while the nominal rate of interest is 9%. What is the
applicable inflation rate?
Select One:
a. -3
b. 1.5
c. 4.75
d. 3
130. The document issued to the exporter by a common carrier transporting the merchandise is
called a ________
Select One:
a. bankers acceptance
b. draft
c. commercial invoice
d. bill of lading
131. The process of clearing transaction electronically in which information about debits and
credits are passed across the clearing system electronically instead of physical instruments is
called
Select one:
a. Electronic data file services
b. Clearing thru documents
c. Clearing thru ACH
d. Clearing Services
132. Which of the following statements is/are true regarding government securities?
Select one or more:
a. Term of short term security T-Bills are always less than a year
 b. Fll are not allowed to invest in government securities.
c. The coupon on these securities are often determined by bidding at open market
operations
d. They may also be issued in the form of zero coupon securities
134. Borrower is suppose to lock the rate at which stage of loan life cycle?
Select one:
a. Loan underwriting
b. Loan origination
c. Loan processing
d. Loan closing
135. The purchase of any stock for immediate delivery is a ____ market transaction.
Select one:
a. Spot
b. Option
c. Stock
d. Futures
136. Participation of more number of banks reduces the risk of lead bank? State True or False
Select One:
a. True
137. Bank are financial institutions that are licensed to accept deposits and issue loans. State
True or False.
Select One:
a. True
b. False
138. GE shares are currently selling for $15.00 each. You bought 200 shares one year at $12 and
received dividend payments of $2 per share. What was your total dollar capital gain this year?
Select one:
a. USD 1000
b. USD 200
c. USD 600
d. USD 400
139. When is a front end fee charged?
Select One:
 a. Affront at the inception
b. Every day
c. Every month
d. Per annum
140. An investment bank is a financial institution that assists corporations and governments in
raising capital by underwriting and acting as the agent in the issuance of _____
Select one or more:
a. Mortgage-backed loan
b. Bonds
c. Warrant
d. Equity
141. Securitization refers to the conversion of illiquid assets to liquid assets by converting longer
duration cash flows into shorter duration ones. In this context, which of the following is/are true
with respect to benefits of securitization?
Select one or more:
a. The investor is benefited since the security he buys is of a good quality debt.
b. Securitization enables the originator to take advantage of more profitable
investment opportunities with revenue generated through it.
c. Securitized debt is more expensive than other forms of funding.
d. Securitization improves asset management and is an effective means of diversifying
credit risk.
142. Who is participating Bank?
Select one:
a. Bank which participates in arranging a loan
b. Bank that participates in the syndication by lending a portion of the total amount
required
c. Bank which underwrites a loan
d. Bank which participates in disbursing a loan
143. Security of Alpha Ltd. Gives a return of 20 % with dispersion of 5 %, while security of Beta
Ltd. Gives return of 15% with a dispersion of 4%. Which security is more risky?
Select one.
a. Both securities are equally risky
b. None of the securities are risky
c. Security of Alpha Ltd is more risky
d. Security of Beta Ltd is more risky
144. Select all that are true for Hedge funds.
Select one or more:
a. Hedge funds trades in options to maximize profit at lowest risk.
b. Hedge funds investments are for small to large scale investors
c. Hedge funds often short sell securities to gain even in bearish market.
d. Hedge funds to buy stocks on margin
145. Daily returns on spot positions of the Euro against INR are highly correlated with returns on
spot holdings of USD against INR. This implies that:
Select one:
a. The two sets of returns tend to be almost equal in magnitude but opposite in sign
b. The two sets of returns tend to be almost equal
c. None of the listed Options
d. When Euro strengthens against INR, the USD also tends to strengthens , but returns
are not necessarily equal

146.A checking Account is primarily used by the customer for___________

Select one:
a) High Interest income
b) Insurance cover
c) Check writing privileges
d) Long term savings

147.Select the combination of options that are true for Money Market Mutual Fund
Select one or more:
a) It provides an investor the choice to invest for short-term
b) It provides higher returns to an investor as compared to debt funds
c) With this fund safety level of the investment is high
d) With this fund liquidity is high

148. The buying or selling of securities with the hope of profiting from confidential company
information is known as _________
Select one:
a) Futures Tracing
b) Option Tracing
c) Insider Trading
d) Spot Trading
149. An investor in need of regular income should NOT select which of the following option?
Select one:
a) An equity growth fund
b) A bank deposit
c) PPF
d) A debt fund

150.Who backs the dollar?

Select one:
a) The Fed(Ans)
b) Private companies
c) The treasury
d) The government

151.Select all the reasons that pointing towards the dander of 2008 subprime mortgage crisis
Select one or more:
a) Mortgage-backed securities were rated very high despite the fact that there were
substantial probability of default
b) This was the first time that such a financial crisis came and hence, financial institutions
were not aware of the root cause
c) Optimism about housing values also led to a boom in home construction

152.A firm has invested 1 million dollar in hedge fund and cant withdraw it up to 2 years.
Suddenly, it got a requirement of taking orders from merchants up to 1.5million dollar due to
seasonal increase in customers. What kind of risk firm is facing.
Select one:
A) Credit risk
B) Liquidity risk
C) Operational risk
D) Market risk

153.Money Multiplier effect would imply which of the following option?

Select one:
a) A decrease in the total money in the bank reserves in the system
b) An increase in the total money in the bank reserves in the system
c) None of the listed options
d) An increase in the total money lent out into the system
154.The arrangement fee paid by the borrower will be paid to:
Select one:
a) Facility manager/agent
b) Will be retained by lead manager
c) Every participant except lead manager
d) Every participant

155.Select one or more options which are true about Public Deposits

Select one or more:

a) Any deposit repayable on demand or on notice can be accepted by a company.
b) A company for meeting its short-term requirements of funds, may accept or renew
deposits for less than 3 months
c) The maximum maturity period for the deposits cannot exceed 60 months

156.Consider an open ended loan account where maximum limit allowed is $2000. If margin is
20% and asset value is @2400. What is the drawing power from the account
Select one:
a) 1920
b) 2000
c) 1800
d) 1600

157.As the credit rating increases from D to AAA, the offer of loan becomes ______ risky and
ensures ____ return
Select one:
a)More, higher
b) less,higher
c)less,lower
d)more,lower
160.Which of the following is/are the part(s) of commodity markets?
I. Agricultural market
II. Metal market
III. Energy market
Select one:
a All I, II & III
b Both I & Ill
C. Both II & III
d Both I & II
161.A corporate rated BB(low rating) requires a loan of USD 2.0 million from a bank To
enhance the loan rating and thus reduce interest payable on the loan, the promoters pledges their
shareholding in the company with the bank .Thus, whenever there Is a default on repayment of
the loan, the bank has the right to sell the shares in the market
Select the most appropriate conclusion based on the above statements
Select One:
a Since share of the corporate is extremely illiquid and less traded it rating is degraded to CCC
b Based on the historic volatility of the shares and the current market value of USD 3.0
million, the bank
upgrades the rating of the loan to BBB+
c. Based on the historic volatility of the shares and the current market values of SUD 3.0 million,
the bank upgrades the rating of the loan to AAA
d. Corporate credit rating cannot be changed by reducing the Interest payable on loan and criteria
given in the statement.
162.When you take a loan of $500 from your bank?
Select one:
a) Banks assets increases by $500
b) Banks liabilities increase by $500
c)Banks reserves decline by $500
d) Banks liabilities decline by $200 and its reserves decline by $300
163.Which of the following players perform the role of intermediary in the capital market,
provide corporate advisory services and also play a major role in the issue of securities?
Select one:
a) Underwriters
b) Investment bankers
c) Custodians
d) Forex dealers
164.Select all that are the main documents in international trade:
Select one or more:
a) Loan guarantee
b) Letter of credit
c) Bill of lading
d) Draft

165.At 7% annual inflation rate, an item costing Rs.100 today, would cost Rs. ______ after three
years.
Select one:
a) 124.5
b) 120
c) 118
d) 122.5

166.Forex market is available for trading 24 by 7. Select all that applies to the stated fact.
Select one or more:
a) Yes, on all day and night form one or the other centers
b) Yes, Except Holidays
c) No, One cant trade at night.
d) Yes, One can trade online

167.The balance sheet items of Lotus Ltd. as at March 31,2013 have increased by the following
amounts compared with those at the end of the previous year:
Assets- $23,000
Liabilities-$14,000
Share Capital- $10,000
The only change to retained earnings during 2012-13 was relating to a dividend payment of
$2,000. The net income of the year 2012-13 amounted to
Select one:
a) $800
b) $1000
c) $900
d) $1200

The total assets of a business are $90,250 and outside liabilities are $34,120. Reserves and
surplus stands at $12,500. Then, the amount of owners equity is
Select one:
a) $56130
b) $43630(Ans)
c) $68630
d) 60120

168. In a typical trade cycle on an exchange, identify the missing step in this sequence: Decision
to trade -> Order placement -> Order Matching -> _______________ -> Trade clearing -> Trade
settlement
Select One:
a. Netting
b. Trade Confirmation
c. Trade Affirmation
d. Trade matching

169. An IPO is sold in the primary market. State True and False
Select One:
a. True
b. False

170. Transaction reporting and compliance activity is performed by which of the following
option?
Select One:
a. None of the listed Options
b. Middle office of an investment firm
c. Front office of an invest firm
d. Back office of an investment firm

171. Suppose we employ a "value -weighted" methodology to construct and track a two-stock
index based on Stocks X and Y. Stock X has an initial price of $15, and there are 10 million
shares outstanding. Stock Y has an initial price of $20. and there are 20 million shares
outstanding. One month later. Stock X's price is $20 and Stock Ys price is still Marked $22. The
shares outstanding remain the same. What is the percentage change in our value -weighted index,
over the one month period?
Select one:
 a. 0.15
b. 0.164
c. 0.185
d. 0.2

172. What is the difference between loans and loan commitment?

Select One:
a. Loans are reflected in the asset side and commitments are off-balance sheet items
b. Loan is reflected in the liability side and commitments in the asset side of Balance sheet
c. There is no difference
d. Loan is reflected in the asset side and commitments in the liability side of Balance sheet

173. Who is arranger/lead manager?

Select One:
a. One who arranges loan
b. One who arranges syndicated loan
c. One who arrange Syndicated borrower
d. One who arrange borrower

174. 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:
Select One:
a. Asset Securitization Loan
b. Bill Discounting
c. Dealer/supplier Loan
d. Working Capital Loan

175. Market values of stocks are the prices at which stocks are currently traded in the capital
market. Cognizant's stock's market price as on 29th Apr 2014 is $48.44 and book value is
$10.10. State as True or False if the book value $10.10 can be considered in evaluating the
weighted average cost of capital (WACC) of Cognizant Technology Solutions.
State True or False
Select one:
a. True
 b. False

176. Which of the following are order types based on price?

Select One:
a. Limit Order
b. All of the listed option
c. Stop Order
d. Stop Limit Order

177. Assets of a company that are reasonably expected to be realized in cash, or sold, or
consumed in the next one year are _________________
Select One:
a. Annual assets
b. Current Assets
c. Fixed Assets
d. Intangible assets

178. BAFT stands for:

Select One:
a. Bankers Acceptance for Factoring Transactions
b. Bankers Association for Forfaiting & Factoring transaction
c. Bankers Association for Foreign Trade
d. Bankers Acceptance for Foreign Transactions

179. What is financial leverage

Select One:
a. a private company transforming itself into a public company
b. investing in derivatives
c. Borrowing funds to increase return on equity
d. Investing in equity
180. Under Basic Indicator Approach for measurement of Operational risk, the banks have to set
aside an amount calculated as the percentage of ____________, for operational risk
management.
Select One:
a. Annual Gross Income
b. Net Worth
c. Net Profit
d. Net Income

181. CRR stands for which of the following option?

Select One:
a. Cash Return Ration
b. Common Reserve Ratio
c. Cash Reserve Ratio
d. Cash Refund Ratio

182. Borrower is supposed to lock the rate at which stage of loan life cycle?
Select One:
a. Loan underwriting
b. Loan closing
c. Loan Processing
d. Loan origination

183. Check 21 Act facilities:

Select One:
a. Check function and creation of the subtitle check
b. Netting and posting of checks at day end
c. Netting and substitution of checks at day end
d. Netting of checks at day end

184. In account period settlement trades are aggregated for a period of time. State True or False
Select One:
 a. True
b. False

185. Which of the following is an unidentified intangible asset that increases the earning capacity
of any company listed on exchange?
Select One:
a. Goodwill
b. Copyrights
c. Patents
d. Licenses

186. When there are risky assets and a risk-free asset available, investors can achieve the best
combinations of risk and return by holding:
Select One:
a. Some combination of the efficient portfolios of risky assets
b. Some combination of the risk-free asset and the market portfolio of risky assets
c. The market portfolio

187. The Money bank receives as deposits becomes a banks

Select One:
a. Liability
b. Profit
c. Loss
d. Assets

188. There are different type of market participants who are directly or indirectly involved in
trading and bringing stock and future prices in equilibrium. Which of the following participants
help in analysis of a company into the derivatives markets leading to overall market efficiency?
Select one or more:
a. Speculators
b. Arbitrageurs
c. Hedgers
d. Financial institutions
189. Identify the wrong statement:
Select One:
a. Preference stock investors primarily seek growth over income
b. Preference shares carry a stated dividend
c. Preference shareholders have priority over common shareholders in time of liquidation
d. Preference shares do not have voting rights

190. Find the future value of $1500 invested at 6.5% p.a. payable annually, after 6 months?
Select One:
a. $1616
b. $1628
c. $1548.75
d. $1597

191. Which of the following are market regulations?

Select One:
a. Financial Services Authority (FSA) of UK
b. Securities and Exchange Board of India (SEBI)
c. Securities and Exchange Commission (SEC)
d. All of the listed options

192. The process of conversion of illiquid assets to liquid assets by converting longer duration
cash flows into shorter duration ones also traded as security is known as ____________.
Select One:
a. Conversion
b. Securitization
c. Backwardation
d. Swaption

193.An investor is holding 100 Microsoft shares that are trading at $27 per share. He instructs
the broker to sell all the 100 shares when the share price reaches 35 or above that. What is this
type of order called?
 a) High price order
b) Limit Order
c) Conditional Order
d) Optional Order
194.In active approach, asset allocation is more influenced by which of the following option?
a) Investors risk preferences
b) Market views
c) None of the listed Options
d) Value of investments
195.What does Single Euro Payment Area (SEPA) do?
a) Applicable to direct debts, credit and debit cards
b) Creates a single payment market
c) Removes differences in intra and cross border payments
d) All of the listed options
196.T+1, T+2, T+3 generally refers to
a) Trading period
b) Settlement period
c) Black out period
d) Holding period
197.Netting reduces the number of settlements needed by more than 95%. State True or False
Select one:
True
False
198.From the following options identify the Voluntary Corporate action:
Select one:
a) Rights Issue
b) Stock Split
c) Bonus Issues
d) Merger and Acquisition
199.Select all that options which are true regarding risk exposure in money market instruments?
a) All the money market instruments are considered as risk free.
b) Compared to long term securities, money market instruments have minimal
inflation risk.
c) As the maturity of money market instruments is short, these instruments are not exposed
to reinvestment risk.
200.Which of the following items appears in the Profit and Loss Appropriation account?
I. Provision for bad debts
II. Provision for taxation for current year
III. Directors remuneration
IV. Interim dividend
a) Both I and II (ans)
b) Both III and IV
c) Only I
d) Only IV
201.Pick the odd one out
a) Agency loans
b) FHA loans
c) VA loans
d) Interest only loans
202.A bank decides to sanction only 70% of the loan sought by a company. The company goes
and pledges extra assets with the bank and the bank then agrees to sanction 90% of the loan
sought. The company has indulged in the process of:
a) Credit Enhancement
b) Credit Revamp
c) Credit Revision
d) Credit Increase
203.Which of the following are core banking vendors?
a) Temenos
b) All of the listed Options
c) Fidelity
d) Infosys (Finacle0)
204.Security of Alpha Ltd. gives a return of 20% with a dispersion of 5%, while security of Beta
Ltd. gives return of 15% with a dispersion of 4%. Which security is more risky?
a) Security of Alpha Ltd is more risky
b) Both securities are equally risky
c) Security of Beta Ltd is more risky
d) None of the securities are risky
205.A bank has a portfolio of $50 million worth of loans out of which it wants to hedge $20
million of loan. What is the process called?
a) Undrawn Loan
b) Held for Sale Loans
c) Trading Loans
 d) Accrual Loans
206.All the following statements relating to bonds are correct EXCEPT:
a) The owner of a registered bond is the person to whom interest payments are mailed.
b) A bonds par value is the amount the issuer must pay the bond owner at maturity.
c) A bond will typically sell at a discount when its coupon rate is less than the current
market rate of interest
d) A bond is a debt instrument giving the issuer flexibility as to maturity date.

207.You can profit in stock market by upward price movement of stocks using one or more
options specified as __________
a) Limit orders
b) Short sales
c) Market orders
208.Which of the following maybe the reason for returning a check?
a) Improper details
b) Insufficient funds
c) All of the listed options
d) Signature not clear
209.Asset allocation activity is performed by which of the following options?
a) Front office of an investment firm
b) Middle office of an investment firm
c) None of the listed options
d) Back office of an investment firm
210.In syndicated loan, borrowers will be charged even if they dont utilize the committed funds.
State True or False
True
211.An investor indulging in short selling on a share expects the share price to decrease. State
True or False.
True
212.Cash management solutions help corporations to:
I. Manage surpluses and deficits, reduce float on collections
II. Automate collections
III. Outsource collections
IV. All of the listed options
a) I only
 b) III only
c) IV
d) II only
213.Following information pertains to a swap deal between Alpha Mills and Beta Textiles.
Firm Objective Fixed interest rate Floating interest rate
Alpha Mills Floating 6.0 % LIBOR + 0.5 %
Beta Textiles Fixed 7.5 % LIBOR + 1.0 %
The benefit from the deal is shared by Alpha Mills and Beta Textiles in the ratio of 1:2. Gain
from the swap deal Alpha textiles is __________
a) 0.0067
b) 0.01
c) 0.005
d) 0.015
214.What is a mutual fund?
a) A pool of funds used to purchase securities on behalf of investors
b) All of the listed options
c) A portfolio of stocks, bonds and other securities
d) A collective investment vehicle
215.Select all that apply. Theta General Insurance Co. has a known liability maturing after 15
years. To immunize its liability from interest rate risks, the insurance co. should buy
__________.
a) A zero coupon bond with maturity of 20 years.
b) A bond with higher coupon
c) A bond with a higher yield to maturity
d) A bond with 15 years maturity

216.Which of the following are the examples of emerging payments?

a) Digital Cash
b) EBPP
c) Proximity Payments
d) All of the listed options

217.Which of the following is NOT a commonly used term in the context of Banking?
a) Investment banking
b) Corporate banking
c) Retail banking
d) Social banking
218.Institutions specializing in securitization transactions of mortgage loans for US banks
are:
a) Fannie Mae and Indymac
b) Fannie Mae and Ginnie Mae
c) Freddie Mac and Fannnie Mac
d) Ginnie Mac and Indymac
219.If the Point of Purchase is $ 52 and the amount given to the issuer is $ 50 what is the
underwriter spread?
a) 102
b) 50
c) 2
d) 52
220.As the credit rating increases from D to AAA the offer of loan becomes_________ risky
and ensures _______ return.
a) More, lower
b) Less, lower
c) More, higher
d) Less, higher
221.In syndicated loan, borrowers will be charged even if they dont utilize the committed
funds. State True or False.
a) True
b) False
222.Which of the following are core banking vendors?
a) Trmenos
b) All the listed options
c) Infosys(Finacle0)
d) Fidelity

223.What is a mutual fund?

a) A portfolio of stocks, bonds and other securities
b) A collective investment vehicle
c) A pool of funds used to purchase securities on behalf of investors
d) All of the listed options
224.Same debenture issues have a call feature attached to them, which provides an option to
the issuing company to redeem debentures at a specified price before the maturity date.
Select all that are true with respect to call price of debentures.
a) The call price declines step-wise towards the face value as the call date
approaches the maturity date.
b) The call price is not dependent on maturity date.
c) The call price is minimum at the start of the effective call option period.
225.Expand NOE:
a) Note of Enrichment
b) Note of Execution
 c) Net Outstanding Error
d) Notice of Error
226.Arrangement fee is also called ___________
a) Pracipium
b) Participatum
c) Praecipium
d) Preacipium
227.Which of the following items should be deducted from the gross profit to arrive at the
net profit for calculation of Managerial Remuneration?
a) Any compensation, damages or payments made voluntarily
b) Any tax notified by the Central Government as being in the nature of a tax on
excess or abnormal profit
c) Interest on unsecured loans and advances
d) Bad debt written off or adjusted during the year.

228.Assets of a company that are reasonably expected to be realized in cash, or solid, or

consumed in the next one year are _________________.
a) Intangible assets
b) Current assets
c) Fixed assets
d) Annual assets
229.A credit scoring system forms the basis of all personal lending decisions that banks
make. What is the basis of these personal credit score?
a) A code the can use on the loan form to identify individual borrowers
b) Automated process that identifies the credit worthiness of a candidate depending
up on billion payments made by him/her in past.
c) A letter from neighborhood and company who will speak up for your honesty and
good character and rate you.
d) Screening of social media profiles to judge the candidates credit worthiness.
230.Which of the following statements is/are true regarding government securities?
a) Term of short term security T-Bills are always less than a year.
b) Fll are not allowed to invest in government securities.
c) The coupon on these securities are often determined by bidding at open market
operations
d) They may also be issued in the form of zero coupon securities.
231.Milky Way Ltd. Is planning a CP issue of $1,000,000. Given the following details:
Face Value: $1,000,000
Maturity Period: 3 months
Effective Interest Rate: 10% p.a.
The issue price of commercial paper is __________
a) 975935.83
b) 975989.11 (most probably)
c) 975945.32
232.Under Basic indicator Approach for measurement of Operational risk, the banks have to
set aside an amount calculated as the percentage of _____________, for operational risk
management.
a) Net worth
b) Net Profit
c) Net Income
d) Annual Gross Income
233.If a financial instrument has a 50% chance of paying 20% and a 50% chance of paying
60% percent, what would be the expected return?
a) 0.5
b) 0.4
c) 0.2
d) 0.8
234.What is OTC
a) None of the listed options
b) On the Counter
c) Over the Counter
d) Options on the counter
235.A document issued to the exporter by a common carrier transporting the merchandise is
called a ___________
a) Commercial invoice
b) Draft
c) Bankers acceptance
d) Bill of lading
236.Variance- Co-variance method is the fastest method for calculation of VaR (Value at
Risk). But it is not suited for the following type if financial products:
a) Currency
b) Bonds
c) Options
d) Stocks
237.Identify the three Cs of underwriting:
a) Collateral
b) Credit
c) Capacity
d) Cash
238.Open ended loan allow the borrower to borrow additional amount subject to the
maximum amount less then a set value. State True or False
a) True
b) False
239.Which of the following is NOT a function of the bank?
a) Facilitate the trade and commerce dealings
b) Ensure super-normal returns to its small depositors
c) Channelize Savings
 d) Provide investment avenues to investors
240.The process of clearing transaction electronically in which information about debits and
credits are passed across the clearing system electronically instead of physical
instruments is called:
a) Clearing thru ACH
b) Electronic data file services
c) Clearing Services
d) Clearing thru Documents
241.The present book value of an asset of a company is $950.120. The company has charged
depreciation at the rate of 10% under straight line method for the last 3 three years. The
original cost of the asset was _________.
a) $1324915
b) $1264610
c) $1488256
d) $1357314
242.Which of the following statements is/are true with respect to different quotes of
exchange rate?
a) An American quote is the number of dollars expressed per unit of any other
currency.
b) Rs.60.71/$ quoted in Mumbai is an example of indirect quote.
c) A direct quote is the quote where the exchange rate is expressed in terms of
number of units of the domestic currency per unit of foreign currency.
d) Rs.60.71/$ is an example of American quote.
243.When would a company pay nominal interest on committed portion?
I: Always
II. In some cases
III: If it Wishes to pay

a) III only
b) II only
c) I only
d) All of the listed options
244.A bank has a portfolio of $50 million worth of loans out of which it wants to sell $20
million worth of loan to another financial institution. What is the process called?
a) Undrawn Loan
b) Held for Sale Loans
c) Accrual Loans
d) Trading Loans
245.What does single Euro Payments Area (SEPA) do?
a) All of the listed options
b) Removes differences in intra and cross border payments
c) Applicable to direct debits, credit and debit cards
d) Creates a single payment market
246.Mutual funds:
a) Require investors to invest very large sums of money, which eliminates small
investors.
b) Give much greater returns than the stock index
c) Are less riskier than individual stocks as the fund managers invest in a
diversified portfolio
d) Are often riskier than investing in individual stocks
247.Client Management is a function of
a) Bank Office
b) Anyone who knows the client
c) Mid office
d) Front office
248.When a bank receives a deposit, its liabilities and reserves increase by the amount of the
loan. State True of False
a) True
b) False
249.Which of the following statements is/are true with respect to Acquisition Finance?
a) Acquisition cannot be financed by private placement of debt and equity shares
b) The securities offered may be in equity, preference shares or debentures
c) Acquisitions may be paid either in cash, securities or combination of cash and
securities
d) The investment banker often arranges for a bridge loan against subsequent
refinancing
250.The process of conversion of illiquid assets to liquid assets by converting longer duration
cash flows into shorter duration ones also traded as security is known as _____________
a) Backwardation
b) Securitization
c) Conversion
d) Swaption
251.Does a pure play investment bank accept deposits
a) Yes, if it is below 10% of market cap
b) No
c) Yes
d) Only during IPO
252.When the Central Bank of a country decides to change the interest rates, it is a
manifestation of which of the following?
a) Monetary Policy
b) Money Multiplier Effect
c) Money Market
d) Money Making
253.The BSE is a large primary financial market in which the initial issuer receives the
proceeds for the sale of securities. State True or False
a) True
 b) False

254.
The BSE is a large primary financial market in which the initial issuer receives the proceeds for
the sale of Securities State True or False
Select one:
True
255.
A proprietary system of ATM's is a network that comes into being when customers of one or
more financial institutions have access to transaction services at ATMs owned or operated by
other financial institutions.
State True or False
Select one
True
False
256.
All of the following investments are examples of "debt" investments EXCEPT
Select one
a. Gold
b Cash Value of Insurance Policy
c. Certificate of Deposit
d Company Bond

257.
Which one of the following is the benefit of Private Banking'?
Select one -
a. Personalized Attention
b. Risk Management Services
c. Specialized Advice
d. All of the listed options
Question 258.
Who is arranger lead manager'?
Select one.
a One who arranges syndicated loan
b. One who arranges loan
c. One who arrange borrower
d One who arrange syndicated borrower
Question 259
A Clearing corporation will have various roles and responsibilities. From the following options
identify the one that is NOT a primary function carried out by a clearing corporation
Select one:
a Guaranteeing settlement
b. Processing for shortages in funds/securities
c. Arranging for the pay in of funds / securities
d Corporate Action processing
Question 260
If the order must be immediately filled in one trade or canceled completely this is called
Select one
a Good till Cancelled
b IOC
c FOK
d Day Order
Question 261
Which of the following is/are true with respect to commercial paper and certificate of
Deposits?
I. Both are issued by corporates.
II. Both can be invested by individuals and corporates_
III. Both can be bought back by the issuer
Select one.
a. Only II
b. Only III
c. Both I & Ill
d. Both II & Ill
Question 262
A bank decides to sanction only 70% of the loan sought by a company. The company goes and
pledges extra assets with the bank and the bank then agrees to transaction 90% of the loan
sought. The company has indulged in the process of.
Select one
a. Credit Increase
b. Credit Enhancement
C. Credit revamp
d. Credit Revision
Question 263
The 91 -day T -Bills of 100 rupees each are sold for Rs 98 per bill. The buyer pays Rs. 98 and
will receive Rs. 100 after 91 -days from the Government of India for every bill he buys today. At
what discount the bills are said to have been sold?
Select one:
a. 0.0831
b. 0.0802
C. 0.0622
d. 0.0755
Question 264
Supplier or Dealer loans refers to which of the following option?
Select one:
a. All of the listed options
b. Immediate loans to the suppliers and dealers of the corporate at higher rate of interest.
c. Long term loans to the suppliers and dealers by the banks
d A short term loan provided by banks to suppliers and dealers of large companies
Question 265
With reference to settlement. FOP stands for
Select one:
a. Free Order Payment
b. Free of Payment
c. Frequently offered Payment
d. Fixed Order Payment
Question 266
Credit card and debit card are the same. State True or False
Select one:
True
False
Question 267
Rs.10. 000 is receivable after two years What is the present value of this sum at a discount rate of
5% under continuous discounting?
Select one
a. INR8992
b. INR9221
c. INR9048
d.INR9110
Question 268
The initial sale of a security is in the market, while subsequent trading in the security is in the
market
Select one:
a. Primary: secondary
b. Secondary: primary
c Spot: futures
d. Money: capital
Question 269

On July 27, 2013. Mrs. Roma goes long on a gold futures contract. Size of the contract is 100
ounces, initial margin is 520.500 per contract and maintenance margin is 518.000 per contract.
On August 5, 2013, opening margin balance was 519.500 and futures closes at 5872.5. If the
previous day's close was 5903.4 the margin call will be

Select one

a. $5488
b. S2560
c. 56995
d. $4090

ANS:

Question 270

Jet Airways and Citibank have tied up to offer this type of credit card What type of card is it"

Select one:
a Affinity Card
b. Gift Card
c Smart Card
d. Co-Branded card

Question 271

Select all that correctly describes The Troubled Asset Relief Program (TARP)

Select one or more.

a. It was a program initiated by major financial institutions across the globe to turn down 2008
subprime mortgage crisis

b. It was the largest component of the government's measures in 2008 to address the
subprime mortgage crisis

c It is a program of the United States government to purchase assets and equity from
financial institutions

d It strengthen the household sector of US economy.

Question 272

Select all the statements that are true with respect to asset allocation

Select one or more

a Strategic asset allocation is generally undertaken periodically.

b. Tactical asset allocation considers changes in risk tolerance level of the

investor

c. Tactical asset allocation is based on the assumption that the markets overreact
to the available information

d Strategic asset allocation indicates a long term asset allocation policy of the
portfolio manager

Question 273
Drafts are negotiable instruments that facilitate international payments through respected
intermediaries such as banks. State True or False
Select one
True
False

Question 274
Identify the wrong statement

Select one:
a. Preference shares do not have voting rights
b Preference shares carry a stated dividend
c Preference stock investors primarily seek growth over income
d. Preference shareholders have priority over common shareholders in time of liquidation

Question 275
Which of the following inventory valuation methods shows higher profits during a period of
rising prices?

Select one:
a Simple Average
b LIFO (Last In First Out)
c. FIFO (First In First Out)
d Weighted Average
Question 276
Securities Settlement is a function of

Select one:

a. Specialists
b. Mid Office
c. Front Office
d. Back Office
Question 277
Given below are some features of financial market Select the combination of features that are
required for perfect market
I. All the players in the market have all the information relating to the security
ll All players in the market are price takers.
III There should be barriers on some entries and exit criteria.
IV The market price of security reflects all the available information
V There should be certain Government restrictions on flow of funds in the market
Select one
a. II. IV and V
b. I. II and III
C.I. IIand V
d. I II and IV
Question 278
If R is the real rate of interest. N is the nominal rate of interest and I is the rate of inflation, then
Select one
A. R=Nx1
B. R=N I
C. R=N+I
D. R = N/I

Question 279
Select all that apply. Theta General Insurance Co. has a known liability maturing
after 15 years. To immunize its liability from interest rate risks, the insurance co should buy
Select one:
a. a bond with a higher yield to maturity
b. a bond with a higher coupon
c. a zero coupon bond with maturity of 20 years.
D. a bond with 15 years maturity (ans)
Question 280
Mark True or False.
A company's beta has doubled The return on investment in the equity of that company will
double
Select one
True
False
Question 281
Mrs Alka, an importer_ is expecting payables in dollar within one month from now She has
entered into one month forward agreement with bank with the base rate at Rs.60 67. one month
premium on dollar is 30 paise and the bank wishes to charge 10 basis points as margin The
forward TT selling rate will approximately be
Select one:
A. Rs 60_97 / S
B. Rs 61.03/S
C. Rs 60 90 / S
D. Rs 61_11 / S

Question 282
Which of the following players perform the role of intermediary in the capital market provide
corporate advisory services and also play a major role in the issue of securities'?
Select one.
a. Investment bankers
b. Underwriters
c. Forex dealers
d Custodians
Question 283

An American Mutual Fund company invested USS 4 million in Bombay Stock Exchange on
31.12.2007 when the BSE Sensex was at 20.286.99 points. The company on 02.05.2008
observed that its portfolio was depreciated by 20% when the BSE Sensex touched 16.244_54
points. If the company decided to withdraw the
investment from India. what would be the net increase or decrease in his investment in terms of
dollar'?
Rs. per S spot rates are quoted as:
On 31.12.2007 : 41.30/41.33
On 02_05 2009: 40 18/40.32

Select one:
a. 10015196.02
b. 745550.15
c. 708412.15
d 10029006.09

Question 284

An investor indulging in short selling on a share expects the share price to decrease. State True
or False

Select one
'
True
False

Question 285

For which reason can a check be returned'?

Select one

a Insufficient funds
b Any one of the listed options
c Signature not clear
d. Improper details
Question 286

The initial current market price of the stock is Rs.42 and warrant price is Rs.7. It is
expected that there will be an increase in stock price by 10.1% and warrant price by
30_5%. The stock -warrant ratio after increase in prices will be
'
Select one:
a. 6.11
b. 4.55
C. 5.06
d. 486

Question 287

In a typical trade cycle on an exchange. identify the missing step in this sequence:

Decision to trade -> Order placement -> Order Matching -> -----------------------
-> Trade clearing -> Trade settlement

Select one.
a. Trade matching
b. Trade confirmation
c. Netting
d. Trade affirmation
Q1. Which of the following statements is/are true regarding government securities?
288.
Select one or more
a. Fll are not allowed to invest in government securities.
b. Term of short term security T-Bills are always less than a year. (Ans)
c. They may also be issued in the form of zero coupon securities. (Ans)
d. The coupon on these securities are often determined by bidding at open market
operations
289.
Q2. Mr. Nash Commence his business on April 01, 2012 with a capital of $69.000. The break-up
of his capital includes cash amounting to $50,000. All his transactions are on cash basis only. He
purchased stock worth $25,000. He paid for miscellaneous expenses of $2,700. During the year
he withdrew $450 per month for his personal use. The depreciation for the year was estimated at
$3,500 and other expenses $1,700. If the sales made during the year were $ 30,000, cash balance
as on March 31, 2013 was ______.
Select one.
a. $41700
b. $15200
c. $45200
d. $60700

290. An investor indulging in short selling on a share expects the share price to decrease. State
True or False.
True

291. Factoring is for long-term receivables (above 90 days) and is more related to receivables
against commodity sales.
Ans: False
292. A borrower intends to borrow 300M USD and approaches his banker for loan. 300M is
more than the appetite of the bank. The bank may________
Ans: b. Suggest syndicated loan

293. GE shares are currently selling for $ 15.00 each. You bought 200 shares one year ago at $
12 and received dividend payments of $2 per share. What was your total dollar capital gain this
year?
Ans: c: USD1000

294. When would a company pay nominal interest on committed portion?

I. Always
II. In some cases
III. If it wishes to pay
Ans: b. II only

295. Market risk is associated with the macroeconomic conditions prevalent across the globe and
hence it is systematic risk and cannot be diversified. Select all the risks that are market risk.
Ans:
a. Commodity risk
c. Currency risk

296. In Private Banking PIC stands for:

Ans: a. Personal Investment Companies

297. You are bullish on reliance stock, the current market price is 505 INR per share. You have
50,000 INR with you which you can invest. Now you borrow another 50,000 INR from your
brokerage banker at an interest rate of 9% per annum and invest all 1,00,000 INR in reliance
stock.
At what price of reliance stock, is the margin call registered if minimum margin required is
30%? (ignore interest rate on brokerage funding)
Ans:
b. 404 INR per share

298. How would you categorize account activity alerts in mobile banking?
Ans: c. Transactions

299. ABC corporation is a large client of BankNew extends a loan to XYZ corporation which is
a supplier of ABC. Ths is an example of:
Ans: b. Dealer/Supplier Loan

300. Transaction reporting and compliance activity is performed by which of the following
option?
Ans: d. Back office of an investment firm

301. The price paid for the use of a financial liability and financial asset is called _______.
Ans: d. Interest
302. Open ended loan allow the borrower to borrow additional amount subject to the maximum
amount less than a set value. State true of false
Ans: True

303. Which of the following debt instrument involves lowest risk?

Ans: c. Treasury Bills

304. In case of auto finance, monthly lease payments are usually lower than monthly loan
payments because of which reason?
Ans: c. All of the listed Options

305. With reference to settlement, FOP stands for:

Ans: d. Free of payment

306. In reality, people hold part of their loans as cash. This makes the multipier:
Ans: a. Smaller

307. Which of the following accounts appear(s) in the balance sheet of a business?
Ans: b. prepaid rent
c. Interest Received
d. Stock at the end of the financial year

308. Consider an open ended loan account where maximum limit allowed is $2000. If margin is
20% and asset value is $2400. What is the drawing power from the account?
Ans: b. 1920

309. Credit enhancements of an asset -backed security imply the existence of support for one or
more of the bondholders in the structure. External Credit and Internal Credit are the two types of
credit enhancement structures. Which of the following is/are form of internal credit
enhancements?
Select one or more
a. Senior structures
b. Bond insurance
c. Subordinated structures
d. Overcollateralization

310. Retail Banking means Banking for

Select one.
a. Whole sale Banking
b. Banking for Individuals and SIY1E5
c. Banking for Corporates
d. Retail Outlets

311. Following information pertains to a swap deal between Alpha Nlills and Beta Textiles.
Firm Objective Fixed Interest rate Floating interest rate
Alpha Mills Floating 6.0 % LIBOR + 0.5 %
Beta Textiles Fixed 7.5 % LIBOR + 1.0%
The benefit from the deal is shared by Alpha Mills and Beta Textiles in the ratio of 12. Gain
from the swap deal to Alpha textiles is
Select one
a. 0.01 u
b. 0.005
c. 0.015
d. 0.0067

312. Who is arranger / lead manager?

Select one
a One who arranges syndicated loan
b One who arrange borrower
c One who arrange syndicated borrower
d One who arranges loan

313. Which of the following are market regulators?

Select one:
a. Financial Services Authority (FSA) of UK
b. Securities and Exchange Board of India (SEBI)
c. Securities and Exchange Commission (SEC)
d. All of the listed options

314. Which of the following generally have higher transaction volumes and lower average
dollar values? Select one:
a. Wholesale payments
b. It depends on currency fluctuations of retail payments
c. Wholesale payments and Retail payments
d. Retail payments

315. Jet Airways and Citibank have tied up to offer this type of credit card. What type of card
is it? Select one
a Co Branded card
b Gift Card
c Affinity Card
d Smart Card

316. Institutions specializing in securitization transactions of mortgage loans for US banks

are
Select one.
a. Fannie Mae and Indymac
b. Freddie Mac and Fannie Mac
c. Ginnie Mae and Indymac
d. Fannie Mae and Ginnie Mae

317. Banks borrow in call money market to meet CRR (Cash Reserve Ratio) requirement
which they should maintain with the central bank State True or False
Select one
a. True
b. False

318. Does a pure play investment bank accept deposits:

Select one
a. Yes
b. No
c. Yes, if it is below 10% of market cap
d Only during IPO

319. Which of the following is NOT a Top 10 US Bank?

Select one:
a. Citigroup
b. Lloyds TSB
c. Wells Fargo
d. JP Morgan Chase

320. Short selling in forex market is market condition

Select one:
a. easier, like
b. easier, unlike
c. more difficult, unlike
 d. more difficult, like

321. BAFT stands for

Select one:
a. Bankers Acceptance for Foreign transactions
b. Bankers Association for Forfaiting & Factoring transaction
c. Bankers Acceptance for Factoring Transactions
d. Bankers Association for Foreign Trade

Question 322. In Sept 2008. following the subprime mortgage crisis, the biggest financial loss
observed was bankruptcy of Lehman Brothers. It carried the assets of S691.1 billion. Who
should be the first losers in such events?
Select one

a. Common stock holders

b. Preferred stock holders
c. Long term creditors

Question 323. Check all that are the benefits of investment in mutual funds
Select one or more:
a. Diversification of risks
b. Availability of various schemes to suit different needs
c. Low transaction costs
d. Professional management

Question 324. The bid -ask spread is seen to be in the interbank market than in the retail market
due to in the interbank market compare to retail market
Select one:
a. lower, lower volume, lower liquidity
b. lower, higher volume lower liquidity
c. higher, lower volume lower liquidity
d. lower, higher volume, greater liquidity

325. The purchase of any stock for immediate delivery is a market transaction.
Select one:
a. Spot
b. Option
c. Stock
d. Futures
 326. Actively managed funds always beats the returns made on passively managed fund State
True or False
Select one:
True
False

327. Netting reduces the number of settlements needed by more than 95% State True or
False Select one
True
False
328. Select one or more options which are true about Public Deposits
Select one or more:
a. The maximum maturity period for the deposits cannot exceed 60 months. LI
b. A company for meeting its short-term requirements of funds, may accept or renew deposits
for less than 3 months.
c. Any deposit repayable on demand or on notice can be accepted by a company.

329. The total assets of a business are S90.250 and outside liabilities are $34.120. Reserves
and surplus stands at 512.500. Then, the amount of owners equity is
Select one
a $60120
b $56130
c $43630
d $68630

330. In Indian Forex market, the market rates are as under

EUR/INR : 83.05/08
1 month : 06 / 08
2 months : 12 / 14
3 months : 22 / 24
If a bank requires an exchange margin of 2 paise. what should be the rate to be quoted to an
importer who wants to have an option delivery in the second month?
Select one:
a. INR 83.24 1 EUR
b. INR 83.19 EUR
C. INR 83.05 / EUR
d. INR 83.37 / EUR

331. Which of the following is/are true with respect to commercial paper and certificate of
deposits?
I. Both are issued by corporates.
II. Both can be invested by individuals and corporates.
III. Both can be bought back by the issuer.
Select one
a. Both II & Ill
b. Only II
c. Only III
d. Both I & III

332. The process undertaken by the clearing house whereby it substitutes itself between the
buyer and the seller of a trade, acting as a counterparty is called
Select one:
a. Netting
b. Novation
c. Settlement
d. Counterparty risk
333. Which of the following is not a function of central bank?
 Select one:
a. Conducting the nations monetary policy
b. Monitoring foreign currency inflow and outflow
c. Managing the branches of public banks
d. Stability of the financial system

334. Select all that options which are true regarding risk exposure in money market
instruments?
a. All the money market instruments are considered as risk free.
b. As the maturity of money market instruments is short, these instruments are not exposed
to reinvestment risk
c. Compared to long term securities, money market instruments have minimal
inflation risk

Question 335. Great mines takes a loan from Bank of America to dig a new coal mine. The loan
would be repaid using the
proceeds from the sale of coal from this mine. This is an example of

Select one.
r Flag question
a Supplier Loan
b Asset Securitization Loan
c Bill Discounting
d Working Capital Loan

Question 336. Which of the following is not an Index

Not yet answered
Select one:
a. FTSE
b. NYSE
c. NASDAQ 100
d. HangSeng

Question 337. statement 1: There are two basic types of corporate stocks and both of them have
ownership and voting rights
Statement 2: These two basic types of stocks are common stocks and preferred stocks
Select one:
a. Only statement 2 is true.
b. Both statements are true
c. Only statement 1 is true
d. Both statements are false

Question 338. Assets of a company that are reasonably expected to be realized in cash. or sold,
or consumed in the next one year
Are_____ Select one
a Intangible assets
b. Fixed Assets
c. Annual assets
d. Current Assets

Question 339. Find the future value of $1500 invested at 6.5% p.a payable annually, after 6
months?
Select one:
a. S1616
b. $1548.75
c. $1597
d. $1628

Question 340. Risk Management is a function of

Select one
a Specialists
b Mid Office
c Back Office
d Front Office

Question 341. Which of the following services are provided by a global custodian?
Select one
a All of the listed options
b Fund administration
c Foreign exchange transactions
d Settlement services

Question 342. Which is NOT a type of corporate bond?

Select one:
a. Unsecured bonds
b. T -Bills
c. Sub-ordinated debentures
d. Secured Bonds

Question 343. A corporate rated BB (low rating) requires a loan of USD 2.0 million from a bank.
To enhance the loan rating and thus reduce interest payable on the loan, the promoters pledges
their shareholding in the company with the bank.
Thus, whenever there is a default on repayment of the loan, the bank has the right to sell the
shares in the market.
Select the most appropriate conclusion based on the above statements.
Select one
a. Based on the historic volatility of the shares and the current market value of USD 3 0
million, the bank upgrades the rating of the loan to BBB+
b. Since share of the corporate is extremely illiquid and less traded, it rating is degraded to CCC
c. Based on the historic volatility of the shares and the current market value of USD 3.0 million,
the bank upgrades the rating of the loan to AAA
d. Corporate credit rating cannot be changed by reducing the interest payable on loan and criteria
given in the statement.

Question 344. John buys a 7 year. 11% annuity deposit certificate for Rs. 30000. What is the
annuity he is entitled to receive over the 7 -year period?

Select one
a. 6995
b. 6367
c. 7234
d. 6440

Question 345. The initial sale of a security is in the market, while subsequent trading in the
security is in the
Select one
a Secondary: primary
b Primary, secondary
c. Money, capital
d. Spot: futures
Question 346. Select all that is/are true about Bill of Lading
Not yet answered
Select one or more Marked out of 1.00
a. Evidence of title to the goods in case of a dispute
b. A receipt issued by a carrier to a shipper for goods received for transportation
c. No terms defined for insurance function
d. A contract between a carrier and a shipper for the transportation of goods.

Question 347. GDR stand for which of the following option?

Select one:
a. Global Derivatives Report
b. Gold Deposit Report
c. Global Deposit Report
d. Global Depository Receipts

Question 348. The process of netting

Select one
a. Neither reduces nor increases the number of settlements Flag question
b. Reduces the number of settlements
c. Increases the number of settlements
d. Increases the transaction costs

Question 349. A bank is required to hold reserves at least equal to a prescribed fraction of its
total deposit liabilities. This requirement is called
Select one
a. ALM
b. SLR
c. SAR
d. CRR

Question 350. If a financial instrument has a 20% chance of paying 80% and a 80% chance of
paying 50% percent, what would be the expected return'?
Select one
a. 0 28
b. 0.56
c. 0.2
d. 0.44

Question 351. Company A has higher credit rating than Company B. What does this means?
Select one
a. Company A is more risky
b. There is no relation between credit rating and risk
c. Both are equally risky
d. Company B is more risky

Question 352. Saltlake Company is considering investing in a new project. The project will need
an initial investment of 51.200.000
Not yet answered and will generate 5600.000 (after-tax) cash flows for three years. Approximate
IRR for the project will be
Select one
a. 0.201
b. 0.233
C. 0.155
d. 0.124

353: Trading of previously issued securities takes place in

Select one:

a. Primary Market
b. Through Private Placement
c. At company headquarters
d. Secondary Market

354: Share price is determined by which of the following option?

Select one:

a. All of the listed options

b. Performance of the relevant industry
c. State of the countys economy
d. Performance of the company

355: Portfolio rebalancing is carried out to benefit out of changing market conditions by using timely and
opportunistic strategy

a. True
b. False

356: In case of auto finance monthly lease payments are usually lower than monthly loan payments because of
which reason?

Select one:

a. All of the listed Options

b. Customer is paying only for depreciation
 c. Customer is paying only for rent charges
d. Customer is paying only for taxes

357: The Glass Stegall Act refers to______________

Select one:

a. Bring bank holding companies under regulation of the Federal Reserve

b. End deposit insurance for commercial banks
c. Controls securities regulation in order to minimize risks
d. Impose a rigid separation between commercial banking and investment banking

358: The type of private equity financing provided to companies for full-fledged manufacturing operation and sales
is all called start-up stage financing

a. True
b. False

359: If a financial instrument has a 20% chance of paying 80% chance of paying 50% percent what would be the
expected return?

Select one

a. 0.28
b. 0.2
c. 0.44
d. 0.56

360: The purchase of any stock for immediate delivery is a ___________ market transaction

Select one

a. Futures
b. Stock
c. Spot
d. Option

361: Following information pertains to a swap deal between Alpha Mills and Beta Texties

Firm Objective Fixed interest rate Floating interest rate

Alpha Mills Floating 6.0% LIBOR+0.5%

Beta Textiles Fixed 7.5% LIBOR+1.0%

The benefit from the deal is shared by Alpha Mills and Beta Textiles in the radio of 1.2 Gain from the swap deal
to Alpha textiles is ____________

Select one

a. 0.01
b. 0.015
c. 0.0067
d. 0.005
 362: What is the central bank in United States called?

Select One

a. Federal Reserve Board

b. Federal Reserve
c. Reserve Bank of America
d. Bank of America

363: Which of the following is the parts of commodity markets?

I. Agricultural market
II. Metal Market
III. Energy Market

Ans: a. All

364. Arrangement fee is also called______________

Ans. B. Praecipium

365. Identify the odd one out:

Select one:

a. Treasury Notes
b. Treasury Bills
c. Commercial Papers
d. Stocks

366: if R is real rate of interest N is the nominal rate of interest and I is the rate of inflation then:

Select one

a. R=N-I

367: Which of the following items appears in the Profit and Loss Appropriation account?

I. Provision for bad debits

II. Provision for taxation for current year
III. Directors remuneration
IV. Interim dividend

a.Both I&II

368: A time deposit can renew automatically after a notification is sent to account holder

True

369: A checking account is primarily used by the customer for ____________

Check writing privileges

369: Due to change in the macroeconomic policies primary lending rate change from 7% to 8% Select all that are
true
 a. Bond prices will go up leading to increase in wealth
b. It lends to increase in mortgage interest payments

370. Company A has higher credit rating than Company B. What does this means?

a. Company A is more risky

b. There is no relation between credit rating and risk

c. Both are equally risky

d. Company B is more risky

371. A company prepares a bookkeeping worksheet in which the balances of all ledgers are compiled into debit
and

credit columns, periodically, usually at the end of every reporting period. The same statement helps an accountant

to assess the arithmetical accuracy of the accounting records, is the

a. Cash Book

b. Income Statement

c. Balance sheet

d. Trial Balance

372. What does Single Euro Payments Area (SEPA) do?

a. Removes differences in intra and cross border payments

b. Applicable to direct debits, credit and debit cards

c. All of the listed options

d. Creates a single payment market

373. 25% of the working capital gap would have to be funded by

sources while the rest 75% can be funded through and overdraft limits.

a. short term, long term

b. equity, debt

c.long term. short term

d. debt. equity

374. In a typical trade cycle, when does the clearing house take over the two legs of the trade through novation?
a. After the confirmation from the broker of the Buy side

b. Before the trades are confirmed with both the brokers

c. After the trades have been confirmed with both the brokers

d. After the confirmation from the broker of the Sell side

375. 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:

a. Asset Securitizabon Loan

b. Dealer / supplier Loan

c. Working Capital Loan

d. Bill Discounting

376. Which of the following inventory valuation methods shows higher profits during a period of rising prices?

a. LIFO (Last In First Out)

b.Weighted Average

c. Simple Average

d. FIFO (First In First Out)

377. There is a rumor that the public issue of Gamma Ltd. would be a hot issue in the market. Based on that rumor.
Mr.

James invests all his savings in this public issue. Mr. Souvick can be __________ type of investor.

a. Speculator

b. Arbitrageur

c. Gambler

d. Hedger

378. From the following options identify the Voluntary Corporate action:
a. Stock Split

b Bonus Issues

c. Merger & Acquisition

d. Rights Issue

379. Assets of a company that are reasonably expected to be realized in cash, or sold, or consumed in the next one
year

a. Fixed Assets

b. Annual assets

c. Intangible assets

d. Current Assets

380. The process of creating buffer against the potential loss of non-performing loans is called:

a. Loan classifying

b. Loan provisioning

c. Loan buffering

d. Loan monitoring

381. Expand NOE

a. Notice of Error

b. Net Outstanding Error

c. Note of Enrichment

d. Note of Execution

382. The Federal funds rate:

a. Is the rate commercial banks use as a benchmark for evaluating their largest borrowers

Flag question

b. Is inversely related to the prime rate

c. Is the rate the Fed charges on overnight loans to commercial banks

d. Is a primary policy target of the Fed in conducting monetary policy

383. Which one of the following is the key information required for wire transfer?

a. LC number

b. Invoice number

c. Receiving bank telephone number

d. SWIFT and/or ABA number

384. What is OTC

a. Options on the counter

b. None of the listed options

c. On the Counter

d. Over The Counter

385. Select all that options which are true regarding risk exposure in money market instruments?

a. All the money market instruments are considered as risk free.

b. As the maturity of money market instruments is short, these instruments are not exposed to reinvestment risk.

c. Compared to long term securities, money market instruments have minimal inflation risk.

386. Share price multiplied by number of shares gives a company's

a. Profit

b. Equity

C. Credit Rating

d. Market Capitalization

387. In Private Banking PTA stands for

a. Payable Through Account

b. Payable Through Automated Means

c. Permission to Act

d. Pay Through Action

388.In case of downturn in prices of shares, the investor will be compensated by which of the following option?

a. Securities and Exchange Commission

b. None of the listed Options

c. U.S. Department of the Treasury

d. Federal Deposit insurance Corporation

389. Which institution is responsible for Monetary policy for the country?

a Finance Ministry

b. Stock Market

c.Central Government

d Central Bank

390. Demand and supply of money go on changing from time to time making interest rates volatile. Other than
duration.

what else are used to mitigate risk arising out of volatility in interest rate.

a. Credit Default Swap - COS

b. Forward Rate Agreement (FRA)

c. Interest Rate Swap

d. Securitization

391. What is a mutual fund?

a. All of the listed options

b. A collective investment vehicle

c. A portfolio of stocks, bonds and other securities

d. A pool of funds used to purchase securities on behalf of investors

392. Consider an open ended loan account where maximum limit allowed is S2000. If margin is 20% and asset
value is

S3000, what is the drawing power from the account.

a. 2000

b. 2200

c. 1600

d. 2400

393. Which of the following generally have higher transaction volumes and lower average dollar values)

a. Wholesale payments and Retail payments

b. It depends on currency fluctuations of retail payments

c. Wholesale payments

d. Retail payments

394. Owners equity at the beginning of the year S42,000. During the year, the owner contributed $12000
additionally

towards capital and withdrew $6,000 for his personal use. If the firm had a net profit of $12,000 for the year. what

was the owners equity at the end of the year?

a. $54000

b. $66000

c. $48000

d. $60000

395. Plck the odd one out

a. Agency loans

b. VA loans

C. Interest only loans

d. FHA Loans
396. The factors to be considered in assigning a credit rating are -Character. Capacity, Covenants and Collateral. In
this

context, which of the following statements is/are true?

a. Historical records of corporate in timely payment of its obligations is important factor.

b. Promise of the borrower to meet certain promises like principal repayment, etc. is an example of affirmative
covenant

c. Covenants are the agreed terms and conditions between the borrower and lender

d. High volatility in earnings is a negative covenant.

397. The estimated percentage change in the value of a bond derived from the duration rule is

a. less than the actual price change when the yield increases

b. always greater than the actual price change

c. less than the actual price change when the yield decreases

d. greater than the actual price change when the yield decreases

398. Which of the following statements is/are true with respect to different quotes of exchange rate?

a. An American quote is the number of dollars expressed per unit of any other currency.

b. Rs.60.71/S quoted in Mumbai is an example of indirect quote.

c. Rs.60.71/S is an example of American quote.

d. A direct quote is the quote where the exchange rate is expressed in terms of number of units of the domestic

currency per unit of foreign currency.

399. Netting reduces the number of settlements needed by more than 95%. State True or False

True

False

400. AB Marketing Company is considering investing in a new project. The project will need an initial investment of

S1.200,000 and will generate 6600,000 (after-tax) cash flows for three years. Calculate the NPV for the project if
the

cost of capital is 15%.

a. 125695
b. 182354

c. 169935

d. 175293

401. Who is facility Manager?

a. An entity who takes care of administrative arrangements over the term of syndicated loan

b. An entity who funds the loan

c. An entity who manages a facility

d. An entity who receives the loan

402. Which of the following is true for stock markets?

a. Stock markets are never fair

b.Stock markets are always self regulated

c. There can only be one stock market in a country

d. Stock markets facilitate secondary buying and selling of shares

403. Which of the following is/are true with respect to commercial paper and certificate of deposits?

I. Both are issued by corporates.

II. Both can be invested by individuals and corporates.

Ill. Both can be bought back by the issuer.

a. Only III

b. Only II

c. Both I & Ill

d. Both II & III

404. The time from acceptance to maturity on a $2000000 bankers acceptance is 90 days. The importers bank's

acceptance commission is 1.75 percent and the market rate for 90 -day B/As is 6.5 percent. The exporter can

receive if he holds the B/A until maturity and if he discounts the B/A with the importer's bank.

a. $1991250. $1969350

b. $1991250. $1958750

c. S1981250. $1949350
d. $1981250. $1958750

405. Participants in currency trading are of different types. Those who trade in hope of profiting from price
movements

a. arbitrageurs

b. hedgers

C. speculators

406.In account period settlement trades are aggregated for a period of time. State True or False

True

64. The future value of an Rs.20. 000 investment, which gives an annual rate of return of 20% per annum
compounded

monthly, after two years would grow to

a. INR28090

b. INR29738

C. INR30142

d. INR32123

407. Select all the reasons that were pointing towards the dander of 2008 subprime mortgage crisis. (multiple
option)

a. Optimism about housing values also led to a boom in home construction.

b. This was the first time that such a financial crisis came and hence. financial institutions were not aware of the
root cause.

c. Mortgage -backed securities were rated very high despite the fact that there were substantial probability of
default.

408. Which one of the following portfolio is more risky?

a. 80% Equity,20% Debt

b. 40% Equity.60% Debt

c. 60% Equity.40% Debt

d. 75% Equity.25% Debt

409. Transaction reporting and compliance activity is performed by which of the following option?

a. None of the listed Options

b. Front office of an investment firm

c. Back office of an investment firm

d. Middle office of an investment firm

410. A person purchases a share at S12.5. After 4 years, the price is at S57.5 and he decides to sell the share at that

price. What is the absolute return that the person has earned?

a. 0.4645

b. 0.7826

c. 3.6

d. 0.36

411. A bought out deal is a method of offering securities to the public through a sponsor (a bank, financial
institution, or

an individual). The securities are listed in one or more stock exchanges within a time frame mutually agreed upon
by

the company and the sponsor. The likely disadvantage of brought out deal is that

a. promoters are not assured of immediate funds

b. sponsor may misuse its power

C. it is more expensive than public issue

412. The treasury asset -liability management (ALM) group assesses asset -liability risk and all banks have ALM

committees comprised of senior managers to address the risk. Duration analysis looks at weighted average
maturity

of cash flows to compare assets and liabilities.

True

413. A bank has a portfolio of $50 million worth of loans out of which it wants to sell S20 million worth of loan to
another

financial institution. What is this process called?

a. Undrawn Loan

b. Trading Loans

c. Accrual Loans

d. Held for Sale Loans

414. Investing in shares will always result in a monetary gain. State True or False

True

False

415. An investor indulging in short selling on a share expects the share price to decrease. State True or False

True

False

CONSOLIDATED OLD

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

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

Market Risk

Credit Risk

Liquidity Risk

Legal Risk

None of Above

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

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

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 in the system

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

Which of the following is associated with the purpose of regulating financial institutions?

To provide stability of the money supply

To serve certain social objectives

To prevent failure of any financial institution

To offset the moral hazard incentives provided by deposit insurance and other guarantees.

Both To serve certain social objectives and To offset the moral hazard incentives provided by deposit
insurance and other guarantees

The central bank in the US is called

Federal Reserve

Federal Reserve Board

Reserve Bank of United States

Central Bank of United States

Reserve Bank of America

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

None of the listed Options

Which of the following is the most profitable for Credit Card Company?

Customers who always pay in time

Customers who never pay

Customers who default but finally pay

all of the listed options

None of the listed Options

Interest rate spread is equal to?

Current rate Base rate

Current rate Floor

Base rate Floor

Cap Current rate

None of the listed Options

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

None of the listed Options

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

Independent sales organization

Merchant

Payment gateway

Associations

None of the listed Options

Who checks for the credit limit of the card before approving the transaction?

Payment processor

Acquiring banks

Payment gateway

Issuing bank

None of the listed Options

Which is not a banking account?

Checking Accounts

Money Market Deposit Accounts

Demat Account

Time Deposits

None of the listed Options

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

None of the listed Options

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

None of the listed Options

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?

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

None of the listed Options

Which of the following is not a credit derivative?

Credit linked Notes.

Total return swaps.

Credit default swap.

Currency swap.

All of the listed options

Which of the following is not a secured loan?

Equity Loans

Secured Loans with Savings

Equity Lines of Credit

Personal Loans

Car Loan

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

None of the listed Options

The basic four parties involved in any transaction using LC (Letter of Credit) are the following
EXCEPT

Issuing Bank

Reimbursement Bank

Seller

Beneficiarys 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

Bankers 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

Forward rate agreement

Swaption

Interest rate guarantee

None of the listed Options

Cash management techniques include

Pooling

Netting

Swapping
Both Pooling and Netting

Pooling, Netting and Swapping

All of the following are payment modes except

EFT

Cheque

Debit to account through Debit card

Lockbox

None of the listed Options

Which of the following are principles used by an asset manager?

Diversification

Screens and Filters

Capital preservation

All of the listed options

Only Diversification and Screens and Filters

Bid-Ask spread refers to

Difference in price between buying one asset and another similar one

Difference in opinion between the seller and buyer on the price of an asset

Difference between the buying and selling price of the same asset

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

None of the listed Options

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

None of the listed Options

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

None of the listed Options

What is the key regulatory authority over the American securities industry?

Federal Reserve

FDIC

DTCC

ASA

Securities Exchange Commission

What is the term for the difference between bid and ask?

Difference

Spread

Profit
Quote

None of the listed Options

What is the Third Market?

NASDAQ

OTC

NYSE

Instinet

None of the listed Options

The Fourth Market refers to

NASDAQ

OTC

NYSE

Instinet

None of the listed Options

Core Custody Services performs the following functions except

Price securities positions

Record Keeping

Fiduciary and compliance monitoring

Reporting services

Processes corporate actions

Services like the settlement, safekeeping, and reporting of customers marketable securities and
cash are provided by _________________

Custodian

Broker

Investment bank

Fund Administrator

Dealer
Money laundering refers to

Money facilitating criminal offences

Extending loans to corporate

Short term borrowing & placements

All of the listed options

None of the listed Options

Federal authorities attack money laundering through

Regulations

Criminal sanctions

Forfeiture

All of the listed options

None of the listed Options

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 banks capital expressed as percentage of the risk weighted credit exposure

Amount of banks capital expressed as percentage of the risk weighted credit exposure & operational risk

Amount of banks capital expressed as percentage of the risk weighted credit exposure, & market risk

Amount of banks capital expressed as percentage of the risk weighted credit exposure,
operational risk & market risk

None of the listed Options

Some pattern questions:

1)The central bank in US is called______

Federal reserve

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 doesnt suffer a loss in any investment

4) Pick the odd one out

a. Rakesh Jhunjunwala
b. Sachin Tendulekar
c. Warren Buffet
d. George Soros
e Peter Ujnah

5) In retail banking the term PDC stands for which of the following

post dated cheques

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

10) Which of the following is associated with the purpose of regulating financial institution

To prevent failure of any financial institution

11) What is the maximum maturity for commercial paper? 270 days

12) The below stated responsibilities are carried out by which of the following players

Cash services/ client reporting/ statements & advice/ domestic & global settlements

Back office

13) In a financial instrument has a 20% chance of paying 20% & a 80% chance of paying 50%, its
expected return would be 44%

14) Which division provides services to high net worth individual

Private banking

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. Auto loans are given by which of the following entities? Marks: 1

Answer: a. All of the listed Options
b. Banks
C. Dealerships
d. Auto manufacturers
e. Credit Unions

2. XYZ corporation is a large client of bank and on a average for a period it

maintains $20 million in its bank account However. the bank allows the authorized
representatives off XYZ to utilize funds up to 1 5% over the balance maintained
This is an example of which of the following option? Marks: 1
Answer: a. Committed Loans
b. Undrawn Loan
c. Held for Sale Loans
d Accrual Loan
e. Overdraft

3. Company ABC has a gross profit of $50000. The operating expenses amounts to
$10000. The interest on loans availed amounts to $5000 and the taxes to
be paid amounts to $5000. Calculate the EPS if there are total of 20000 shares.
Marks: 3
Answer: a. 2.5 b.1.25
c.2
d. 1.5

4. What is the difference between Bankers acceptance and sight draft? Marks: 3
Answer: a. Bankers acceptance reduces banks lending capacity
b. Bank can raise funds by selling the acceptance
c. Sight drafts are negotiable instruments
d. None of the listed Options
e. Bankers acceptance demands immediate payment.

5. Which of the following is a corporate action? Marks: 3

Answer: a. All of the listed options
b. Rights Issue
c. M&A
d. Declaring Dividend
e. Stock split
6. Checking Account, Deposit Account and Savings account are the Assets of the
Bank State True or False
Marks: 1 Answer: True False
7. BAFT stands for: Marks: 1
Answer a. Bankers Association for Foreign Trade
b. Bankers Acceptance for Foreign transactions
c. Bankers association for Factoring Trade.
d. Bankers Acceptance for Factoring Transactions
e. Bankers Association for Forfaiting & Factoring transaction

8 Inflation represents which of the following option? Marks: 2

Answer: a. Currency crisis
b. Very high change in prices
c. Economic crisis
d. Increase in prices
e. Decrease in prices

9 In a economy where inflation is 4%, future value of 100 units of money after 2
year would be which of the following option? Marks: 2
Answer: a. Around Rs 104
b. None of the listed options
c. Exactly 108
d.108.16

e. Exactly 100

10. The type of loan in which spread varies over the life of the loan is called Marks:
3
Answer: a. Fixed rate loan
b. Semi-fixed rate loan
c. Positive spread loan
d. Negative spread loan
e. Floating rate loan

11 Simple interest is calculated on which of the following basis? Marks: 1

Answer: a. Beginning principal only
b Accumulated interest in each period
c. beginning principal + accumulated interest in each period
d. None of the listed Options

12 Bank ABC interest rate on deposits is 7.20% and its interest rate on loans is
9.25% during 2009. What is the spread for Bank ABC? Marks: 3
Answer: a. 10195
b. 00225
c. None of the listed options
d. 01655

14 Equity Research (Research on stocks and market) is performed by which of the

following option? Marks: 2
Answer: a. Back office of an investment firm
b. None of the listed Options
c. Middle office of an investment firm
d. Front office of an investment firm

15 If the Limit = $2000. margin = 20% and Asset Value = $2000. then Drawing Power
for an Open ended loan is equal to? Marks: 3
Answer: a. 2000
b. 2200
c. 1600
d. None of the listed Options
e. 2400

16. With continuous compounding at 10 percent for 3 years. the future value of an
initial investment of $2000 is closest to Marks: 3
____________

Answer: a. 2870
b. 2662
c. 3000
d. 2700

17. Which are true in a Basic or No Frill Checking Account? Marks: 3

I: Limitthe number of checks written
II: Interest paid
III: Limit the number of withdrawals made
Answer: a. All of the listed Options
b. II and III
c. I and III
d. I and II

18. When Checks are deposited they are converted into digital files and then images
are transferred to financial intermediaries. What is the process of clearing
and settlement called? Marks: 3
Answer: a. Check Imaging
b. Paper check processing
c. None ofthe listed options
d. Certified check

19. VISA is involved in which of the following? Marks: 2

I: Provide the interchange systems to transfer data and funds between members
II: Set credit limits
Ill: Issue credit cards
Answer: a. I only
b. Both I and II
c. II only
d III only

20. Tax and Insurance premiums collected as part of Loan repayment are handled
through which of the following type of account? Marks: 2
Answer: a. Mutual fund account
b. Fixed deposit
c. DMAT account
d. Escrow account

21 Number of stages in loan syndication are _____ Marks: 2

Answer: a. 1
b. 4
c. 3
d. 5
e. 2

22. Choose the correct order of occurrence of following activities: Marks. 3

Answer: a. Trade execution. Trade confirmation, Trade matching. Trade clearance,
-

Trade settlement
b. Trade execution, Trade matching. Trade clearance. Trade confirmation, Trade
settlement
c. Trade execution. Trade matching, Trade confirmation. Trade clearance. Trade
settlement
d. Trade matching. Trade execution. Trade confirmation. Trade clearance, Trade
settlement

23. The counterparty in a futures contracts trade is: Marks: 3

Answer a. The brokers who struck the deal b. Banks c. The Exchange d.
Government e. The buyer and seller

24. P&L Statements represent transactions over a period of time while the
balance sheet show information as of a specific data State True or False
Marks: 1 Answer: True False

25. What is the difference between residential and commercial mortgage?

Marks: 3
Answer: a. Type of customers
b. Type of property being collateralized
c. Range of loan tenor
d. All of the listed options

26. Which of the following combinations holds true? Marks. 3

Answer: a. Documentary collection: strict compliance rules apply
b. Foreign Checks: Not useful for cross border trade
c. Standby letter of credit: less costly than documentary collection
d. Wire transfer: more costly than other payment alternatives
e. Commercial letter of credit: Improves applicants credit facilities

27. Direct investment in stock markets can be a better option over investing
through mutual funds if: Marks: 3
Answer: a. The investor wants to invest for the long term
b. The investor wants better returns than those offered by mutual funds
c. The investor has identified a bullish phase in the stock market
d. The investor has large capital. knowledge and resources for research
28. An investor indulging in short selling on a share expects the share price to
decrease State True or False Marks: 2
Answer True False

29. Hedge Funds are now regulated by: Marks: 3

Answer: a.SEC
b. Industry wide SROs
c. State regulatory agencies
d. None of the listed options

30. What happens when the interest rates rise? Marks: 1

Answer: a. Bond prices decrease
b. Bond prices do not change
c. Interest rates never fall, they always go up
d. Bond prices increase

31. Bank A, based in the US, provides safekeeping services for securities to its US
clients. It also has clients in France and Belgium. and provides securities
safekeeping services to these clients through Banks C and D respectively. Which of
the following terms best describes Bank A? Marks: 2
Answer: a. Secondary Custodian
b. None of the listed Options
c. Sub Custodian
d. Global Custodian
e. Main Custodian
32 SMA oners investors a customized approach to investing. Rawer than a generic
product State True or False. Marks: 2
Answer: True False

33 What is the role of a Central Bank in Forex market of a country? Marks: 2 ,

Answer: a. Regulatory role depending on countrys economic policies b. Acts as a trader
for maximum profit making
c. Encouraging trading in all currencies and not be limited to USD only d. Seller of USD

34 What are Yankee bonds also known as? Marks: 3

Answer: a. Shares
b. T-Bills
c. None of the listed Options
d. Call Options
e. Junk bonds

35. Which of the following LCs is similar to a Bank Guarantee? Marks: 2

Answer: a. Stand by
b. Negotiable
c. Back to Back
d. Straight
e. Revolving

36. You purchased a stock for $40. One year later you received $2 as dividend and
sold the share for $48. How much is the return of holding period? Marks: 3
Answer: a. 10 percentage
b. 50 percentage
c. None of the listed options
d. 45 percentage
e. 25 percentage

37. Banks operations are divided into which of the following option? Marks: 2
Answer: a. Back Office
b. All of the listed options
c. Middle Office
d. Front office

38. If a bank gets a deposit of $5000. assuming a reserve requirement (CRR) of

10%. and that it circulates through 2 more banks, leading to which of the following
money multiplier effect? Marks: 3
Answer: a. It creates reserve of $1000
b. It creates a Loan of $8550
c. It creates a reserve of $500
d. None of the listed Options
e. It creates a Loan of $12195

39 Which of the following Mechanisms is used for financing for auto loans? Marks:
2
Answer: a. Dealer financing
b. Direct Lending
c. Leasing
d. All of the listed Options

40. The purpose of Community development banks (CDBs) is to serve residents and
spur economic development in low to moderate income (LMI) geographical areas
State True or False. Marks: 1
Answer: True False

41. Which of the following methods eliminate country risk and commercial risk
upon confirmation? Marks: 1
Answer: a. Documentary Collection, Letter of Credit
b Letter of Credit, Back to back Letter of Credit
c. Stand by Letter of Credit, Letter of credit
d. Documentary collection. Stand by letter of credit
e. Back to back Letter of Credit. Documentary collection

42. Which of the following methods of payment is most risky to the Buyer? Marks:
2
Answer: a. Open Account
b. Letter of Credit
c. Documentary Collection
d. Cash in Advance
e. Counter trade

43. Which of the following is a benefit from a Mutual Fund? Marks: 2 ,

Answer: a. Investor is able to diversify risk
b. Investor can get professional management to manage his money
c. All of the listed options
d. Investor can save costs

44. TARP stands for which of the following option? Marks: 1

Answer: a. Term Assets Relief Program
b. Troubled Assets Relief Program
c. Troubled Assets Reform Program
d. Term Assets Reform Program
e. None of the listed options
45. Hedge Funds can use which of the following investment Strategies? Marks: 1
Answer a. Short Bias
b. All of the listed options
c. Short Selling
d. Regulation D
e. Credit Arbitrage

46. Which two risks of a financial institution may bring gains as well as losses?
Marks: 3
Answer: a. Interest rate risk and foreign exchange risk
b. None of the listed options
c. Liquidity risk and credit risk
d. Credit risk and foreign exchange risk
e. Credit risk and interest rate risk

47. Which of the following is NOT a core private banking function? Marks: 3
Answer: a. Investment Analysis and Advise
b. Client Management
c. Sales and Marketing
d. Deposit Mobilization
e. Research

48 When is a bank failure is more likely to occur? Marks: 2 ,

Answer: a. Capital adequacy ratio is increased
b. Cash Reserve ratio is increased
c. Bank increases its equity capital
d. Capital adequacy ratio is reduced
e. Bank holds more short-term riskless securities

49 In account period settlement trades are aggregated for a period of time--- State
True or False Marks: 2
Answer: True False

50 There are 5 participants A, B, C, D, E in a 25M USD syndicated loan and A is the

lead manager. The borrower has agreed to pay 0.4% ($1 ,00,000)
participant fee How much each participants will share in participant fee? Marks: 3
Answer: a. $1 ,00.000 will be received every time money is withdrawn
b. $1 ,00.000 will be charged towards undrawn portion
c. None of the listed Options
d. $1 ,00.000 will be received every month
e. $1 ,00.000 will be received affront

51 A Custodian processes Interest proceeds from the fixed income securities

held under its custody. Which division within the custodian company is
responsible for carrying out the process. Marks: 2
Answer: a. Transaction management
b. Income processing
c. Brokerage services
d. Cash Management
e. Fund administration

52 Check 21 Act facilitates Marks: 1

Answer: a. Netting and pooling of checks at day end
b. Check truncation and creation of substitute check
c. Netting and substitution of checks at day end
d. Clearing check by manually processing the check
e. Netting of checks at day end

53 Which of the following represents the correct hierarchy of corporate

ratings (highest to lowest)? Marks: 1
Answer a.D,-,B,A4A ...

b.AAA,AA-,D, BBB8
c. MA, AA+, BBB, D 6
d. D,C,B.A
e.AM,AA, D,AA

54 assumes the counter party risk of each member and guarantees

______________

financial settlement. Marks: 3

Answer: a. Depository
b. Custodian
c. clearing house
d. Stock Exchange

55 Which of the following is a Top 10 US Bank? Marks: 1

Answer: Q a. HDFC
b. INC Bank
c. Rabo bank
d. Morgan Stanley
e. Wells Fargo

56 SPV means: Marks: 2

Answer: a. Special Purpose Vehicle
b. Security Purpose Vehicle
c. Special Principal Vehicle
d. Securitized Planning Vehicle
e. None of the listed options

57 The term OTC usually stands for which ofthe following in the context of
financial markets? Marks: 1
Answer: a. Over the cash
b. Overview of trading courses
c. Online trading in commodities
d. Out of the cash
e. Over the counter

58 Company A has higher credit rating than Company B. What does this
means? Marks: 1
Answer: a. Company B is more risky
b. All of the listed options
c. Both are equally risky
d. There is no relation between credit rating and risk
e. Company A is more risky

59 Two major functions of Corporate Finance division of investment banks

are? Marks: 2
Answer: a. Short Selling
b. Technology and M&As
c. Risk Management and Underwriting
d. Mergers and acquisitions advisory and Underwriting
e. Security Trading and Underwriting
60 Annuities are: Marks: 3
Answer: a. True discounted Loan
b. A loan that is paid in periodic equated installments with capitalized interest
c. Amortized Loan
d. Discounted loan
e. Capitalized Loan

61 The underwriting agreement states Marks: 3

Answer a Public Offering Price
b. None of the listed options
c. All of the listed options
d Underwriting Spread
e terms and conditions of the offering

62 Due to which of the following reason is Rebalancing performed? Marks: 3

Answer: a change in original asset allocation due to market performance
b All of the listed options
c occurrence of major life events in the investors life
d. change in risk profile of the investor

63 An investor has multiple investment options yielding various dollar returns at

various points of time. While he is comfortable with a return of X%. Which
method should he use to compare the various investments? Marks: 3
Answer: a. Net Present Value
b. Internal Rate of Return
c. Simple Interest
d. External Rate of Return
e. Compound Interest

64 The Federal funds rate: Marks: 2

Answer: a. Is the rate the Fed charges on overnight loans to commercial banks b. Is
inversely related to the prime rate
c Is the rate commercial banks use as a benchmark for evaluating their largest borrowers
d. None of the listed Options
e. Is a primary policy target of the Fed in conducting monetary policy
65 What is NOT true about Back to Back LC (letter of Credit)? Marks: 3
I: Buyer to open new LC against an already issued LC
II: Seller to use the LC received from his buyer in favor of another
Ill: Buyer to use the LC received from his seller to open his own LC
IV: Seller to receive one more LC against an already issues LC from his buyer
Answer: a. I only
b. I. III and IV
c. III only
d. IV only
e. II only

67. Which of the following is NOT a Settlement Method for Bank Loans? Marks: 3
Answer: a Securities Repository
b. Assignment
c Participation
d Sub-Participation
e Pre closure

68 Which ofthe following operations cannot be done on a LC (Letter of Credit)?

Marks: 2 ,
Answer: a Purchase
b None of the listed Options
c Discount
d. Acceptance

69 What is a collateral? Marks: 2

Answer: a. Obligations to be fulfilled by the borrower
b. A form of loan
c. None of the listed Options
d. A bad loan
e. Asset put up as security

70 In a typical credit card transaction processing cycle. which of the following is

applicable? Marks: 3
I: The Issuer and Acquirer route authorization through the Association
II: Issuer transfers funds to the Acquirer
Answer: a None of the listed options
b. I only
c. II only
d. Both I and II

71 In a Securities lending transaction, if the buyer of securities provides cash as a

collateral. Then the seller of securities has to provide the buyer with a interest
amount for the cash What is this interest amount called? Marks: 3
Answer: a Interest Rate
b Rebate Rate
c Collateral Interest
d. Return Rate
e None of the listed Options

72 The term settlement cycle refers to which of the following option? Marks: 1
Answer: a time period between the date on which an investor first makes the decision to
enter a trade and the date when the trade is settled b None of the listed option are correct
c time period between the date on which the trade is cleared and the date when the trade
is settled
d time period between the date on which the trade is executed and the date when the trade
is settled

73 What is the common advantage of using leasing? Marks: 1

Answer: a. Lower cost for items purchased
b. Using the asset without need for purchase.
c. Less impulse buying
d. None of the listed Options
e. Lower chance of overspending
74 Jet Airways and Citibank have tied up to offer this type of credit card What type
of card is it? Marks: 2
Answer: a. Gift Card
b Co Branded card
c Smart Card
d Affinity Card

75 When a Sank goes to the Fed to borrow funds. The interest rate charged by the
Fed is known as: Marks: 2
Answer: a Prime rate
b. Discount rate
c Bond rate d Federal funds rate
76 Interest rate spread is equal to? Marks: 3
Answer a Current rate Base rate
-

b Base rate - Floor

c Cap - Current rate
d. None ofthe listed Options
e Current rate - Floor

77 The share price of a company may drop considerably from its current levels. In
this scenario, what type of risk are the investors facing? Marks: 3
Answer: a. Market Risk
b. Credit Risk
c. Company Risk
d. Business Risk
e Liquidity Risk

78 Which of the following are NOT the benefits of using credit derivatives? Marks 3
-Answer: a Credit derivatives can be used both to diversify their credit risk exposures and
free up capital from regulatory constraints b. Credit derivatives can be used either to
take on more risk or to avoid (hedge) it
c. Increasing the credit limit of a corporate
d Credit derivatives can be used to create positions that can otherwise not easily be
established in the cash market

79 Which of the following is NOT a banking service? Marks: 2

Answer: a. Corporate Banking
b Stock market regulation
c. Private Banking
d. Consumer Lending
e Retail Banking

80 Which of the following are involved in the retail brokerage business in US?
Marks: 2
Answer: a. E-Trade
b. Sallie Mae
c. Ginnie Mae
d. Federal Reserve
e. Freddie Mac
81 represents the creditworthiness of the borrower Marks: 2
__________

Answer: a. LOAN score

b. score
c. FICO score
d. Interest score

82 In Trade Finance, which of the following factors are considered while

choosing mode of financing? Marks: 2
Answer: a. Exporters Fund, Risk Factors, Cost of financing. Time frame
b None of the listed options
c Government Guarantee Program. Seller preference
d Time frame, Cost of financing. Buyers trade associates

83 How would you categorize account activity alerts in mobile banking?

Marks: 2
Answer: a Transactions
b Support
c Investment
d Account Information

84 Banks are NOT allowed to: Marks: 1

Answer a. Print money
b. Make loans
c. Invest money
d. Take deposits

85 The BASEL 2 framework has 3 main pillars From the options given below.
find the one that is NOT a part of it: Marks: 1
Answer: Q a. Operational Effectiveness
b Minimum Capital Requirements
c. Market Discipline
d. Supervisory Review

86 In Normal Distribution 99% Confidence interval corresponds to Marks:

3
Answer: a. 3 Sd
b. 196 Sd
c. 2.33 Sd
d. 1.65 Sd
e. 1 Sd

87 What does Single Euro Payments Area (SEPA) do? Marks: 1

Answer: a. Applicable to direct debits, credit and debit cards
b. Creates a single payment market
c. Removes differences in intra and cross border payments d. All of the listed
options

89 Mutual funds: Marks: 2

Answer: a. Are often riskier than investing in individual stocks
b. Give much greater returns than the stock index
c. Require investors to invest very large sums of money, which eliminates small
investors.
d. Carry no risk
e. Are less riskier than individual stocks as the fund managers invest in a
diversified portfolio

90 Which of the following are NOT examples of Payment Methods? Marks: 1

Answer: a. Letter of credit
b. None of the listed Options
c. Cash in advance
d. Documentary collection

91 In any task undertaken by a company, the presence of risk implies that Marks
1
Answer: a. The shareholders of the company will lose money
b. The outcome of the tasks undertaken by the company is uncertain
c. The company will not fare better than its competitors
d. The companys management has not done a good job
e. The standard deviation of the return is zero

92 Trading of a corporations stock or other securities (eg bonds or stock options)

by individuals with potential access to non-public information about the company is
called: Marks: 2
Answer: a. Insider Holdings
b. Lock in Period
c Insider Trading
d Hedging
e Initial Public Offer

93 If total spread on underwriting is $ 500000 and Managers fee is S 100000. What

is the amount which will be distributed in the syndicate? Marks:3
Answer a. Cannot be determines ....

b. 100000
c. 400000
d. 600000
e. 500000

94 If an investment company has securities and other assets worth $100 million and
has liabilities of $10 million. the investment companys NAV will be? Marks: 2
Answer a. $110 million
b. $10 million
c. $100 million
d. $90 million

95 is the amount of net income related to each share. Marks: 1

Answer a. EBIT
b. PAT
c. PBT
d. LEPS

96 A process in which money is lent to corporate bodies refers to: Marks: 1

Answer a. Loans provided to individuals
b Loans provided to companies by Government
c. Loans provided by companies to individuals
d. Loans provided to high net worth individuals
e. Loans provided to companies

97 Which of the following is a treasury management system? Marks: 1

Answer a. Pinnacle
b Front Arena
c.TS2
d. Finnacle
e. Flex cube

98 What is Line of credit? Marks: 2

Answer: a. None of the listed Options
b. Irrevocable credit provided by financial institution
c. A formal, legal commitment to extend credit up to some maximum amount over a
stated period of time
d. Similar to credit card
e. Removing credit agreement

99 A person purchases a share at $50 After 2 years, the price is at $75 and he
decides to sell the share at that price. What is the annualized return that the person
has earned?
Marks: 3 Answer: Q a None of the listed options
b. 0.5
c. 06667
d. 03333
e. 02247

100 Dividend declaration is an example of: Marks: 3

Answer: a. Private Banking
b. Investment Banking
c. Merger and acquisition
d. Initial Public Offer
e. Corporate action

101 Which is NOT a type of corporate bond? Marks: 1

Answer: a. Unsecured bonds
b. Sub-ordinated debentures
c. T-BiIIs
d. Secured Bonds

102 An investor is holding 1 00 Microsoft shares that are trading at $27 per
shara He instructs the broker to sell all the 1 00 shares when the share price
reaches 35 or above that. What is this type of order called? Marks: 1
Answer: a. Optional Order
b. Conditional Order
c. None ofthe listed Options
d. Limit Order
e. High price order

103 There are 5 participants A, B, C, D, E in a 25M USD syndicated loan and

A is the lead manager The borrower has agreed to pay 0.4% ($1,00,000)
arrangement fee. How much each participant will share in arrangement fee?
Marks: 3
Answer: a. 20000
b.15000
c. 18000
d. 17000

104 In a typical trade cycle, when does the clearing house take over the two
legs of the trade through notation? Marks: 3
Answer: a. After the confirmation from the broker of the Sell side
b. After the confirmation from the broker of the Buy side
c. After the trades have been confirmed with both the brokers
d. Before the trades are confirmed with both the brokers

105 At the end of the trade cycle. the trades are to determine the obligation of
the trading members to deliver securities/funds as per settlement
schedule. Marks: 2
Answer: a. Offset
b. Grossed
c. Netted
d. Aggregated
106 Based on your understanding of EBPP, which would you identify as a
potential cost-cutting opportunity for a bank? Marks: 1
Answer: a. Outsourcing the Billing Service Provider
b. Give preference to check-based bill payment
c. All ofthe listed options
d. Create bills offline but ensure online payments

107 From the given options identify the service(s) that can be categorized
under Asset Servicing line of business.
I: Corporate Action processing
Marks: 1 II: Income Processing
Ill: Transfer Agency services
IV: All of the listed options
Answer: a. Ill only
b. I only
c. Both I and II
d .IV
0 e. II only

108 Identify the odd one out: Marks: 1

Answer: a. Treasury Notes
b. Stocks
c. Treasury Bills
d. Bill of Exchange
e. Commercial Papers

109 Which of the following is NOT an example of an option? Marks: 1

Answer: a. Oil Futures
b. Call Option
c. LEAPS (Long Term Options)
d. Swap option
e. Put Option

110 GE shares are currently selling for $15 each. You bought 200 shares one
year ago at $12 and received dividend payments of $2 per share. What was
your total dollar capital gain this year? Marks: 2
Answer: a. 600
b. 1000
c. None of the listed options
d. 400
e. 200

111 of a securities trade involves the transfer of the securities from the
_____________

seller to the buyer. Marks:2

Answer: a. Settlement
b. Netting
c. Trading
d. Clearing

112 In FOP mode of settlement there is no simultaneous exchange of securities

and payments State True or False
Marks: 1 Answer: True False

113 If R is the real rate of interest. N is the nominal rate of interest and I is the
rate of inflation, then: Marks:2
Answer a R= Nxl
b. R=N+l
c. R = N/I d. R=N-l

114 ABC corporation is a large client of Bank New. Bank New extends a loan
to XYZ Corporation which is a supplier 0fABC. This is an example of:
Marks: 2
Answer: Q & Working Capital Loan
b Asset Securitization Loan
c. Revolving Line of Credit
d. Bill Discounting
e. Dealer I supplier Loan

115 In Electronic Check Conversion (ECC), what happens once the check is
processed? Marks: 3
Answer: a. Receive Cash immediately
b. The customer signs a receipt authorizing the store to present the check to the
bank electronically and depositthe funds into the stores
account
c. The customer can present a check to a store cashier
d. All ofthe listed options

116 A Central Bank in an economy is also known as: Marks: 1

Answer: a. The Retail Depositors Bank
b. The Bankers Bank
c. None of the listed Options
d. The Banking Boss
e. The Government Bank

117 Open ended loan allow the borrower to borrow additional amount subject
to the maximum amount less then a set value. State True or False Marks: 1
Answer: True False

118 Private Banking Clients have high _________ Marks: 1 _

Answer a Investible Assets

b. Net worth. Investible assets and Income
c. Income
d. Net worth

119 Which of the following risks for the investor is associated with corporate
bonds but NOT U.S. Treasury securities? Marks: 2
Answer: a. Credit Rating Risk
b. Interest Rate Risk
c. None of the listed options
d. Default Risk
e. Reinvestment Risk

120 Which of the following are the list of risks that Cognizant faces at an
organization level? Marks: 1
Answer: a. Cognizant faces all of the above risks
b. Market Risk
c. Operational Risk
d. Credit Risk
e. Currency Risk

121 On a trading day at an exchange. a broker undertakes the following trades:

Marks: 3
Buy 200 Microsoft shares for S10.00 each
Sell 100 Microsoft shares for S10.00 each
Buy 100 Google shares for $20.00 each
Sell 30 Microsoft shares for $11. 00 each
Sell 50 Google shares for $20.50 each
Sell 40 Microsoft shares for $9.00 each
How much did the broker pay out to the exchange in total in case of (a) gross settlement
system (b) net settlement system?
Answer: a. (a) $4000 (b) $1285
b. (a) $1235 (b) $2235
c. (a) $260 for Microsoft $975 for Google (b) $975 for Google & $260 for Microsoft
d. (a) $1235 (b) $4,000
e. None ofthe listed Options

122 On a trading day at the NYSE. a broker undertakes the following trades:
Marks: 2
Buy 120 Dell shares for $10.00 each
Sell 70 Dell shares for $10.50 each
Buy 200 Cisco shares for $20.00 each
Sell 20 Dell shares for $1 1.00 each
Sell 50 Cisco shares for $20.50 each
Sell 1 0 Dell shares for $9.00 each
Given that a net settlement system is being used, find out the net position of the broker at
the end of the day.
Answer: a. Dell: 70 shares to give out: Cisco: 90 shares to receive: $3,000 to pay out to
the exchange
b. Dell: 20 shares to receive: Cisco: 1 50 shares to receive: $31 30 to pay out to the
exchange
c. Dell: 150 shares to receive: Cisco: 20 shares to receive: $3130to receive from the
exchange
d. None of the listed Options
e. Dell: 20 shares to pay out: Cisco: 1 50 shares to receive: $3,780 to pay out to the
exchange

123 The process of netting: Marks. 1

Answer: a. Increases the number of settlements
.

b. Neither reduces nor increases the number of settlements

c. Increases the transaction costs
d Reduces the number of settlements

124 On a trading day at the NYSE. a broker undertakes the following trades:
Marks: 3
Buy 100 IBM sharesfor$11.00 each
Sell 50 IBM shares for $10.50 each
Buy I 00 MSFT shares for $20.00 each
Sell 20 IBM shares for $1 1 .00 each
Sell 1 0 MSFT shares for $20.50 each
Sell 30 IBM shares for $9.00 each
How much did the broker pay outto the exchange in total in case of (a) gross settlement
system (b) net settlement system?
Answer: a. (a) $3100 (b) $1880
b.(a) $1880 (b) $3100
c. None of the listed Options
d. (a) 0 for IBM, $1 ,795 for MSFT (b) $1,780
e. (a) $1 .780 (b) 0 for IBM. $1 ,795 for MSFT

125 Which of the following is associated with the purpose of regulating financial
institutions? Marks: 3
Answer: a. To off set the moral hazard incentives provided by deposit insurance and
other guarantees.
b. To serve certain social objectives
c. To prevent failure of any financial institution
d. None of the listed options
e. To provide stability of the money supply

126 If a financial instrument has a 50% chance of paying 20% and a 50% chance of
paying 60% percent, what would be the expected return? Marks: 2
Answer: a. 0.2
b. 0.8
c.0.4
d. 0.5

127 Warrants are the combination of which of these instruments? Marks: 3

Answer: a. Put Options and Swaps
b. Cash and Call Options
c. Equities and Call Options
d. Equities and Futures
e. Call and Put Options

128 is the legal and professional proceeding in which a lender, obtains a court
ordered termination of a borrowers equitable right of redemption. Marks: 3
Answer: a. Credit-Freeze
b. Foreclosure
c. Securitization
d. Sub-Prime
129 The components to determine the rate of exchange in a Forward Contract are:
Marks: 2 ,
Answer a. Current Spot Rate and Forward rate adjustment
b. Forward rate adjustment and amount of currency bought 7 sold
c. Current Spot Rate, amount of currency bought / sold
d. Cross Currency Rate and forward rate adjustment

130 Money laundering refers to which of the following option? Marks. 1

Answer: a Extending loans to corporate
.

b. Converting the profits from criminal activities into legitimate funds

c. Short term borrowing & placements
d. All of the listed options

I Credit derivatives can be used to ____________ the regulatory capital requirements and ____________

credit risk.
Answer: Q a. increase, transfer
Marks: 2 , b avoid, manage
0 c. improve. eliminate
0 d reduce. diversify
0 e. estimate, assess

3 Jet Airways and Citibank have tied up to offer this type of credit card. What type
of card is it? 11 12
Answer: a. Co Branded card 2
Marks:2 Q b. Gift Card t.
8
0 c. Smart Card 6
0 d. Affinity Card

4 Which of the following are NOT the benefits of using credit derivatives?
Answer 0 a. Credit derivatives can be used both to diversify their credit risk exposures
and free up capital from regulatory constraints Marks: 3 0 b Increasing the credit limit of
a corporate
0 c. Credit derivatives can be used to create positions that can otherwise not easily be
established in the cash market
0 d. Credit derivatives can be used either to take on more risk or to avoid (hedge) it
5 A Custodian has different types of assets under its custody and those assets earn returns
to the original investor in various forms. What are the types of returns that can be taxed?
Marks: 3 I: Dividend
II: Interest
Ill: Capital Gain
IV: All of the listed options
Answer: & II only
0 b. I only
0 c. Both I and II
0 d. Ill only
Qe.IV
6 Which of the following are benefit(s) of EMV?
Marks: 1 I: Fraud Prevention
II: Exception transactions
Answer: Q & II only
0 b. None of the listed options
0 c. I only
0 d. Both I and II

KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
Page: (Previous) 1 2 3 4 5 6 7 8 9 10 11 12 13 (Next)

12 Operational Risk is defined as:

Answer: Q & he possibility of loss as a result of default, such as when a customer defaults
-

on a loan
Marks. 1 , b the possibility of loss over a given period of time related to uncertain
movements in market factors
0 c. the possibility of loss when a contract cannot be enforced
0 d. the risk of loss resufting from errors in processes, people and systems
0 e the possibility that a firm will be unable to generate funds to meet contractual
obligations as they fall dueS
0:14:51

I 4 Which one of the following is NOT offered by Investment Banking division of a

bank?
Answer: a. Valuation of firms
Marks: 2 b. Lending services
0 c. Underwriting and distribution of equity issues
0 d. None of the listed Options
0 e. Mergers and acquisitions
I 5 Which of the following is an example of Pre Srupment Loan?
Answer: 0 a. Working Capital for purchase of raw material
Marks: 1 b. None of the listed options
0 c. Bills receivable and payable
0 d. Bill discounting
16 In case of auto finance. monthly lease payments are usually lower than monthly loan
payments because of which reason? 12
Answer: , a. All of the listed Options 10 . 2
Marks: 3 0 b. Customer is Paying only for depreciation9 . . . 3
.

0 c. Customer is Paying only for Rent Charges8. 4

0 d. Customer is Paying only for Taxes
0 e. Customer is Paying only for Fees
I 7 Generally, if Bond X had a lower rating than Bond Y, the yield on Bond X would be:
Answer C a. Lower than that of Bond Y
Marks: 1 b. same as that of Bond Y
C c. Volatile
0 d. Higher than that of Bond Y

KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
Page: (Previous) 1 2 3 4 5 6 7 8 9 10 11 12 13 (Next)

23 Which of the following is NOT a player in a typical trade cycle?

Answer 0 a. Custodian bank 12
Marks: 3 0 b Clearing bank ?. . . . . .
0 c Regulator 8 4
0 d Clearing member 7 6
0 e Trading member
24 Which of the following is NOT Banks primary use for deposits from depositors?
Answer: Q a Withdrawals
Marks: 1 b Loans
0 c Employee salaries
0 d Investments
0 e. None of the listed Options
25 All the following statements concerning US Government securities are correct
EXCEPT:
Answer 0 a. Treasury notes have maturity dates up to I 0 years.
Marks: 2 0 b. Treasury bills have a greater interest rate risk than either Treasury bonds or
Treasury notes.
c Treasury bonds have maturity dates up to 30 years
0 d. Treasury bills have their interest paid in a lump sum at maturifr
26 What is a mutual fund?
Answer: 0 a A pool of funds used to purchase securities on behalf of investors
Marks: 3 0 b All of the listed options
o c. A portfolio of stocks. bonds and other securities
o d A collective investment vehicle
27 Identify the core risk that a Securities lending firm faces:
Answer 0 a. Compliance risk
Marks: 1 0 b Credit risk
o c. Strategic risk
o t Transaction risk
o e. Reputation risk
28 Trading occurs between clearing and settlement State True or False
Marks 2 Answer QTrue 0 False

30 Private Banking includes which of the following options?

Answer & All of the listed options
Marks: 2 0 b money management
0 c. Investment services
0 ci personalized banking services
o e financial advice
KOL-24-Aug-1 I [1 5:OOel 7:30]
Attempt I
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31 Which of the following is NOT true about LC (Letter of Credit)?
I: Shifts credit risk from the Importer to the Importers Bank (Issuing Bank)
Marks: 3 II: Deals with products and not with documents
Ill: Are typically revocable unless specified otherwise
IV: Advising bank has the liability for the payment of the LC.
Answer: Q a. I only
QbHVonIy
0 c II. Ill and IV
0 d II only
0 a III only
32 A settlement can be considered as final only if:
Answer: rj & The settlement is irrevocable
Marks: 2 b The transfer offunds and securities take place simultaneously
0 c The settlement is unconditional
0 d The settlement is unconditional as well as irrevocable
0:14:24
11 12
10 2
9 3
. . . .4..

36 Which of the following are not institutional investors?

Answer: cj & High Net worth Individuals
Marks: 1 b Mutual Funds
0 c. Banks
0 d Pension Funds
0 e Hedge Funds

KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
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43 Which of the following services are provided by a global custodian?

Answer: & All of the listed options
Marks: 3 0 b. Fund administration 01412
0 c. Tax reclaims processing 12
0 d. Settlement services 2
0 e Foreign exchange transactions . . .. a

47 Which of the following is associated with the purpose of regulating financial

institutions?
Answer: , a. To serve certain social objectives
Marks: 3 0 b. To provide stability of the money supply
0 c. None of the listed options
0 d. To prevent failure of any financial institution
0 e. To offset the moral hazard incentives provided by deposit insurance and other
guarantees

49 The risk that a given security or asset cannot be traded quickly enough in the market
to prevent a loss (or make the required profit) is:
Answer: 0 a. Liquidity Risk
Marks: 3 0 b. Business Risk
0 c. Credit Risk
0 d. Financial Risk

KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
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54 Mutual Funds cannot

Answer: a. Invest in equity
Marks: 2 0 b. Short Sell
C c. Invest in Money Market Instruments
0 d. Can follow any of the investment practices
0 e. Invest in Bonds
55 A card holder swipes his card for USD 100. How much does the merchant
Marks: 3 I: deduct from the card holder?
II: receive from the Acquirer?
Assume Merchant Discount at 2 %
Answer: Q a. I: USD 100 ll:USD2
0 b. I: USD 98 II: USD 98
0 c. I: USD 100 II: USD 98
0 d. I: USD 100 II: USD 100

57 What happens when the Fed manipulates the federal funds interest rate?
Answer 0 a. None of the listed Options
Marks: 2 , b. Affects withdrawals
0 c. Affects lending
Qd Affects deposits
0 e. Affects credit card balances
58 In defined benefit plans, the benefit is expressed as an and in defined contribution
__________

plans. the benefit is expressed as an ____________

Answer: Q a. Annuity: annuity

Marks: 2 b. Account balance: annuity
0 c. Account balance: account balance
0 d. Annuity: account balance
59 Which of the following is usually NOT a participant in Stock Markets?
Answer: 0 a. FlIs
Marks: 2 , b. Mutual Funds
0 c. Individual investors
0 d. Central banks
60 The trade terms 1 0/3, net 1 5 indicate that:
Answer: a. 30% discount is offered if payment is made before 15 of the month
.

Marks. 3 0 b. 3% discount is offered if payment is made within 10 days

0 c. 10% discount is offered if payment is made between 3 and 15 days
0 d. 10% discount is offered if payment is made within 3 days. the payment should
however be made in 15 days
C e. 3% discount is offered if payment is made within 1 5 days

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KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
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62 Client Management is a function of:

Answer: Q & Back Office
Marks: 1 b Front Office
0 c. Anyone who knows the client Qd.MidOffice
0:13:53
63 Which are the basic parties involved in any transaction using LC (Letter of Credit)?
Answer: Q a None of the listed otioq 1 12
Marks: 1 b Beneficiarys Bank 2 ::

0 c Seller, Buyer 8 4

0 d Issuing Bank 7 6

65 CIP in the context of anti money laundering:

Answer: 0 All of the listed options
Marks: 2 b. Stands for customer identification program
0 c Stands for Suspicious activity reports
0 d. Needs to be filed by Securities brokers and dealers as well as commodity merchants
0 e Requiring businesses. which were only to report cash transactions involving more
than $1 .000.000 to the IRS to file

66 When a firm needs short-term funds for a specific purpose. the bank loan will likely
be a
Answer: Q & Term Loan
Marks: 1 b Line of credit
0 c. Revolving credit agreement
0 d Compensating balance arrangement
0 a Transaction loan

67 Suppose that a portfolio manager has a daily VaR equal to $1 million at 99% What
does this imply?
Answer: Q a Portfolio looses 1% everyday
Marks: 1 c b Under normal circumstances. on 1 day out of 100 portfolio can loose S 1
million
0 c. On 1 day out of 100 portfolio can loose S 1 million
0 d Portfolio size is S 100 million
0 e Under abnormal circumstances, on 1 day out of 100 portfolio can
loose S 1 million

KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
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72 An investment that earns compound interest is the same as one that earns simple
interest at the effective yield State True or False
Marks 2 Answer QTrue 0 False

74 On a trading day at the NYSE. a broker undertakes the following trades:

Buy 120 Dell sharesfor$1ODO each
Marks: 2 Sell 70 Dell shares for $1050 each
Buy 200 Cisco shares for S2OOO each
Sell 20 Dell shares for $1 1 .00 each
Sell 50 Cisco shares for $20.50 each
Sell 1 0 Dell shares for $900 each
Given that a net settlement system i s being used. find out the net position of the broker at
the end of the day
Answer: Q & Dell: 150 sharesto receive: Cisco: 20 sharesto receive: $3130to
receivefromthe exchange
0 b Dell: 20 shares to receive: Cisco: 1 50 shares to receive: $31 30 to pay out to the
exchange
0 c. Dell: 70 shares to give out: Cisco: 90 shares to receive: $3.000 to pay out to the
exchange
0 d None of the listed Options
0 a Dell: 20 shares to pay out: Cisco: I 50 shares to receive: $3,780 to pay out to the
exchange

75 Share price is determined by which of the following option?

Answer: a Market sentiment
Marks: 1 b. Performance of the company
0 c All of the listed options
0 d. Performance of the relevant industry
0 e State of the countrys economy

77 A person purchases a share at $12.5. After 4 years, the price is at $57.5 and he decides
to sell the share at that price. What is the absolute return that the person has earned?
Marks: 2 Answer: Q & 0.36
0 b None of the listed options
c.3.6
0 d 0.7826
0 e. 0.4645
78 The Advising bank is used as a trusted bridge between the and when they do not have
an active relationship.
Answer 0 a. Reimbursing bank: Beneficiary bank
Marks: 2 b. Beneficiary bank: Reimbursing bank 01339
0 c. Applicant bank: Beneficiary bank
0 d. Importer: Exporter 1 12
0 e. Issuing bank: Confirming bank 10 2

9 .. .:
8
79 Which one of the following is NOT a measurement technique for Credit Risk?
Answer: a. LGD
Marks: 1 b. EAD
0 c. Probability of Defauft
0 d. FIRB
0 e. Basic Indicator Approach
80 Company ABC has a gross profitof$50000. The operating expenses amounts to
$10000. The interest on loans availed amounts to $5000 and the taxes to be paid amounts
to $5000. Calculate the EPS if there are total of20000 shares.
Marks: 3 Answer: Q a. 1.25
0 b. 1.5
Qc.2
Qd.2.5

KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
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82 Which one of the following portfolio is more risky?

Answer: Q & 60% Equity. 40% Debt
Marks: 2 b 80% Equity, 20% Debt
0 c 75% Equity. 25% Debt
0 d 400/b Equity, 60% Debt
83 Unit capital of a mutual fund scheme is Rs 20 million: The market value of its
investments is Rs. 55 million. The number of units is 1 million What is the 0:13:29
NAV?
Marks: 2 Answer: Q a. Rs. 75 11 12
bRs55 19 2
0 c. Not possible to sa8
QdRs2O
84 Find out the one which does NOT come under the retail banking service?
Answer: & Credit card services
Marks: 1 b Personal loans
0 Trade Finance
0 & Electronic banking
85 The clearing process is completed When delivery and payment have occurred State
True or False
Marks 2 Answer: GTrue 0 False

88 When in a front end, fee is charged?

Answer: 0 a Upfront at the inception
Marks: 2 0 b. Per annum
0 c Every month
Qd Everyday
0 a One off in case of prepayment
89 Which of the following is not an Index?
Answer Q&NYSE
Marks: 2 0 b. HangSeng
0 c FTSE
QcIDAX
0 a NASDAQ 100
90 What is a credit union?
Answer: 0 & Providing credit at reasonable rates
Marks: 2 0 b Providing otherfinancial services to its members
3 c All of the listed Options
0 d. Operated forthe purpose of promoting thrift
0 a A cooperative financial institution that is owned and controlled by its members

KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
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91 What does a CALL option give the buyer?
Answer: Q a. The right, but notthe obligation. to buy
Marks: 3 0 b. The right. but not the obligation. to sell
0 C. The right and obligation to buy
0 d. The obligation to sell
0 e. The obligation to buy

93 Which of the following is NOT a derivatives instrument? ...

Answer: cij a. Corporate Bonds

Marks: 2 , b. Put Options 6

0 c. Equity
Qd. Swaps
0 e. Call Options
94 On a trading day at the NYSE. a broker undertakes the following trades:
Marks: 3 Buy 100 IBM sharesfor$11.OO each
Sell 50 IBM shares for $10.50 each
Buy I 00 MSFT shares for $20.00 each
Sell 20 IBM shares for $1 I .00 each
Sell 1 0 MSFT shares for $20.50 each
Sell 30 IBM shares for $9.00 each
How much did the broker pay out to the exchange in total in case of (a) gross settlement
system (b) net settlement system?
Answer: a. None of the listed Options
0 b. (a) $1880 (b) $3100
0 c. (a) $1 .780 (b) 0 for IBM, $1 .795 for MSFT
0 d. (a) 0 for IBM, $1 ,795 for MSFT (b) $1,780
0 e. (a) $3100 (b) $1880

96 Which of the following is an Un-secured loan?

Answer: Q a. Overdraft on checking.
Marks: 2 b. Credit cards
0 c. Study loan
0 d. Personal lines of credit.
C e. All of the listed options

98 Red herring prospectus is issued during _______________

Answer: a. When a dividend is declared

Marks: 3 0 b. During Securitization
0 c. A merger
0 d. During a IPO
0 e. Post-Acquisition
99 Premature withdrawal in a IRA account does NOT attract penalty and taxes need NOT
be paid for the period forgone. State True or False
Marks: 2 Answer OTrue 0 False
I 00 Which is NOT a Captive finance company?
Answer 0 a. Ford Motor Credit
Marks: 2 , b. None ofthe listed Options
0 c. Bank of America
0 d. General Motors Acceptance Corporation
0 e. Hyundai Motor Finance Company

KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
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I 01 In reality. people hold part of their loans as cash. This makes the multiplier
Answer: 0 a. Smaller
Marks: 2 b. Larger
0 c. Zero
0 d. The same as if people did not hold cash
I 02 Securities with an original maturity of lesser than 1 -year are traded on money
markets. State True or False
Marks: 1 Answer: True 0 False
103 When is a bank failure is more likely to occur?
Answer 0 Capital adequacy ratio is increased
Marks: 2 , b. Bank holds more short-term riskless securities
0 c. Bank increases its equity capital 013010
0 d. Cash Reserve ration is increased
... ii12i
0 e Capital adequacy ratio is reduced io 2
9 3 . ....

8: 4

I 04 With continuous compounding at I 0 percent for 3 years, the future value of an initial
investment of $2,000 is closest to ___________

Answer: a. 2700
Marks: 3 0 b. 2870
0 c. 3000
0 d. 2662

I 06 A person purchases a share at $50. After 2 years, the price is at $75 and he decides
to sell the share at that price. What is the annualized return that the person has earned?
Marks: 3 Answer: Q a. 0.3333
Qb.0.5
0 c. 0.2247
0 d. None of the listed options
0 e. 0.6667

I 09 Banker acceptances are credit investment created by ________ and used for financing
imports, exports and domestic shipping.
Answer: Q a. Short term: financial firms
Marks: 2 , b. Long term: non-financial firms
0 c. Medium terms: banks
0 d. Long term: financial firms
0 e. Short term: non-financial firms

KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
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I I I Identify the services offered by Retail Banks:
Answer: Q a Debit Cards
Marks: 1 b Personal Loans
0 C. All of the listed options
0 & Savings and Checking Accounts
I I 2 A Custodian holds a wide range of assets on behalf of its customers What are these
assets known as?
Answer: Q a. Shared Assets
Marks: 1 b. Assets Under Custody
0 c. None of the listed Options
0 d. Assets Under Management
0 e. Custodian Assets
0:12:59
I I 3 There are 5 participants A, B. C, D. E in a 25M USD syndicated loan and A is the
lead manager The borrower has agreed to pay 0.4% (Si 00,000)
participant fee How much each participants will share in participant fee? 11 12 1
Marks: 3 Answer: a. $i,00.000 will be received every time money is withdrawr?. 2 .

0 b $1 00,000 will be charged towards undrawn portion 8 4

0 c. None of the listed Options
0 d $i ,00.000 will be received affront
0 e. $1 ,00.000 will be received even month
I 14 Which ofthe following are market regulators?
Answer: cj a All ofthe listed options
Marks: 2 b Securities and Exchange Commission (SEC)
0 c. Securities and Exchange Board of India (SEBI)
0 t Financial Services Authority (FSA) of UK
115 Pick the odd one out:
Answer: & VA loans
Marks: 1 , b. Interest only loans
0 c. Agency loans
0 d. Fl-IA Loans
I 16 are profits of the business that have not been distributed to the owners as of the
________

balance sheet date

Answer 0 Share capital
Marks: i b Revenue
0 c. Gross profit
0 d Retained earnings
I I 7 A clearing system in which payment instructions between banks are processed and
settled individually and continuously throughout the day is called:
Answer: Q & Automated Clearing House
Marks: i b. Continuous Linked Settlement
0 c. Clearing Services
dRTGS
0 e. Collection Services

KOL-24-Aug-1 I [1 5:OOel 7:30]

Attempt I
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I 22 Which entity is NOT involved in Student loan?
Answer 0 Federal government
Marks: 1 b Servicers and Guarantors
0 c None ofthe listed Options
0 d Lenders and Borrowers
0 e Schools
0:12:50
123 A proprietary system 0f ATMs is a network that comes into being when
customers of one or more financial institutions have access to transaction services
at ATMs owned or operated by other financial institutions State True or False 11. 12
1
Marks: 1 Answer GTrue QFals

I 24 Bank ABC interest rate on deposits is T30% and its interest rate on loans is
925% during 2OO9 What is the spread for Bank ABC?
Answer: QaOi655
Marks: 3 0 b OO225
0 c. None of the listed options
0 d 0.0195

I 27 A Custodian processes Interest proceeds from the fixed income securities held
under its custody. Which division. within the custodian company. is responsible for
carrying out the process.
Marks: 2 Answer Q a Transaction management
0 b Cash Management
0 c. Brokerage services
0 d Fund administration
0 a Income processing

130 Identify the odd one out:

Answer: 0 a. Bill of Exchange
Marks: 1 0 b. Treasury Notes
0 c. Commercial Papers
0 t Stocks
0 e. Treasury Bills
Intermediate Save j [ Submit the Quiz
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KOL-23-Aug-1 I [1 1 :OOel 3:30]
Attempt I
Page: 1 2 3 4 5 6 7 8 9 10 11 12 13 (Next)
I All broker/dealers involved in the underwriting of non-exempt securities must be
Answer: Q a NYSE Member
Marks: 3 0 b SEC Member
0 c. No such membership is required
0 & NASD Member
0 a NASDAQ Member
2 If a financial instrument has a 20% chance of paying 80% and a 80% chance of paying
50% percent, what would be the expected return?
Answer: Q & 028
Marks: 2 b 02
0 c 044 Qd0.56
0:39:60

4 You invest Rs20,000 at 10% pa compound interest compounded annually in a bank

After 2 years. what is the amount you have received from the bank?
Answer: Q a Rs. 24000
Marks: 3 0 b. Rs.15092
QcRs4000
0 d Rs24692
0 a Rs. 24200

7 The process of clearing transaction electronically in which information about debits and
credits are passed across the clearing system electronically instead of physical
instruments is called
Marks: 1 Answer: cj & Clearing thru Documents
0 b All ofthe listed options
0 c. Clearing thru ACH
0 d Clearing Services
0 e. Electronic data file services
8 On a trading day at the NYSE. a broker undertakes the following trades:
Buy 120 Dell sharesfor$1OJJO each
Marks: 2 Sell 70 DelI shares for $1050 each
Buy 200 Cisco shares for S20D0 each
Sell 20 DelI shares for $1 1 00 each
Sell 50 Cisco shares for $20.50 each
Sell I 0 Dell shares for $9.00 each
Given that a net settlement system is being used, find out the net position of the broker at
the end of the dayS
Answer 0 Dell: 20 shares to pay out: Cisco: 1 50 shares to receive: $3,780 to pay out to
the exchange
0 b Dell: 70 shares to give out: Cisco: 90 shares to receive: $3,000 to pay out to the
exchange
0 c Dell: 150 shares to receive: Cisco: 20 shares to receive: $3130to receive from the
exchange
0 d Dell: 20 shares to receive: Cisco: 1 50 shares to receive: $31 30 to pay out to the
exchange
0 a None of the listed Options

I 0 Credit union members have what type of accounts (rather than checking)?
Answer: cj & None ofthe listed options
Marks: 3 0 b. Checking
0 c. Basic
Qd Share Draft
[ntermediate Save J L Submitthe Quizj
Page: 1234567891011 1213 (Next)

KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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I 2 Which of the following are NOT the benefits of using credit derivatives?
-Answer 0 a. Credit derivatives can be used either to take on more risk or to avoid (hedge)
it 0:39:32
Marks. 3 0 b. Credit derivatives can be used both to diversify their credit risk exposures
and free up capital from regulatory constraints 12
0 c. Increasing the credit limit of a corporate ic : 2
0 d. Credit derivatives can be used to create positions that can otherwise not easily be
established in the cash market 9 : 3
.

8 :4
76

14 NASDAQ is based out of____________

Answer: a. Chicago
Marks: 3 0 b. None of the listed options
0 c. Singapore
0 d. London
0 e. Hong Kong
I 5 Securities with an original maturity of lesser than 1 -year are traded on money
markets. State True or False
Marks: 1 Answer GTrue 0 False
I 6 The Advising bank is used as a trusted bridge between the and when they do not have
an active relationship.
Answer: Q a. Applicant bank: Beneficiary bank
Marks: 2 b. Beneficiary bank: Reimbursing bank
0 c. Importer: Exporter
0 d. Reimbursing bank: Beneficiary bank
0 e. Issuing bank: Confirming bank
I 7 Credit derivatives can be used to the regulatory capital requirements and
____________ ____________

credit risk.
Answer: cj a estimate, assess
Marks: 2 , b. increase, transfer
0 c. reduce. diversify
0 d. improve. eliminate
0 e. avoid. manage

I 9 Which ofthe following are benefit(s) of EMV?

Marks: 1 I: Fraud Prevention
II: Exception transactions
Answer: Q a. None of the listed options
0 b. Both I and II
0 c. II only
0 d. I only

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KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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23 If the nominal interest rate is 10% and rate of inflation is 2%, what is the real interest
rate?
Answer: Qa12
Marks: 2 b 20 0:39:22
Qc5 iil2i
..

0 d. None ofthe listed option0 2::

Qe8 9 E 3
8:
7j5
24 In case of downturn in prices of shares. the investor will be compensated by which of
the following option?
Answer: , & Stock Exchange
Marks: 2 b U.S. Department ofthe Treasury
0 c. None ofthe listed Options
0 d Securities and Exchange Commission
0 a Federal Deposit insurance Corporation
25 Which ofthe following represents the correct hierarchy of corporate ratings (highestto
lowest)?
Answer: a AAA. AA+, BBB. D
Marks:1 Qb.D,AA-.B,W
0 c. D,C,B,A Qd.W,AA+,D,AAQe W,AA-.DBBB

KOL-23-Aug-1 I [11:00-13:30]
Attempt I
Page: (Previous) 1 2 3 4 5 6 7 8 9 10 11 12 13 (Next)
31 At the end of the trade cycle. The trades are to determine the obligation of the
__________

trading members to deliver securities funds as per settlement schedule

Marks: 2 Answer: a Grossed
QbAggregated
0 c Offset
0 d. Netted
32 What are Secondary markets defined as?
Answer: a Either auction or dealers markets and being only OTC market
Marks: 2 b. None ofthe listed Options
0 C. Market where security is sold during IPO
G d Markets in which security are resold after they are originally issued

0:39:010
33 Which of the following services are provided by a global custodian
Answer: a. Tax reclaims processing 11 12
Marks: 3 0 b Fund administration 10 2.

c All ofthe listed options 8 4

0 d. Settlement services 7 5
0 e Foreign exchange transactions
34 All of the following are benefits of netting EXCEPT:
Answer: a Reduction in systemic risk
Marks: 3 0 b Reduction in the number of deliveries and receipts
0 c Reduction in the cost of settlement
0 d Reduction in compliance risk
35 Unit capital of a mutual fund scheme is Rs. 20 million: The market value of its
investments is Rs. 55 million. The number of units is 1 million. What is the NAy?
Marks: 2 Answer: a Rs. 75
0 b. Not possible to say
0 C. Rs 20
0 d. Rs. 55
36 Fedwire is an electronic transfer system developed and maintained by the Federal
Reserve System. State True or False
Marks: 2 Answer: True 0 False

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KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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41 Find the future value of$1500 invested at 6.5% p.a payable annually. after 6
months?
Answer Qa 1616
Marks: 2 Q b 1628
0 C. 154875
Qd 1597
Q e None of the listed Options
42 Drafts are negotiable instruments that facilitate international payments through
respected intermediaries such as banks State True or False
Marks: 1 Answer GTrue QFalse
43 Retail loans are asset products offered by the bank State True or False
Answer: True QFalse
Marks 1 0:39:01
11 12
10 : 2
9 ::. a .

44 When the Central Bank of a country decides to change the interest rates. it is a
manifestation of which of the following? 8 4

Answer: C) & Money Market 6

Marks: 2 Q b. Money making
Q c Money Policy
0 d. Money Multiplier Effect
Q e. Monetary Policy
45 Which of the following is a corporate action?
Answer 0 a All of the listed options
Marks: 3 Q b Declaring Dividend
Q c. Stock split
QdM&A
0 e Rights Issue
46 In passive approach. asset allocation is influenced by which of the following
option?
Answer: 0 a All of the listed options
Marks: 2 o b Tax status of the investor
oc Cash needs of the investor o d Investors risk preferences

49 A type of stock in which the stockholder is likely to get a percentage of

dividends each year based on the profits of the company is:
Answer: Q a. None of the listed options
Marks: 1 0 b Preferred Stock
0 c Common Stock
0 d Convertible Stock
50 In an exchange on a particular day there is a buy trade for 150 shares of a
particular company and there are two sell trades for 70 and 60 shares of the same
company Can the buy trade and sell trades be matched?
Marks: 2 Answer: Q a No
o b. Yes, but only if the number of shares on the buy & sell side match
o c. Yes
dYes, but only if the prices on the buy & sell side match
[ Intermediate Save j [ Submit the Quiz j
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KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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51 Banks are financial intermediaries that:
Answer: Q a. Do not operate efficiently in the financial system
Marks: 1 b help connect public to the central banks
0 c Should not be allowed to open Savings Accounts
0 & Are not required
0 e. Link depositors to borrowers
52 Coming together of BNY and Mellon is an example of _____________

Answer: Q & Acquisition

Marks: 3 0 b Merger
0 c Brokerage
0 d. All of the listed options
0 e Takeover
0:38:52
53 All the following statements concerning US Government securities are correct
EXCEPT: 12 2
Answer 0 a. Treasury bills have their interest paid in a lump sum at maturity 9 3
- .

Marks 2 b Treasury bonds have maturity dates up to 30 years 8 4

0 c Treasury notes have maturity dates up to 1 0 years 7 5
0 d. Treasury bills have a greater interest rate risk than either Treasury bonds or
Treasury notes.
54 Increasing the Cash Reserve Ratio for banks would have an impact on which
ofthe following:
Answer: Q & Increased Money Supply in the economy
Marks: 2 b Profitability of firms
0 c Reduced Money Supply in the economy
0 c[ Increased interest rates

57 Liquidity refers to the ease with which an asset can be converted into cash.
State True or False
Marks 1 Answer: OTrue 0 False
58 Following are the types of market risks except:
Answer: 0 a. Equity Risk
Marks: 1 0 b. Credit Risk
o c Commodity Risk
o d. Interest Rate Risk
o a Currency Risk
60 Asset allocation activity is performed by which of the following option?
Answer: Q a. None of the listed Options
Marks: 1 0 b Back office of an investment firm
o c Front office of an investment firm 0 d. Middle office of an investment firm
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KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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61 Which of the following is true for stock markets?
Answer: Q a. Stock markets are never fair
Marks: 2 b. Stock markets facilitate secondary buying and selling of shares
0 c. Individual small investors can never make money in stock markets
0 d. Stock markets are always self regulated
0 e. There can only be one stock market in a country
62 Secured bonds
Answer: Q & are secured by assets of the issuing company and also have higher priority
.

for repayment than unsecured debt

Marks. 1 b. are issued only by large and financially sound companies
0 c. have higher priority for repayment than unsecured debt
0 d are secured by assets of the issuing company.
0:38:42
9.: 3
.

8 :
7j5

65 ATMs fall under which of the following?

I: Front office
Marks: 2 II: Middle Office
Ill: Back Office
Answer: () & Ill only
b. i only
0 c. Both II and Ill
0 d. II only
0 e Both I and II

70 Most common reasons for a corporate seeking a loan from a Bank include all of the
following EXCEPT:
Answer: 0 & Capacity expansions
Marks: 1 b. Paying bonuses to top executives
0 c. New projects
0 & Daily cash flow requirements
0 a Plant modernization

KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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72 The risk that a given security or asset cannot be traded quickly enough in the marketto
prevent a loss (or make the required profit) is:
Answer: Q a Credit Risk
Marks: 3 0 b Financial Risk
0 c Business Risk
0 d. Liquidity Risk

74 Assets of a company that are reasonably expected to be realized in cash, or sold, or

consumed in the next one year are __________

Answer: cj & Current Assets

Marks: 1 b. Annual assets
0 c. Intangible assets
0 d Fixed Assets
75 The money bank receives as deposits becomes a banks
Answer: a Loss
Marks: 1 b Liability
QcAsset
0 d. All ofthe listed Options
0 e Profit
76 An export oriented firm, apart from facing usual risks associated with any firm, which
other very important risk it faces?
Answer: Q a. Legal Risk
Marks: 1 b. Credit Risk
0 c. Currency Risk
0 d. Operational Risk
0 e. Liquidity Risk

79 In a syndicated loan of 1 OOM, each participant commits for 25% of loan. But due to
exigencies if one participant reduces his share to 22% and others to share equally, what
will be revised share of other participants?
Marks: 3 Answer: Q a Oil
0 b. 0.3
0 c. 0.24
0 d. 0.26
QeO29
80 Great mines takes a loan from Bank of America to dig a new coal mine. The loan
would be repaid using the proceeds from the sale of coal from this mine. This is an
example of:
Marks: 1 Answer: Q Asset Securitization Loan
0 b Working Capital Loan
0 c. RevoMng Line of Credit
0 d. Supplier Loan
0 e. Bill Discounting
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KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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81 Which of the following type of loan requires the amount of interest that would be
earned on the amount of interest paid upfront by the borrower?
Answer: Q a Capitalized Loan
Marks: 3 0 b Amortized Loan
0 c. Discounted Loan
0 d True discounted Loan
0 a Demand loan
82 In Rolling Settlement trades are aggregated for a period of time State True or False
Marks: 2 Answer GTrue 0 False
83 Warrants are the combination of which of these instruments?
Answer: & Call and Put Options
Marks: 3 0 b Put Options and Swaps 0:38:2 1
0 c. Equities and Call Options
0 d Cash and Call Options 2 ::

0 e Equities and Futures 9 3

8:
84 Bank ABC interest rate on deposits is 7.30% and its interest rate on loans is 9.25%
during 2009. What is the spread for Bank ABC?
Answer: a None of the listed options
Marks: 3 0 b. 0i655
0 c 0.0195
0 d. 0.0225
86 Role of syndicate is to:
Answer: Q a. Issue Derivatives
Marks: 2 , b. Ensure proper Risk Management
0 c. Participate in swaps
0 & Monitor bank regulations
0 a Place securities in a public offering
90 Which of the following is NOT correct for a personal loan?
Answer: 0 a. Loan amount is not linked to borrowers repayment capacity
Marks: 2 0 b. None of the listed Options
0 c. They are short term loans
0 d. The financer is not interested in the intention of the loan
0 e. No security required
[
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KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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91 Which of the following is associated with the purpose of regulating financial
institutions?
Answer: Q a. To serve certain social objectives
Marks: 3 0 b. To prevent failure of any financial institution
0 c None of the listed options
0 d To provide stability of the money supply
0 e. To offset the moral hazard incentives provided by deposit insurance and other
guarantees

93 What is a mutual fund?

Answer: cj a All ofthe listed options 0:38:13
Marks: 3 0 b. A collective investment vehicle 12
0 c A pool of funds used to purchase securities on behalf ofinvestor011 : 2
.

0 d. A portfolio of stocks, bonds and other securities 9

8:
94 If a portfolio of stocks has a one day 5% VaR of S 1 Million. what does it mean?
Answer: 0 a There is a 5% chance that the value of the portfolio will fall by S 1 Million
or above over a one day period Marks: 1 , b None ofthe listed Options
0 c. There is a 5% chance that the value of the portfolio will increase by S 1 Million or
above over a one day period
0 d There is a 95% chance that the value of the portfolio will increase by S 1 Million or
above over a one day period
0 a There is a 95% chance that the value of the portfolio will fall by S 1 Million or above
over a one day period

97 Borrower is suppose to lock the rate at which stage of loan life cycle?
Answer & Loan Processing
Marks: 3 0 b Loan origination
0 c Loan closing
0 t Loan underwriting
98 In a typical trade cycle on an exchange. the successive functions of order matching.
determining obligations of participants. and undertaking settlement. are respectively
carried out by:
Marks: 2 Answer: Q & Broker/dealer exchange: clearing house
0 b. Exchange: depository: clearing house
0 c. Exchange: clearing house: depository
0 d Clearing house: clearing house: depository
0 a None of the listed Options
99 The trade terms 1 0/3, net 1 5 indicate that:
Answer: & 30% discount is offered if payment is made before 15 of the month
Marks: 3 0 b 10% discount is offered if payment is made within 3 days. the payment
should however be made in 15 days
0 c. 10% discount is offered if payment is made between 3 and 15 days
0 d 3% discount is offered if payment is made within 1 5 days
0 a 3% discount is offered if payment is made within 10 days
I 00 US Export and EURImport agree to carry out the transaction, goods worth $1
.000.000 under a confirmed term Letter of Credit with a maturity date of 60
days from the time of shipment The Acceptance commission 1 8% pa equals
Calculate the acceptance commission
Marks: 3 Answer: Q a. 300
0 b 250
0 c. 2500
0 d. 3000
E Intermediate Save E Submitthe Quiz ]
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KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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101 IRR stands for which of the following option?
Answer: Q & International Rate of Return
Marks: 1 b Indexed Rate of Return
0 C. Indian Rate of Return
0 t Internal Rate of Return
0 a Internal Referenced Return

I 04 Which of the following is an Issuer & Acquirer?

Answer: Q a. First Data Corporation
Marks: 2 b. Elavon
c. Tsys
Qd.Amex

I 06 Which of the following is not a derivative?

Answer 0 a. Options
Marks: 2 , b. Forwards
0 c. Futures
0 d. Bonds
0 e. Swaps
107 Company ABC has a gross profitofS50000 The operating expenses amounts to
S10000 The interest on loans availed amounts to 55000 and the taxes to be paid amounts
to 55000. Calculate the EPS if there aretotalof20000 shares
Marks: 3 Answer Q & 125
0 b. 2.5
0 c. 2
d. 1.5

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KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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I I 2 In Trade Finance the term LC stands for:

Answer: Q a Letter of Complaints
Marks: 1 b Letter of Credit
0 c Letter of Commerce
0 d Letter of Creditworthiness
0 e Letter of Commercials
0:37:51

I 14 What is the purpose of rebalancing?

-Answer: ( & To keep investments in line with original investment strategy
Marks. 3 0 b Reallocation of asset classes to gain competitive advantage
0 c To maximize the portfolio return by effectively timing the market
0 d All ofthe listed options
I 15 Which of the following are order types based on price?
Answer: o Limit Order
Marks: 2 , b. Stop Order
0 c. Market Order
0 t All ofthe listed options
0 e Stop Limit Order

I 18 Which of the following is NOT a player in a typical trade cycle?

Answer & Regulator
Marks: 3 0 b Clearing bank
0 c Custodian bank
0 d Trading member
0 e Clearing member
I I 9 Private Banking is so called because:
Answer: Q a. It is private to a group of individuals
Marks: 2 b. The banking services provided are confidential
0 It is done privately without anyones knowledge
0 t Personalized banking services are provided to the clients
0 a It deals with black money

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KOL-23-Aug-1 I [1 1 :OOel 3:30]

Attempt I
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121 Trade Finance primarily helps in:
Answer: Q a. Facilitating intra-company transactions
Marks: 1 b. Facilitating inter company transaction
0 c. Facilitating corporate lending
0 & Facilitating International transactions
0 a Facilitating setting up of new factories
I 22 A card holder swipes his card for USD 1 OO How much does the merchant
Marks: 3 I: deduct from the card holder?
II: receive from the Acquirer?
Assume Merchant Discount at 2 %
Answer: a. I: USD 100
II: USD 98 0 b I: USD 100
II: USD 2
0 c I: USD 98 O3742 II: USD 98
0 d. L USD 100 12 II: USD 100 io : 2
9.: 3
8 :
I 23 What term is used to describe an LC that remains valid for years thereby eliminating
the cost of separate LOs for each transaction with a regular client?
Answer: (j a Irrevocable LC
Marks: 2 b. Evergreen Clause
0 c Green clause
0 d Red Clause
0 a RevoMng LC
I 24 A person purchases a share at $50. After 2 years, the price is at $75 and he decides to
sell the share at that price What is the annualized return that the person has earned?
Marks: 3 Answer: Q a 05
0 b. 06667
0 c. None ofthe listed options
0 d 03333
0 a 0.2247
I 25 Stock Split is a type of Corporate Action
Answer: Optional
Marks: 1 b. Mandatory with Options
0 c. Mandatory
0 d. Voluntary
I 26 Which or the following are not institutional investors?
Answer: Q a Pension Funds
Marks: 1 b Banks
0 c. High Net worth Individuals
0 d Mutual Funds
0 e Hedge Funds

128 Market timing is used in: 2

Answer 0 a. Active approach of Asset allocation
Marks: 2 b. Passive approach of Asset allocation
0 c. None of the listed Options
0 d. It can be used in both the approaches
I 29 CRR stands for which of the following option?
Answer: a. Cash Reserve Risk
Marks: 1 b. Cash Return Ratio
0 c. Common Reserve Ratio
0 d. Cash Refund Ratio
0 e. Cash Reserve Ratio
I 30 If the Limit = $2000, margin = 20% and Asset Value = $2000. then Drawing Power for
an Open ended loan is equal to?
Answer: Q 2200
Marks: 3 0 b 1600
0 c None of the listed Options
Qd.2400
Qe2000
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KOL-05-Sep-1 I [14:30-17:00]
Attempt I
Page: 1 2 3 4 5 6 7 8 9 10 11 12 13 (Next)
I Which of the following statements pertaining to Pooling is true?
Marks: 1 I: All value balances of a set of participating accounts are centralized at the
end of each day
II: Banks offer both domestic and cross border zero balancing
Ill: The participating accounts bear credit or debit interest.
IV: All of the listed options
Answer: Q a. Ill only
0 b. Both I and II
0 c. II only
0 d. I only
e.IV
2 The clearing process is completed When delivery and payment have occurred. State
True or False
Marks: 2 Answer True 0 False
0:28:55

4 From the given options identify the service(s) that can be categorized under Asset
Servicing line of business.
I: Corporate Action processing
Marks: 1 II: Income Processing
Ill: Transfer Agency services
IV: All of the listed options
Answer: cj a. Both I and II
0 b. II only
0 c. Ill only
Qd.IV
0 e. I only

6 NASDAQ is based out of _____________

Answer: Q a. None of the listed options

Marks: 3 0 b. London
0 c. Chicago
0 d. Singapore
0 e. Hong Kong

9 Which are the basic parties involved in any transaction using LC (Letter of Credit)?
Answer: Q a. Seller, Buyer
Marks: 1 0 b. Beneficiarys Bank
0 c. None of the listed option
0 d. Issuing Bank

KOL-05-Sep-1 I [14:30-17:00]
Attempt I
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I I The Advising bank is used as a trusted bridge between the and when they do
___________ __________

not have an active relationship.

Answer: Q a. Beneficiary bank: Reimbursing bank
Marks: 2 , b. Importer: Exporter
0 c. Applicant bank: Beneficiary bank
0 d. Reimbursing bank: Beneficiary bank
0 e. Issuing bank: Confirming bank
I 2 A person purchases a share at $50. After 2 years, the price is at $75 and he decides to
sell the share at that price. What is the annualized return that the person has earned?
Marks: 3 Answer: c a. 0.2247
0 b. None of the listed options
0 c. 0.6667
0 d. 0.3333
Qe.0.5
0:28:18

I 6 Coming together of BNY and Mellon is an example of _____________

Answer 0 a. All of the listed options

Marks: 3 0 b. Acquisition
0 c. Takeover
0 d. Merger
0 e. Brokerage
I 7 If the Limit = $2000. margin = 20% and Asset Value = $2000. then Drawing Power for
an Open ended loan is equal to?
Answer 0 a None of the listed Options
Marks: 3 0 b. 2200
0 c. 2400
0 d. 2000
e.1600
I 8 An investor has lost track of a particular companys shares that he holds for the last 5
years. Now the investor wants the know the details like how many shares he owns, in
what form they exist etc. Whom should he contact?
Marks: 1 Answer: Q a The investor has to obtain the information only through an
authorized intermediary.
0 b. The investor has to contact the Custody service provider to get the details
0 c The investor can call the company directly and get the information
0 d. The investor has to contact to the Companys transfer Agent to get the details
I 9 A card holder swipes his card for USD I 00 How much does the merchant
Marks: 3 I: deduct from the card holder?
II: receive from the Acquirer?
Assume Merchant Discount at 2 %
Answer: a. I: USD 100
II: USD 100 Qb.I:USD98
II: USD 98 0 c. I: USD 100
lI:USD2
0 d. I: USD 100 II: USD 98
20 NPV stands for
Answer: a. Net Present Value
Marks: 1 b. No Present Value
0 c. Net Past Value C d. New Present Value

KOL-05-Sep-1 I [14:30-17:00]
Attempt I
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22 Which of the following is NOT a function of Central Bank?

Answer 0 Stability of the financial system
Marks: 2 , b Conducting the nations monetary policy
0 c Monitoring foreign currency inflow and outflow
0 d Managing the branches of public banks
0 e Regulating the Banking institutions
23 If a financial instrument has a 20% chance of paying 80% and a 80% chance of paying
50% percent, what would be the expected return?
Answer a O44 0.28.02
Marks: 2 .

0 u no 12
Qc.051i0 2
QdO29 :3
8
24 Choose the right option:
Answer 0 a Both close and open ended funds have a fixed maturity period
Marks: 2 b. Mutual funds dont have a fixed maturity period
0 c. Close ended funds have a fixed maturity period
0 d. Open ended funds have a fixed maturity period
25 If the Point Of Purchase is S 52 and the amount given to the issuer is S 50 what is the
underwriter spread?
Answer: Q a 50
Marks:2 Qb52
0 c. 102
0 d. None of the listed Options
e2
26 Identity the three Cs of underwriting:
Answer: a. Collateral
Marks: 3 El b. Capacity
El c Credit
ci d. Cash
29 Ram deposits $1 00 in XYZ Bank. Puja takes a loan of $1 00 from XYZ Bank.
Which of the following is most likely to happen?
Answer: & Bank is paying 3% interest to Puja and charging 5% interest to Ram
.

Marks. 3 0 b. Bank is charging 3% interest to Puja and paying 5% interest to Ram

0 c. Bank is charging 5% interest to Puja and paying 3% interest to Ram
0 d. Bank is paying 5% interest to Ram and charging 5% interest to Puja
0 e None of the listed Options

KOL-05-Sep-1 I [14:30-17:00]
Attempt I
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Qe.M&A
32 A building society is a financial institution. owned by its members. that offers banking
and other financial services. especially mortgage lending and are
prevalent only in UK. State True or False
-

Marks 2 Answer: True 0 False

33 The BSE is a large primary financial market in which the initial issuer receives the
proceeds for the sale of securities State True or False
Marks: 2 Answer: GTrue 0 False
0:27:51
11 1:2 i
10 2
37 Which of the following are benefit(s) of EMV?
Marks: 1 I: Fraud Prevention
II: Exception transactions
Answer: 0 a. II only
0 b. None of the listed options
0 c. Both land II
Qd. l only

39 Which of the following type of loan requires the amount of interest that would be
earned on the amount of interest paid upfront by the borrower?
Answer: 0 a. True discounted Loan
Marks: 3 0 b. Discounted Loan
0 c Demand loan d. Amortized Loan
0 e. Capitalized Loan

KOL-05-Sep-1 I [14:30-17:00]
Attempt I
Page: (Previous) 1 2 3 4 5 6 7 8 9 10 11 12 13 (Next)
42 Under Basic Indicator Approach for measurement of Operational risk. the banks have
to set aside an amount calculated as the percentage of___________

for operational risk management

Marks: 1 Answer: c a Net Income
Qb Net worth
0 c. Annual Gross Income
0 d Net Profit
0 a Quarterly Income
43 Which of the following are examples of emerging payments? 0:27:40
Answer: cj & All of the listed options
o 10 .2
0 c. Proximity Payments 9 1o
.

0 d. Digital Cash 8 4
44 Credit union members have what type of accounts (rather than checking)?
Answer: a. None of the listed options
Marks: 3 0 b. Checking
0 c Basic
Qd Share Draft

47 If an investment pays interest at an annual rate of r % per year, compounded twice a

year. then what is the effective yield?
Answer & greater than r %
Marks: 2 o b All of the listed options
Qc. equal to r%
Q& less than r%

49 Identify the services offered by Retail Banks:

Answer: 0 a Savings and Checking Accounts
Marks: 1 0 b Personal Loans
0 c. All of the listed options
0 & Debit Cards
50 Increasing the Cash Reserve Ratio for banks would have an impact on which of the
following:
Answer: 0 & Reduced Money Supply in the economy
Marks: 2 0 b Profitability of firms
o c Increased Money Supply in the economy o d Increased interest rates

KOL-05-Sep-1 I [14:30-17:00]
Attempt I
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51 If the money multiplier is 1. the required reserve ratio must be:
Answer: Q a. 1
Marks: 2 b Greater than 100%
0 C. 0.5
0 d. Zero
52 In defined benefit plans. investment management of funds is done by and in
________

defined contribution plans. it can be done by Answer 0 a. Plan administrator plan

________

administrator
Marks: 2 , b Employer: employee
0 c. Trustee: trustee
0 d. Employee: employer
53 Which one of the following portfolio is more risky?
Answer: &j a. 80% Equity, 20% Debt
Marks: 2 b 60/b Equity, 40% Debt 0:27:30
0 c. 40/b Equity, 60% Debt 12
0 t 75% Equity, 25% Debt o 2
9
8

56 Which of the following market entities cannot provide securities lending service?
Answer: a. Sub-Custodians
Marks: 1 b. Custodians
0 c. Wholesale intermediaries
0 d. Securities market regulators
0 e. Niche intermediaries
57 In Normal Distribution 99/b Confidence interval corresponds to __________

Answer: Q a. 3 Sd
Marks: 3 0 b. 1.65 Sd
Qc.1965d
Oct lSd
0 e. 2.33 Sd
58 How much will be the 1% legal fee on 30M USD?
Answer: Qa3M
Marks: 2 b 0.3M
0 c. 3000
0 d. None of the listed Options
Qe0.1 M
59 Which of the following is the most risky asset?
Answer: Q a Treasury bills
Marks: 1 b Investment in Real Estate
0 c. Triple A rated bond
0 d. Shares of a Blue chip company
0 e Investment in Mutual fund
KOL-05-Sep-1 I [14:30-17:00]
Attempt I
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62 Market Risk is defined as:

.Answer: G a. the possibility of loss over a given period of time related to uncertain
movements in market factors
Marks. 1 b. the possibility of loss resulting from errors in instructing payments or settling
transactions
0 c. The possibility of loss as a result of default. such as when a customer default on a
loan 0:27:18
0 d. the possibility of loss when a contract cannot be enforced
C e. the possibility that a firm will be unable to generate funds to meet contractual
obligations as they fall 12I
7: e

67 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. Red Clause
Marks: 2 b. Irrevocable LC
0 c. Revolving LC
0 d. Green clause
0 e. Evergreen Clause
68 Investing in shares will always result in a monetary gain. State True or False
Marks: 1 Answer: C True 0 False

70 Corporate Loans are:

Answer: Q a. Never unsecured
Marks: 1 b. Always unsecured
0 c Secured or unsecured
0 d. Never secured
0 e. Always secured

KOL-05-Sep-1 I [14:30-17:00]
Attempt I
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71 A Standard and Poors bond rating of D refers to:
Answer: Q a High quality investment grade bonds
Marks: 2 b Convertible bonds
0 C. Junk bonds
0 d Government bonds only
0 a Corporate bonds
72 Trading occurs between clearing and settlement State True or Ealse
Marks 2 Answer QTrue 0 False
75 Product development in sales and marketing refers to which of the following option?
Answer: a All of the listed Options
Marks: 3 0 b Collateral eg Cars in case of car loans. houses in case of mortgages
0 c. Identifying products such as SAP. Oracle for the bank
0 & Developing and differentiating deposits. loans etc
0 a Products that are bought using online payment such as e-commerce
76 A is a less risk-averse investor than S Hence what will be the consequences?
Answer: & For the same return. A takes higher risk than B.
Marks: 1 b For the same return, B tolerates lesser risk than &
0 c For the same risk, A requires a higher rate of return than R
0 d. For the same risk, A requires a lower rate of return than B.
77 Which of the following is true?
-Answer: Q a. Tax deduction can be claimed for the full value of the rental paid in case of
lease
Marks. 2 , b. Depreciation is claimed by the financier in Lease and not in case of Hire
Purchase
0 c. All of the listed Options
0 d. The financier owns the asset both in case of Lease and Hire Purchase
78 US Export and EURImport agree to carry out the transaction, goods worth $1
.000.000 under a confirmed term Letter of Credit with a maturity date of 60 days from the
time of shipment. The Acceptance commission I .8% pa equals. Calculate the
acceptance commission.
Marks: 3 Answer: a. 300
0 b. 2500
0 c. 250
0 d. 3000

KOL-05-Sep-1 I [14:30-17:00]
Attempt I
Page: (Previous) 1 2 3 4 5 6 7 8 9 10 11 12 13 (Next)
81 Unit capital of a mutual fund scheme is Rs. 20 million: The market value of its
investments is Rs 55 million. The number of units is 1 million. What is the
NAV?
Marks: 2 Answer: a. Rs. 20
0 b. Not possible to say
0 c. Rs. 75
d. Rs. 55
83 On a trading day at the NYSE. a broker undertakes the following trades:
Buy 120 Dell shares for $10.00 each 0:26:54
Marks: 2 Sell 70 Dell shares for $10.50 each
Buy 200 Cisco shares for $20.00 each if.12 i
Sell 20 Dell shares for $1 1 .00 each 10 2 .

Sell 50 Cisco shares for S2050 each 9 : 3

.

Sell 1 0 Dell shares for $9.00 each 8 4

Given that a net settlement system is being used, find out the net position of the broker at
the end of the day. 7 e
Answer: a Dell: 70 shares to give out: Cisco: 90 shares to receive: $3,000 to pay out to
the exchange
0 b. Dell: 20 shares to receive: Cisco: 1 50 shares to receive: $31 30 to pay out to the
exchange
0 c. Dell: 20 shares to pay out: Cisco: I 50 shares to receive: $3,780 to pay out to the
exchange
0 d. None of the listed Options
0 e. Dell: 150 shares to receive: Cisco: 20 shares to receive: $3130to receive from the
exchange
84 Credit derivative is all BUT:
Answer: Q a. Financial Instrument
Marks: 3 0 b. Traded over the counter
0 c. Facilitate greater efficiency
0 d. Transfers ask
85 Does a pure play investment bank accept deposits?
Answer: Q & Yes. if it is below 1 0% of market cap
Marks: 1 b. Only during IPO
0 c. No
0 d. None of the listed options
Qe.Yes
86 What is coupon in reference to bonds?
Answer: oj a. the interest rate that the issuer pays to the bond holders
Marks: 2 , b. Cheap is to buy bond
0 c. Percentage change in a bonds phce function with respect to interest rate
0 d. Number of days to maturity of bond
0 e. Present value of Bond
87 Which of the following is a type of underwriting spread?
Answer: Q a. Concession
Marks: 3 0 b. None of the listed options
0 c. Managers fee
0 d. All of the listed options
0 e. Underwhters Allowance
88 The trade terms 1 0/3, net 1 5 indicate that:
Answer: Q & 3% discount is offered if payment is made within 1 5 days
.r

Marks. 3 0 b. 1 0% discount is offered if payment is made within 3 days. the payment

should however be made in 1 5 days
0 c. 3% discount is offered if payment is made within 10 days
0 d. 1 0% discount is offered if payment is made between 3 and 1 5 days
0 e 30% discount is offered if payment is made before 15 of the month
89 In an exchange on a particular day there is a buy trade for 1 50 shares of a particular
company and there are two sell trades for 70 and 60 shares of the same company. Can the
buy trade and sell trades be matched?
Marks: 2 Answer: Q & No
Qb.Yes
0 c. Yes, but only if the prices on the buy & sell side match
0 t Yes, but only if the number of shares on the buy & sell side match
90 What is the purpose of rebalancing?
Answer: Q a. Reallocation of asset classes to gain competitive advantage
Marks: 3 0 b. All of the listed options
0 c. To maximize the portfolio return by effectively timing the market
0 d. To keep investments in line with original investment strategy

Answer: 0 & Internal Rate of Return

o b. Simple Interest
o c. Compound Interest
o c[ External Rate of Return
0 a Net Present Value

95 Which of the following services are provided by a global custodian?

Marks: 3

Answer: 0 a. Foreign exchange transactions

o b. Settlement services
o c. Fund administration
o d. Tax reclaims processing
0 a All of the listed options

There are 10000 shares of company XYZ. XYZs net income for the year 2008 is
$40000. The current market price of the share is $48. Find the PIE ratio.
Answer a.12
Qb.64
o c. 48
Qd. 192

KOL-05-Sep-1 I [14:30-17:00]
Attempt I
Page: (Previous) 1 2 3 4 5 6 7 8 9 10 11 12 13 (Next)
From an investors standpoint. a debenture issued by the Excellent Company will
appear safer than a share of preferred stock issued by the Excellent Company.
State True or False
Answer: OTrue 0 False

96 Bank ABC interest rate on deposits is 7.30% and its interest rate on loans is 9.25%
during 2009. What is the spread for Bank ABC?
Answer: 0 a. 0.0225
.

Marks. 3 0 b. None of the listed options

o c. 0.1655
0 d. 0.0195

97
Marks: 3 ;1
Search Desktop;0]

KOL-05-Sep-1 I [14:30-17:00]
Attempt I
Page: (Previous) 1 2 3 4 5 6 7 8 9 10 11 12 13 (Next)
I 01 The amount of money that banks can lend is directly affected by the reserve
requirement set by the Central Bank State True or False
Marks 2 Answer: OTrue 0 False
I 02 Risk Management is a function of
Answer a. Mid Office
Marks:3 Qb Traders
0 c. Specialists
Qd. Front Office
0 a Back Office
103 Share price is determined by which of the following option?
Answer: c & All of the listed options
Marks: 1 b Performance of the relevant industry
0 c. Performance of the company 0:26:32
0 t Market sentiment
0 e State of the countrys economy i 12
10 2
9
8
I 04 Who is a Underwriting Bank?
Answer: Q a Bank which underwrites a IPO
Marks: 2 , b Bank which insures a loan
0 c. Bank which does not insures a loan
0 d Bank which commits supply of funds in a syndicated loan
0 a Bank which underwrites a insurance

107 What is the purpose of Mortgage loan?

Answer: 0 a. Buying Property
Marks: 1 0 b Buying shares
o c Buying Car o c[ Buying farm equipment
108 Treasury bills can be transacted and settled on the same date State True or False
Marks 1 Answer: OTrue 0 False

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Attempt I
Page: (Previous) 1 2 3 4 5 6 7 8 9 10 11 12 13 (Next)
I I I CRR stands for which of the following option?
Answer: Q a. Cash Refund Ratio
Marks: 1 b Cash Reserve Risk
0 c. Cash Return Ratio
0 d Common Reserve Ratio
0 a Cash Reserve Ratio

I 13 Which of the following financial institutions are covered under the Anti-money
laundering. US PatriotAct? 0:26:22
Answer: oj a Securities brokers and dealers 12
Marks: 2 b. Banks and Trust companies 1o 2
QcMutualFunds 9
0 d. All ofthe listed options 8 4
7s
I 14 If you invest S 500for 3 years at 8 % simple interest. how much will you have at the
end of the 3 years?
Answer: Q & 580
Marks: 3 0 b. 680
0 c. 620
0 d. None of the listed options
0 e. 606

I I 6 Which are the types of IRA?

Answer: a. SEP IRA
Marks: 2 , b. Simple IRA
0 c. Traditional IRA
0 d. All ofthe listed Options
Qe.RothIRA
I I 7 It is possible to nil an order to buy 1 UU snares of GTSri with o sen oroers for uTSri,
of 20, 30 and a shares each, leaving 1 buy order with 20 shares on the order book. State
True or False
Marks: 2 Answer OTrue 0 False
I I 8 A type of stock in which the stockholder is likely to get a percentage of dividends
each year based on the profits of the company is:
Answer: rj a. None of the listed options
Marks: 1 b. Preferred Stock
0 c. Common Stock
0 d. Convertible Stock

KOL-05-Sep-1 I [14:30-17:00]
Attempt I
Page: (Previous) 12345678910111213

I 25 The term settlement cycle refers to the time period between the date on which an
investor first makes the decision to enter a trade to the date when the trade is settled. State
True or False
Marks: 2 Answer OTrue 0 False
I 26 A Custodian has different types of assets under its custody and those assets earn
returns to the original investor in various forms. What are the types of returns that can be
taxed?
Marks: 3 I: Dividend
II: Interest
III: Capital Gain
IV: All of the listed options
Answer: cj a. IV
0 b. III only
0 c. Both I and II
0 d. I only
0 e. II only
I 27 What are Secondary markets defined as?
Answer Q a. Either auction or dealers markets and being only OTC market
Marks: 2 , b. Market where security is sold during IPO
0 c. None of the listed Options
0 d. Markets in which security are resold after they are originally issued.

I 30 Securities with an original maturity of lesser than 1 -year are traded on money
markets. State True or False
Marks: 1 Answer OTrue 0 False

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

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 dealers skill
e. Equal to offer

3. Which of the following is usually not participant in stock market

a. Small individuals 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 is 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

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
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
17. The trade finance the term LC stands for;

a. Letter of commercials
b. Letter of credit worthiness
c. Letter of credit
d. Letter of commerce
e. Letter of complaints

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.
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

21. Which is associated with purpose of regulating financial institution?

a. None
b. To provide stability of money supply.
c. To serve certain social objectives.
d. To prevent failure of any financial institution.
e. To offset moral hazard incentive provided by deposit insurance and other guarantees.

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 isnt 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?

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?

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

B) Attrition

C) Credit risk

D) All of the above

E) Protective legislation by US/UK

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
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

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

49. Capital adequacy ratio refers to

A) Amount of bank capital expressed as % of the risk weighted credit exposure & market risk.
B) Amount of bank capital expressed as % of the risk weighted credit exposure
C) Amount of bank capital expressed as % of the risk weighted credit exposure & operational risk.
D) Amount of bank capital expressed as % of the risk weighted credit exposure operational risk &
market risk.
E) None

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
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

 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

a. Trade Credit
b. Revolving Credit agreement
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

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 applicants bank and the beneficiarys
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.

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. 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

87. Who are involved in the preparation of prospectus of IPO?

A) Commercial bankers
B) Investment Bankers
C) None
D) Company Management
E) Company Management and Investment Bankers
 88. 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.
89. 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

90. 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

91. 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.

92. 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?

93. 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

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

94. Dow Jones industrial average is made of

A) 30 stocks
B) 20 stocks
C) 40 stocks
D) 10 stocks
E) 50 stocks

95. Which is the key feature of Letter of Credit?

A) basis for devising proper currency hedging strategy

B) Distributes risk between buyer n sellers.

C) basis for devising proper currency hedging strategy and opportunity for receiving payment in
advance of the due date.

D) All

E) Opportunity for receiving payment in advance of the due date.

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

101. The term CP is used in corporate lending for ____. Marks: 1

1. Collateral provision

2. Client Partner

3. Commercial Paper

4. Commodity Put options

5. Credit Provision

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 30indicates that _____. Marks: 3

a. 2% discount is offered if payment is made within 15 days.

a.b. 15% discount is offered if payment is made within 2 days; the payment should however be
made in 30 days.
b.c. 30% discount is offered if payment is made before 15 of the month.
c.d. 15% discount is offered if payment is made between 2 & 30 days;
 d.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

105 What term is used to describe n LC that remains valid for years thereby eliminating the cost of
separate LCs for each transaction with a regular client?(not sure bout the answer)

a. Irrevocable LC
b. None
c. Red clause
d. Revolving LC
e. Evergreen clause

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
d. US treasuries
e. Shares

112 In benefit administration what are the relationships that exits 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

118 Which of them represent company is incorporated in USA?

a) Plc
b) Pte
c) Ltd
d) Inc

119 Which of the factors affect the choice of payment methods?

a) Govt. guarantee Program

b) Time frame
c) All
d) Cost of financing
e) Exporter fund.

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
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 dont remember the
question/
Answer: option having TRANSFER

132 Question related to non-discretionary Investment Management

Answer: the bank offers investment recommendations based on the Clients 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:-
a. Increased money supply
b. Reduced interest rates
c. Reduced money supply in the economy
d. Profitability of firms
e. None
4. Under corporate stock repurchase program
a. Corporate purchase their own shares from shareholders

5. 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
f.
6. One would go for bank deposits because
a. Money easily available
b. Interest earned
c. Insurance cover available
 d. All

7. Basic 4 parties involved in any transaction using letter of credit are following except
a. Issuing bank
b. Buyer
c. Reimbursement bank
d. Seller
e. Beneficiary bank

8. From sellers point of view which method has least risk

a. LC
b. Direct debit
c. Documentary collection
d. Counter trade
e. Cash in advance

9. 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

10. Which is not the settlement method for bank loans?

a. Pre-closure
b. Assignment
c. Participation
d. Sub participation
e. Securities repository

11. Which is correct hierarchy of corporate ratings (high to low)?

a. AAA,AA+,BBB,D

12. 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

13. Brokerage firms are regulated by

a. SEC
b. Industry wide SROs
 c. State regulatory Agency
d. All

14. Odd man out:-

a. SEC
b. NYSE
c. NASDAQ
d. LSE
e. NSE

15. 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

16. Risk associated with hedge funds:-

a. High exposure in derivatives
b. All
c. High speculation
d. High leveraging

17. 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

18. Which of the following affects the choice of payment method

a. All
b. Government guarantee method
c. Exporters fund
d. Time frame
e. Cost of financing

19. Which risk may bring gains and losses?

a. Credit risk and interest rate risk
b. All
c. Liquidity risk and foreign exchange risk
d. Credit risk and foreign exchange risk

20. Bankers acceptance differs from sight draft in that

a. Sight drafts are negotiable instruments
 b. Bankers acceptance demand immediate payments
c. Bank can raise funds by selling acceptance
d. Bank acceptance reduces banks lending capacity
e. None

21. Formal legal commitment to extend credit up to some maximum amount over a period of time is a
description of
a. Line of credit
b. Irrevocable credit
c. Letter of credit
d. Revolving credit agreement
e. Trade credit

22. Security settlement is function of

a. Specialist
b. Traders
c. Back office
d. Front office
e. Mid office

23. 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

24. 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

25. 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
e. Up/down market analysis

26. Interest rate spread:-

a. Current rate floor
 b. Cap current rate
c. Current rate-base rate
d. Base rate-floor rate
e. None

27. Who insures stocks in stock market

a. Security and exchange commission
b. Federal deposit insurance corporation
c. Us department of treasury
d. None

28. NASD is not an SRO for

a. 4th market
b. 3rd market
c. Listed market
d. 2nd market
e. OTC market

29. Which of the following loan requires the amount of interest that would be earned on the loan to
be paid upfront by borrower:-
a. Discounted loans
b. True discount check not sure
c. Capitalized
d. Demand
e. Amortized

30. Limit = $2000 Margin=20% Asset value=2000

a. Drawing power = 1600

31. Over the counter market is also called

a. Unlisted market
b. 2nd , unlisted and OTC market
c. Unlisted
d. Super
e. 2nd market

32. 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
 33. Standby letter is _____ secure than documentary collection and cheaper than ____
a. More, commercial LOC

34. Which is not an option

a. Call
b. Put
c. Swaption
d. Oil futures
e. Leaps

35. question on top 10 US bank REBO

36. ACH transaction involves

a. Cash
b. Electronic data
c. Docs
d. Checks and drafts
e. All
37. Interest rates falls
a. Bond prices increase
b. Bond prices decrease
c. Do not change
d. Economy goes to deflation
38. Rate at which bank purchases US dollars against home currency is :-
a. Bid
b. Indirect
c. Direct
d. Cross currency
e. Ask rate

39 Offer price is the price at which the firm

f. Intends to buy
g. Intends to sell
h. Trades in securities
i. None
39. 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
40. Company would pay interest on what portion of the loan?
a. Disbursed amount
b. Committed amount
c. Both
d. Either
e. None
41. Odd man out?
a. Equity
b. Stocks
c. Shares
d. Convertible bonds
e. Common stock
42. A bank cannot cover the money demanded by depositor, then it goes out to
a. Federal reserve bank
43. Institutions involved in benefit administration process, discussing plans
a. Sponsor
b. Custodian
c. Plan administration
d. Record keeper
e. Participant
44. Which of the following eliminates both country risk and commercial risk?
a. Both standby LOC and LOC
45. 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

Some important questions:

There will be 1,2,3 marks questions

There will be 121 questions

1) Page 5

State T/F
Simple interest is calculated only on the beginning principal.

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

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.

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

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

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

Full form of CHIPS?

Clearing House Interbank Payments System

What is SWIFT?

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) runs a worldwide

network by which messages concerning financial transactions are exchanged among banks and

other financial institutions

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.

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.

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:

AccrualLoans
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:

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 latters 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?

64)page 104

What are risk factors choosing the mode of financing?

Costs

Time frame

Risk factors

Govt gurantee programs

Exporters funds
65)page 105

What is BOL?

Full form of BOL?

66) page 105

PAYMENT METHODS
Cash in advance

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

68)page 107

four parties are involved in any transaction using an LC:

1. Buyer or Applicant

2. Issuing bank

3. Beneficiarys bank

4. Beneficiary or Seller

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 buyers 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

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 clients 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 Clients approval. The client may choose to ignore

this.

Discretionary: In this case, the banks 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

83)page 133

In achieving the above goals, an Investment Manager uses the following approaches/principles:

Asset Mix

International Diversification

Screens/Filters.

Capital preservation

Alternative Investments

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

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 clients 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.

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

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

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

113) page 190 -191

Read USA PATRIOT ACT

Two questions will come from money laundering..

114) page 194

SARBANES OXLEY ACT

115) page 196

Pillar 1
Quantitative Minimum Capital Requirements

Pillar 2
Qualitative Supervisory Review

Pillar 3
Market Forces Market Discipline
115) page 198
Check 21

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

Some numerical questions I will send later

All the best

1.An underwriter ______________.

a. guarantees & makes good of any shortfall in subscription to the extent of his underwriting

b. decides the insurance premium

c. is typically an investment bank

d. guarantees that the capital issue will be subscribed at premium

e. All of the listed options

2. Which of the options best describes the sequence of following events?

1. Issuing bank arranges for advising bank to make payment
2. Freight forwarder sends documents to the advising bank
3. Issuing bank issues the letter of credit (LC)
4. Advising bank advises seller that an LC has been opened
5. Advising bank sends documents to the issuing bank
a. 4,1,3,2,5 b. 4,5,2,3,1 c. 1,2,3,4,5 d. 3,4,2,5,1 e. 2,5,1,3,4

3. Corporate Lending refers to:

a. Loans provided by companies to individuals

b. Loans provided to high net worth individuals

c. Loans provided to individuals

d. Loans provided to companies by Government

e. Loans provided to companies

4. A choice quote is _______________.

a. price at which a firm is ready to buy or sell. It also means when bid is equal to offer
b. when bid is equal to offer
c. where the firm has a choice of deciding the security to take
d. price at which a firm is ready to buy or sell

5. In an international securities transaction, which of the following participants will NOT be involved?

a. Domestic Sub-custodian
b. b. Stock exchange in foreign country
c. c. Global Custodian, Domestic Sub Custodian, Depository in Foreign Country and
Sometimes Stock exchange in foreign Country
d. d. Depository in foreign country e. Global Custodian

6. Stock A is more volatile than Stock B. Which stock is more risky?

a. Data on SD is required for this b. A c. B
d. Depends e. Both are equally risky

7. Which of the following would be most attractive private banking destination

a. Delhi b. Jakarta c. Thimpu d. NewYork e. Lahore

8. A good risk management system

a. sends alerts automatically when the risk crosses a defined tolerance limit.
b. allows the risk managers to drill down the risk to lowest components
c. All of the given options
d. carries out sensitivity, what-if analyses,
e. generates customizable reports

9. On a 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 MSFT shares for $20.00 each
Sell 20 IBM shares for $11.00 each
Sell 10 MSFT shares for $20.50 each
Sell 30 IBM shares for $9.00 each
How much did the broker pay out to the exchange in total in case of (a) gross settlement system (b)
net settlement system?

a. (a) $1,780 (b) 0 for IBM, $1,795 for MSFT

b. (a) $1,780 (b) $3,000 c. (a) 0 for IBM, $1,795 for MSFT (b) $1,780

d. None of the listed Options e. (a) $3,000 (b) $1,780

10. Which of the following is likely to have the highest interest rate
a. 12 month deposit with minimum balance of 1000$
b. Cannot be determined
c. 6 month deposit with minimum balance of 1000$
d. 3 month deposit with minimum balance of 4000$
e. 6 month deposit with minimum balance of 2000$

11. A Central Bank in an economy is also known as:

a. The Retail Depositors' Bank b. The Banking Boss
c. None of the listed Options d. The Big Boss e. The Bankers' Bank

12. Retail loans are asset products offered by the bank. State True or False .

True False

13. Which of the following methods of payment is most risky to the Seller?
a. Counter trade b. Open Account c. Cash in Advance d. Letter
of Credit e. Documentary Collection

14. If the price of a security on day 1 & 2 are $ 100 and $ 102 respecti vely the return is
a. 1% b. 2% c. Very high d. -1% e. -2%

15. Cash management solutions help corporations to ___________

a. manage surpluses and deficits b. reduce float on collections
c. outsource collections d. All of the listed options e. automate collections
16. What is the role of a Central Bank in Forex market of a country?
a. Acts as a trader for maximum profit making
b. Encouraging trading in all currencies and not be limited to USD only
c. Seller of USD
d. Regulatory role depending on country's economic policies
e. No role

17. If a bank gets a deposit of $1000, assuming a reserve requirement (CRR) of 10%, and that it
circulates through 2 more banks, leading to the following money multiplier effect

a. Loan of $1710 b. Create reserve of $190 c. None of the listed Options

d. Create a reserve of $100 e. Loan of $2439

18. High-Net worth individuals generally have _______.

a. Networth greater than $500,000 b. All of the listed options
c. Market capitalization more than $200,000
d. Household income of maximum $50,000 per year

19. Which of these instruments is not included as part of Asset servicing services under the
category "Pricing/Holdings Valuation", which includes accurate pricing, ratings, etc. ?
a. Equities
b. The service may be provided for all of these instruments
c. Government securities
d. Certificates of participation
e. Certificates of deposit

20. In the Historical Simulation method of VaR calculation

a. no assumption is made about the distribution of returns
b. random returns are generated to calculate VaR
c. returns are assumed to be not normally distributed
d. returns are assumed to be normally distributed
e. returns are not required at all

21.Which is the most risky of the following:

a. An asset with a standard deviation of 3
b. An asset with a standard deviation of 1
c. An asset with a standard deviation of 2
d. An asset with a standard deviation of 5
e. An asset with a standard deviation of 4

22. A mutual fund with investment objective of achieving high capital growth approaches an investor
services firm for advice. The firm advises 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, depends on market conditions prevailing at the time

b. Is too high c. Is about right d. Is too low

23. In which of the following cases can the Securities Lending service of a custodian be used to
borrow securities?

a. A broker has made a sale of securities, but some of the securities were delivered defective
b. All of the listed options
c. A hedge fund manager wants to trade with borrowed shares as part of his arbitrage strategy
d. A broker has made a short sale of a security, and wants to cover it

24. The process of transferring obligation from one party to another is called _________
a. Settlement b. Novation c. Netting d. None of the listed Options e. Counterparty risk

25. Which of the following methods eliminate country risk and commercial risk upon confirmation?
a. Standby Letter of Credit b. Both Standby Letter of Credit & Letter of Credit

c. Letter of Credit d. Back to back Letter of Credit e. Documentary Collection

26. ADR stands for which of the following?

a. American Demand of Russian bond b. American Demand of Rented homes

c. American Demand Receivables d. American Dollar Receivables

e. American Depository Receipts

27. Which of the following are examples of Payment Methods?

a. Letter of credit b. Open account or credit c. Cash in advance

d. All of the listed options e. Documentary collection

28. All broker/dealers involved in the underwriting of non-exempt securities must be

a. NASDAQ Member b. No such membership is required c. NYSE Member

d. SEC Member e. NASD Member

29. Credit derivative have all of the following characteristics EXCEPT:

a. Traded over the counter b. Financial Instrument c. None of the listed Options
d. Transfers risk e. Facilitate greater efficiency

30. Risk Management is a function of

a. Back Office b. Mid Office c. Traders d. Front Office e. Specialists

31. Pick the odd one out

a. Demat b. Personal Loans c. None of the listed Options
d. Hire Purchase e. Auto Loans

32. The term CP is used in Corporate Lending for:

a. Client Partner b. Credit Provision c. Commercial Paper
d. Commodity Put Options e. Collateral Provision
33. In defined contribution retirement plans, Tax-sheltered Annuities fall under Section ______ of
ERISA
a. 401(b) b. None of the listed Options c. 401(k) d. 403(b) e. 403(k)

34._____________ is typically the largest part of the spread and is paid to the broker/dealer that
actually took the clients order.
a. Underwriter's Allowance b. Wage c. Manager's fee d. Concession e. Salary

35. 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. True discounted Loan b. Discounted Loan c. Capitalized Loan

d. Demand loan e. Amortized Loan

36. Auto loans are loans financed for vehicles for business use. State True or False.

True False

37. The real rate of interest is 9.50% while the nominal rate of interest is 11.70%. The applicable
inflation rate is:
a. 2.2 b. 2.1 c. None of the listed Options d. 0 e. -2.2

38. If the price of a security on day 1 & 2 are $ 102 and $ 100 respectively the return is
a. 2% b. -2% c. -1.96% d. 1 to 2% e. Very high

39. Which of the following is NOT a category of health & welfare plan?
a. Property insurance b. Survivor benefits c. All of these are valid categories
d. Disability income e. Health care plan

40. If total spread on underwriting is $ 500000 and Manager's fee is $ 100000, what is the amount
which will be distributed in the syndicate?
a. $400,000 b. $500,000 c. $600,000 d. Cannot be determined e. $100,000

41. What are the risks associated with Hedge Funds?

a. High Leveraging b. High Speculation
c. High Exposure in Derivatives d. All of the listed options

42. Which is the best VaR estimation model

a. Variance-Covariance Matrix b. Cannot Say - depends on case to case
c. Historical Simulation d. A combination of Monte Carlo and Historical Simulation
e. Monte Carlo Simulation

43. A bank decides to sacntion only 10% of the loan sought by a company. The company goes and
pledges extra assets with the bank and the bank then agrees to sanction 50% of the loan sought.
The company has indulged in the process of:

a. Credit Revision b. Credit Increase c. Credit scoring

d. Credit Enhancement e. Credit Incrementation

44. A purely competitive financial market is not characterized by:

a. Many Traders b. Government Regulation c. Cost
effective Trading d. Full Information

45. On a 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 MSFT shares for $20.00 each
Sell 20 IBM shares for $11.00 each
Sell 10 MSFT shares for $20.50 each
Sell 30 IBM shares for $9.00 each
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: 70 shares to give out; MSFT: 90 shares to receive; $3,000 to pay out to the exchange
b. IBM: no exchange of shares; MSFT: 90 shares to receive; $3,000 to pay out to the exchange
c. IBM: no exchange of shares; MSFT: 90 shares to receive; $1,780 to pay out to the
exchange
d. None of the listed Options
e. IBM: no exchange of shares; MSFT: 90 shares to receive; $1,780 to receive from the exchange

46. Card associations provide which of the following services ?

a. Set interest rates b. Set card fees c. Issue cards
d. Set credit limits e. Security/Risk management

47. FX Spot Deal in US assumes a maturity of how many business days ahead?
a. Five days b. Three days c. Four days d. Two days e. One days

48. A fixed income analyst will analyze all but

a. Municipal Bonds b. Shares c. US Treasuries
d. Corporate Bonds e. Bonds of Government Sponsored Enterprises

49. Which of the following is not correct for a personal loan?

a. Loan amount is not linked to borrowers repayment capacity

b. No security required
c. The financer is not interested in the intention of the loan
d. They are short term loans e. None of the listed Options

50. In Check 21, IRD stands for:

a. Investor Replacement Document b. Institutional Replacement Document
c. Internal Rating Document d. Image Replacement Document

51. In an account earning simple interest, the interest from the first year is reinvested at the
beginning of the second year. State True or False.

True False

52.Which of the following is not a Charge Type

a. Hypothecation b. Pledge c. Collateral d. Lien

53.Jo inherited an antique tie pin. It was valued at $1350. Each year its value appreciated by 5%.
Approximately how much was the tie pin expected to be worth 5 years later
a. $1,723 b. $1,450 c. None of the listed options d. $1,688 e. $1,045
54. Which of the following represents the correct hierarchy of corporate ratings (highest to lowest)?
a. AAA, AA+, BBB, D b. AAA, AA-, D, BBB c. D,C,B,A
d. D, AA-, B, AAA e. AAA, AA+, D, AA-

55. The rate at which the bank will purchase US dollars against home currency is called as
___________.
a. Direct Rate b. Ask Rate c. Bid Rate d. Indirect Rate e. Cross Currency Rate

56. Which among the following is an investment company that pools money from unitholders and
invests in a variety of securities?
a. Mutual Fund b. None of the listed options c. Stock
Exchange d. Mortgage Company

57. Pick the odd one out.

a. George Soros b. Bill Gates c. Warren Buffet d. Ben Graham e. Peter Lynch

58. USExport and EURImport agree to carry out the transaction, goods worth $1,000,000 under a
confirmed term Letter of Credit with a maturity date of 60 days from the time of shipm ent. The
Acceptance commission @ 1.5% pa equals ___________.

a. 2500 b. None of the listed Options c. 300 d. 250 e. 3000

59. Which of the following, according to you, has resulted in defined contribution plans gaining
popularity over defined benefit plans?

a. All of the listed options

b. Employers increasingly want employees to share responsibility for their retirement
c. DC plans fix the monthly contribution from the employee, making his financial planning easier
d. DC plans are seen by employees as an investment vehicle to accumulate retirement income

60. Which of the following financial institutions are covered under the Anti -money laundering, US
Patriot Act
a. Mutual Funds b. Securities brokers and dealers
c. All of the listed options d. Banks and Trust companies

61. All the following statements concerning U.S. Government securities are correct EXCEPT:

a. Treasury bills have a greater interest rate risk than either Treasury bonds or Treasury
notes.

b. None of the listed options

c. Treasury notes have maturity dates up to 10 years.

d. Treasury bonds have maturity dates up to 30 years

e. Treasury bills have their interest paid in a lump sum at maturity.

62. Legitimate ways to cancel the credit card transactions within a limited time frame are
_________________
a. Chargeback and Chargeback reversals b. Chargeback reversals

c. Chargeback d. Presentment
63. Syndicate helps in all the following activities but
a. raising huge money from the banks b. managing large capital raising activity

c. IPO Distribution d. managing conflicts between investment banks

e. managing large bond issues

64. Bank New has a portfolio of $30 million worth of loans, which it wants to hedge. This is an
example of what kind of loan?

a. Held for Sale Loans b. Trading Loans c. Committed Loans

d. Accrual Loans e. Undrawn Loan

65. Operational Risk is defined as

a. the risk of loss resulting from errors in processes, people and systems

b. he possibility of loss as a result of default, such as when a customer defaults on a loan

c. the possibility of loss over a given period of time related to uncertain movements in market
factors

d. the possibility that a firm will be unable to generate funds to meet contractual obligati ons as they
fall due.

e. the possibility of loss when a contract cannot be enforced

66. Open ended loan allow the borrower to borrow additional amount subject to the maximum
amount less then a set value. State True or False.

True False

67. Which risks may bring gains as well as losses?

a. Credit risk and interest rate risk

b. Liquidity risk and credit risk

c. All these risks may lead to profits as well as losses

d. Credit risk and foreign exchange risk

e. Interest rate risk and foreign exchange risk

68. Banks are financial institutions that are licensed to accept deposits and issue loans

True False

69. Bank A, based in the US, provides safekeeping services for securities to its US clients. It also
has clients in France and Belgium, and provides securities safekeeping services to these clients
through Banks C and D respectively. Which of the following terms best describes Bank A?

a. Sub Custodian b. Secondary Custodian c. None of the listed Options

d. Main Custodian e. Global Custodian

70. Credit derivatives can be used to ___________ the risk and ___________ the regulatory capital
requirements.
a. Diversify; reduce b. Manage; avoid c. Transfer; increase

d. Assess; estimate e. Eliminate; improve

71. Liquidity refers to the ease with which an asset can be converted into cash. State True or False.

True False

72. Trade Finance helps in:

a. Facilitating corpoate lending b. Facilitating intra-company transactions

c. Facilitating International transactions, corporate lending and s etting up of new factories

d. Facilitating International transactions e. Facilitating setting up of new factories

74. An insurer undertakes an analysis of a portfolio of insurance policies by exploring scenarios for
the paths followed by swap rates, policy surrender rates, mortgage prepayment rates for the
mortgage-backed securities in the portfolio, etc. What is this process called?
a. Cash projections b. Fund Administration c. Asset/Liability analysis

d. Investment Manager Universe e. Asset allocation

75. The Brokerage firms are regulated by:

a. State regulatory agencies b. Industry wide SROs c. SEC d. All of the listed options

76. Which of the following factors affect the choice of payment methods?

a. Government Guarantee Program b. All of the listed options

c. Cost of financing d. Time frame e. Exporters Fund

77. Which of the following is associated with the purpose of regulating financial institutions?
a. To offset the moral hazard incentives provided by deposit insurance and oth er guarantees.

b. To provide stability of the money supply c. None of the listed options

d. To prevent failure of any financial institution

e. To serve certain social objectives

78. Retail banking is banking services provided for corporates. State True or False.
True False

79. If the funding cost of a Company goes up due to hardening of interest rates, this can be
attributed to
a. Commodity Risk b. Liquidity Risk c. Operational Risk

d. Legal Risk e. Interest Rate Risk

80. I deposit $100 in a bank. Bank loans out $90 out of it to someone else who then invests the
money in setting up a new factory. This process is called?
a. Profit making tendancies of the Bank b. None of the listed options

c. Monetery Policy d. Money Multiplier Effect e. Fiscal Policy

81. Which of the following is NOT an example of an Asset Based Loan?

a. Auto Loan b. Home Loan c. Personal Loan d. All of the listed Options

82. The purchase of any stock for immediate delivery is a ______ market transaction.
a. Option b. Forward c. Spot d. Futures e. Stock

83. Universal banks provide commercial banking as well as investment bank services under one
roof. State True or False.

True False

84. If 1 day VaR is $ 1 million, 9 Day VaR is

a. $ 9 Mn b. $ 3 Mn c. $ 4.5 Mn d. $ 4.4 Mn e. $ 1 Mn
85. Which of the following is NOT a potential benefit of Straight Through Processing ?
a. Increased diversity in IT systems of various players supporting the trade cycle

b. Increased liquidity

c. Reduction in trade processing time

d. Drastic reduction in operational risk through reduction of human element

e. Elimination of delays in settlement

86. The "Compliance reporting" service, offered as part of Investor services in the US, provides
automated, __________, information highlighting potential violations of pre-agreed investment
guidelines, external regulations & internal risk exposure limits
a. Risk-based b. Exception-based c. Rule-based d. Client instruction-based

87. The Advising bank is used as a trusted bridge between the _ _________ and _______________
when they do not have an active relationship
a. Issuing bank; Confirming bank b. Beneficiary bank; Reimbursing bank

c. Issuing bank; Beneficiary bank d. Importer; Exporter

e. Reimbursing bank; Beneficiary bank

88. Pick the odd one out

a. Merill Lynch b. Federal Reserve c. CSFB d. UBS

e. Saloman Smith Barney

89. Which of the following are disadvantages of using LC (Letter of Credit)?

a. Credit Line tied up. b. Costly c. Specific and Binding

d. Deals with documents and not with products

e. Time consuming

90. CPI stands for which of the following?

a. Consumer Popularity Index b. Consumer Product Index

c. Consumer Price Index d. None of the listed options

e. Consolidated Price Index

91. Which of the following holds true for an LC (Letter of Credit)

a. Are typically revocable unless specified otherwise.

b. Advising bank has the liability for the payment of the LC.
c. Shifts credit risk from the Importer to the Importer's Bank (Issuing Bank).

d. Deals with products and not with documents

e. One of the relatively cheaper forms of payment guarantee.

92. Which of the following is not a derivatives instrument?

a. Futures b. Corporate Bonds c. Put Options d. Call Options e. Swaps

93. In a 2 way quote for a share the bid is

a. more than offer b. equal to offer c. less than offer

d. 2% less than offer e. dependent on dealer's skill

94. HPPL shares are currently selling for $25.00 each. You bought 200 shares one year ago at $24
and received dividend payments of $1.50 per share. What was your total dollar capital gain this
year?
a. $300 b. $200 c. $400 d. $500 e. None of the listed options

95. A bank providing custody services is in a good position to offer securities lending services to its
clients as well. State True or False.

True False

96. Which of the following operations can be done on a LC (Letter of Credit)?

a. Purchase b. Negotiate c. Acceptance d. All of the listed Options e. Discount

97. Under what category can services like asset/liability analysis, asset allocation, cash projection,
compliance reporting, fund administration, investment manager universe, etc. provided by an
institution be classified?
a. Asset servicing b. Investment management c. Investor services

d. Trading e. None of the listed Options

98. Which of the following best describes bank systems?

a. Unregulated and safe b. Unregulated and unsafe

c. Regulated and unsafe d. None of the listed Options

e. Regulated and safe

99. In a economy where inflation is 9%, future value of 100 units of money after 2 year would be
which of the following?
a. Around Rs 109 b. None of the listed options c. 118.8

d. Exactly 120 e. Exactly 100

100. An investor wants to undertake a cross-border transaction in a security. Which of the following
does NOT correctly represent a way in which such a trade may be settled?
a. Directly through a local agent who is a member of the local depository

b. All of these are valid ways for settling the cross-border trade

c. Through a Global Custodian, operating through a local agent, who is a member of the local
depository

d. Through an International Central Securities Depository, which has direct links with the local
depository

e. Through direct communication link between investor's depository and local depository

101. You purchased a stock for $40. One year later you received $2 as dividend and sold the share
for $48. What was your holding period return?
a. 10% b. 50% c. 45% d. None of the listed options e. 25%

102. NASD is an not an SRO for ____________.

a. Over the counter market b. Second Market c. Fourth Market

d. Listed Market e. Third Market

103. A successful wealth manager needs to know about ___________.

a. All of the listed options b. 401 k rollovers c. tax and estate planning

d. fixed income investments e. equity investments

104. Offer is the price at which a firm

a. intends to buy b. trades in securities c. quotes when it does not want to trade

d. quotes to its best customers e. Intends to sell

105. Which of the following best describes how banks make loans?
a. None of the listed Options b. Reasonably, not depending upon risk

c. Without limitation d. Blindly with equal offers to all customers

e. Reasonably, depending upon risk

106. Which of the following is not an example of an option?

a. Oil Futures b. Call Option c. Put Option d. Swaption e. LEAPS (Long Term Options)

107. If the price of shares of Cognizant change from $ 65 to $ 60, this can be attribut ed to
a. Credit Risk b. Interest Rate Risk c. Operational Risk d. Liquidity Risk e. Market Risk

108. A company would pay the interest on what portion of the loan?
a. Disbursed amount b. Unused amount of the loan c. None of the listed Options

d. Either disbursed or committed amount e. Committed amount

109. A bank is required to hold reserves at least equal to a prescribed fraction of its total deposit
liabilities. State True or False

True False

110. Securities with an original maturity of greater than 1-year are traded on money markets. State
True or False.

True False

111. Interest rates are ____________.

a. the prices paid for the use of a real asset b. the prices paid for the use of a real liability

c. the prices paid for the use of a financial liability

d. the prices paid for the use of a financial asset

e. the prices paid for the use of a financial liability and the prices paid for the use of a financial asset

112. Basel capital accord was instituted to coordinate global regulatory efforts to institute
_______________ capital requirements to eliminate the threat posed by _____________
a. Minimum; undercapitalized banks

b. Maximum; undercapitalized financial institutions c. Minimum; overcapitalized banks d.

Maximum; overcapitalized financial institutions e. None of the listed Options

113. Which of the following trading services reduces the trading costs for institutional investors?
a. Transition management b. None of the listed Options

c. Transition management and commission recapture

d. Commission recapture e. Stock repurchase program

114. Money Market accounts never require a minimum balance to operate. State True or False.

True False

114. which of the following is not a feature of private banking?

a. Specialist Advice b. Commercial Lending c. Lot of research

d. High Investment in technology e. Understanding the capital and investment needs

115. What happens when the interest rates fall?

a. Interest rates never fall, they always go up b. Economy goes into a deflation

c. Bond prices decrease d. Bond prices do not change e. Bond prices increase

116. What are the two types of portfolio management services?

a. Penny wise and Pound wise b. X and Y c. Directed and Straight

d. Discretionary and Non Discretionary e. Universal and Local

117. Who backs the dollar?

a. None of the listed Options b. The treasury

c. Private companies d. The government e. The Fed

118. Warrants are the combination of which of these instruments?

a. Cash and Call Options b. Equities and Futures c. Call and Put Options

d. Equities and Call Options e. Put Options and Swaps

119. Which of the following is computationally the fastest method for calculating VaR
a. Monte Carlo Simulation b. Historical Simulation
c. All would take equal time if done using a software

d. Variance-Covariance Matrix
e. A combination of Monte Carlo and Historical Simulation

120.Factoring is______________
a. Purchase of account receivables at a discount
b. works mostly with capital goods c. sharing risk with third party
d. works with medium and long term receivables
e. a discounting method without recourse

121.A life insurance company has guaranteed a payment of $ 8 Million to a pension fund, 4 years from
now. If the Insurance company has received a total premium of $ 6.5 million, and can invest this entire
amount for 3 years at 6.75 %, will it have sufficient funds to meet the $ 8 million obligation?

a) No
b) Yes
 c) Insufficient data to draw any conclusions

122. You have invested $5000, for 5 years and 3 months @ an annual interest rate of 6%. What is the
future value of this amount?

a) $ 6890.42
b) $ 6789.31
c) $ 6780.24
d) $ 7346.51

123. An investor is considering the purchase of a financial instrument, that promises to make the
following payments:

Year 1 $ 100

Year 2 $ 100

Year 3 $ 100

Year 4 $ 1,200

What is the price she should pay for this instrument, assuming she wants a 7% annual interest rate?*

* PV Values of $ 1: PV(1,0.7) (i.e. discounted over 1 period by 7%) = 0.9346

PV(2,0.7)=0.8734; PV(3,0.7) = 0.8163; PV(4,0.7)= 0.7629600

a. $1500
b. $ 1231.31
c. $ 1177.91
d. $ 1096.28

Data for questions 4-7: The following data is gathered from Cognizants annual report 2002 (it is not an
exact copy).Use this to answer the next 3 questions. (all $ values in millions)

Total Revenue : $ 229.08

Direct Cost $ 122.7
Tax 23.35%
Interest Income $ 1.8
Depreciation & Amortization $ 7.84
# shares outstanding 59.2 Mn
 Selling, General & Administrative $ 53.34
Expense
Other expenses $ 1.9

124.What is the Gross Profit?

a. $ 106.38 Mn
b. $ 227.18 Mn
c. $ 104.48 Mn
d. $ 51.14 Mn

125. What is the EBIT?

a. $ 106.38 Mn
b. $ 53.04 Mn
c. $ 52.94 Mn
d. $ 45.10 Mn

126. What is the PAT?

a) $ 45.1 Mn
b) $ 35.5 Mn
c) $ 34.56 Mn
d) $ 52.94 Mn

127. What is the EPS?

a. 0.76
b. 0.599
c. 0.58
d. 0.63

128. .A firms undistributed profit falls under which category in the balance sheet?

a) Working Capital
b) Asset
c) Owners Equity
d) Borrowings

Leary Corporation's snapshot as of December 31, 2002 is presented below in random order.

Accounts receivable $60,000

Shareholders' equity $377,000

Short term debt $130,000

Accounts payable $37,000

Inventory $165,000

Equipment $500,000

Long-term debt payable $ 350,000

Land $194,000

Cash $25,000

Prepare the balance sheet for December 31, 2003, and answer questions 9-13.

Assume depreciation @ 10%, using straight-line method

129. With the above data, what is the total of the assets /or liabilities+shareholders equity ?

a) $ 944,000
b) $ 894,000
c) $ 900,000
d) $ 874,600

130. What is the total of the Current Assets?

a. $ 250,000
b. $ 85,000
c. $ 225,000
d. $ 190,000

131. What is the total of the Current Liabilities?

a) $ 165,000
b) $ 377,000
c) $ 350,000
d) $ 167,000

132.What is the amount of depreciation?

a. $ 0
b. $ 19,400
c. $ 50,000
d. $ 69,400

133. What is the total of short term liabilities?

 a) $ 727,000
b) $ 377,000
c) $ 350,000
d) $ 167,000

134. ABC Corporation Ltd.s capital structure is given below. How much minimum cash will the company
need to meet its necessary payment obligations to investors this year?

Pref. equity $ 1,000,000 dividend rate 9%

Debentures $ 500,000 8% interest rate

Secured Loans $1,200,000 5% interest rate

Common shares $1,000,000 -

Assume that principal need not be repaid this year on any debt, and that ABC Corp is making no profits
this year.

a. $0
b. $190,000
c. $100,000
d. $60,000

135. The following are the cash flows for a trader over the next 7 days. He has Rs. 10,000 in his current
account with the bank. The bank also offers an overdraft facility. Does the trader need to use overdraft
on his account? If yes, how much should be the minimum overdraft allowed by the bank? Assume that
all payments are made using checks on the account and similarly all incoming payments are deposited
directly in the same account. Assume that he gets a 1-day float on the payments made using checks, and
checks he receives get credited immediately. Also assume that debits and credits for a day take place at
the same time.

Day 1: Pay supplier Rs. 5,400

Day 2: Pay telephone bill Rs. 4,000

Receive payment Rs. 1,800

Day 3: Pay instalment on Loan Rs. 5,200

Day 4: Receive payments Rs. 3,900

Day 5: Pay salaries Rs. 2,500

Receive payments Rs. 1,700

Pay to Supplier Rs. 5,500

Day 6: Reimburse expenses Rs. 1,400

Day 7: Receive payment Rs. 1,950

 a. No, he doesnt need an overdraft
b. Yes, and the min. limit should be Rs. 4,650
c. Yes, and the min. limit should be Rs. 6,600
d. Yes, and the min. limit should be Rs. 5,200

136. Using the data of the question above: The following are the cash flows for a trader over the next 7
days. He has Rs. 10,000 in his current account with the bank. The bank also offers an overdraft facility.
Does the trader need to use overdraft on his account? If yes, how much should be the minimum
overdraft allowed by the bank? Assume that all payments are made using checks on the account and
similarly all incoming payments are deposited directly in the same account. Assume that he does not get
a 1-day float on the payments he makes using checks. Checks he receives get credited immediately.
Also assume that debits and credits for a day take place at the same time.

Day 1: Pay supplier Rs. 5,400

Day 2: Pay telephone bill Rs. 4,000

Receive payment Rs. 1,800

Day 3: Pay instalment on Loan Rs. 5,200

Day 4: Receive payments Rs. 3,900

Day 5: Pay salaries Rs. 2,500

Receive payments Rs. 1,700

Pay to Supplier Rs. 5,500

Day 6: Reimburse expenses Rs. 1,400

Day 7: Receive payment Rs. 1,950

a. No, he doesnt need an overdraft

b. Yes, and the min. limit should be Rs. 4,650
c. Yes, and the min. limit should be Rs. 6,600
d. Yes, and the min. limit should be Rs. 5,200

1. You invest Rs.5000 at 8% p.a. compound interest in a bank. After 5 years, what is the amount
you have received from the bank?
Rs.12346 Rs. 7000 Rs. 2346 Rs. 7346 Rs. 7546

2. Your friend invests Rs.8000 in the some bank at 10% p.a. His interest is getting compounded each
year. At the end of 5 years, how much interest will he have earned on his investment?
 Rs. 4845.6 Rs. 4000 Rs. 12000 Rs. 4884.08 None of the listed Options

3. Your brother calls you, saying that he has found a great plot of land, which requires a payment of
Rs.50, 000 immediately, which he has made. He asks you to pay the Rs.2, 50,000 which is due after one
year. You have Rs.2, 25,000 right now, and want to invest it right away, to yield the desired amount after
one year. However, it is also your hard-earned money, and rather than simple go for the highest return,
you want to find the right risk-return balance. Here the options open to you, which one would you chose?

a. Investment Option: Bank Fixed Deposit 1, Rate of return offered: 11% p.a.

b. Investment Option: Bank Fixed Deposit 2, Rate of return offered: 11 % semi annually
compounded every 6 mths

c. Investment Option: Co-operative Bank FD, Rate of return offered: 14% p.a

d. Investment Option: Friends business, Rate of return offered: 18% p.a.

e. Investment Option: Share market

4. Present Value of Rs.600 received one year from now (using 15% time value rate) is

510 521.7 690 517.2 None of the listed Options

5. An investor is considering the purchase of a financial instrument that promises to make the following
payments:
Yrs from now Promised Payments
1 Rs. 2000
2 Rs. 2000
3 Rs. 22500
Investor wants exactly 6% return on the investment. At what price should the investor buy the instrument?

22512 22558 23021 21000 21500

6. A person borrows $12,000 from a private money lender at a rate of 9.50% for a period of 1 year, when
the average inflation rate for the period is 4%. The real rate of interest is ____ while the nominal rate of
interest is _____.

9.50%, 13.50% 9.50%, 5.50% 9.50%, 9.50%

9.50%, information not sufficient for finding real rate of interest

None of the listed Options

7. The real rate of interest is 7.60% while the nominal rate of interest is 9.70%. The applicable inflation
rate is:
2.10% -2.10% 13.10% 0% None of the listed Options

8. As nominal interest rates increase in the economy, the inflation should ideally:

Decrease Remain same Increase

Depends on rate of increase in real interest rates

None of the listed Options

9. A person wants to borrow money from the banking system for the purpose of an overseas holiday.
Bank A offers him an interest rate of 5.15% p.a. payable monthly, bank B offers him 5.20% p.a. payable
semi-annually while Bank C offers him 5.25% p.a. payable annually. Which is the cheapest option for the
borrower?

Bank A Bank B Bank C All of them are the same Both Bank B & Bank C

10. Find the future value of $1200 invested at 5.25% p.a. payable quarterly, after 5 years?

1465.2 1280.95 1557.55 1987.4 None of the listed Options

11. Find the future value of $1200 invested at 5.25% p.a. payable annually, after 6 months?

1231.1 1243.1 1235 1345.1 None of the listed Options

12. Find the present value of $1200 payable after 2 years, assuming the applicable interest rate is
5.10%?

1131.1 1078 1065 1086.36 None of the listed Options

13. Person A wins a lottery and the lottery organizers give the man the following options: Receive
$120,000 no or receive $135,000 after 18 months? Assuming bank rates are at 8% p.a. payable
quarterly, which is the better option?

Receive $120,000 now Receive $135,000 after 18 months

Both options are equally good Depends on bank rates at the end of 18 months

None of the listed Options

14. An investment of 12,000 at the beginning of Year 1 yields $1000 at the end of Year 1, $1200 at the
end of Year 2 and $1300 at the end of Year 3, apart from recovery of principal. What is the NPV of the
investment assuming re-investment and a cut-off yield of 9.00%?

$201.20 $3,500.00 $1,012.20 $181.20 None of the listed Options

15. An investment of 10,000 at the beginning of Year 1 yields $1200 at the end of Year 1, $1500 at the
end of Year 2. What should be the return at the end of Year 3, apart from principal recovery, to justify the
investment with a cut-off yield of 15.00%?

$14,000.00 $13,423.67 $11,896.75 $12,345.90 None of the listed Options

16. A consumer goods company has a market share of 23% in the Flat screen television industry. The
company is weighing the option of investing an additional $1.2 million in modernization and expansion,
which is expected to yield additional revenues of $0.4 million over the first 3 years while it would yield
$0.3 million and $0.1 million each in years 4 and 5. Assuming that the time window for the investment is 5
years and the hurdle rate for investments is 15%, should the company go for the investment from a purely
financial perspective?

No Yes Maybe Insufficient information None of the listed Options

17. An investor has multiple investment options yielding various dollar returns at various points of time,
while he is comfortable with a return of X% p.a. Which method should he use to compare the various
investments?

IRR NPV Either of these Insufficient information None of the listed Options

18. An investor estimates an investment of $15,000 to yield returns of $1200 each at the end of the first 3
years apart from return of principal at the end of 3 years. Assuming that the inflation rate is 5%, should
the investor opt for the investment?

No Yes Maybe Insufficient information None of the listed Options

19. What is the IRR for an investment of $ 10,000 that yields a return of $1000 at the end of each of the
first 3 years, $600 at the end of the 4th and 5th years and principal recovery at the end of 5 years?

5.55% 7.65% 8.47% Insufficient information None of the listed Options

20. The following concepts are derived from the basic concept of time value of money except:

Present value Future value IRR Net Present Value None of the listed Options

21. A young student looking for monthly income should invest most of his savings in

Bank deposits & Fixed Interest instruments Regular dividend paying companies

Blue-chip shares Zero coupon bonds Real estate

22. Savings bonds are:

Issued by department of Treasury Unregistered

Transferable without registration

Issued by department of Treasury and Transferable without registration

Unregistered and Transferable without registration

23. The interest rate on a bond doesnt depends on

Years to Maturity Credit Rating of the Issuer Currency of Issue

Bond Face Value All of the listed options

24. What is the Yield to Maturity for a 6% - 5 years bond with face value $ 1000 trading at $ 800 after one
year?

7.50% 6% 11% 7% 10%

25. Unsecured bonds are:

Issued only by large and financially sound companies

Secured by assets of the issuing company.

Have lower priority for repayment than secured debt

Issued only by large and financially sound companies and Secured by assets of the issuing company.

Secured by assets of the issuing company and Have lower priority for repayment than secured debt

26. In what form are bonds typically issued in US?

Physical, Registered

Electronic, Registered

Physical, Registered and Electronic, Registered

Physical, Unregistered

Electronic, Unregistered

27. What is the backing for a Mortgaged Bond?

No backing Bank Guarantee The credit worthiness of the issuing company

Real estate owned by the Issuer None of the listed Options

28. What secured debt securities are generally backed by a portfolio of non-issuer securities, usually U.S.
Government Securities?
Debentures Bearer Bonds Collateral Trust Bonds Junk bonds Equipment Trust
Debenture

29. What bondholders would have a general creditor status?

Debentures Bearer bonds Unsecured bonds Junk bonds Equipment Trust debenture

30. What is the S & P ratings below which bonds are considered to be speculative?

Less than AAA Less than BBB Less than CCC D Junk grade

31. What securities experience Reinvestment Risk?

Cumulative Interest Bonds Callable bonds Zero coupon bonds Junk bonds None of
the listed Options

32. What are the current maturities for T-Bills?

1, 2 and 3 months 3, 6 and 12 months 1, 2 and 3 years 1 month only None of the listed
Options

33. What is the maximum maturity for Commercial Paper?

90 days 180 days 270 days 360 days None of the listed Options

34. Who sets the Fed Funds Rate?

Federal Reserve Banks SEC Stock Exchanges Investors 1

35. Negotiable securities are:

Sale price can be negotiated Freely transferable

Can only be sold to the issuer Cant be sold except on maturity

Have a lock in period

36. Mutual funds

Are often riskier than investing in individual stocks.

Require investors to invest very large sums of money, which eliminates small investors.

Are less riskier than individual stocks as the fund managers invest in a diversified portfolio

Give much greater returns than the stock index Carry no risk
37. Hybrid securities are

Combination of Preference and Common stock

Combination of put and call Combination of debt and equity

Combination of growth and income None of the listed Options

38. Why would an investor choose to invest in Money Market Securities?

Investor looking for capital gains Investor looking for liquidity

Arbitrageur Investor looking for regular income None of the listed Options

39. Which of the following bonds involves highest risk?

Subordinated debenture bonds. Debenture bonds.

Collateral bonds. Mortgage bonds None of the listed Options

40.Which of the following statements is true about futures?

Future prices are paid for current transactions

Risk is often increased when dealing in futures because buyers and sellers may be required to accept a
price other than the one to which they agreed.

Financial futures are traded primarily at the New York Stock Exchange.

Investors may hedge their risk by entering into futures

Futures are same as Options

41.The responsibility of enforcing futures contracts is taken on by

A clearing house. The brokers who struck the deal.

Banks The buyer and seller. Arbitrageurs

42.What provides the incentive for someone to sell an option when that individual has no rights, just
obligations?

The seller stands to gain from changes in interest rates.

The seller stands to gain from changes in prices.

Selling options is relatively risk free

The seller earns commission

The buyer must pay an option premium to the seller.

43. Which of the following is used primarily by financial intermediaries to hedge interest rate risk for long
periods of time (up to 15 years)?

Swaps. Put options. Futures Call options LEAPS

44. Which of the following is not an example of a derivative?

Financial futures Options Preferred stock of a company Swaps

Swaptions

45. Company ABC Inc. Declares bankruptcy. Now, $180 million has been accumulated through
liquidation of its assets. The main stake holders in the firm are debt holders (Bank of New York - $140
million, Union Bank of California - $30 Million) and equity holders (Templeton Investments - $100 million).

What is the amount that the three stake holders end up with (in $ million)? (In the order, BNY, UBC and
TI)

30, 140 and 10 60, 60 and 60 93, 20 and 67 140, 30 and 10

140, 30 and 0

46. If General Electric would borrow $300 million from Bank of America, how would its balance sheet be
affected in terms on leverage ratio?

Leverage ratio would remain the same Leverage ratio would increase

Leverage ratio would decrease Leverage ratio has no relation with borrowing

None of the listed options

47. People who buy stock in a corporation such as Coca Cola become

Part owners of Coca Cola, so the benefits of holding the stock depend on Coca Colas profits

Part owners of Coca Cola, but the benefits of holding the stock do not depend on Coca Colas
profits

Receive interest

Creditors of Coca Cola, so the benefits of holding the stock depend on Coca Colas profits

Creditors of Coca Cola, but the benefits of holding the stock do not depend on Coca Colas profits

48. Assuming that IBM has paid handsome dividends to its shareholders this year, what would be a right
assumption to make?

No relationship between interest and dividend payouts

IBM has only paid dividends and no interest on its issued bonds

IBM has paid the dividends after paying interest to its bondholders

IBM will pay interest if it has enough cash after its dividend payout

IBM will pay interest only if it is still in profit zone after the dividend payout

49. Municipal bonds

Are exempt from federal taxes.

Usually have yields that are higher than U.S. government securities with similar maturities.

Are guaranteed by the federal government.

Usually support real estate spending and student loans.

Are junk grade bonds

50.Bonds with relatively low risk of default are called

Zero coupon bonds Junk bonds Investment grade bonds Price-premium bonds
High Yield bonds

51. A young investor comes to an Investment Consultant and asks him for advice for his investments. He
declares that he doesnt 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 the consultants
choice for his profile?

Income Fund Liquid Fund Growth Fund Balanced Fund Bank Deposit

52. 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 Indian Share Public offering in India

Global Depository Receipt None of the listed options

53. If I expect the price CTS share price to rise by $5 from its current levels within 1 month, then which
would be the best option?

Buy a put option on CTS stock Sell a put option on CTS stock

Buy a call option on CTS stock Sell a put option on CTS stock
Buy a put as well as a call at different strike prices

54. Casablanca Inc. Issues $100 million worth of securities which will continue to pay a fixed coupon of
2% annually for next five years.The investors also have an option of converting the security into equity
after the first year. Such a security would be termed as

Convertible Bond Preferred Stock Stock Option Forward Contract Futures

55. State and local government or municipal bonds have one unique feature that makes them attractive to
wealthy investors.Which of the following is that unique feature of "muni" bonds?

They are exempt from state taxation for all investors

They are exempt from federal and state (resident investors) income taxation

State and municipal bonds usually have coupon rates

State and local municipal bonds are all revenue bonds

They have high credit rating

56. If IBM finds it much cheaper to raise money in US and Vodafone in UK. However, both IBM would like
to raise money in UK and Vodafone in US, both of which are costlier propositions for the firms. What
would be best possible solution to this problem?

Future contract LEAPS Vanilla Call Option Forward Contract Currency Swap

57.Forward contracts are promises to buy or sell foreign exchange:

On a futures exchange at some time in the future.

On a specific future date at a price established on that specific future date.

At a specific forex rate at some time during the contract period.

At a specific price on a specified future date.

None of the listed Options

58. If the forward rate (Forex/U.S. dollar) is selling at a premium over the spot rate, which of the following
statements best reflects the expectations of the foreign exchange market?

No forecast can be made with forward contracts

The U.S. dollar is expected to appreciate

The foreign currency is expected to appreciate

The spot rate is expected to remain constant

None of the listed Options

59. A U.S. importer who owes 1 million Canadian $ in 90 days and wishes to hedge his/her foreign
exchange risk would:

Take no action

Wait and buy Canadian in the spot market in 90 days

Sell Canadian dollars forward for delivery in 90 days

Buy Canadian dollars forward for delivery in 60 days

Buy Canadian dollars forward for delivery in 90 days

60. A U.S. importer of Canadian nickel ore with an invoice to pay $1 million U.S. dollars in thirty days
would

Pay the invoice in thirty days.

Buy a forward contract in U.S. dollars for delivery in thirty days.

Sell Canadian dollars in the futures market.

Sell US dollars in futures market

Purchase Canadian dollars for delivery in thirty days.

61. A 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 foreign exchange speculator

Expecting the dollar to depreciate against the Euro

A hedger in the foreign exchange market

Planning to pay a set amount of dollars for the items purchase

None of the listed Options

62. A hedger in the financial futures market

Usually buys financial futures to hedge

Usually sells financial futures to hedge

Either buys or sells financial futures contracts so that the underlying asset spot gains/losses are directly
related to futures contract gains/losses

Either buys or sells financial futures contracts so that the underlying asset spot gains/losses are
inversely related to financial futures contract gains/losses

None of the listed Options

63. Who will lose money if the price of any underlying instrument falls?

The seller of a futures contract The buyer of a put.

The writer of a call. The buyer of a futures contact.

None of the listed Options

64. The value of options

Varies inversely with the price variance of the underlying asset.

Varies directly with the length of time to expiration.

Varies inversely with the level of interest rates

Increases with the decreased volatility of the underlying asset.

None of the listed Options

65. A Standard and Poor's bond rating of AAA refers to

High quality investment grade bonds.

Bonds of high quality, but with an elevated risk of long-term default.

Non-investment grade bonds, with uncertain long-term prospects.

Government bonds only

None of the listed Options

66. The first time a company issues stock to the public the issue is called

An initial public offering (IPO).

A secondary offering.

A stock option.

Internal financing.

An initial public offering (IPO) and Internal financing

67. Common stockholders usually trade ________ to preferred stockholders in return for __________.

Interest income; voting rights

A prior claim on dividends; higher dividend income

A prior claim on dividends; voting rights

Their residual claim on assets in liquidation; preferred claim on dividends

Both 2 and 3

68. Leverage financing refers to

Using Promoters credibility to raise money

Leveraging brand value to issue equity

Using debt finance

Selling assets to raise money

Use of retained profits for expansion

69. Preferred stock dividends are paid

Each year on a contractual basis, but before common dividends.

After common dividends are paid.

Before interest is paid on debt.

If declared by the board of directors.

After both interest and common dividends are paid

70. The purchase of U.S. Treasury bonds for immediate delivery is a ______ market transaction

Stock Option Spot Futures Forward

71. Suppose Ruthie has the option of receiving a $10,800 payment today or a $15,868.7 payment in six
years. Which of the following statements is true if the interest rate is 8 percent?

She should take the $10,800 today because the present value of the $15,868 paid in six years is only
$9,752.54.

The present value of the $10,800 is $15,868.74.

She should take the $15,000 in six years because $15,000 is more than $10,000.

She should take the $15,000 in six years because the future value of $10,800 is only $15,000.

Both are equal

72. The buying or selling of securities with the hope of profiting from privileged information is known as

Speculation. The spot market. Arbitraging The futures market. The term to maturity.
73. If the issue price of a 5 year zero-coupon bond is $940 and its redemption price is $1000, market
price $955,then the difference amount of $45 stands for

The interest for the 5-year period

The return on the investment of $960

Both The interest for the 5-year period and The return on the investment of $960

Only 1

Premium on the bond

74. The effective interest rate on a bond, (when the price of the bond is greater than its par value)

Is lower than the coupon rate.

Is always equal to the coupon rate.

Increases as the bond price decreases.

Is greater than the coupon rate.

None of the listed Options

75. John holds 2007 maturity government security which pays a semi-annual coupon of 8%. What should
John do with this security?

Sell it, if interest rate is increasing

Sell it, if interest rate is decreasing

Sell it with the next coupon date, irrespective of interest rates movement

Sell it now or hold it till maturity

Can never sell

76. If bond portfolio managers expect interest rates to increase

They will anticipate a decrease in bond prices.

They will probably buy bonds now to avoid capital losses.

They will wait for the rates to actually change before taking any action.

They will probably sell more bonds now before the bond prices decreases.

They will buy short-term bonds.

77. Which of the following is not a characteristic of money markets?

They trade in a central location.

They have an active secondary market.

They are wholesale markets.

They are beyond the reach of small investors.

They trade in short term instruments

78. Investors use the money market

To reduce the liquidity of their funds.

To reduce the opportunity cost of idle funds.

To gain from expected declines in future interest rates.

To earn high returns on their investments.

To manage long-term cash requirements

79. Which of the following is true for The Fed funds rate

It can be raised if the Govt. buys securities from the public.

It can be raised if the Treasury will sell more bills.

It can be raised if the Govt. announces an increase in the rate at its regular meeting.

It is cost of borrowing immediately available funds for one day.

The Fed cant do anything because it is market determined.

80. If John, a foreign exchange trader sees that EUR/USD, EUR/JPY and USD/JPY show that he could
make money by buying two of them and selling the other, then what is he trying to do?

Arbitrage trading Hedging Taking high risks to get high returns

Both arbitrage trading and hedging Cant say

81.One potential problem that could be caused by the tremendous growth of the international financial
system in recent years is

Lower standards of living around the world.

That a disturbance in one financial market can spread more quickly to other countries.

That the additional transactions will make the international financial markets less efficient.

That economic growth will be likely to slow down in many countries

Higher Income inequality

82. Primary markets

Are markets in which primary goods and service, i.e. raw materials are traded.

Are markets in which short-term debt is traded.

Are markets in which claims that have already been issued are sold by one investor to another.

Are markets in which newly issued claims are sold to initial buyers.

Are markets in which shares are actively traded.

83. The current market interest rate is 10%. A coupon bond with a coupon payment of $70, a face value
of $1000, and with still ten years to maturity, will trade at what discount?

$1000. $0. $300. $200. $70

84. "Liquidity" is a term that is used to refer to

The ease with which assets can be converted into goods and services.

Financial assets in general.

The practice of converting financial assets into money.

Money.

The devaluation of assets in general.

85. Discount bonds are

Bonds that are currently trading below their face value.

Bonds that are currently trading above their face value.

Bonds that are sold below their face value, which yield interest payments in one lump sum at the
day of maturity.

Bonds that are sold at face value, but which yield interest payments in one lump sum at the day of
maturity.

Bonds that can be redeemed anytime at a discount 3

86. The money market trades debt

of a short-term maturity.

of a medium-term maturity.

of a medium-to-long-term maturity.

of a long-term maturity.
of all types of maturities.

87. Say you buy a bond with a face value of $1000 at a discount for $750. The bond still has 10 years to
maturity, and the coupon rate on the bond is 10%. The yield to maturity of this bond is approximately

70%. 14%. 10% 7% 12.5%

88. Which of the following classifies financial markets by term to maturity?

Debt vs. equity market

Money vs. capital market

Spot vs. futures market

Primary vs. secondary market

None of the listed Options

89. The initial sale of a security is in the ______ market, while subsequent trading in the security is in the
________ market

Primary; secondary

Secondary; primary

Money; capital

Spot; futures

Debt; equity

90. Which of the following functions of financial markets best describes the primary functions of the
financial futures market where trading is done for delivery some time in the future?

Speculation; raise funds

Payments system; risk management

Risk management; speculation

Funds intermediation; risk management

Raise funds; payment system

91. The financial system

Provides risk sharing, liquidity and information services.

Provides liquidity services only.

Provides information services only.

Refers to the banking system only.

Where only financial assets are bought & sold

92. While the primary market provides ________ for spenders, the secondary market provides
________ for investors

Funds; liquidity

A place for investing; liquidity

Funds; low risk

Securities; funds

Low risk; high returns

93. Which of the following is associated with increased liquidity of a secu rity?

Increased transactions costs

Increased time it takes to sell a security

Increase in taxes for every transaction

Increased number of dealers trading the security

All of the listed options

94. Which of the following is not associated with money market securities?

Short-term Marketable High quality Equity securities Repo

95. The second largest amount of capital market securities outstanding, after common stock, is

Corporate and foreign bonds Mortgages U.S. Treasury securities

U.S. Agency securities Municipal Bonds

96. Regulations limiting risk taking of financial institutions are imposed for which of the following
reasons?

The social costs to shareholders of a general bank failure are more than the private cost of the bank
failure.

The costs of regulation exceed the benefits.

The private costs of a bank failure exceed the social costs of general bank panic.
The social costs of a general bank failure exceed the private costs to the shareholders of t he
bank that failed.

Private costs to the shareholders of the bank exceeds the social costs of the a general bank failure.

97. Which of the following is associated with the purpose of regulating financial institutions?

To provide stability of the money supply

To serve certain social objectives

To prevent failure of any financial institution

To offset the moral hazard incentives provided by deposit insurance and other guarantees.

All of the listed options

98. Regulatory balance sheet restrictions are designed to

Limit the size of depository institutions.

Limit risk-taking and to encourage diversification.

Limit excessive diversification.

Encourage high risk-taking by proper diversification.

Limit diversification and encourage risk taking

99. Regulators' attempting to limit competition by restricted entry, exclusive services, etc. was an
attempt to serve which of the following purposes of regulation?

To promote competition in the financial services markets.

To promote limited quantities of financial services at maximum prices.

To promote safety and soundness of depository institutions.

To protect the soundness of the deposit insurance fund.

None of the listed Options

100. Which of the following are involved in the regulation of Capital Markets in the US?

Ginnie Mae Fed SEC The US government None of the listed Options

101. Who among the following would not be a participant in the money-markets

Banks Central Bank Small Investor Companies Financial Institutions

102. Repos are considered the safest financial instruments as

They are backed by the government

They are of very short-term maturity

They come in very small denominations

They are backed by all big banks and companies

They offer lowest interest rates.

103. Individual investors are most likely to trade securities in

The primary market a brokered market an auction market

a block transaction a direct search market

104. Financial intermediaries differ from other businesses in that both their assets and their
liabilities are mostly

illiquid. owned by government real. financial regulated. 3

105. Insurance or a guarantee to cover losses of a financial institution may create a moral hazard

Which is an increase in the chance that a random negative economic event will occur.

Which is an incentive to decrease risk-taking by the insured.

Which is an incentive to increase risk-taking by the insurance authority.

Which is an incentive to increase risk-taking by the insured.

Which is an incentive to decrease risk-taking by the insured

106. In what roles do investment bankers perform?

design securities with desirable properties

market new stock and bond issues for firms

provide advice to the firms as to market conditions, price, etc.

None of the listed options

All of the listed options

107. Financial intermediaries exist because small investors cannot efficiently

gather information
advertise for needed investments

monitor their portfolios

diversify their portfolios

All of the listed options

108. Exchange rate risk

results from changes in the exchange rates in the currencies of the investor and the country in
which the investment is made.

can be hedged by using a forward or futures contract in foreign exchange.

cannot be eliminated.

Both results from changes in the exchange rates in the currencies of the investor and the
country in which the investment is made and can be hedged by using a forward or futures
contract in foreign exchange.

results from changes in the exchange rates in the currencies of the investor and the country in
which the investment is made, can be hedged by using a forward or futures c ontract in foreign
exchange and cannot be eliminated.

109. A coupon bond is a bond that

does not pay interest on a regular basis but pays a lump sum at maturity

pays interest on a regular basis (typically every six months)

can always be converted into a specific number of shares of common stock in the issuing company

always sells at par

None of the listed options

110. Under the present international monetary system,

Exchange rates fluctuate freely without government intervention.

Central banks determine the exchange rates in all countries

Supply and demand are the only factors for price determination. Central banks dont intervene

Supply and demand are the primary forces that determine exchange rates, but central banks
may intervene if they believe currency values are over- or undervalued.

It is illegal for central banks of major countries to coordinate their intervention activities.

111. The presence of risk means that

Few outcomes possible Investors will lose money
Investors will gain money
The standard deviation of the return is large
Final wealth will be lower than the initial wealth

112. Which asset class would provide highest returns for the lowest risk?
Property Shares Bonds Cash Cant be answered

113. Which asset class would provide lowest returns for the highest risk?
Property Gold Bank deposits Cash Cant be answered

114. If REAL rate of return was 10% last year and inflation was 3%, what was your investment
returned?
3.30% 7% 13% 30% 10%

115. Which of the following statements regarding risk -averse investors is true?
They will only accept lower returns and low risk
They accept investments that provide high returns.
They only care about rate of return.
They will only accept higher returns and low risk
None of the listed options

116. Alex is a more risk-averse investor than Olivia. Therefore

For the same risk, Alex requires a higher rate of return than Olivia.
For the same return, Alex tolerates higher risk than Olivia.
For the same risk, Alex requires a lower rate of return than Olivia.
For the same return, Olivia tolerates lesser risk than Alex.
Both 2 and 3

117. If a T-bill pays 5 percent, which of the following investments would not be chosen by a risk-
averse investor?
An asset that pays 10 percent with a probability of 0.60 or 2 percent with a probability of 0.40.
An asset that pays 10 percent with a probability of 0.40 or 2 percent with a probability of 0.60.
An asset that pays 10 percent with a probability of 0.30 or 3.75 percent with a probability of 0.70.
An asset that pays 10 percent with a probability of 0.20 or 3.75 percent with a probability of
0.80
An asset that pays 10 percent with a probability of 0.50 or 2.75 perc ent with a probability of 0.50

118. 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

119. 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
Market Risk Credit Risk Liquidity Risk Legal Risk None of Above

120. 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

121. VaR is used for which of the following

Risk Measurement Risk Mitigation Risk Taking
Risk Assumption None of the listed options
122. A trader lost more than $50 million as the market moved against his positions. However, when
measured the previous day by hisrisk manager, his VaR for a single day was defined at $20 million.
Is this possible that the VaR is right
Yes because VaR does not cover 100% of the outcomes
No, it is impossible
Yes but only if the trader must have broken the VaR limit purposely
Both a and c
None of the listed options

123. 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

124. Which percentage of confidence for VaR is the most conservative?

99% 95% 96% 90% 68%

125. Which of the following is not a risk management measure?

Diversification Hedging Insurance Budgeting All are risk management techniques

126. Risk is best measured when looked at

At a Macro level At the lowest possible level At a sub-macro level
At a super-macro or organizational level
At a macro level and at the lowest possible level

127. Value-at-Risk can be estimated using

Monte Carlo Simulation Historical Simulation
Variance-Covariance Matrix Parametric methods
All of the listed options

128. Is time horizon of importance when calculating VaR?

Only for certain instruments Yes, for all financial instruments
No. It is not a factor used for calculations.
Yes but only time horizons lesser than a week
Yes but only high value financial instruments 2

129. What would be the most accurate VaR estimation method?

Monte Carlo Simulation Historical Simulation
Variance-Covariance Matrix Cannot Say Analytical Methods

130. VaR helps in describing which of the following?

How big the loss would be on a bad day.
How to minimize the loss on bad days
Approximately predict movements of asset to help minimize losses
Explains the loss on a bad day as compared to other days
None of the listed options 1

131. A 2.33 sigma limit for calculating risk would refer to what level of confidence?
95% 99% 99.99% 50% 100%

132. Risk-based capital requirements, under the Basel Accord, focused on what area of commercial
bank risk?
Default risk Interest rate risk Liquidity risk
Political risk None of the listed options
133. An investor's strategy of holding many risky assets in an attempt to reduce overall risk is called
------------
Spread management Specialization Coincidentialization Securitization.
Diversification

134. 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
0.008 0.036 0.053 0.017 -0.029 4

135. Risk is usually measured as the

Potential loss. Variability of outcomes around some expected value.
Probability of expected values. Potential expected loss.
None of the listed options

136. 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

137. If one project has a higher standard deviation than another

It has a greater risk. It has a higher expected value.
It has more possible outcomes.
It may be riskier, but this can only be determined by the coefficient of variation.
Both It has a greater risk and It has a higher expected value 1

138. Which of the following is a false statement?

Risky investments may produce large losses.
Risky investments may produce large gains.
The standard deviation of returns is a risk measure.
Risk-averse investors cannot be induced to invest in risky assets.
Both Risky investments may produce large losses and Risky investments may produce large gains
4

139. Risk, as used in financial markets, means

The probability of a loss. The probability of a gain.
The probability of a gain and the probability of a loss.
The overall rate of return. The present value of a financial instrument. 3

140. Legal risk is the

Possibility that you will face legal action
Loss you could incur when legal action is taken against you
Possibility of loss when a contract cannot be enforced
Possibility of loss from errors in instructing payments or settling transactions
None of the listed options

141. The monetary value at risk is expressed as

A number between 0 and 1 Possible impact in Dollars
(1) * (2) cant be assigned None of the listed options
142. A Portfolio Manager is examining the stock performance of Company Dee. She sees that, in
the past, the maximum the stock has ever fallen is 5%. She buys 1 million worth of Company Dee
stock. Which of the following statements is true?
Her VaR is $50,000 with a confidence level of 100%
Her VaR is $ 5,000 with a confidence level of 100%
Her VaR is $ 50,000 with a confidence level of 0%
Her VaR is $1 Million with a confidence level of 100%
Her VaR is $ 1 Million with a confidence level of 0%

143. State which of the following statement(s) is (are) true

There is no risk without reward
There is no reward without risk
Increasing business in Europe also reduces a certain risk to Cognizants business
Both There is no reward without risk and Increasing business in Europe also reduces a
certain risk to Cognizants business
Risk doesnt change with time

144. State which of the following statement(s) is (are) true

Microsoft stock is the safest investment
It is better not to spend time and effort to identify and measure a risk if in the end we may not
undertake any risk mitigation measure
Risk management initiatives should reduce the risk to zero to obtain maximum benefit
All of above
None of the listed options

145. It is estimated that the probability of a particular risk in a project is 0.3 and the impact, should
the risk materialize, is $ 5,000, while the project is worth $ 3 million. The Project Manager should
Compare the cost of risk management with the value at risk and decide on optimum strategy
Take immediate action to reduce the probability to as low as possible
Ignore the risk the monetary value is negligible
Cannot say
Shouldnt take up the project

146. In 2002, interest earned on bank deposits was higher than profit from stock market
investments, even though deposits were supposed to have less risk associated with them. It means
Bank deposits are actually riskier form of investment than share prices, since reward has to be
proportional to risk
The scenario described above is impossible; there must be an error in measurement
The risk-reward principle holds true over a long period, while in the short term it is less
certain
Cannot say
The risk-reward principle holds true over a short period, while in th e long term it is less certain

147. Following are the list of risks that Cognizant faces at an organization level EXCEPT
exchange rate fluctuation protective legislation by U.S/U.K
attrition payment default None of the listed Options

148. Following are the list of risks that your project or a typical project in Cognizant is exposed to
EXCEPT
attrition cost & time over-run incorrect requirements
requirement evolution None of the listed Options

149. The extent of diversification affects the following EXCEPT

risk return liquidity total investment None of the listed Options
150. Indian software firms lost a lot of money due to the Dollar appreciating against the Indian
Rupee. This risk could be term
Liquidity Risk Market Risk Credit Risk Legal Risk Price Risk

151. Fill in the blanks: The liability of a bank include ____________, while the assets of a bank
include _____________
Deposits, loans.
Savings accounts and large time deposits, checking accounts.
Long term deposits and short term loans Loans, deposits.
None of the listed Options

152. What is the best basis for the comparison of dividend paying s tocks with other investments
such as bonds, certificates of deposits etc
interest spread exchange rate interest rate equity yield dividend yield

153. Banks are financial intermediaries that

a) Link lenders (depositors) to borrowers
b) Evaluate the likelihood of borrower repayment, reducing risk by developing a diversified
portfolio rather than lending to a single borrower.
c) Create monopolies, monetary & fiscal policies.
d) Both Link lenders (depositors) to borrowers and Create monopolies, monetary & fiscal
policies.
e) Both Link lenders (depositors) to borrowers and Evaluate the likelihood of borrower
repayment, reducing risk by developing a diversified portfolio rather than lending to a
single borrower

154. A bank failure is more likely to occur when

bank increases its equity capital bank holds more short-term riskless securities
bank large loans outflows bank increases its holdings of excess reserves
capital adequacy ratio is reduced

155. When you deposit $200 in currency into your bank

its assets decline by $200 its reserves decline by $200
its liabilities increase by $200 each of the above occur
its assets decline by $200 and its reserves decline by $200

156. Which of the following is NOT under the purview of the Central Bank
Monitoring foreign currency inflow and outflow
Stability of the financial system
Conducting the nations fiscal policy
Regulating the Banking institutions
Conducting the nations monetary policy

157. Which of the following represent tools available to th e Fed to control the money supply?
a) The capacity to make direct commercial loans to the public.
b) The ability to inject or remove money held by the public by buying or selling U.S.
Treasury Bonds.
c) The ability to write legislation to generate increased gover nment spending on public works
projects such as building trails, parks, and bridges.
d) The ability, through its Internal Revenue Service division, to change federal income tax
rates, and thus vary cash holdings by the public.
e) all of the listed options.

158. CRR stands for which of the following

Cash Reserve Ratio Common Reserve Ratio Cash Refund Ratio
Cash Re-service Ratio Cash Reserve Risk
159. Increasing the Cash Reserve Ratio for banks would have an impact on which of the following
Increased Money Supply in the economy Reduced interest rates
Reduced Money Supply in the economy Profitability of firms
Both Increased Money Supply in the economy and Reduced interest rates 3

160. Which two risks of a financial institution may bring gains as well as losses?
Credit risk and interest rate risk
Interest rate risk and foreign exchange risk
Credit risk and foreign exchange risk
Liquidity risk and credit risk
None of the listed options

161. How does the central bank increase money suppl y in the economy?
By reducing the Cash Reserve Ratio (CRR)
By buying foreign currency
By increasing the wages of the salaried class
By selling Government Securities in the open market
By maintaining a high interest rate

162. When the interest rate rises, people are

Less likely to borrow, that is, sell a financial asset.
More likely to borrow, that is, sell a financial asset.
Less likely to borrow, that is, purchase a financial asset.
More likely to borrow, that is, purchase a financial asset.
Would be neutral to borrowing

163.Banks must keep a percentage of their deposits on hand as

Required reserves. Excess reserves. Savings accounts.
Home loans Safe deposit reserves. 1

164. When a large majority of a bank's depositors lose faith in it and attempt to withdraw their
deposits, the bank
a) Will not experience difficulties because its required reserves will be adequate to meet
withdrawals
b) Will not experience difficulties because it will hold sufficient excess reserves to meet
withdrawals
c) Will experience difficulties but will not fail
d) Will fail unless it can obtain additional reserves or government assistance
e) Both Will not experience difficulties because its required reserves will be adequate to meet
withdrawals and Will not experience difficulties because it will hold sufficient excess
reserves to meet withdrawals

165. A financial asset is liquid

a) If it can be carried easily from one place to another.
b) If it can be readily exchanged for another asset or good.
c) Only if it takes the form of cash.
d) If it is held by the public and earning interest.
e) Both If it can be carried easily from one place to another and If it can be readily exchang ed
for another asset or good.

166. In Harvey, N.D. three local banks have issued no-interest loans in the form of Harvey Bucks.
They can be spent in local stores. Retailers get 95 U.S. cents for each Harvey Buck. From this
information you can conclude that Harvey Bucks
a) Although less liquid than Fed Notes, are money because they are accepted as money.
 b) Although less liquid than Fed Notes, are money because they are assets of everyone who
holds them.
c) Are not money because they are liabilities for consumers who have been issued
Harvey Bucks.
d) Are not money because they are not backed by the Federal governm ent.
e) None of the listed options

167. If Bank of Japan was buying Dollars fervently, it would most likely be for which of the following
reasons
a) To protect Japanese exporters from loss due to movement in Yen
b) To protect Japanese importers from loss due to movement in Yen
c) For speculative purposes
d) Both To protect Japanese exporters from loss due to movement in Yen and For speculative
purposes
e) None of the listed options

168. ACommercial bank would be able to make money in which of the following ways
a) Make the lending rate below the deposit rate
b) Make the lending rate equal to the deposit rate
c) Keep the lending rate above the deposit rate but play the volume game
d) Either Make the lending rate below the deposit rate or Make the lending rate equal to th e
deposit rate
e) Either Make the lending rate equal to the deposit rate or Keep the lending rate above the
deposit rate but play the volume game

169. Retail Banking division in a bank would not include which if the following departments
Personal Loans Home Mortgages Derivatives Trading Consumer Loans
Vehicle Loans

170. Glass-Steagall act (1933) was created to ensure which of the following
a) Create a Chinese wall between Commercial Banking and Securities Business
b) Create a Chinese wall between Corporate Banking and Retail Banking Business
c) To make the banks more efficient
d) To promote the concept of Universal Banking
e) Both To make the banks more efficient and To promote the concept of Universal Banking

171. Money Multiplier effect would imply

a) An increase in the total money lent out into the system
b) An increase in the total money in the bank reserves in the system
c) A decrease in the total money in the bank reserves in the system
d) Both An increase in the total money lent out into the system and An increase in the
total money in the bank reserves in the system
e) 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

172. Cash Reserve Ratio is maintained for which of the following reasons?
a) To ensure that the Bank doesnt face a cash crunch due to heavy withdrawals
b) To ensure that the Central Bank can take this cash in case of its need
c) To contribute towards government needs in times of crisis
d) Both To ensure that the Central Bank can take this cash in case of its need and To
contribute towards government needs in times of crisis
e) None of the listed Options

173. The Fed has been reducing the interest rates with aim of achieving which of the following
a) Increasing the growth rate of the economy
b) Decreasing the growth rate of the economy
 c) Help interest-rate traders book profit
d) Both Increasing the growth rate of the economy and Help interest -rate traders book profit
e) To help the government raise funds

174. 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 1

175. Regulations limiting risk taking of financial institutions are imposed for which of the following
reasons?
a) The social costs to shareholders of a general bank failure are more than the private cost of
the bank failure.
b) The costs of regulation exceed the benefits.
c) The private costs of a bank failure exceed the social costs of general bank panic.
d) The social costs of a general bank failure exceed the private costs to the shareholders
of the bank that failed.
e) None of the listed Options

176. Which of the following is associated with the purpose of regulating financial institutions?
To provide stability of the money supply
To serve certain social objectives
To prevent failure of any financial institution
To offset the moral hazard incentives provided by deposit insura nce and other guarantees.
Both To serve certain social objectives and To offset the moral hazard incentives provided by
deposit insurance and other guarantees.

177. Regulators' attempting to limit competition by restricted entry, exclusive services, etc. was an
attempt to serve which of the following purposes of regulation?
a) To promote competition in the financial services markets.
b) To promote limited quantities of financial services at maximum prices.
c) To promote safety and soundness of depository institutions.
d) To protect the soundness of the deposit insurance fund.
e) Both To promote limited quantities of financial services at maximum prices and To promote
safety and soundness of depository institutions

178. Regulatory balance sheet restrictions are designed to

Limit the size of depository institutions.
Limit risk-taking and to encourage diversification.
limit excessive diversification
to promote Universal Banking
encourage high risk-taking by proper diversification 2

179. A bank that is earning 7% on its earning assets and is paying 4% on its interest-earning
liabilities is said to
Have a negative spread.
Have a positive GAP position.
Have a positive spread.
Will always have positive net earnings.
Both Have a negative spread and Will always have positive net earnings

180. Which of the following is not a commonly used term in the context of Banking?
Corporate banking Investment banking Public banking
Retail banking Private banking
181. The term Spread refers to
a) The amount of profit a bank makes after clearing all its costs including payment of interest to
deposit holders.
b) The difference in the purchase and sale prices of any financial instrument quoted by any
financial intermediary such as a bank, a broker, etc.
c) The difference between the lending rates and deposit rates of a bank.
d) Both The difference in the purchase and sale prices of any financial instrument
quoted by any financial intermediary such as a bank, a broker, etc. and The
difference between the lending rates and deposit rates of a bank.
e) None of the listed Options

182. Why do we need banks?

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 and Deposits are participants in primary and secondary markets
d) All of above of small investors are protected, hence it is a low risk investment avenue
e) Banks

183. CRR stands for

Cash Requirement Ratio Cash Reserve Requirement Cash Reserve Ratio
Cash Requirement Reserve Capital Reserve Requirement

184. The central bank in the US is called

Federal Reserve Federal Reserve Board Reserve Bank of United States
Central Bank of United States Reserve Bank of America

185. Investment Banking division of a bank offers all of the following except
Underwriting and distribution of equity issues Leasing services
Mergers and acquisitions Valuation of firms None of the listed Options

186. Which division provides services to High Net Worth individuals?

Corporate banking Investment banking Retail banking
Private banking None of the listed Options

187. Which of the following statements is true

a) Banks may loan out all the money they receive through deposits
b) When the central bank reduces CRR, amount of money in circulation in the economy
goes up
c) When the central bank issues securities in the market, amount of liquidity in the economy
goes up
d) All of the listed options
e) None of the listed Options

188. Which of the following US banks is the biggest based on the asset size as on July 2003
Bank of America J.P. Morgan Chase & Co Citigroup, Inc
ABN AMRO Bank One Corporation

189. 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

190. Today, the most important monetary policy tool is

bank examination and supervise capital requirements
discount rate policy open market policy required reserves policy

191. Which of the following is not covered under retail operations of a Bank ?
Loan for Consumer durables Hire Purchase Bill Discounting
Lease Auto Loans

192. Which of the following is not correct for a personal loan?

The financer is not interested in the intention of the loan
Loan amount is linked to borrowers repayment capacity
They are short term loans
No security required
None of the listed Options

193. "Thumb rules for calculation of Maximum loan amount in case of auto loan are?
a) Not greater than 3 times the yearly income of the borrower
b) Not greater than 2 times the yearly income of the borrower
c) The EMI should be less than 70 pct of the gross monthly income
d) The EMI should be less than 60 pct of the gross monthly income"
(b) and (c) (a) and (d) (a) and (c) (b) and (d) None of the listed Options

194. Interest rate charged on asset based loans is

Greater than the personal loans Always equal to the personal loans
Lesser than the personal loans all of the listed options
None of the listed Options

196. Which is true for a closed ended loan?

There is no end to such loans Overdraft is not allowed in such loans
Interest is calculated on daily outstanding balance
The borrower gets a credit card along with the loan
None of the listed Options

197. 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 None of the listed Options

198. If the Limit = $1200, margin = 20% and Asset Value = $1200 then Drawing Power for an Open
ended loan is equal to?
$1,500 $1,200 $960 $900 None of the listed Options

199. Which of the following is true?

a) The financier owns the asset in case of Lease but not in case of Hire Purchase
b) Depreciation is claimed by the financier both in Lease and Hire Purchase
c) Callable bonds
d) Tax deduction can be claimed for the full value of the payment in lease but only to the extent
of interest paid in Hire Purchase
e) None of the listed Options

200. Which of the following is the most profitable for Credit Card Company?
Customers who always pay in time
Customers who never pay
Customers who default but finally pay
all of the listed options
None of the listed Options
201. Which of the following is not a repayment method?
Post dated checks Salary deductions Direct receipts
Direct debits None of the listed Options

202. Which of the following is not a kind of repayment?

Slice payment Step up Step down Bullet payment None of the listed Options

203. Interest rate spread is equal to?

Current rate Base rate Current rate Floor Base rate Floor
Cap Current rate None of the listed Options

204. Collateral is?

A form of loan Asset put up as security
Obligations to be fulfilled by the borrower
A bad loan None of the listed Options

205. While comparing mortgages, one should use?

Internal rate of return Annual Percentage Return
Net present Value Rate of Interest applicable for the loan
None of the listed Options

206. While taking a Mortgage, one needs a large sum to furnish the home, then whic h interest rate
deal should be chosen?
Discounted interest rate Capped rate Standard variable rate
Standard variable rate with cash back None of the listed Options

207. In
case of discounted interest rate deal for a mortgage the following is true?
a) One receives a substantial cash sum when one takes the loan.
b) Interest rate is guaranteed to be set amount below the base rate
c) The payments are set at less than that lenders going rate for a fixed period of time.
d) The payments go up and down as the mortgage rate changes but are guaranteed not to go
above a set level
e) None of the listed Options

208. Capped rate of interest in case of Mortgage implies

a) The rate of interest cant move above a set level
b) The rate of interest cant move below a set level
c) The collar of the interest rate cant move above a set level
d) The spread of the interest rate cant move above a set level
e) None of the listed Options

209. Which is not true in case of Repayment Mortgage?

a) Monthly payments goes partly towards the interest and partly towards the principal
b) If all the monthly payments are made, the loan will be repaid by the end of the term
c) Monthly payments would increase if interest rates rise
d) Monthly payments would decrease in interest rates fall
e) None of the listed Options

210. Endowment mortgage refers to the following?

a) An interest only mortgage, along with a endowment policy to mature at the same time
as the term of the loan
b) An interest only mortgage that comes with life insurance policy
c) Another name of interest only mortgage
d) An interest only mortgage combined with tax saving investment policies
e) None of the listed options
211. Annual Percentage Rate for a loan takes into account the following?
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

212. Freddie Mac, Ginnie Maes & Fannie Mae are?

a) Marketing institutions selling home loans
b) Lenders to the banks for home loan bought by retail customers
c) Regulatory bodies governing home loan market in US
d) Primarily asset management companies
e) None of the listed Options

213. Which is not true for an Acquiring bank

a) They approve a merchant for accepting credit cards
b) They collect the merchant's online payments
c) They are members of Visa and Master Card Associations
d) They are members of Dinners club
e) None of the listed Options
214. Which of the following is not true Independent sales organization?
a) They provide merchant accounts
b) They process the funds of merchants
c) They keep reports of all the activity of merchant accounts
d) They work on behalf of Acquiring banks
e) None of the listed Options

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

Independent sales organization Merchant Payment gateway
Associations None of the listed Options

216. After a credit card transaction is initiated by a customer in a shop, the transactions information
is sent to?
Payment Processor Merchants payment gateway
Issuing banks payment gateway Acquiring banks payment gateway
None of the listed Options

217. Who checks for the credit limit of the card before approving the transaction?
Payment processor Acquiring banks Payment gateway
Issuing bank None of the listed Options

218. When the merchant clicks the Bill Orders button in the store to "capture" the funds, the store
sends the capture information to?
Payment Processor Merchants payment gateway
Issuing banks payment gateway Acquiring banks payment gateway
None of the listed Options

219. Which information is not provided by a Credit Bureau?

Credit History Report inquiries Personal Identifying Information
Public Records None of the listed Options

220. Which of the following data appear on a credit report?

Bank account balances Race & Religion Health
Income & Driving records None of the listed Options

221. Which of the following is not true for the credit score?
 a) Its based on ones consolidated financial information fr om the Credit Report
b) Its a number calculated based on ones credit history
c) Its used by lenders for a simpler "lend/don't lend" answer
d) Its a three digit number varying between 300 900
e) None of the listed Options

222. Which one of the following contributes to ones credit report?

Bank account balance Personal Assets Ones qualification
Types of existing credit None of the listed Options

223. Which of the following does not contributes to the cost of using credit card?
Expenses incurred through credit cards Annual Percentage rate
Utility Bills paid through credit card Late payment charges
None of the listed Options

224. Which is not a banking account?

Checking Accounts Money Market Deposit Accounts
Demat Account Time Deposits None of the listed Options

225. One should have the checking account if one is looking for?
Quick, convenient and, frequent-access to the money
A high rate of interest Guaranteed rate of interest
Low fee None of the listed Options

226. One should have the MMDA if one is looking for?

Quick, convenient and, frequent-access to the money
A high rate of interest Guaranteed rate of interest
Low fee None of the listed Options

227. 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 None of the listed Options

228. One should have the Basic Account if one is looking for?
Quick, convenient and, frequent-access to the money
A high rate of interest Guaranteed rate of interest
Low fee None of the listed Options 4

229. One should have the Savings account if one is looking for?
Quick, convenient and, frequent-access to the money
A high rate of interest Guaranteed rate of interest
Low fee None of the listed Options 5

230. Which one is true for a capitalized loan?

a) Monthly payments go towards the interest, while a lump sum payment at the end of the term
goes towards the principal
b) Monthly payments goes partly towards the interest and partly towards the principal
c) The interest due and not paid is added to the principal balance of the loan. interest
becomes part of the principle of the loans
d) Such loans come at a very low processing fee
e) None of the listed Options

231. The term Capture in context of credit cards refers to?

a) Capture of credit card number by the issuing bank during a transaction for authentication
b) Capture of the person using a card not owned by him
 c) Conversion of the authorization amount into a billable transa ction record.
d) Recording of a persons credit details in the credit report.
e) None of the listed Options

232. Considering the amount of competition in the retail market, which of the following are the
upcoming challenge/s for the banks
a) Single customer interface across multiple departments
b) Increasing their cross-sell opportunities to customers
c) Improving internal processing efficiency and quality
d) all of the listed options
e) None of the listed Options

233. "A bank has provided the following options to the borrower for $50,000 of lending for duration
of 5 years.
a. Pay $80,525.5 at the end of 5 years
b. Pay $25,500 now and $50,000 at the end of 5 years
c. Pay $16,105.1 end of every year for 5 years
d. Pay $16,105.1 beginning of every year for 5 years
Considering 10% as IRR for the borrower"
Option (a) is the cheapest for the borrower
Option (b) is the cheapest for the borrower
Option (c) and (d) are equally costly to the borrower
all of the listed options
None of the listed Options

234. Electronic banking doesnt covers the following service/s

Pay-by Phone system ATM System Point of Sale system
all of the listed options None of the listed Options

235. EFT act covers

Prepaid Telephone cards Gift cards Mass transit passes
Both Prepaid Telephone cards & Gift cards None of the listed Options

236. What is Checking Account?

a) An account at a bank where funds have been deposited against which checks may be
written
b) An account, folder, or file where checks are stored
c) A type of bank account that allows withdrawals by phone or Internet
d) A form of documentation for transactions between you and the bank
e) None of the listed Options

237. Net Settlement stands for

Settlement of funds over the Internet Posting net debit or net credit
Real time settlement all of the listed options None of the listed Options

238. Direct debits

Authorizes specific deposits to your account on regular basis
Authorizes all deposits directly to your account Pre-Authorized direct withdrawal
Pre-authorization to withdraw from others account None of the listed Options

239. EFTA stands for

Electronic Funds Trading Act Electronic Financial Transfer Act
Electronic Funds Transfer Act Electronic Fee Transfer Act
Electronic Funds Telecommunication Act
240. ______________ preauthorizes banks to pay recurring bills like insurance premium, utility bills
automatically
Pay-by-Phone System EFT Direct Debit Direct Credit Direct Deposit

241. ATM stands for

a) Automatic Transaction Machine; Almost anytime banking
b) Automated Teller Machine; Remote location transactions
c) Automatic Transaction Machine; Fund transfer between accounts
d) Automated Teller Machine; Direct Deposit
e) Automatic Transaction Machine; Personal Banking

242. Debit Card

is a stored value card provide credit line transfer money at Point of Sale
Only provide credit line and transfer money at Point of Sale
None of the listed Options 5

243. EFT systems are a major form of electronic payment systems in banking and retailing
industries. EFT is an acronym for
Electronic Financial Transactions Encrypt Fund Transfer
Electronic Fund Transactions Electronic Fund Transfer
External Fund Transfer

244. EFT services require institution to tell the following to the customers
a) Summary of Customers assets for unauthorized transfers
b) Summary of institution's liability if it fails stop certain transactions.
c) List of institute holidays
d) Circumstances under which institute will not disclose information to third party.
e) None of the listed Options

245. A transaction error has occurred in customers account. Which of the following holds as per
EFT act?
a) Customer has 30 days to notify the error from the date a statement is received
b) Financial Institution has 15 days to investigate the errors
c) Financial Institution has to communicate within 7 working days the result after
completion of the investigation
d) Financial Institution has to correct the error within one working day after detecting
the same.
e) Both Financial Institution has to communicate within 7 working days the result after
completion of the investigation and Financial Institution has to correct the error within
one working day after detecting the same.

246. Customer can lose much more on ________________ loss than on _____________ loss
Credit Card; Debit Card Credit Card; ATM Card Credit Card; Stored Card Debit
Card; ATM Card Debit Card; Credit Card 5

247. In the case of Debit or ATM card

 a) Customer liability is limited if the loss is reported before it is used without his/her
permission.
b) Customer liability varies depending on the delay in the reporting of the loss, if
unauthorized use occur before reporting
c) Customer liability is limited if the unauthorized use occurs before reporting the loss.
d) Notification period cant be extended even in the case of extenuating circumstances.
e) There cant be unlimited liability

248. Stop-Payment privilege provides

a) right to customer to stop payment on any EFT transaction
b) customer can stop payment if the purchase is defective or not delivered
c) customer can stop payment only for preauthorized regular payments
d) customers dont have privileges for any transaction
e) None of the listed Options

249. Terminal Receipts

a) issued for regularly occurring electronic payments that are pre-authorized
b) entitled to customer only when the electronic transaction is terminated
c) provides statement of all the transactions terminated for a given period
d) must show the amount and date of the transfer, and its type, such as "from savings to
checking
e) None of the listed Options

250. 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
None of the listed Options

251. Which of the following statements about the Fed's involvement in electronic banking is
true?
a) each year the Fed conducts billions of transactions valued in the trillions of dollars
b) funds transfers are originated and received through a sophisticated telecommunications
network called FedWire
c) financial institutions can move their balances at the Fed or send funds to another
institution through electronic banking
d) all of the listed options
e) None of the listed Options

252. The Federal Reserve System processes about ___ of all checks written in the country 1/5
2/3 1/3 4/5 All

253. Just after you write a check at a store to make a purchase

a) your checking account at a financial institution is instantly reduced by the value of the
check
b) the store manager sends the check to a Federal Reserve Bank to be processed
 c) the store manager deposits the check in the stores account at a local financial
institution
d) your checking account at a financial institution is increased by the value of the check
after it has been processed by a Federal Reserve Bank or a correspondent bank
e) All of the listed options

254. A one-time written order that instructs a financial institution to transfer funds from your
account to the account of an individual or business is called
check Automatic Clearinghouse (ACH) transaction. currency debit credit 1

255. 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

256. FEDWIRE involves the following intermediaries for the fund transfer EXCEPT Inter
District Settlement Fund
Federal Reserve bank Treasury & Government agencies
Depository institutions None of the listed Options

257. CHIPS uses ______________ to & from special settlement account on the booking of the
_____________
ACH; Federal Reserve Bank EFT; Federal Reserve Bank
FEDWIRE; New York Fed
Inter District Settlement Fund; Federal Reserve Bank
FEDWIRE; Federal Reserve bank

258. Following are all Private-sector payment systems EXCEPT

Check Clearing System Inter District Settlement Fund
Automated Clearing Houses CHIPS FEDWIRE

259. "Two Financial Institutions 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?"
a) At the 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 of the day, $17m will be transferred to B and At the end of the day, $25m
will be transferred to A
260. EFT offers the following services EXCEPT
Electronic check Conversion Pay by Phone Direct Debit
Direct Deposit All Stored value cards

261. What is the electronic payment delivery system most often used to process low-dollar
repetitive retail payments?
Check Funds transfer Treasury payments
Automated Clearinghouse (ACH) FEDWIRE

262. Which of the following results in a direct, immediate, electronic payment from the
cardholder's checking account to a merchant?
Credit Card Money Order Checks Debit card ATM card

263. If you use your debit card to make a purchase, the amount will be transferred out of your
account
Typically within one day In whole-dollar amounts
The next business day
The amount is not transferred, but added to your credit card bill
Depends on the billing cycle

264. The Federal Reserve System is responsible for

regulating banks and financial institutions
creating a stable economic environment
managing regional and national check clearing
monetary policy All of the listed options 5

265. Which of the following is probably the most familiar form of electronic banking? ATM
Debit card Credit card POS system ACH

266. Which of the following transactions would cost the most?

ATM deposit Deposit at Teller window
Direct deposit Electronic fund transfer None of the listed Options

267. FEDWIRE transfer

involves relatively large no. of book keeping entries
are free of cost
handle high volume of small transactions
are settled on net settlement basis
handle high value transactions

268. Which of the following transactions costs the least?

Payment by personal check Payment via ACH
Debit card for point of sale purchase ATM withdrawal
Withdrawal at teller window
269. FEDWIRE differs from CHIPS in that
a) FEDWIRE is gross settlement system
b) FEDWIRE is a private sector fund transfer system
c) CHIPS provide international fund settlement
d) FEDWIRE offers free services
e) FEDWIRE provides domestic fund settlement

270. Which of the following transfers are covered by the Electronic Funds Transfer Act?
a) Bobs purchase of an electronic toilet seat with a wire transfer
b) Joes transfer, made in person, from his checking to his savings account, to post bail from
prison
c) Larrys check written at the Three Strikes and Your Out Bowling Alley
d) Tims point of sale purchase from his business account to buy that new hardware store he
has always wanted
e) None of the listed Options

271. Inter District Settlement Fund is a

a) Fund Transfer System

b) Electronic Bill Presentment System

c) Settlement Account

d) Booking System

e) Transaction System

272. John loses his ATM card, which has his PIN written on the back of the card. He doesnt discover this
until two weeks later and immediately notifies the bank. During the two weeks that his card was lost,
$9,000 worth of withdrawals have been made from his account. Tim is liable for which of the following

a) $500

b) 40 hours of community service teaching classes on why to not write your PIN on the back of
your card

c) Half of the $9,000

d) $50

e) None of the listed Options

273. Stored value cards

a) are like prepaid mobile cards, mass transit passes etc.,

b) are all covered by EFT act

c) stores encrypted code for accessibility

 d) are used for accessing personal bank account

e) are like debit cards, credit cards etc.,

274. What does the Federal Reserve Supervisory Letter define private banking as?

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

e) None of the listed Options

275. Structured Lending

a) Investment Management and Advice

b) Issuer Capital Formation

c) Trade Finance Management and Advice

d) Access to investment banking and institutional services

e) Structured Lending

276. Private Banking clients can be based on

a) Volume of business

b) Traditional banking business

c) Net Worth

d) Retail Banking business

e) All of the listed options

277. Which of the following is true for the Personal Investment Companies (PICs) setup

a) Tax benefit

b) Huge startup fee

c) Annual Administration Fee

d) Foreign Check Writing Services

 e) None of the listed Options

278. Typical Fee charged for private banking services

a) Less than 1%

b) Between 1 to 4%

c) Between 6 to 10%

d) More than 10%

e) None of the listed Options

279. Client relationship manager doesnt have to understand which of the following need/s for investment
management and advice

a) Liquidity requirement

b) Capital Base

c) Tax planning

d) Arbitrage trading

e) None of the listed Options

280. High-Net worth individuals generally have

a) Household income atleast $50,000

b) Networth greater than $500,000

c) Market capitalization more than $200,000

d) all of the listed options

e) None of the listed Options

281. The process flow in a Private banking firm goes as

a) Servicing Specialist => Client Representative => Middle Office => Back Office

b) Client Representative => Servicing Specialist => Middle Office => Back Office

c) Client Representative => Servicing Specialist => Back Office => Middle Office

d) Middle Office => Back Office => Servicing Specialist => Client Representative

e) Client Representative => Middle Office => Servicing Specialist => Back Office

282. In the case of self directed investment management in Private banking

 a) Banks portfolio managers make investment decisions only after customer approval

b) Banks portfolio managers make self-directed investment decisions

c) Banks portfolio managers make investment decisions on behalf of the customer

d) Banks portfolio managers make investment decisions behalf of all the customer

e) None of the listed Options

283. Which of the following roles and responsibilities are correctly stated?

a) Services Provider; Tax Services

b) Middle Office; Statements & Advices

c) Front Office; Client Reporting

d) Back Office: Risk Management

e) Middle Office; Custodial Services

284. High net worth individuals are normally defined based on the

a) Household income

b) Net Worth

c) Value of shares held by the household + household income

d) Both Net Worth and Value of shares held by the household + household income

e) Both Household income and Net Worth

285. Which of the following is/are not a responsibility of the Middle office?

a) Account Aggregation

b) Domestic Global Settlement

c) Cash Processing

d) Sales & Brokerage

e) Both Account Aggregation and Sales & Brokerage

286. Private Banking doesnt deal with the following services EXCEPT

a) Tax & estate planning

b) Insurance

c) Foreign exchange

d) Automated credit entitlement

 e) all of the listed options

287. A Private Banking division would entail the need for which of the following

a) Efficient Portfolio Analysis

b) Asset Allocation techniques

c) High Technology Investment

d) all of the listed options

e) Only Efficient Portfolio Analysis and Asset Allocation techniques

288. Private clients trade in ____________ volumes and ___________ fees and commissions

a) larger; larger

b) small; larger

c) small; small

d) larger; small

e) Either small; larger or larger; small

289. Sweep facility provides

a) automatic transfer of funds from one account to another account, whose balances have fallen
below the pre-determined limit

b) automatic transfer of funds from one account to another account, whose balances have
exceeded pre-determined limit

c) automatic transfer of funds from one account, whose balances have exceeded pre-determined
limit, to another account

d) Both automatic transfer of funds from one account to another account, whose balances
have fallen below the pre-determined limit and automatic transfer of funds from one account,
whose balances have exceeded pre-determined limit, to another account

e) Both automatic transfer of funds from one account to another account, whose balances have
fallen below the pre-determined limit and automatic transfer of funds from one account to another
account, whose balances have exceeded pre-determined limit

290. Managing clients liquidity assumes paramount importance in private banking, it involves

a) Short term credit facilities

b) Flexible cash management

c) Optimizing returns on short term cash

 d) all of the listed options

e) None of the listed Options

291. The two most distinguishing features of Private banking are _____________ and _____________.

a) Liquidity management; risk management

b) Specialist advice; risk management

c) Wealth management; financial advice

d) Extensive research; specialist advice

e) Liquidity management; structured lending

292. Private Banking providing Risk management services thereby strives to

a) Eliminate risk and maximize returns

b) Reduce risk and optimize returns

c) Avoids risk and optimize returns

d) Transfers risk and maximize returns

e) all of the listed options

293. Private Banking provides plethora of specialized services to it clients. Which of the following
statements holds true?

a) It is less dependent on accepting deposits than retail banking.

b) Client portfolios are reflected on the liability side of the banks balance sheet

c) Client portfolios are reflected on the asset side of the banks balance sheet

d) Both It is less dependent on accepting deposits than retail banking and Client portfolios are
reflected on the asset side of the banks balance sheet

e) Both Client portfolios are reflected on the liability side of the banks balance sheet and Client
portfolios are reflected on the asset side of the banks balance sheet

294. Which of the following companies offer Private banking services?

a) Credit Suisse

b) Fidelity

c) Merrill Lynch

d) all of the listed options

e) None of the listed Options

295. _____________ provides Private banking in the Trust or Investment management division whereas
_______________ provides Private Client Services (PCS)

a) Credit Suisse; Salomon Smith Barney

b) Fidelity; UBS

c) Mellon and Bank One; Salomon Smith Barney

d) All of above

e) None of the listed Options

296. The below stated responsibilities are carried out by which of the following players. Cash
Services/Client Reporting/Statements & Advices/Domestic & Global Settlements

a) Services Provider

b) Client Representative

c) Back office

d) Front Office

e) Middle Office

297. Private banking offers structured lending that provides

a) Customized asset-based credit solutions

b) Long-term liquidity to clients

c) Advice-led credit solutions

d) Credit solutions to High Net worth individuals

e) All of the listed options

298. Private Banking customers can be categorized based on the following parameters

a) Risk taking capability

b) Investible assets

c) Networth

d) Both Investible assets and Networth

e) All of the listed options

299. In the case of discretionary investment management in Private banking

 a) Banks portfolio managers make investment decisions only after customer approval

b) Banks portfolio managers make self-directed investment decisions

c) Banks portfolio managers make investment decisions on behalf of the customer

d) Banks portfolio managers make investment decisions behalf of all the customer

e) None of the listed Options

300. Jim Morrison, 52 years old, founder, chairman and largest shareholder of a small Australian listed
company, seeking to borrow A$8 million secured against his 45 percent shareholding (valued at A$30
million) to diversify his asset base and invest in a separate business venture. He has existing relationship
with the bank. Given the fact that loan represented quasi-equity as it would be almost impossible to
offload the shares into the market, what kind of solution can be provided by the bank to the client?

a) Issuer Capital formation

b) Investment Management Services

c) Structured Lending

d) Hedge Funds

e) Payable Through Account

301. Increasing numbers of hedge funds are locating to Cayman Islands because al EXCEPT

a) Tax haven

b) Flexible legislation

c) Highly sophisticated venue

d) Numerous capable professionals

e) None of the listed Options

302. Hedge funds have attracted investors' attention due to some spectacular & successes & failures, but
in fact they aim to provide a low risk investment solution. Which of the following does hold true for hedge
funds?

a) Highly speculative

b) Private investment partnership

c) Highly leveraged

d) Consistent performance

e) Investor needs to be fully accredited

303. Financial planning involves all EXCEPT

a) Cash flow management

b) Retirement planning

c) Risk management

d) Tax planning

e) Portfolio management

304. Which of the following is not a secured loan?

a) Overdraft on checking.

b) Personal lines of credit.

c) Study loan

d) Credit cards

e) All of the listed options

305. Which of the following statements is true?

a) Requires "collateral" or something, which the lender can easily sell and use to pay off
the loan if the borrower defaults.

b) Rates are generally lesser for unsecured loans.

c) If a person with a less than perfect credit history gets a loan it will be at a lower interest rate.

d) Having a good credit record of lender is a critical factor because higher interest rate can be
charged to that individual.

e) Rates are generally greater for secured loans

306. Which of the following statements is false about loan?

a) The amount of the loan that is disbursed is an asset for the bank

b) The interest rate on a loan depends on the disbursed amount and Schedule.

c) Loans can be disbursed in multiple currencies with different schedules.

d) Loan is considered as a liability for the customer.

e) Loan can be prepaid with or without penalty

307. Which of the following statement is faulty about credit enhancement?

a) Enhancing the duration of the credit given to the corporate

 b) Evaluating the feasibility of extending the credit facility to the borrower.

c) Mechanism to improve the original rating of the credit for the borrower.

d) Increasing the credit limit for the corporate

e) None of the listed Options

308. Which of the following is true about Working Capital?

a) Working capital requirements depends on the current assets and current liabilities of the
corporate.

b) 25% of the Working capital gap has to be fulfilled by long term funding and 75% by short term
loans and overdrafts.

c) Overdraft limit is extended to corporate to manage their day to day cash flow needs

d) Part of the current liabilities need to be funded through the current assets.

e) None of the listed Options

309. Supplier or Dealer loans provide

a) Assurance from the Corporate in case of default by suppliers and dealers

b) Immediate loans to the suppliers and dealers of the corporate at higher rate of interest.

c) Long term loans to the suppliers and dealers by the banks

d) all of the listed options

e) None of the listed Options

310. Which of the following is NOT a Settlement Method for Bank Loans?

a) Assignment

b) Participation.

c) Securities Repository.

d) Sub-Participation

e) Preclosure

311. Once the Syndicate has closed, all other trades, Participations, Sub-participations and Assignments
are considered trades in what market?

a) Primary market

b) Index market

c) Secondary market
 d) Participation market

e) Over the counter market

312. Consider a loan of USD 10,000 which is agreed to be lent for a period of six months on Jan 1, 2004
at an interest rate of LIBOR + 2%. Here, the base rate is LIBOR and the spread is 2%. Further, consider
that the LIBOR was 7% p.a. on Jan 1, 4% p.a. on May 1. What would be the interest paid at the end of six
months?

a) 600 USD

b) 400 USD

c) 1400 USD

d) 1350 USD

e) 350 USD

313. Consider a one-year loan of USD 10,000 given by bank to a borrower on Jan 1, 2004. The loan
carries an interest rate of 10% p.a. As per the terms and conditions of the loan, the borrower has to pay
the interest amount together with principal amount on Dec 31, 2004. The Bank follows straight-line
accrual with monthly frequency. What would be banks income as on June 31, 2004?

a) 11,000 USD

b) 600 USD

c) 1,000 USD

d) 5,500 USD

e) 10,000 USD

314. Which of the following type of loan requires the amount of interest that would be earned on the
amount of interest paid upfront by the borrower?

a) Demand loan

b) True discounted Loan

c) Discounted Loan

d) Capitalized Loan

e) Amortized Loan

315. Interest rates are

a) The prices paid for the use of a real liability.

b) The prices paid for the use of a real asset.

 c) The prices paid for the use of a financial liability.

d) The prices paid for the use of a financial asset.

e) The price paid for the use of a contingent asset

316. A loan that can be paid in periodic equated installments with capitalized interest is called

a) Amortized Loan

b) Capitalized Loan

c) Annuities

d) Discounted loan

e) True discounted Loan

317. Loan can take many of the following basic forms EXCEPT

a) Overdrafts

b) Bills and promissory notes

c) Corporate bonds

d) Advances

e) Credit line

318. 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)?

a) Allocation

b) Syndicate

c) Secondary

d) Assignment

e) None of the listed Options

319. In the case of floating rate loan, which of the following is false?

a) Base rate can be reset at mutually agreed time period or it can be periodic.

b) Spread is applied over and above the base rate.

c) The spread varies over the life of the loan.

d) Spread can be negative.

e) None of the listed Options

320. What does loan provisioning stand for?

a) To create the provisions for doing business in different lines of businesses.

b) Loan provisioning is done to classify and grade the loans.

c) All of above

d) To create buffer against the loss of the non-performing loans.

e) None of the listed Options

321. Credit risk in the swap market is

a) Extensive.

b) Equal to the total value of the payments that the floating rate payer was obligated to make

c) Limited to the difference between the values of the fixed rate and floating rate
obligations.

d) Both Extensive and Limited to the difference between the values of the fixed rate and floating
rate obligations.

e) None of the listed Options

322. When a firm needs short-term funds for a specific purpose, the bank loan will likely be a

a) Compensating balance arrangement

b) Revolving credit agreement

c) Transaction loan.

d) Line of credit

e) Term Loan

323. Which of the following are the benefits of using credit derivatives?

a) Credit derivatives can be used either to take on more risk or to avoid (hedge) it.

b) Credit derivatives can be used to create positions that can otherwise not easily be established
in the cash market.

c) Credit derivatives can be used both to diversify their credit risk exposures and free up capital
from regulatory constraints.

d) All of above

e) None of the listed Options

324. A formal, legal commitment to extend credit up to some maximum amount over a stated period of
time

a) Letter of credit

b) Revolving credit agreement

c) Line of credit

d) Trade credit

e) Irrevocable Credit

325. Utility companies and medical service organizations commonly offer (fill in the blank) credit

a) Revolving

b) Single payment

c) Installment

d) Retail

e) Corporate

326. A common advantage of using credit is

a) less impulse buying

b) lower cost for items purchased

c) ability to obtain needed items now

d) lower chance of overspending

e) None of the listed Options

327. A Company has negotiated a $500,000 revolving credit agreement with a National Bank. The
agreement calls for an interest rate of 10% on fund used and a commitment fee of 1% on the unused
amount of the credit line. The effective annual interest cost if the firm borrows $200,000 for one year is
closest to

a) 11.50%

b) 15%

c) 26.50%

d) 13.25%

e) 11.50%

328. Which of the following is not a credit derivative?

 a) Credit linked Notes.

b) Total return swaps.

c) Credit default swap.

d) Currency swap.

e) All of the listed options

329. Secondary loan trading refers to ______________ of _____________ on the secondary market.

a) Approving; new debts

b) Buying/Selling; only bad debts

c) Selling; new debts

d) Buying/Selling; existing debts

e) Reassignment; debts

330. Asset securitization refers to

a) financing vehicle consisting of pooling of existing debts as collateralized asset for the issuance
of the debt

b) financing vehicle consisting of pooling of government securities as collateralized asset for the
issuance of debt

c) financing vehicle consisting of the pooling financial assets, and the issuance of debt
collateralized by these assets

d) financing vehicle consisting of pooling of corporate bonds and equities as collateralized asset
for the issuance of debt

e) None of the listed Options

331. Credit derivatives can be used to ___________ the risk and ___________ the regulatory capital
requirements

a) Transfer; increase

b) Diversify; reduce

c) Eliminate; improve

d) Manage; avoid

e) Assess; estimate

332. Credit derivative is all BUT

 a) Financial Instrument

b) Transfers risk

c) Traded over the counter

d) Facilitate greater efficiency

e) None of the listed Options

333. Which of the following is not a secured loan?

a) Equity Loans

b) Secured Loans with Savings

c) Equity Lines of Credit

d) Personal Loans

e) Car Loan

334. In the inflationary economy, which of the following is the best option for the bank while lending,
$10,000 to a corporate borrow (Assume IRR at 10%)
A. Discounted loan @ 10% interest rate
B. Bullet payment loan @10% interest rate
C. True discounted loan @10% rate of interest
D. Equated installed loan @10% interest rate

a) Option A

b) Option B

c) Option C

d) Option D

e) All of the listed options

335. The key feature of letter of credit

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

e) All of the listed options

336. USExport and EURImport agree to carry out the transaction, goods worth $1,000,000 under a
confirmed term Letter of Credit with a maturity date of 60 days from the time of shipment. The Acceptance
commission @ 1.5% pa equals

a) 3000

b) 250

c) 2500

d) 300

e) None of the listed Options

337. A company called FixImport Co. awards USExport a contract that requires not only making a large
quantity of widgets, but also installing and integrating them into an existing manufacturing process at
FixImport's plant. So, USExport asks for 25% down payment to finance the pre-shipment production.
FixImport agrees provided that an Advance Payment Guarantee is issued on its behalf. To what risk has
CanExport exposed itself as a result of issuing the Advance Payment Guarantee?

a) Wrongful demand against the Advance Payment Guarantee.

b) Country risk

c) The remainder of the payment might not be made on time

d) Risk of default.

e) Interest Risk

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

a) Buyer can refuse to take the delivery

b) Quality of the Good is guaranteed

c) Buyer is expected to make the payment after specified credit days

d) Payments made based on only bill of lading

e) None of the listed Options

339. UKImport, a financially sound G-7 company, convinces to buy widgets from USExport on open
account basis, with 60 days credit. The goods were dispatched by USExport on 15th Oct, value being
10,000$. Therefore, the payment was due on 14th of Dec. However the payment was made by UKImport
on 21st Feb. The delay in payment cost USExporter$. because of overdrawn account (consider
9% pa interest rate)

a) 1700

b) 1900

c) 190

d) 170
 e) 2100

340. USExport and CanImport agree to carry out transaction under a confirmed letter of credit with
maturity date of 180 days from the time of shipment. But after shipping the goods, USExport realizes that
it doesnt have the cash flow to wait 180 days to receive the payment? Which of the following options can
USExport use to collect the payment before the maturity date?

a) Requesting a Sight Letter of Credit

b) Applying for Bank Loan

c) Discounting the term letter of credit

d) Taking Advance from the Issuing Bank

e) Not Possible before date of maturity

341. The trade terms "15/2, net 30" indicate that

a) 2% discount is offered if payment is made within 15 days

b) 15% discount is offered if payment is made within 2 days

c) 2% discount is offered if payment is made within 30 days

d) 15% discount is offered if payment is made between 2 and 30 days

e) 30% discount is offered if payment is made before 15 of the month

342. The basic four parties involved in any transaction using LC (Letter of Credit) are the following
EXCEPT

a) Issuing Bank

b) Reimbursement Bank

c) Seller

d) Beneficiarys Bank

e) Buyer

343. The Advising bank is used as a trusted bridge between the __________ and _______________
when they do not have an active relationship

a) Issuing bank; Confirming bank

b) Beneficiary bank; Reimbursing bank

c) Importer; Exporter

d) Issuing bank; Beneficiary bank

 e) Reimbursing bank; Beneficiary bank

344. Which of the following is the safest type of letter of credit from seller point of view?

a) Confirmed Letter of Credit

b) Irrevocable Letter of Credit

c) Red Clause

d) Standby Letter of Credit

e) Revolving Letter of Credit.

345. Credit cards

a) Create financial liabilities for those who use them.

b) Create financial liabilities for the issuer once they are used by the holder

c) Create money for those who use them

d) Create money for those who issue them

e) Create financial asset for those who use them

346. Which of the following operations cant be done on a LC (Letter of Credit)?

a) Discount

b) Purchase

c) Acceptance

d) Collection

e) None of the listed Options

347. A Revocable LC (Letter of Credit)

a) can be revoked without the consent of the Exporter

b) can be revoked without the consent of the Exporters bank

c) can be revoked without the consent of the Importers bank

d) cant be revoked with the consent of the Advising bank

e) cant be revoked without the consent of Exporter.

348. Standby LC (letter of Credit)

a) Is used as primary payment method.

 b) Promises payment only if the buyer fails to make an arranged payment

c) Promises payment only if the seller fails to meet pre-determined terms and conditions

d) Can remain valid for short duration only.

e) Involves complex process and complicated documentation

349. Back to Back LC (letter of Credit) allows

a) buyer to open new LC against an already issued LC

b) seller to use the LC received from his buyer to open his own LC

c) buyer to use the LC received from his seller to open his own LC

d) seller to receive one more LC against an already issues LC from his buyer

e) Buyer to open one more LC based on an already issued LC

350. ________________ evidences delivery of goods and services whereas _______________ relates to
the apparent performance / non-performance of an obligation of the applicant

a) Transferable LC; Confirmed LC

b) Confirmed LC; Red Clause

c) Green Clause; Back to Back LC

d) Confirmed LC; Standby LC

e) None of the listed Options

351. 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?

a) Evergreen Clause

b) Red Clause

c) Irrevocable LC

d) Revolving LC

e) None of the listed Options

352. Which of the following holds true for an LC (Letter of Credit)

a) Shifts credit risk from the Importer to the Importer's Bank (Issuing Bank).

b) Deals with products and not with documents

c) Are typically revocable unless specified otherwise.

 d) One of the relatively cheaper forms of payment guarantee.

e) Advising bank has the liability for the payment of the LC.

353. Draft can

a) be called bill of exchange

b) be a written order by one party directing a second party to pay a third party

c) be a negotiable instruments that facilitate international payments through respected

intermediaries

d) offer more flexibility than LCs

e) not be transferred from one party to another party

354. Bankers acceptance defers from sight draft in that

a) Sight drafts are negotiable instruments

b) Bankers acceptance demands immediate payment.

c) Bankers acceptance reduces banks lending capacity

d) Bank can raise funds by selling the acceptance

e) None of the listed Options

355. Counter-trade or barter is most likely used when buyer

a) has access to convertible currency

b) finds that rates are favorable

c) will compensate the seller in a manner other than transfer or money or products

d) cant exchange for products or services desirable to the seller

e) None of the listed Options

356. Factoring is

a) a discounting method with recourse

b) works with short term receivables

c) works mostly with capital goods

d) works with medium and long term receivables

e) sharing risk with third party

357. Fundamental difference between factoring and forfeiting lies in

a) transferring the credit risk to the third party (Factor)

b) removal of contingent liabilities from balance sheet

c) term of the contract viz., short, medium or long term

d) difference in the risk profiles of the receivables

e) the structuring of the contract with the third party

358. An Asian Importer wants to purchase machinery that he is unwilling or unable to pay for in cash until
that machinery begins to generate income. At the same time, the exporter wants immediate payment in
full in order to meet his on-going business commitments. Which of the following solutions best suit the
situation?

a) Bill Discounting

b) Factoring

c) Forfaiting

d) Letter of Credit

e) Consignment

359. Which of the following methods of payment is most risky to the Seller?

a) Documentary Collection

b) Open Account

c) Letter of Credit

d) Counter trade

e) Cash in Advance

360. Which of the following are disadvantages of using LC (Letter of Credit)?

a) Time consuming

b) Costly

c) Specific and Binding

d) Deals with documents and not with products

e) Credit Line tied up.

361. BOL stands for

a) Bill of Letter
 b) Bankers Overdraft Limit

c) Bank of London

d) Bill of Leasing

e) Bill of Lading

362. BAFT stands for

a) Bankers Acceptance for Factoring Transactions

b) Bankers Association for Foreign Trade

c) Bankers Acceptance for Foreign transactions

d) Bankers Association for Forfaiting & Factoring transaction

e) Bankers association for Factoring Trade.

363. Bill of Lading is

a) a contract between Importer and Exporter for transportation of goods

b) a receipt issued by importer to exporter for goods received for transportation

c) a contract between a carrier and a shipper for the transportation of goods

d) A receipt issued by exporter to importer for goods delivered.

e) None of the listed options

364. Foreign Credit Insurance Underwriters and Brokers is

a) A collection of banking institutions, dedicated to promoting American exports, international

trade, and finance and investment between U.S. firms and their trading partners

b) A forum for analysis, discussion and action among international financial professionals on a
wide range of topics affecting international trade and finance, including legislative/regulatory issues.

c) A forum to insure repayment of export credit against nonpayment due to political and/or
commercial causes

d) A forum to set up a trade finance database with a grant from the U.S. Department of
Commerce

e) None of the listed Options

365. An Asian Buyer entered into deal with Swedish Exporting company on open account terms. The
Asian Buyer obtained 60 days credit, calculated from the date of the invoice. The value of the order was
USD 100, 000 and the goods were dispatched and invoiced by the Swedish Exporter on the 15th July
2003. The payment from Asia was due on the 15th Sept 2003. The payment eventually arrived on the
15th Nov 2003, over two months late leading to interest loss for two months @ 9%. However if confirmed
Letter of credit had been required, what would have been the exporter benefit? Given that the
Confirmation Fee & Acceptance Commission is 1.5% each, Negotiation Fee of $150, and other
administration expenses of about $60.

a) $1,200

b) $1,700

c) $710

d) $990

e) $250

366. Which of the following combinations holds true?

a) Wire transfer; more costly than other payment alternatives

b) Foreign Checks; Useful when information/documentation must accompany payment

c) Commercial letter of credit; Improves applicants credit facilities

d) Standby letter of credit; less costly than documentary collection

e) Documentary collection; strict compliance rules apply

367. Standby letter of credit is __________ secure than documentary collection and cheaper than
__________________

a) Less; open account

b) More; documentary collection

c) More; commercial letter of credit

d) Less; commercial letter of credit

e) None of the listed Options

368. Banker acceptances are ________________ credit investment created by ___________ and used
for financing imports, exports and domestic shipping

a) Long term; financial firms

b) Long term; non-financial firms

c) Short term; non-financial firms

d) Short term; financial firms

e) Medium terms; banks

369. Discounting method for long term account receivables on non-recourse basis is termed as

a) Factoring

b) Leasing

c) Forfaiting

d) Bill discounting

e) None of the listed Options

370. Due Diligence is performed to

a) Assess the risk

b) Performed by the buyer

c) Performed on the seller

d) Executed after contract is signed

e) All of the listed options

371. Which of the following methods eliminate country risk and commercial risk upon confirmation?

a) Back to back Letter of Credit

b) Standby Letter of Credit

c) Documentary Collection

d) Letter of Credit

e) Both Standby Letter of Credit & Letter of Credit

372. Documentary Letter of credit provides all BUT

a) Cheaper than letter of credit

b) More rigid than letter of credit

c) No strict compliance rules

d) No credit facilities required

e) No guarantee of payment by bank

373. Which of the following factors affect the choice of payment methods?

a) Time frame
 b) Exporters Fund

c) Government Guarantee Program

d) Cost of financing

e) All of the listed options

374. The treasury services department performs all of the following functions except

a) Research market factors e.g., Interest rate monitoring

b) Managing corporate collections and payments

c) Managing liquidity and cash position

d) Risk Management services

e) None of the listed Options

375. A bank treasury manages investment of surplus cash in which of the following instruments EXCEPT

a) Money market instruments

b) Treasury securities

c) Debt

d) Deposits with other banks

e) None of the listed Options

376. Assume that Bank A treasury borrows $2.0 million for 2-years from another bank at US Treasury Bill
rate and lends it to a corporate borrower in US for 2 years at LIBOR + 1.5%. Which of the following risks
is the bank exposed to?

a) Forex risk

b) Repricing risk

c) Optionality

d) Basis risk

e) All of the listed options

377. The following are interest rate risk management instruments EXCEPT?

a) Interest rate swap

b) Forward rate agreement

 c) Swaption

d) Interest rate guarantee

e) None of the listed Options

378. The following forex risk management instruments used for foreign exchange risk EXCEPT?

a) Cross currency swap

b) Spot Forex contract

c) Options

d) Forward Forex contract

e) Both Cross currency swap and Options

379. On October 15, ABC Limited enters in to a 3-month forward contract with Bank A for delivering USD
20.0 million at INR 46.50 /USD, while the spot rate is INR 46.20/USD. Subsequently, USD depreciates to
INR 47.05/USD by the end of 3 months. Assuming this as a stand-alone deal, which of the following is
true

a) Bank A loses money in the deal

b) ABC Limited loses money in the deal

c) There is insufficient information to answer the question

d) Loss/Gain depends on forward rate at the end of 3 months

e) Neither party loses money in the deal

380. Bank A has significant investments in 10-year treasury bonds at a coupon rate of 4.9% and Bank B
has significant investments in 10-year treasury bonds at a coupon rate of 5.2%. When market yield for 10-
year treasury bonds start moving upwards from the current level of 5.0%,

a) Both banks see an increase in portfolio value

b) Bank A portfolio value increases while Bank Bs decrease

c) Bank B portfolio value decreases while Bank As increase

d) Both banks see a decrease in portfolio value

e) Insufficient information for answering the question

381. A corporate has on books a 5-year floating rate loan at LIBOR+2%. Suppose interest rates are
anticipated to rise in the near term. The corporate should ideally

a) Retain the floating rate loan

 b) Convert to fixed rate loan immediately

c) Wait for the interest rates to rise and then go for a fresh fixed rate loan to repay the old loan

d) Wait for the interest rates to rise and then go for a fresh floating rate loan to repay the old loan

e) None of the listed Options

382. Assume hypothetically that Bank A has hedged a long position in 5 year government bonds with a
short position in 3 year government notes. When the yield curve steepens

a) Bank A stands to lose money

b) Bank A stands to gain money

c) Depends on interest rates of the instruments

d) Insufficient information

e) None of the listed Options

383. A financial entity XYZ Ltd borrows 5-year money from Bank A at LIBOR+2.25% and lends the money
to a corporate borrower ABC Ltd at 5-year T-bill rate + 2.00%. XYZ Ltd is exposed to the following risk

a) Repricing risk

b) Basis risk

c) Yield curve risk

d) Political risk

e) None of the listed Options

384. ABC Ltd in US has to make an import payment of Euro 2.3 million after 3 months. Market feels that
Euro will appreciate against the US dollar in the near term however the final rate would depend on the
results of the US presidential elections which would be happening after 1 month. Prima facie, ABC Ltd
should go for

a) 3-month forward purchase of Euro

b) Purchase of a 3-month Euro future

c) Purchase a 3-month Call option on the Euro

d) Sell a 3-month put option on the Euro

e) 3-month forward sale of Euro

385. Assume that Euro/USD is quoting at 1.2476/0.2481 and GBP/USD is at 1.8195/0.8200. What would
be the cross currency rate for Euro/GBP?
 a) 1.2476/0.8200

b) 0.6793/0.6802

c) 0.6854/0.6860..

d) 1.2481/0.8195

e) None of the listed Options

386. Assume that INR/USD is quoting at 45.35/0.36 and Euro/USD is at 1.2476/0.2481. What would be
the cross currency rate for Euro/INR?

a) 55.2344/0.4565

b) 36.3300/0.4016

c) 56.3849/0.5231

d) 56.5787/0.6138..

e) None of the listed Options

387. Which of the following is a valid forex risk management strategy?

a) Purchase a put option on a currency which is anticipated to appreciate

b) Purchase a call option on a currency which is anticipated to appreciate

c) Sell a call option on a currency which is anticipated to appreciate

d) Both Purchase a put option on a currency which is anticipated to appreciate and Purchase a
call option on a currency which is anticipated to appreciate

e) Both Purchase a put option on a currency which is anticipated to appreciate and Sell a call
option on a currency which is anticipated to appreciate

388. The USD/INR spot rate is 45.35/0.36 and the 3-month forward premium quote is 0.02/0.04. What is
the forward rate applicable?

a) 45.37/45.32

b) 45.37/45/46

c) 45.37/45.40

d) 45.39/45.38

e) None of the listed Options

389. Which of the following is true theoretically?

 a) As interest rates in India rise, forward premium for USD/INR rise

b) As interest rates in India rise, forward premium for USD/INR fall

c) As interest rates in India fall, forward premium for USD/INR fall

d) Both As interest rates in India rise, forward premium for USD/INR rise and As interest
rates in India fall, forward premium for USD/INR fall

e) None of the listed Options

390. Which of the following is correct?

a) Swaps are not derivative instruments

b) Swaption is a combination of a swap and an option

c) Swaps can be used for covering interest rate risk and forex risk

d) Both Swaption is a combination of a swap and an option and Swaps can be used for
covering interest rate risk and forex risk

e) None of the listed Options

391. ICICI Bank has an account with Chase Manhattan for settling forex transactions. Such an account is
called

a) Nostro account of ICICI Bank

b) Vostro account of ICICI Bank

c) Correspondent Vostro account

d) Both Vostro account of ICICI Bank and Correspondent Vostro account

e) None of the listed Options

392. Cash management techniques include

a) Pooling

b) Netting

c) Swapping

d) Both Pooling and Netting

e) Pooling, Netting and Swapping

393. Cheque Lock box refers to

a) The main method of collections management

 b) The main method of payments management

c) Electronic Finds transfer

d) Both The main method of collections management and Electronic Finds transfer

e) None of the listed Options

394. The following happens in zero-balance structure

a) Cash balances are pooled to a central account

b) Cash balances of surplus accounts are use to top up deficit accounts

c) Cash balances are made zero in surplus accounts

d) All of the listed options

e) None of the listed Options

395. All of the following are payment modes except

a) EFT

b) Cheque

c) Debit to account through Debit card

d) Lockbox

e) None of the listed Options

396. A traditional cash management system takes care of the following except

a) Pooling collections to one central account

b) Electronic bill presentment and payment

c) Cash funding for purchase of capital equipment

d) Netting receipts and payments globally

e) Providing customized MIS for cash flow monitoring

397. ACH payments are usually used for

a) Large value, single transfers

b) Small value, periodic transfers

c) Transfers to distant parties

d) All of the listed options

 e) None of the listed Options

398. The following parties can act as clearing members

a) National Banks

b) Regional banks

c) Corporates

d) National Banks and Regional Banks

e) National Banks, Regional Banks and Corporates

399. In RTGS, the following is true

a) All members need to maintain a central account with the nodal agency

b) Settlements are done at a transaction level

c) Settlements are done on a batch mode

d) Both All members need to maintain a central account with the nodal agency and
Settlements are done at a transaction level

e) All members need to maintain a central account with the nodal agency, Settlements are done
at a transaction level and Settlements are done on a batch mode

400. A traditional end-of-day settlement process results in the following risks except

a) Credit risk

b) Interest rate risk

c) Operational risk

d) Systemic risk

e) None of the listed Options

401. Continuous Linked Settlement is applicable to

a) Domestic cash payment

b) Domestic collections

c) Electronic Funds Transfer

d) International forex transfers

e) All of the listed options

402. Continuous Linked Settlement removes which of the following risks primarily

a) Exchange risk

b) Temporal risk

c) Country risk

d) All of these

e) None of the listed Options

403. Treasury & cash Management takes care of all of the following except

a) Liquidity risk

b) Interest rate risk

c) Forex risk

d) Credit risk of corporate borrowers

e) None of the listed Options

404. Asset Managers uses which of the following principles/approaches

a) Screens and Filters

b) Capital Preservations

c) Alternatives investments

d) All of the listed options

e) None of the listed Options

405. The difference between private banking and asset management lies in

a) Investment management techniques

b) Type of returns promised

c) Type of investors

d) Extensive Research techniques

e) Both Investment management techniques and Extensive Research techniques

406. The following major players provide asset management services

a) UBS
 b) Aberdeen Asset Management

c) JP Morgan Chase

d) All of the listed options

e) None of the listed Options

407. Active Approach to Asset Management refers to

a) Diversification to minimize risk and maximize return

b) Successful market timing

c) Invest in a single line of assets

d) Both Diversification to minimize risk and maximize return and Successful market timing

e) Both Diversification to minimize risk and maximize return and Invest in a single line of assets

408. The philosophy that if prices go up, they tend to keep going up, is known as

a) Contrarians Investing

b) Market Timing

c) Momentum Investing

d) Passive Value Investing

e) None of the listed Options

409. The philosophy that markets systematically undervalue certain companies, is known as

a) Contrarians Investing

b) Market Timing

c) Momentum Investing

d) Passive value Investing

e) None of the listed Options

410. For portfolio objectives of growth of income and capital appreciation, which of the following securities
will most likely have to be in the portfolio?

a) Common stocks

b) Corporate bonds

c) Preferred stock
 d) U.S. Treasury bonds

e) Municipal Bonds

411. Which of the following is best associated with asset allocation in portfolio management?

a) The choice of assets to use for consumption for the year.

b) The selection of asset classes within which to invest portfolio funds.

c) The selection of the proportion of funds for each asset class.

d) The selection of asset classes for investment and the proportion of each asset class for
portfolio funds.

e) The selection of assets in a particular asset class.

412. A portfolio strategy associated with little trading or change once established is called

a) resistance management.

b) active management.

c) passive management.

d) resilient management.

e) Top-down management

413. Which of the following are principles used by an asset manager?

a) Diversification

b) Screens and Filters

c) Capital preservation

d) All of the listed options

e) Only Diversification and Screens and Filters

414. A buy-and-hold strategy is representative of a(n) ___ portfolio management style

a) active.

b) passive.

c) indecisive.

d) rebalanced.

e) resilient
415. The components involved in the cost of portfolio execution are

a) Bid-ask Spread

b) Illiquidity

c) Tax impact

d) All of the listed options

e) Only Bid-ask Spread and Tax impact

416. The dimensions to portfolio execution could be

a) Cost of execution

b) Trading speed

c) Portfolio Risk Management

d) All of the listed options

e) Both Cost of execution and trading speed

417. Momentum investing would refer to

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

418. The performance of an internationally diversified portfolio may be affected by

a) currency selection

b) country selection

c) stock selection

d) All of the listed options

e) None of the listed Options

419. In the long run, diversifying into international markets is most likely to benefit U.S. investors

a) Under all U. S. market conditions.

 b) When U.S. markets are performing well.

c) When U.S. markets are performing poorly.

d) Under no circumstances.

e) Only when currency risk is hedged.

420. When an investor adds international stocks to her portfolio

a) it will raise her risk relative to the risk she would face just holding U.S. stocks.

b) she needs to seek professional management because she doesn't have access to international
stocks on her own.

c) she will increase her expected return, but must also take on more risk.

d) it will have no significant impact on either the risk or the return of her portfolio.

e) she can reduce its risk relative to the risk she would face just holding U.S. stocks.

421. Contrarian Investing refers to investing on the basis of

a) Market correction due to accelerated movement

b) Single direction market movement Bull or Bear run

c) Market timing for greater gains

d) Momentum Investing

e) None of the listed Options

422. "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

423. By alternative investments (other than debt and equity), what are the investment avenues for a asset
manager?

a) Hedge funds

b) Futures
 c) Savings bank accounts

d) All of the listed options

e) Both Hedge funds and Futures

424. Bid-Ask spread refers to

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

e) None of the listed Options

425. Which of the following statements concerning correlation coefficients is (are) correct?
I. A correlation coefficient of -1 for the returns of two securities would indicate that both of them should be
carefully considered for inclusion in a portfolio since maximum risk reduction could be achieved by
including both.
II. The returns of security B would increase 8% if the returns of security A increased 8% if the correlation
coefficient for the returns of the two securities was +1.

a) I only

b) II only

c) Both I and II

d) Neither I or II

e) None of the listed Options

426. Beverly Drake has two stocks with a correlation coefficient of zero. Which of the following is true?

a) These stocks are well diversified because as one stock appreciates in value, the other
decreases.

b) These stocks are well diversified because they will move in unison.

c) These stocks are not well diversified because they move in unison.

d) These stocks will move independently of each other.

e) None of the listed options.

427. Which of the following are major categories of investments?

 a) Cash (or cash equivalents such as money market funds)

b) Stocks

c) Bonds

d) Real Estate (including Real Estate Investment Trusts)

e) All of the listed options

428. A very effective way to employ a passive strategy is to

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

429. Risk reduction (Diversification) in a stock portfolio can be achieved by

a) Investing in a few less risky stocks

b) Investing is as many stocks on the index as possible

c) Buying an option to hedge risk on all stocks in portfolio

d) Investing in an index option

e) None of the listed Options

430. A buy-and-hold strategy would be with the aim of

a) Reducing Transaction costs

b) Reduce costs involved in constant researching of stocks

c) Wait till the investors objective is met

d) All of the listed options

e) Both Reduce costs involved in constant researching of stocks and Wait till the investors
objective is met

431. The derivatives market provide the asset manager a tool to

a) Increase trading speed

b) Reduce cost of execution

 c) Hedge portfolio risks

d) Both Increase trading speed and Reduce cost of execution

e) Both Reduce cost of execution and Hedge portfolio risks

432. Which of the following statements concerning diversification is (are) correct?

I. Studies suggest a portfolio of 100 or more different common stocks is needed to substantially reduce
unsystematic risk.
II. The key to effective risk reduction through diversification is combining assets whose returns show
negative, low, or no correlation over time.
III. Security analysis will permit investors to consistently earn returns superior to the market.

a) I only

b) I and II only

c) I and III only

d) II and III only

e) I, II, and II

433. Bottom-Up approach would involve

a) Building country-by-country forecasting models

b) Validating the forecasting models and investing in portfolio of high yield countries

c) Selecting few scripts, forecasting their performance and investing based on the
forecasts

d) Both Building country-by-country forecasting models and Validating the forecasting models
and investing in portfolio of high yield countries

e) Both Validating the forecasting models and investing in portfolio of high yield countries and
Selecting few scripts, forecasting their performance and investing based on the forecasts

434. Underwriting in Investment banking stands for

a) Process of understanding the risks and return profile for investment portfolio

b) Guarantees the capital issue and making good for any shortfall

c) Processed of getting the shortfall insured from an insurance company

d) All of the listed options

e) None of the listed Options

435. The process of Hiring of the Lead Managers in the case of IPO is referred to as
 a) Red Herring

b) Road-show

c) Investment Manager Contest

d) Advisor Contest

e) Beauty Contest

436. The top tier investment banks are EXCEPT

a) Salomon Smith Barney

b) Sallie Mae

c) Credit Suisse First Boston

d) UBS

e) None of the listed Options

437. The Chinese Wall in an investment bank refers to

a) The separation of Legal and Marketing

b) The separation of Sales and Trading

c) The separation of Corporate Finance and Research

d) The separation of Senior Management and Brokers

e) The separation of Underwriting and Sales

438. Syndicate in Investment banking refers to all Except

a) Hub of the investment banking wheel

b) Determination of allocation of bonds

c) Merger and Acquisition advisory

d) Facilitating placing of securities in public offering

e) None of the listed Options

439. Sales function in Investment banking takes the form of

a) Retail Broker

b) Institutional Sales Person

 c) Private client service representative

d) All of the listed options

e) None of the listed Options

440. The ECNs (like Instinet) offer after the market trading facilities. They

a) Involve Stock Exchange Brokers

b) Dont Involve Stock Exchange Brokers

c) Also called as Fourth Market

d) Both Involve Stock Exchange Brokers and Also called as Fourth Market

e) Both Dont Involve Stock Exchange Brokers and Also called as Fourth Market

441. Specialist in broking parlance refers to one

a) Specializes in one or few stocks and offer buy as well as sell quotes

b) Employee of stock exchange

c) Specializes in all equities

d) Only person authorized to buy or sell a particular stock

e) Charges commission for trades

442. Dealer in broking parlance refers to one

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

443. The latest quote for IBM is $ 90. A Stop Order to sell IBM at $ 85 means

a) The order will get released only when the Market Price hits $ 85

b) The stock will get sold immediately at Current Market Price but not less than $ 85

c) The stock will get sold immediately at Current Market Price but not less than $ 90

d) The order will get released immediately and the stock will get sold between $ 85 - $ 90
 e) The order will get released at $ 85 as a limit order at $ 90

444. The latest quote for IBM is $ 90. A Stop Limit Order to sell IBM at $ 85 stop & $ 87 limit means

a) The stock will get sold immediately at Current Market Price but not less than $ 85

b) The stock will get sold immediately at Current Market Price but not less than $ 87

c) The order will get released immediately and the stock will get sold between $ 85 - $ 87

d) The order will get released only when the Market Price hits $ 85 as a Market Order

e) The order will get released at $ 85 as a limit order at $ 87

445. The difference between Fill or Kill and All or None order is

a) Fill or Kill allows multiple trades

b) All or None can be a Good Till Cancelled order

c) They are synonyms

d) Fill or Kill can be valid till end of day

e) Fill or Kill allows partial execution

446. The quote for CTSH in NASDAQ was $ 43. The best buyer was at $ 42.5 and the best seller at $
43.5. How much is the bid-ask spread

a) $0.50

b) ($0.50)

c) $1.00

d) ($1.00)

e) $86

447. Figuration in brokerage industry means

a) Monetary value of a transaction

b) Number of shares bought/sold

c) Settlement details

d) Payment instrument details

e) Dividend payable/receivable
448. Movement of securities and funds within a brokerage firm is done by

a) Margin Department

b) Cashiering department

c) Corporate Actions team

d) Purchase and Sales

e) Accounting Department

449. CTSH has announced a stock split of 3 shares for 1 share. The record date for the same is Dec 19,
2003. The holder will be eligible for the bonus only if he holds the shares as of close of business on

a) Jan 01, 2003

b) Dec 19, 2003

c) Dec 18, 2003

d) Dec 20, 2003

e) Dec 31, 2003

450. 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.

451. Dow Jones Industrial Average (DJIA) and Bombay Stock Exchange Index (Sensex) are

a) Both are Price Weighted

b) Both are Value Weighted

c) DJIA is Value Weighted & Sensex is Price Weighted

d) DJIA is Price Weighted & Sensex is Value Weighted

e) None of the listed options

452. A Value Weighted Index has stocks in

a) Equal proportion
 b) Each stock in proportion to its intrinsic value

c) Each stock in proportion to its free float

d) Each stock in proportion to its equity capital

e) Each stock in proportion to its market value

453. Consider an index with only 3 stocks

Stock A 2 million shares Market Price $ 50
Stock B 4 million shares Market Price $ 40
Stock C 8 million shares Market Price $ 30
The Weightage for Stock A in Value Weighted Index is

a) 14.14%

b) 20%

c) 33.33%

d) 50%

e) 41.66%

454. The FTSE (Footsie) Index reflects share prices in

a) London

b) Europe

c) Asia

d) Americas

e) Australia

455. Which equity securities provide for the domestic trading of foreign stock?

a) Eurodollars

b) American Depository Receipts

c) Foreign stocks

d) Sterling shares

e) International equities

456. In general, how frequently do companies declare Cash Dividends?

a) Annual
 b) Half Yearly

c) Quarterly

d) Monthly

e) Irregular

457. What would happen to Convertible Preferred Stock if the underlying common stock experienced a 2
for 1 stock split?

a) Conversion price would be reduced, and the number of convertible shares would increase.

b) Conversion price would be reduced, and the number of convertible shares remain the same

c) Conversion price remains the same, and the number of convertible shares would
increase

d) No impact

e) Conversion price would be increased, and the number of convertible shares would increase

458. What date represents the announcement by the board of directors that a dividend will be paid?

a) Book Closure date

b) Record Date

c) Declaration Date

d) Dividend date

e) Payment Date

459. If the payable date is Friday, December 6, and the record date is Monday Jan 12, when is the Ex-
Dividend Date?

a) December 4

b) December 6

c) January 12

d) January 10

e) January 8

460. Which term refers to securities that are sold by the issuer to investors?

a) Secondary Offering

b) Outright Sale
 c) Primary Offering

d) Select Sale

e) None of the listed Options

461. When are shareholders of record determined for dividend purposes?

a) Primary Offering

b) Secondary Offering

c) Outright Sale

d) Select Sale

e) None of the listed Options

462. If a stock trades on Wednesday, May 2, when will Regular Settlement occur in US markets?

a) May 3

b) May 4

c) May 5

d) May 7

e) May 8

463. Consider an index with only 3 stocks

Stock A 2 million shares Market Price $ 50
Stock B 4 million shares Market Price $ 40
Stock C 8 million shares Market Price $ 30
The Weightage for Stock A in Price Weighted Index is

a) 14.14%

b) 20%

c) 33.33%

d) 50%

e) 41.66%

464. All of these are different types of brokerage accounts except?

a) Margin Account

b) Nostro Account
 c) Cash Account

d) IRA Account

e) Power of Attorney Account

465. The NYSE is an example of

a) Primary Market

b) Secondary Market

c) OTC Market

d) Fourth Market

e) None of the listed Options

466. What is the key regulatory authority over the American securities industry?

a) Federal Reserve

b) FDIC

c) DTCC

d) ASA

e) Securities Exchange Commission

467. If a company announces a 2 for 1 Stock Dividend, what will happen to the price and number of
shares outstanding on the ex-date?

a) Price will go down by 50% while shares outstanding would double

b) Price will go down by 50% while shares outstanding would remain the same

c) Price will remain the same while shares outstanding would double

d) Price and shares outstanding would double

e) Price and shares outstanding would remain the same

468. What is the term for previously issued stock that has been re- purchased by the issuer in the
secondary market?

a) Treasury Stock

b) Preference Stock

c) Promoter Stock
 d) Trade able Stock

e) Non voting Stock

469. If a corporate bond which pays its coupon on April 1 and October 1 is traded on Wed, June 10, how
many days of accrued interest does the buyer owe the seller?

a) 0

b) 70 days

c) 71 days

d) 74 days

e) 75 days

470. What is the Effective Yield for a bond trading at a discount?

a) Less than interest indicated in the bond

b) Same as interest indicated in the bond

c) More than interest indicated in the bond

d) No relationship between the interest and effective yield

e) None of the listed Options

471. What securities do not require proof of ownership to receive interest or principal payments?

a) Bearer bonds

b) Registered Securities

c) Unregistered Securities

d) Warrants

e) Debentures

472. Who is at risk during a best efforts underwriting?

a) Investor

b) Underwriter

c) Issuer

d) Stock Exchanges

e) Securities Exchange Commission

473. When must GTC orders be reconfirmed?

a) End of every day

b) End of every week

c) End of every month

d) End of every quarter

e) End of April and October

474. What is the term for the difference between bid and ask?

a) Difference

b) Spread

c) Profit

d) Quote

e) None of the listed Options

475. What is the Third Market?

a) NASDAQ

b) OTC

c) NYSE

d) Instinet

e) None of the listed Options

476. What is the term for a broker/dealer that maintains an inventory of stock and disseminates quotes on
that stock to other broker/dealers?

a) Issuer

b) Investor

c) Underwriter

d) Stock Exchanges

e) Market Maker

477. Corporate Action refers to

 a) All company announcements

b) All stock exchange announcements

c) Dividends/Stock Splits

d) New investments

e) None of the listed options

478. Dow Jones Industrial Average (DJIA) has

a) All companies listed at NYSE

b) 30 large companies listed at NYSE

c) Top 10% of NYSE

d) Top 10% of NASDAQ

e) 30 large companies listed at NASDAQ

479. Insiders of the company cannot sell any shares for a specified period of time, this is known as

a) Holding Period

b) Blackout Period

c) Buy & Hold Period

d) Book Closure Period

e) None of the listed Options

480. In a Rights offering of shares, which of the following is used?

a) Firm commitment

b) Stand by underwriting

c) Best Efforts underwriting

d) Outright Sales

e) None of the listed Options

481. The Fourth Market refers to

a) NASDAQ

b) OTC

c) NYSE
 d) Instinet

e) None of the listed Options

482. The coming together of Daimler AG of Germany and Chrysler of US to form Daimler Chrysler can be
termed as

a) Chrysler acquiring Daimler

b) Merger of Daimler & Chrysler to form a new company

c) An informal arrangement between the two companies to manufacture and sell each others
products

d) Daimler acquiring Chrysler

e) A technical collaboration

483. What is a meant by a buy limit at 46?

a) Buy at exactly 46 + brokerage

b) Buy Price + Brokerage exactly equal to 46

c) Buy at 46 or lower + brokerage

d) Buy Price + Brokerage equal to or lower than 46

e) None of the listed Options

484. Which of the following risks need to be managed while lending securities

a) Foreign exchange risk

b) Liquidity risk

c) Credit risk

d) Equity risk

e) All of the listed options

485. Development of investment objectives and investment policy falls under the purview

a) Fund Administration

b) Asset Allocation

c) Compliance reporting

d) Investment Manager Universe

 e) Asset Liability Analysis

486. Schroeders PLC presently has State Street as its custodian. They would like to move the assets to
JP Morgan Chase as the new custodian because of better pricing and services. Which of the following
teams in JPMC will handle this change?

a) Account Management

b) Transition Management

c) Brokerage Services

d) Administration

e) Treasury

487. Core Custody Services performs the following functions except

a) Price securities positions

b) Record Keeping

c) Fiduciary and compliance monitoring

d) Reporting services

e) Processes corporate actions

488. Transition Management under the purview of trading services help

a) Multi-currency collateral management and reporting

b) Brokerage to minimize costs and maximize efficiency

c) Institutional investors reduce their trading costs

d) Setting brokerage rates

e) None of the listed options

489. Which of the following trading services provide institutional investors reduce their trading costs

a) Stock repurchase program

b) Transition management

c) Commission recapture

d) Both 2 and 3

e) None of the listed Options

490. Alternate Investments refer to

a) Diversification from equity into debt

b) Investment into non-regular asset categories

c) Forex trading

d) Arbitraging

e) None of the listed Options

491. Corporate Actions are communicated to the clients by custodians using

a) MT 15022

b) MT 5022

c) MT 2001

d) MT 199

e) None of the listed Options

492. Which one of the following is NOT an Alternate Asset

a) Distressed debt

b) Private Equity

c) Venture Funds

d) IBM stock

e) LBOs

493. Income Processing team of a custodian takes care of:

a) Stock splits

b) Trade Processing

c) Global income and payments on due dates

d) Settlements

e) Clearing

494. Asset-Liability analysis results in

a) Determining excess of assets over liabilities

 b) Estimating Future economic wealth

c) Effect of return volatility

d) Both 2 and 3

e) Term mismatch of assets and liabilities

495. Which of the following services doesnt fall under the purview of Trading?

a) Foreign exchange

b) Transition management

c) Commission recapture
d) Local fund servicing

e) Cash & short term investment

496. Which of the following services doesnt fall under the purview of Trading?

a) Performance management

b) Investor management universe

c) Cash projection

d) Cash & short term management

e) Fund administration

497. Fund administration covers the administrative and legal services to meet the needs of the fund.
Which of the following items are not covered?

a) Fund Development

b) Portfolio evaluation

c) Transfer agency

d) Corporate Stock Repurchase

e) Fiduciary and compliance monitoring

498. Transition management is a systematic, controlled process that utilizes all available sources of
liquidity to simultaneously _____________ and _____________

a) Minimize risk; maximize profits

b) Maximize liquidity; minimize risk

c) Minimize cost ; maximize efficiency

 d) Minimize liquidity; maximize efficiency

e) None of the listed Options

499. Securities lending experts specializes in market information and negotiation skills to provide
profitability to the lender while managing

a) Credit risk

b) Liquidity risk

c) Interest rate risk

d) Both Credit risk and Liquidity Risk

e) Both Credit risk and Interest Rate Risk

500. In the case of securities lending services, the Third party intermediaries

a) Conduct transactions directly with the lender and borrower

b) specialize in particular types of securities loaned

c) target clients that are dissatisfied with the performance of their custody banks

d) become a principal to the transaction

e) Both Conduct transactions directly with the lender and borrower and

501. In the case of securities lending services, the Wholesale intermediaries

a) conduct transactions directly with the lender and borrower

b) specialize in particular types of securities loaned

c) target clients that are dissatisfied with the performance of their custody banks

d) becoming a principal to the transaction

e) Both conduct transactions directly with the lender and borrower & becoming a principal
to the transaction

502. ______________ 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

503. Offshore securities lending markets required

a) the settlement of securities lending transactions on the books of Global custodians

b) the settlement of securities lending transactions on the books of domestic custodians

c) the settlement of securities lending transactions on the books of foreign sub custodians

d) the settlement of securities lending transactions on the books of foreign sub domestic
custodians

e) None of the listed Options

504. The reason for the development of offshore securities lending is

a) Unfavorable tax treatment

b) Assorted securities restrictions

c) Legalities of transaction

d) All of the listed options

e) None of the listed Options

505. Distressed debt refer to

a) distressed state of market for debts/loans

b) loan/debt that has become watchlist or impaired

c) corporate bonds of companies that have filed for bankruptcy

d) All of the listed options

e) None of the listed Options

506. Besides providing core custody services, the global custodian typically provides which of the
following services?

a) Foreign exchange transactions

b) Futures & Options Clearing and Execution

c) Tax reclaims processing

d) Both Foreign exchange transactions and Futures & Options Clearing and Execution

e) Both Foreign exchange transactions & Tax reclaims processing

507. When an entity is able to control a majority of shares by using borrowed money, it is called

a) Corporate stock repurchase

b) Leveraged buyout

c) Corporate lending

d) Busted takeover

e) Management buyout

508. Managers' returns are analyzed using a market factor-based performance analysis model that allows
us to create accurate manager peer groups based on market exposures, what is it called as

a) Financial reporting

b) Income processing

c) Investment manager universe

d) Investment manager portfolio

e) None of the listed Options

509. What is one of the best investment strategies to protect an investor from volatility?

a) Hedging

b) Market timing

c) Insurance

d) Diversification

e) None of the listed Options

510. Standard & Poor's and Moody's are companies that would be examples of

a) Stockbrokers

b) securities exchanges

c) stock regulations

d) investor's services

e) stock underwriter

511. The most readily available source of information for an investor

 a) the daily newspaper

b) government publications

c) corporate reports

d) investor newsletters

e) business periodicals

512. In the case of Single Premium Deferred Annuities (SPDA),

a) Premium is an asset for the bank

b) Premium is a liability for the customer

c) Deferred annuities are an asset for the bank

d) Deferred annuities are liability for the customer

e) None of the listed Options

513. Asset allocation process generate

a) Lowest possible risk

b) Highest possible returns

c) Meet planned objectives

d) All of above

e) None of above

514. SWIFT is a

a) Proprietary network interface

b) Open standard network interface

c) Message based network interface

d) Both Open standard network interface & Message based network interface
e) Both Proprietary network interface & Message based network interface

515. Compliance reporting

a) Provides exception-based information

b) Provides standard template based information

 c) Highlights potential violations for internal regulations

d) All of the listed options

e) None of the listed Options

516. Compliance reporting covers all of the following services EXCEPT

a) Hedging and gearing reports

b) Weighted average analytics

c) Prohibited investments

d) Suspicious activity reports

e) Sharing holding restrictions

517. Custody clients' trade instructions are typically communicated using

a) SWIFT network

b) FEDWIRE

c) CHIPS

d) Clearing

e) None of the listed Options

518. Tax processing investor services include

a) make reclamations for client accounts

b) pursue tax relief at the source

c) manage clients' investment-related tax issues

d) All of the listed options

e) None of the listed Options

519. _____________, the largest discount brokerage house, uses the Internet to deliver both high-tech
and high-touch services to its clients

a) Charles Schwab

b) Brown & company, J P Morgan Chase

c) Ameritrade

d) All of the listed options

 e) None of the listed Options

520. Private Equity

a) Requires very large investment

b) Quoted on the stock market

c) Listed on stock exchange

d) All of the listed options

e) None of the listed Options

521. Asset Allocation involves

a) Immunization techniques

b) Use of options

c) Use of emerging market equities

d) Use of venture funds

e) All of the listed options

522. Does Asset Allocation help reduce the investment risk?

a) No - It only maximizes return

b) It increases risk

c) Yes

d) It increases choice No impact on risk

e) None of the listed Options

523. Services like the settlement, safekeeping, and reporting of customers marketable securities and
cash are provided by _________________

a) Custodian

b) Broker

c) Investment bank

d) Fund Administrator

e) Dealer
524. Asset Allocation in an investment policy is designed to meet the required rate of return. If the
investment objective is Generate as much income as possible. Which of the following asset allocation
strategy would be suitable for the above objective?

a) Invest in high quality bonds

b) Invest in shares of rapidly growing companies

c) Investment in both shares and bonds

d) Invest in lower quality bonds

e) None of the listed Options

525. Custody as an industry is going through a period of massive change. What do you think are the
major driver/s changing the way the business is done?

a) Increasing regulation and transparency

b) Infrastructure rapidly changing towards tight cost base and automated trade workflows

c) Disintegration of the Global custody market

d) Increasing regulation and transparency and Infrastructure rapidly changing towards

tight cost base and automated trade workflows

e) All of the listed options

526. Sarbanes-Oxley Act comprises of

a) Section 401 seek to improve objectivity of research by recommending rules

b) Section 201 specifies enhanced financial disclosures

c) Section 501 prohibits non audit services

d) all of the listed options

e) None of the listed Options

527. Federal communication privacy law features

a) Three tiered system

b) prohibits electronic eavesdropping on telephone conversations, face-to-face conversations, or

computer and other forms of electronic communications

c) privacy protection covers telephone records, e-mail held in third party storage

d) All of the listed options

e) None of the listed Options

528. Which of the following financial institutions are covered under the Anti-money laundering, US Patriot
Act

a) Securities brokers and dealers

b) Mutual Funds

c) Banks and Trust companies

d) All of the listed options

e) None of the listed Options

529. The US Patriot act deals with the following money laundering crime

a) Proceeds from foreign crimes of violence and political corruption

b) Proceeds from cyber crime

c) Counterfeiting

d) All of the listed options

e) None of the listed Options

530. Check21 provides

a) Fully automated Day 1 processing

b) Decreased collection float due to faster clearing process

c) Compressed processing windows to enable later branch cutoff times

d) Only privately-held companies that are headquartered in the U.S.

e) None of the listed Options

531. The US Patriot Act doesnt allows for

a) US enforcement of foreign forfeiture orders

b) Seizure of correspondent accounts held in U.S. financial institutions for foreign banks

c) Confiscation of property located in US for crimes committed in violation of foreign laws

d) All of the listed options

e) None of the listed Options

532. Under the new rules, an accounting firm that does an audit is prohibited from providing many other
accounting services. Which of the following is specifically permitted under Sarbanes-Oxley?
 a) Broker or dealer, investment adviser, or investment banking services

b) Financial Information Systems Design and Implementation

c) Appraisal or Valuation Services

d) Tax services

e) All of the listed options

533. 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

a) If no one on the board objects

b) If the audit committee gives its prior approval 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

534. Sarbanes-Oxley Act, section 501, specifies

a) Book Keeping and Actuarial Services

b) Balance sheet transactions

c) Commission rules on pro forma figures

d) Rules for greater public confidence in securities research

e) None of the listed Options

535. The stated objectives of the stringent rules under Sarbanes-Oxley Act are

a) To protect the interest of investors

b) To improve the accuracy and reliability of corporate disclosures

c) To deter and punish corporate and accounting frauds

d) To ensure justice for wrongdoers

e) All of the listed options

536. USA PATRIOT Act enforces which of the following

 a) Criminal Investigations

b) Foreign Intelligence Investigations

c) Money Laundering

d) All of the listed options

e) None of the listed Options

537. Money laundering refers to

a) Money facilitating criminal offences

b) Extending loans to corporate

c) Short term borrowing & placements

d) All of the listed options

e) None of the listed Options

538. 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

e) None of the listed Options

539. Which of the following is not an example of money laundering during the placement stage?

a) Exchanging many small denomination bills (i.e. tens, twenties and fifties) for larger bills and
bank drafts

b) Repeated deposits of cash into a financial institution just below mandatory reporting threshold

c) Setting up an offshore "shell" corporation to "lend" yourself money for a new house

d) All of the listed options

e) None of the listed Options

540. Federal authorities attack money laundering through

a) Regulations
 b) Criminal sanctions

c) Forfeiture

d) All of the listed options

e) None of the listed Options

541. The US Patriot Act expands the authority of the ________________ to regulate the activities of U.S.
financial institutions, particularly their relations with ______________and entities

a) Secretary of the Treasury; domestic individuals

b) Secretary of the Treasury; foreign individuals

c) Securities Exchange Corporation; domestic individuals

d) Securities Exchange Corporation; foreign individuals

e) None of the listed Options

542. SARs in the context of anti money laundering

a) stands for Suspicious activity reports

b) Needs to be filed by Securities brokers and dealers as well as commodity merchants

c) Requiring businesses, which were only to report cash transactions involving more than
$1,000,000 to the IRS to file

d) Both stands for suspicious activity reports & Needs to be filed by Securities brokers
and dealers as well as commodity merchants

e) All of the listed options

543. Which of the following regulations are not covered under the US Patriot act?

a) Encouraging financial institutions and law enforcement agencies to keep confidential

information concerning suspected money laundering and terrorist activities

b) Prohibiting U.S. financial institutions from maintaining correspondent accounts for foreign shell
banks

c) Establishing minimum new customer identification standards and record-keeping

d) Requiring financial institutions to maintain anti-money laundering programs which must include
at least a compliance officer

e) None of the listed Options

544. Forfeiture regulation under the US patriot act allows

 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

d) All of the listed options

e) None of the listed Options

545. US Patriot act incorporates the following new crimes

a) terrorist attacks on mass transportation facilities

b) for biological weapons offences

c) for fraudulent charitable solicitation

d) All of the listed options

e) None of the listed Options

546. Federal communications privacy law features a three tiered system under US Patriot act
First level: prohibits electronic eavesdropping on telephone conversations, face-to-face conversations, or
computer and other forms of electronic communications
Second level: telephone records, e-mail held in third party storage, and the like
Third level: in the case of serious criminal cases, law enforcement officers may seek a court order
authorizing them to secretly capture conversations

Which of the above levels are correctly described?

a) All the levels

b) First & Second

c) Only Second level

d) Second & third

e) None of the listed Options

547. Which of the following institutions are not covered under the AMR guidelines?
a) Credit unions

b) Securities brokers and dealers

c) Mutual funds

d) Futures commission
 e) None of the listed Options

548. The Customer Identification program includes all of the following EXCEPT

a) Collecting information

b) Verifying identity

c) Checking terrorist list

d) Reliance on other financial institution

e) None of the listed Options

549. For the customer identification program, the AMR guidelines

a) dictates which forms of identification documents financial institutions can accept

b) financial institutions responsible for assessing and minimizing the risk associated with the
documents

c) risk based approach to determine the form of identification

d) Both financial institutions responsible for assessing and minimizing the risk associated
with the documents and risk based approach to determine the form of identification

e) All of the listed options

550. Which of the following risk categories are covered under Basel II
A. Interest risk
B. Market risk
C. Foreign exchange risk
D. Liquidity risk
E. Credit risk
F. Operational risk
G. Qualitative risk

a) A, C, F

b) E,B,F

c) A, B, G

d) B,D,G

e) E,C,A

551. The deadline for the implementation of BASEL II for all the foreign and financial institutions is

a) December 2005
 b) December 2007

c) December 2006

d) December 2004

e) None of the listed Options

552. The aim of Basel II is

a) To promote safety and soundness in the financial system by allocating capital in

organizations to reflect risk more accurately

b) To promote efficiency in the financial system by allocating capital in organizations efficiently to

minimize risk and maximize returns

c) To promote standardization in the financial system by allocating capital in organizations to

obtain optimal risk return profile

d) To establishing a more sophisticated framework for banks to measure risk and ensure
sufficient capital to cover losses from market and credit risk

e) None of the listed Options

553. How many countries so far have signed the new capital accord Basel II

a) 10

b) 92

c) 110

d) 176

e) 21

554. Basel capital accord was established in

a) 1998

b) 1978

c) 1988

d) 1992

e) None of the listed Options

556. Three pillars of the new capital accord, Basel II, are

a) Quantitative; Supervisory; General

 b) Qualitative; Market Forces; Geographic

c) Quantitative; Operational; Supervisory

d) Quantitative; Qualitative; Market Forces

e) Qualitative; Mandatory; Quantitative

557. Basel capital accord was instituted to coordinate global regulatory efforts to institute
_______________ capital requirements to eliminate the threat posed by _____________

a) Maximum; overcapitalized financial institutions

b) Minimum; overcapitalized banks

c) Maximum; undercapitalized financial institutions

d) Minimum; undercapitalized banks

e) None of the listed Options

558. The Qualitative pillar of the Basel II encompasses

a) Capital management processes

b) Trading book changes

c) Disclosure requirements

d) Operational risk

e) Capital structure

559. Which of the following risks has been incorporated in the new framework for the first time?

a) Operational risk

b) Market risk

c) Interest risk

d) Exchange risk

e) Credit risk

560. Which of the following method can be utilized for the evaluation of operational risk?

a) Basic indicator approach

b) Internal ratings based approach

c) Advanced internal rating based approach

 d) all of the listed options

e) None of the listed Options

561. Under the standardized approach for credit risk assessment, bank

a) Allocates risk weights to each of the assets and off-balance sheet positions

b) Calculates sum of risk-weighted asset values

c) Risk weights depend on the broad category of borrower

d) Risk weights can be refined by reference to external ratings

e) All of the listed options

562. Capital adequacy ratio refers to

a) Amount of banks capital expressed as percentage of the risk weighted credit exposure

b) Amount of banks capital expressed as percentage of the risk weighted credit exposure &
operational risk

c) Amount of banks capital expressed as percentage of the risk weighted credit exposure, &
market risk

d) Amount of banks capital expressed as percentage of the risk weighted credit exposure,
operational risk & market risk

e) None of the listed Options

563. Operational risk results from inadequate

a) Internal processes

b) People

c) System or from External events

d) All of above

e) None of the listed Options

564. Under standardized approach for operational risk

a) Capital charge is calculated by multiplying a banks broad financial indicator by a beta

factor

b) Capital charge is calculated by multiplying a banks broad financial indicator by a alpha factor
 c) Capital charge is calculated by multiplying a banks broad financial indicator by a gamma
factor

d) Factor can applied for any bank regardless of its complexity or sophistication

e) None of the listed Options

565. The internal rating based approach differs from standardized approach for credit risk assessment,
in that

a) IRB results in lesser risk sensitivity

b) IRB uses diverse range of risk weights

c) IRB is simpler approach

d) IRB leads to lower capital charges

e) All of the listed options

567. USA PATRIOT Act has been enacted in response to

a) Very high profile corporate scandals such as Enron

b) The terrorists attacks of September 11, 2001

c) Growing complexity, volatility, and interdependence among international financial markets

d) High tax payers defaults

e) None of the listed Options

568. In order to implement new capital adequacy framework by 2006, banks are planning to go for
different approaches for credit and operational risks, as specified in the framework, based on its
readiness in terms of systems and processes. What could be the challenges that would be faced by these
financial institutions?

a) Availability of historic data

b) System Integration

c) Re-engineer business process

d) Only Availability of historic data and System Integration

e) All of the listed options

569. Which of the following benefits can accrue to the banks implementing the new capital adequacy
norms besides reduced capital adequacy requirements?

a) Better risk based pricing

 b) Improved capital allocation

c) Increased corporate and emerging markets lending

d) Only Better risk based pricing and improved capital allocation

e) All of the listed options

570. The migration to Check21 environment requires substantial investment in imaging, storage and
image exchange technology. Some of these investments can be avoided by outsourcing some of these
processes to third party ASP Solutions. Which of the following factors are likely to influence the decisions
of the banks to outsource or not?

a) Capacity planning

b) Security Analysis

c) AS IS process analysis

d) All of the listed options

e) None of the listed options

571. Which of the following activities can invite the application of Anti Money Laundering guidelines?

a) Purchase or sale of same good

b) Multiple transfer of money

c) Depositing cash in big amounts

d) Only Purchase or sale of same good and Multiple transfer of money

e) Only Multiple transfers of money and Depositing cash in big amounts

572. Which of the following methods, parameters used, for measuring credit risk is more reliable while
processing credit application, assume that the calculation engine allocate equal weightage to different
factors:

a) Method A

b) Method B

c) Method C

d) Method D

e) Both Method A and Method D

573. 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

1. vaR is a measure of _________ (164)

2. Expand vaR Value at Risk
3. Best method for vaR _______________variance co-variance model
4. Rate of Inflation R=N-I
5. Check21
6. Liquidity
7. DC and DB differences
8. hedge,syndicate
9. Back to Back LC
10. Electronic

BFS L0 LATEST DUMPS

1. Which of the following is NOT a settlement Method for Bank Loans

a. Securities Repository
b. Sub-Participation
c. Assignment
d. Participation
e. Preclosure

2. Tax and insurance Premiums Collected as part of Loan repayment are handled through which of the
following type of account?
a. DMAT account
b. Mutual fund account
c. Escrow account
d. Fixed despoait

3. What is the difference between Bankers acceptance and sight draft

 a. Bank can raise funds by selling the acceptance
b. Sight drafts are negotiable instruments
c. Bankers acceptance reduces banks leading capacity
d. None of the listed Options
e. Bankers acceptance demands immediate payment

4. Red herring prospectus is issued during _______________

a. When a divided is declared
b. Poat-Acquisition
c. During Securitization
d. During a IPO
e. A merger

5. Which of the following is NOT a banking service?

a. Retail Banking
b. Private Banking
c. Stock market regulation
d. Corporate Banking
e. Consumer Lending

6. Who among the following offers private banking services?

a. Bank of New-York Melon
b. Bank One
c. All of the listed options
d. UBS
e. Credit Suisse

7. Ram deposits $100 in XYZ Bank. Puja takes a loan of $ 100 from XYZ Bank. Which of the following is
most likely to happen?
a. Bank is charging 3% interest to Puja and paying 5% interest to Ram
b. Bank giving 3% interest to Ram and Take 5% interest from Puja
c. .
d.
e.

8. Which of the following represents the correct hierarchy of corporate rating (highest to lowest)

9. Bank ABC interest rate on deposits is 7.30% and its interest rate on loans is 9.25% dur.
Find the spread for Bank ABC?
a. 0.
b. 0.
c. N
 d. 0.

9.25 7.30 = 1.95

10. If a bank gets a deposit of $5000, assuming reserve requirement(CRR) of 10%, and it Circulate
through 2 more banks, leading to which of the following money multiper effect?
a. None
b. It crea..
c. It crea..
d. It crea..
e. It crea...

Solution:

CRR (Cash Reserve Ratio).

Deposit 10% Reserve Loaned Out

1 5000 500 4500

2 4500 450 4050

3 4050 405 3645

An initial deposit of $5000 has created a reserve of $1355, and loan of $12195.

11. What does a CALL option give the buyer?

a. The right, but not the obligation, to sell
b. The Obligation to sell
c. The right and obligation to buy
d. The obligation to buy
e. The right, but not the obligation, to buy

Put Options - The right, but not the obligation, to sell

12. What is the purpose of rebalancing

a. To keep investments in line with original investment strategy
b. To Maximize the portfolio return by effectively timing the market
 c. All of the listed options
d. Reallocation of assets classes to gain competitive advantage

13. Which two risks of a financial institution may bring gains as well as losses?
a. Credit risk and interest rate risk
b. Credit risk and foreign exchange risk
c. Liquidity risk and credit risk
d. None of the listed options
e. Interest rate risk and foreign exchange risk

14. Institution specializing transactions of mortgage loans for US banks are

a. Gennie Mae and indymac
b. Gennie Mae & Fannie Mae
c.
d.

Fannie Mae and Ginnie Mae are examples of institutions specializing in securitisation
transactions of mortgage loans for US banks.

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".

15. A proprietary system of ATMs is a network that comes into being when custom...
institutions have success to transaction services at ATMs owned or operated b State True
or False
a. True
b. Flalse

16. Assuming a 4% annual inflation rate, in how many years will the purchasing power of $1,000 be cut
in half?
a. 18 Years
b. 16 Years
c. 20 Years
d. 12 Years
e. 24 Years

17. The term Settlement cycle refers to the which of the following options?
a. time period between the date on which the trade is executed and the date when the
trade is settled
b. time period between the date on which an investor first makes the decision to enter a
trade and the date when the trade is settled.
 c. Time period between the date on which the trade is cleared and the date when the trade
is settled.
d. None of the listed option are correct

18. When is a bank failure is is more likely to occur?

a. Capital adequacy ratio is increased
b. Cash Reserve ration is increased
c. Bank increases its equity capital
d. Capital adequacy ratio is reduced
e. Bank holds more short-term riskless securities

19. GDR stand for which of the following option?

a. Gold Deposit Report
b. Global Depository Receivables
c. Global Deposit Report
d. Global Depositary Receipt
e. Global Derivatives Report

20. If the entry load is 2% and the NAV is Rs 10, then how much the investor will have to pay for 100
units?
a. Rs. 1020

b. Rs 1500

c. Rs. 1200

d. Rs. 800

NAV Net Asset Value

(10+(2/100*10))*100 =1020

21. After a buyer and a seller enter into a trade agreement, who initiates the issues of LC?
a. None of the listed Options
b. Buyers bank
c. Seller
d. Advising bank
e. Sellers bank

22. If a financial instrument has a 50% chance of paying 20% and a 50% chance of paying 60% percent.
What would be the expected return?
a. 0.4
b. 0.2
c. 0.5
 d. 0.8

= (50/100)*(20/100) + (50/100)*(60/100) = 0.4

23. Does a pure play investment bank accept deposits?

a. No
b. Only during IPO
c. Yes
d. Yes , if it is below
e. None of the listed Option

24. Which of the following is a corporate action?

a. Declaring Dividend
b. All of the listed options
c. Rights issue
d. M & A
e. Stock Split

25. In a typical credit card transaction processing cycle, which of the following is
I: The issuer and acquirer route authorization through the Association

II: Issuer transfers funds to the Acquirer

a. I only
b. Both I and II
c. II only
d. None of the listed options
Answer: I & II
26. Choose the correct order of occurrence of the following activities
a. Trade execution, Trade matching, Trade clearance, Trade confirmation, Trade Settlement
b. Trade execution, Trade matching, Trade confirmation, Trade clearance, Trade Settlement
c. Trade matching, Trade execution, Trade confirmation, Trade clearance, Trade
Settlement
d. Trade execution, Trade confirmation, Trade matching, Trade clearance, Trade Settlement

27. From the given options the service(s) that can be categorized under A..
I: Corporate Action processing

II: income Processing

a.
b.
c.
d.

28. There are 5 participants A, B, C, D, E in a 25M USD syndicated loan and A is the lead m has agreed to
pay 0.4% ($1,00,000) participant fee. How much each participant will share in participant fee?
a. $1,00,000 will be received every time money is withdrawn
b. $1,00,000 will be received every month
 c. $1,00,000 will be received affront
d. $1,00,000 will be charged towards undrawn portion
e. None of the listed Options

29. Which of the following are NOT the benefits of using credit derivatives?
a. Increasing the credit limit of a corporate
b. Credit derivatives can be used both to diversity their credit risk exposures and free up
capital from regulatory constraints
c. Credit derivatives can be used to create positions that can otherwise not established in
the case market
d. Credit derivatives can be used either to take on more risk or to avoid (hedge) it

30. The counterparty in a futures contracts trade is

a. The Exchange
b. Banks
c. The buyer and Seller
d. The brokers who
e. Government

31. .

32. .

33. .

34. .

35. .

36. .

37. .

38. .

39. .

40. .
41. What is OTC?
a. Over The Counter
b. .
c. .
d. .
e. .

42. All the following statement concerning U.S Governmernt securities are Correct EXCEPT
a. Treasury notes have maturity dates up to 10 years
b. Treasury bonds have maturity dates up to 30 years
c. Treasury bills have a greater interest rate risk than either Treasury bill
d. Treasury bills have their interest paid in lump sum at maturity.

43. Interest rate spread is equal to?

a. Capital Rate Base Rate
b. Base Rate Current Rate
c. Current Rate
d. Current Rate Base Rate
e. None of Listed Options

44. Universal banks provide commercial banking as well as investment bank services under one head .
State True or False
a. True
b. False

45. Dividend declaration is an example of

a. Corporate Action
b. .
c. .
d. .

46. Identity the services offered by Retail Banks.

a. Sa.
b. All
c. Deb..
d. Pe.

47. VISA involved in which of the following?

I: Provide the interchange systems to transfer data and funds between members

II: Set credit limits

III: Issue credit cards

a. I Only
 b. II only
c. I & II
d. I, II & III

48. Which are true in a BASIC or No Frill Checking Account?

I: Limit the number of check written

II: Interest paid

III: Limit the number of withdrawals made

a. .
b. .
c. .
d. .

49. On a trading day at the NYSE, a broker undertakes the following trades:
Buy 120 DELL shares for $ 10.00 each

Sell 70 DELL shares for $ 10.50 each

Buy 200 CISCO shares for $ 20.00 each

Sell 20 DELL shares for $ 11.00 each

Sell 50 CISCO shares for $ 20.50 each

Sell 10 DELL shares for $ 9.00 each

Given that a net settlement system is being used. Find out the net position of the broker

a. Dell 70 Shares to give out, Cisco 90 shares to receive, $3,000 to pay out to the exchange
b. Dell 20 Shares to pay out, Cisco 150 shares to receive , $3,780 to pay out to the exchange
c. Dell 20 Shares to receive, Cisco 150 shares to receive , $3,130 to pay out to the exchange
d. None of the listed Options
e. Dell 150 shares to receive, Cisco 20 shares to receive, $3130 to receive from the exchange

Solution:

Sock Buy/Sell Quantity Price Amount

DELL Buy 120 $10.00 (1200)

DELL Sell 70 $10.50 735

CISCO Buy 200 $20.00 (4000)

DELL Sell 20 $11.00 220

 CISCO Sell 50 $20.50 1025

DELL Sell 10 $9.00 90

Total (3130)

Net position for DELL: +120 70-20-10 = 20

Net position for CISCO: +200 50 = 150

So exchange will need to deliver 20 DELL & 150 CISCO shares to the broker.

This was what exchange owes to broker.

So the broker has to pay $3130 only and he gets 20 DELL & 70 CISCO shares from the
exchange.

50. Which of the following are involved in the regulation of capital markets in USA?
a. SEC
b. FSA
c. Senate
d. Federal Reserve

51. In syndicate loan, borrowers will be charged even if they dont utilize the committed
fu
a. True
b. False

52. Inflation represents which of the following option?

a. Ver
b. Increase in price
c. Eco
d. Curr
e. Dec

53. Loan Servicing starts after underwriting state True or False

a. True
b. False

54. All of the following investments are examples of debt investments Except
a. Cash Value
b. Gold
 c. Certificate of
d. Company Bond
e. Fixed Annuity

55. Which of the following is the most risky asset?

a. Shares of a Bi
b. Investment in N
c. Triple A rated b
d. Investment in R
e. Treasury bills

56. What is a credit union?

a. Operated for the purpose of promoting thrift
b. Providing other financial services to its members
c. Providing credit at reasonable rate
d. A cooperative financial institution that is owned and controlled b
e. All of the listed Options

57. Coming together of BNY and Mellon is an example of __________________

a. Brokerage
b. Takeover
c. Acquisition
d. Merger
e. All of the listed options

58. CIP in the context of anti money laundering

a. Requiring businesses, which were only to report cash transactions involving more than
$1,000,000 to the IRS to file
b. Stands for Suspicious activity reports
c. Stands for customer identification program
d. N
e. eeds to be filled by Securities brokers and dealers as well as commodity merchants
f. All of the listed Options

59. Which among the following is a key feature of letter of credit?

a. All of the listed options
b. Opportunity to receive payment in advance of the due date
c. Basis for devising proper currency hedging strategy and opportunity to receive payment in
advance of the due date
d. Distributes risk between buyer and seller
e. Basis for devising proper currency hedging strategy

60. Find out the one which does NOT come under the retail banking Service
a. Personal Loan
 b. Transfer Fund
c. Credit Services
d. Electronic Transfer

61. How would you categorize account activity alerts in mobile banking?
a. Account information
b. Transactions
c. Investment
d. Support

62. Pooling and repackaging of cash-flow-producing financial assets into securities, which are then sold
to investors is called ____________
a. Leveraging
b. Securitization
c. Initial Public Offer
d. Short Selling
e. None of the listed options

63. An investor indulging in short selling on a share expects the share price to decrease. State True or
False
a. True
b. False

64. GE shares are currently selling for $15.00 each. You bought 200 shares one year ago at $12 and
received dividend payments of $2 per share. What was your total capital gain this year?
a. 600
b. 400
c. 1000
d. None of the listed options
e. 200

Solution:

(200*15) + (200*2) (200*12) = 1000

65. Securities with an original maturity of lesser than 1-year are traded on money markets. State True or
False
a. True
b. False

66. Pick the odd one out

 a. .
b. .
c. .
d. .

67. _____________ is the legal and professional proceeding in which a lender, cbtains a court orders
...a borrowers equitable right of redemption.
a. .
b. .
c. .
d. .

68. 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. Secondary custodian
b. Global Custodian
c. Sub Custodian
d. None of the listed Options
e. Main Custodian

69. In Trade Finance, Which of the following factors are considered while choosing made of financing?
a. Time frame, cost of financing, Buyer trade associates
b. Government Guarantee Program, Seller Preference
c. None of the listed options
d. Exporters Fund, Risk Factors, Cost of financing, Time frame

70. Company ABC has a gross profit of $50000. The operating expenses amounts to $10000. The interest
on loans availed amounts to $5000 and the taxes to be paid amounts to $5000. Calculate the EPS if
there are total of 20000 shares.
a. 2.5
b. 2
c. 1.25
d. 1.5

Solution:

Operating Income = Gross Profit - Operating Expenses

EPS (Earnings Per Share) = (Operating Income Interest on Loan Taxes Paid) /
Number of shares
 = (50000-10000-5000-5000) / 20000 = 1.5

71. The risk that a given security or asset cannot be traded quickly enough in the ..the required
profit) is
a. .
b. .
c. .
d. .

72. Identify the core risk that a securities lending firm faces
a. .
b. .
c. .
d. .
e. .

73. Netting reduces the number of settlements needed by more than 95% state True or False
a. True
b. False

74. The Components to determine the rate of exchange in a Forward Contract are
a. Cross Currency Rate and forward rate
b. Current Spot Rate and Forward rate a
c. Current Spot Rate, amount of currency
d. Forward rate adjustment and amount

75. High-Net worth individuals generally have ____________________.

a. Net worth greater than $500,000
b. Household income greater than $500,000
c. Market capitalization more than $200,000
d. Household income of maximum $50,000

76. Product development in sales and marketing refers to which of the following option?
a. Developing and differentiating deposits, loans etc
b. Products that are bought using online payment such as e-commence
c. All of the listed Options
d. Identifying products such as SAP, Oracle for the bank
e. Collateral e.g. Cars in case of car loans, houses in case of mortg

77. Which of the following methods of payment is most risky to the Buyer?
a. Open Account
 b. Documentary Collection
c. Letter of Credit
d. Counter trade
e. Cash in advance

Methods of payment is most risky to the Seller Open Account

78. on a trading day at the NYSE, a broker undertakes the following trades
Buy 100 IBM shares for $11.00 each

Sell 50 IBM shares for $10.50 each

Buy 100 MSFT shares for $20.00 each

Sell 20 IBM shares for $11.00 each

Sell 10 MSFT shares for $20.50 each

Sell 30 IBM shares for $9.00 each

How much did the broker pay out to the exchange in total in case of (a) gross settlement (b) Net
settlement system?

a. None of the Listed Option

b. (a) $1880 (b)$ 3100
c. (a) $1,780 (b) 0 for IBM, $1795 for MSFT
d. (a) 0 for IBM, $1795 for MSFT (b) $1880
e. (a) $3100 (b) $1880

Solution:

Sock Buy/Sell Quantity Price Amount

IBM Buy 100 $11.00 (1100)

IBM Sell 50 $10.50 525

MSFT Buy 100 $20.00 (2000)

IBM Sell 20 $11.00 220

MSFT Sell 10 $20.50 205

IBM Sell 30 $9.00 270

Total (1880)
 Net position for IBM: +100 50-20-30 = 0

Net position for MSFT: +100 10 = 90

So broker would not receive any IBM shares from the exchange as he sold all the shares that he
bought during the day. But exchange will need to deliver 90 MSFT shares to the broker.

This was what exchange owes to broker.

So the broker has to pay $1880 only and he gets 90 MSFT shares from the exchange

0 for IBM, $1,795 for MSFT,

It is worth understanding that, we have some markets where settlement happens on a gross
basis, meaning no netting is done and all the transactions need to be settled individually. This is
prevalent in Fixed Income markets in the US and the settlement mechanism is known as Real
Time Gross Settlement (RTGS). - (Page No 181 in BFS PDF)

79. How much will be the 1% legal fee on 30M USD

a. 0.03M
b. 30M
c. None of listed Option
d. 3M
e. 0.3M

80. The arrangement fee paid by the borrower will be paid to:
a. Facility manager / agent
b. Every participant expect lead manager
c. Will be retained by lead manager
d. Underwriting bank
e. Every participant

81. In a securities lending transaction, if the buyer of securities provides cash as collateral, then the
seller of securities has to provide the buyer with a interest amount for the cash. What is this interest
amount called?
a. Rebate rate
b. Collateral Interest
c. Interest Rate
d. None of the listed Options
e. Return Rate
82. Corporate Loans are.
a. Never unsecured
b. Never secured
c. Always secured
d. Always unsecured
e. Secured or unsecured

83. Who is a underwriting Bank?

a. Bank which underwrites a IPO(not sur shd b thz)
b. Bank which commits supply of funds in a syndicated loan
c. Bank which does not insures a loan
d. Bank which underwrites a insurance
e. Bank which insures a loan

84. The amount owed by a company to suppliers in the next one year will be categorized under
__________________
a. Annual liabilities
b. Deferred Liabilities
c. Accrued Liabilities
d. Current Liabilities

85. What is a mutual fund?

a. A pool of funds used to purchase securities on behalf of investors
b. A collective investment vehicle
c. All of the listed options
d. A portfolio of stocks, bonds and other securities

86. The Advising bank is used as a trusted bridge between the ____________ and _____________ when
they do not have an active relationship
a. Reimbursing bank; beneficiary bank
b. Issuing bank; Confirming bank
c. Importer; Exporter
d. Applicant bank; Beneficiary bank (Issuing bank; Beneficiary bank)
e. Beneficiary bank; Reimbursing bank

87. Which of the following debt instrument involves lowest risk?

a. Munis
b. Junk Bonds
c. Corporate bonds
d. Treasury Bills
e. Yarkee Bonds
88. Following are the types of market risks except
a. Currency Risk
b. Commodity Risk
c. Interest Rate Risk
d. Credit Risk
e. Equity Risk

89. When the Central Bank of a country decides to change the interest rates, it is a manifestation of
which of the following?
a. Money Policy
b. Money Making
c. Money Market
d. .
e. .

90. In terms of computation, which of the following is the fastest method for calculating VaR?
a. All would take equal time if done using a software
b. Variance-Covariance Matrix
c. Morte carlo Simulation
d. Historical Simulation
e. A combination of Morte Carlo and Historical Simulation

91. ABC co. wants to identity the best way for making salary credits to its huge employee base. Can you
select the best option?
a. Paper Checks
b. Automated Clearing House
c. Cash
d. Contactless Payments

92. In a economy where inflation is 4%, future value of 100 units of money after 2 year would be which
of the following option?
a. Exactly 108
b. None of the listed options
c. Exactly 100
d. Around Rs. 104
e. 108.16

Solution:

FV = PV*(1 + i)n = 100(1+0.04)2 = 108.16

FV: Future Value at the end of n time periods,

 PV: Beginning value OR Present Value

i: Interest rate per unit time period

n: Number of time periods

93. if R is the real rate of interest, N is the norminal rate of interest and I is the rate of inflation, then:
a. R = N I
b. R = N * I
c. R = N + I
d. R = N/I

94. FFELP or the Federal Family Education Loan Program can be of which type?
a. Federal Stafford
b. Consolidation loans
c. Federal PLUS
d. Graduate Plus (its not their in FFELP type)
e. All of the listed Options

95. What is the settlement standard followed in the US?

a. T+1
b. T+4
c. T+2
d. T+3

Normal T+3 settlement cycle. When confirmation /affirmation completed are -> T+2

96. P&L Statements represent transactions over a period of time while the balance sheet shows
information as on Specific date. State True or False.
a. True
b. False

97. Which of the following is not the example of options?

a. Put Option
b. Oil Futures
c. Swaption
d. Call Option
e. LEAPS (Long Term Options)

98. What are Yankee bonds also Know as?

a. Junk bonds
b. None of the listed Options
c. Shares
 d. Call Options
e. T-Bills

99. The share price of a company may drop considerably from its current levels. In this scenario, what
type of risk are the investors facing?
a. Market Risk
b. Business Risk
c. Credit Risk
d. Company Risk
e. Liquidity Risk

100. From the following options, find what type of risks that a software export company may face?
a. Operational Risk
b. It can face all the risks
c. Legal Risk
d. Currency Risk
e. Credit Risk

101. The Federal funds rate

a. Is the rate commercial banks use as a benchmark for evaluating their largest borrowers
b. Is inversely related to the prime rate
c. None of the listed Options
d. Is a primary policy target of the Fed in conducting monetary policy
e. Is the rate the Fed charges on overnight loans to commercial banks

102. A bank has a portfolio of $50 million worth of loans out of which it wants to sell $20 million
worth of loan to another financial institution. What is this process called?
a. Held for Sale Loans
b. Trading Loans
c. Accrual Loans
d. Undrawn Loan
e. Committed Loans

103. You purchased a stock for $40. One year later you received $2 as dividend and sold the share for
$48. How much is the return of holding period?
a. 50 percentage
b. 45 percentage
c. 10 percentage
d. 25 percentage
e. None of the listed options

104. Money laundering refers to which of the following option?

a. All of the listed options
b. Extending loans to corporate
 c. Short term borrowing & placements
d. Converting the profits from criminal activities into legitimate funds

105. Banks are financial institutions that are licensed to accept deposits and issue loans. State True or
False
a. True
b. False

106. In FOP mode of Settlement, there is no simultaneous exchange of securities and payment State
True or False
a. True
b. False

107. The type of loan in which spread varities over the life of the loan is called ___________.
a. Positive spread loan
b. Fixed rate loan
c. Semi-fixed rate loan
d. Negative spread loan
e. Floating rate loan

108. Which of the following combination holds true?

a. wire transfer, more costly than other payment alternatives
b. commercial letter of credit, Improves applicants credit facilities
c. Foreign Checks Not useful for cross border trade
d. Documentary collection, Strict compliance rules apply
e. Standby letter of credit, less costly than documentary collection

109. Which of the following type of loan requires the amount of interest that would be earned on the
amount of interest paid upfront by the borrower?
a. Demand loan
b. True discounted Loan
c. Capitalized loan
d. Amortized loan
e. Discounted loan

110. Which of the following is not a derivative?

a. Bonds
b. Futures
c. Options
d. Swaps
e. Forwards

111. TARP stands for which of the following options?

 a. Term Assets Reform Program
b. None of the Listed options
c. Term Assets Relief Program
d. Troubled Assets Relief Program
e. Troubled Assets Reform Program

112. If the Limit = $2000, Margin = 20% and Asset value = $2000, then Drawing Power for an Open
ended loan is equal to
a. 2200
b. 2000
c. 1600
d. 2400
e. None of the listed options

Solution:

Limit (L) max outstanding allowed

Margin (M) percentage of limit that can be drawn

Asset value (AV) value of underlying asset

Drawing Power (DP) - lower of L and (1-M)*AV

DP = (1-0.20)*2000 = 1600

113. ..
a. 20000
b. 17000
c. 18000
d. 15000

114. Customers usually interact extensively with the banks mid and back offices. State True or False
a. True
b. False

115. In Normal Distribution 99% confidence interval corresponds to __________

a. 2.33 Sd
b. 1.65 Sd
c. 1.96 sd
d. 3 Sd
e. 1 Sd
116. At the end of an active trading day, a broker sees that he has a net position in 6 securities, and
owes the system some money. How many settlement transactions will take place at the end of the
settlement cycle?
a. 6 any 5 as transfer of securities and 1 as securities-versus-cash
b. Neither the number of securities nor the number of cash tranactions can be determined
c. 7, 6 as transfers of securities and 1 as transfer of cash
d. 6, all 6 as securities-verus-cash
e. 1 as transfer of cash, but the number of transactions for securities cannot be determined.

117. A person purchases a share at $50. After 2 years, the price is at $75 and he decides to sell the
share at that price. What is the annualized return that the person has earned?
a. 0.6667
b. 0.3333
c. 0.5
d. 0.2247
e. None of the listed options

118. Which of the following operations cannot be done on a LC (Letter of Credit)?

a. Purchase
b. Discount
c. Acceptance
d. None of the Listed options

119. Which of the following is a treasury management system?

a. TS2
b. Front Arena
c. .
d. .
e. ..

120. Which of the following are involved in the retail brokerage business in US?
a. Freddie Mae
b. E-Trade
c. Ginnie Mae
d. Sallie Mae
e. Federal Reserve

121. Which of the following methods eliminate county risk and commercial risk upon confirmation?
a. Back to back Letter of Credit. Documentary collection
b. Documentary Collection, Letter of Credit
c. Letter of Credit, Back to back Letter of credit
d. Standby Letter of credit, Letter Credit
e. Documentary Collection, Stand by letter of Credit
122. All of the following are valid means for a custody client to communicate trade instructions to its
custodian, EXCEPT
a. SWIFT networks
b. FEDWIRE
c. By Fax
d. By Telephone

123. SPV means

a. Security Purpose vehicle
b. None of the listed options
c. Securitized planning Vehicle
d. Special principal vehicle
e. Special purpose vehicle

124. NPV stands for

a. Net Present Value
b. New Present Value
c. No Present Value
d. Net Past Value

125. SMA offers investors a customized approach to investing. Rather than a generic product. State
True or False
a. True
b. False

126. If total Spread on underwriting is $ 500000 and Managers fee is $100000. What is the amount
which will be disturbed in the syndicate?
a. Cannot be determined
b. 600000
c. 400000
d. 100000
e. 500000

127. An investor has multiple investment options yielding various dollar returns at various points of
time, while he is comfortable with a return of X% p.a. Which method should he use to compare the
various investments?
a. External Rate of Return
b. Compound Interest
c. Simple Interest
d. Internal Rate of Return
e. Net present value
128. In case of Auto finance, monthly lease payments are usually lower than monthly loan payments
because of which reason?
a. Customer is paying only for depreciation
b. Customer is paying only for Fees
c. All of the listed Options
d. Customer is paying only for Taxes
e. Customer is paying only for Rent Charges

129. In Electronic Check Conversion (ECC). What happens once the check is processed?
a. The customer can present a check to a store cashier
b. The customer signs a receipt authorizing the store to present the check to the bank
electronically and deposit the funds into the bank account
c. Receive Cash immediately
d. All of the Listed options
Missing Question

1. Which of the following represents the correct hierarchy of corporate ratings (highest to lowest)?

a. AAA, AA+, BBB, D

b. AAA, AA-, D, BBB
c. D,C,B,A
d. D, AA-, B, AAA
e. AAA, AA+, D, AA-
Mutual funds can not invest in

a. Bond
b. Equity
c. Share
d. None

2. There are five participant A, B, C, D, E and A is a manager. Profit is 500000 and operating charges is
100000. Then how the profit will be distributed among all?
Ans: 20000

3. 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

4. Among which is Issuer as well as Acquirer

a. Amex
b. T-sys
 c. Elavon
d. Front Data Company

http://www.creditmanagementworld.com/glossary/letterofcreditglossary.html

http://books.google.com/books?id=EqoN-
3wnMVgC&pg=PA38&lpg=PA38&dq=methods+of+payment+is+most+risky+to+the+Buyer&source=bl&o
ts=vzMehoM1LA&sig=npc-
HsSsOitQrx5pVM5oueaKys8&hl=en&ei=DzOWTN2dNZGuvgOpmdnnCw&sa=X&oi=book_result&ct=resul
t&resnum=9&ved=0CDgQ6AEwCA#v=onepage&q&f=false

1) Page 5

State T/F
Simple interest is calculated only on the beginning principal.

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

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.

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

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

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

Full form of CHIPS?

Clearing House Interbank Payments System

What is SWIFT?

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) runs a worldwide

network by which messages concerning financial transactions are exchanged among banks and

other financial institutions

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.

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.

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:

AccrualLoans

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:

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 latters 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?

64)page 104

What are risk factors choosing the mode of financing?

Costs

Time frame

Risk factors

Govt gurantee programs

Exporters funds

65)page 105

What is BOL?

Full form of BOL?

66) page 105

PAYMENT METHODS
Cash in advance

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

68)page 107

four parties are involved in any transaction using an LC:

1. Buyer or Applicant

2. Issuing bank

3. Beneficiarys bank

4. Beneficiary or Seller

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 buyers 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

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 clients 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 Clients approval. The client may choose to ignore

this.

Discretionary: In this case, the banks 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

83)page 133
In achieving the above goals, an Investment Manager uses the following approaches/principles:

Asset Mix

International Diversification

Screens/Filters.

Capital preservation

Alternative Investments

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

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 clients 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.

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

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

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

113) page 190 -191

Read USA PATRIOT ACT

Two questions will come from money laundering..

114) page 194

SARBANES OXLEY ACT

115) page 196

Pillar 1
Quantitative Minimum Capital Requirements

Pillar 2
Qualitative Supervisory Review

Pillar 3
Market Forces Market Discipline

115) page 198

Check 21

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

BFS L0 LATEST DUMPS

1. Which of the following is NOT a settlement Method for Bank Loans
a. Securities Repository
b. Sub-Participation
c. Assignment
d. Participation
e. Preclosure

2. Tax and insurance Premiums Collected as part of Loan repayment are handled through which of the
following type of account?
a. DMAT account
b. Mutual fund account
c. Escrow account
d. Fixed despoait

3. What is the difference between Bankers acceptance and sight draft

a. Bank can raise funds by selling the acceptance
b. Sight drafts are negotiable instruments
c. Bankers acceptance reduces banks leading capacity
d. None of the listed Options
e. Bankers acceptance demands immediate payment

4. Red herring prospectus is issued during _______________

a. When a divided is declared
b. Poat-Acquisition
c. During Securitization
d. During a IPO
e. A merger

5. Which of the following is NOT a banking service?

a. Retail Banking
b. Private Banking
c. Stock market regulation
d. Corporate Banking
e. Consumer Lending

6. Who among the following offers private banking services?

a. Bank of New-York Melon
b. Bank One
c. All of the listed options
d. UBS
e. Credit Suisse
7. Ram deposits $100 in XYZ Bank. Puja takes a loan of $ 100 from XYZ Bank. Which of the following is
most likely to happen?
a. Bank is charging 3% interest to Puja and paying 5% interest to Ram
b. Bank giving 3% interest to Ram and Take 5% interest from Puja
c. .
d.
e.

8. Which of the following represents the correct hierarchy of corporate rating (highest to lowest)

9. Bank ABC interest rate on deposits is 7.30% and its interest rate on loans is 9.25% dur.
Find the spread for Bank ABC?
a. 0.
b. 0.
c. N
d. 0.

9.25 7.30 = 1.95

10. If a bank gets a deposit of $5000, assuming reserve requirement(CRR) of 10%, and it Circulate
through 2 more banks, leading to which of the following money multiper effect?
a. None
b. It crea..
c. It crea..
d. It crea..
e. It crea...

Solution:

CRR (Cash Reserve Ratio).

Deposit 10% Reserve Loaned Out

1 5000 500 4500

2 4500 450 4050

3 4050 405 3645

 An initial deposit of $5000 has created a reserve of $1355, and loan of $12195.

11. What does a CALL option give the buyer?

a. The right, but not the obligation, to sell
b. The Obligation to sell
c. The right and obligation to buy
d. The obligation to buy
e. The right, but not the obligation, to buy

Put Options - The right, but not the obligation, to sell

12. What is the purpose of rebalancing

a. To keep investments in line with original investment strategy
b. To Maximize the portfolio return by effectively timing the market
c. All of the listed options
d. Reallocation of assets classes to gain competitive advantage

13. Which two risks of a financial institution may bring gains as well as losses?
a. Credit risk and interest rate risk
b. Credit risk and foreign exchange risk
c. Liquidity risk and credit risk
d. None of the listed options
e. Interest rate risk and foreign exchange risk

14. Institution specializing transactions of mortgage loans for US banks are

a. Gennie Mae and indymac
b. Gennie Mae & Fannie Mae
c.
d.

Fannie Mae and Ginnie Mae are examples of institutions specializing in securitisation
transactions of mortgage loans for US banks.

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".
15. A proprietary system of ATMs is a network that comes into being when custom...
institutions have success to transaction services at ATMs owned or operated b State True
or False
a. True
b. Flalse

16. Assuming a 4% annual inflation rate, in how many years will the purchasing power of $1,000 be cut
in half?
a. 18 Years
b. 16 Years
c. 20 Years
d. 12 Years
e. 24 Years

17. The term Settlement cycle refers to the which of the following options?
a. time period between the date on which the trade is executed and the date when the
trade is settled
b. time period between the date on which an investor first makes the decision to enter a
trade and the date when the trade is settled.
c. Time period between the date on which the trade is cleared and the date when the trade
is settled.
d. None of the listed option are correct

18. When is a bank failure is is more likely to occur?

a. Capital adequacy ratio is increased
b. Cash Reserve ration is increased
c. Bank increases its equity capital
d. Capital adequacy ratio is reduced
e. Bank holds more short-term riskless securities

19. GDR stand for which of the following option?

a. Gold Deposit Report
b. Global Depository Receivables
c. Global Deposit Report
d. Global Depositary Receipt
e. Global Derivatives Report

20. If the entry load is 2% and the NAV is Rs 10, then how much the investor will have to pay for 100
units?
a. Rs. 1020

b. Rs 1500

c. Rs. 1200
 d. Rs. 800

NAV Net Asset Value

(10+(2/100*10))*100 =1020

21. After a buyer and a seller enter into a trade agreement, who initiates the issues of LC?
a. None of the listed Options
b. Buyers bank
c. Seller
d. Advising bank
e. Sellers bank

22. If a financial instrument has a 50% chance of paying 20% and a 50% chance of paying 60% percent.
What would be the expected return?
a. 0.4
b. 0.2
c. 0.5
d. 0.8

= (50/100)*(20/100) + (50/100)*(60/100) = 0.4

23. Does a pure play investment bank accept deposits?

a. No
b. Only during IPO
c. Yes
d. Yes , if it is below
e. None of the listed Option

24. Which of the following is a corporate action?

a. Declaring Dividend
b. All of the listed options
c. Rights issue
d. M & A
e. Stock Split

25. In a typical credit card transaction processing cycle, which of the following is
I: The issuer and acquirer route authorization through the Association

II: Issuer transfers funds to the Acquirer

a. I only
 b. Both I and II
c. II only
d. None of the listed options
Answer: I & II

26. Choose the correct order of occurrence of the following activities

a. Trade execution, Trade matching, Trade clearance, Trade confirmation, Trade Settlement
b. Trade execution, Trade matching, Trade confirmation, Trade clearance, Trade Settlement
c. Trade matching, Trade execution, Trade confirmation, Trade clearance, Trade
Settlement
d. Trade execution, Trade confirmation, Trade matching, Trade clearance, Trade Settlement

27. From the given options the service(s) that can be categorized under A..
I: Corporate Action processing

II: income Processing

a.
b.
c.
d.
28. There are 5 participants A, B, C, D, E in a 25M USD syndicated loan and A is the lead m has agreed to
pay 0.4% ($1,00,000) participant fee. How much each participant will share in participant fee?
a. $1,00,000 will be received every time money is withdrawn
b. $1,00,000 will be received every month
c. $1,00,000 will be received affront
d. $1,00,000 will be charged towards undrawn portion
e. None of the listed Options

29. Which of the following are NOT the benefits of using credit derivatives?
a. Increasing the credit limit of a corporate
b. Credit derivatives can be used both to diversity their credit risk exposures and free up
capital from regulatory constraints
c. Credit derivatives can be used to create positions that can otherwise not established in
the case market
d. Credit derivatives can be used either to take on more risk or to avoid (hedge) it

30. The counterparty in a futures contracts trade is

a. The Exchange
b. Banks
c. The buyer and Seller
d. The brokers who
e. Government

31. .

32. .

33. .

34. .

35. .

36. .

37. .

38. .

39. .
40. .

41. What is OTC?

a. Over The Counter
b. .
c. .
d. .
e. .

42. All the following statement concerning U.S Governmernt securities are Correct EXCEPT
a. Treasury notes have maturity dates up to 10 years
b. Treasury bonds have maturity dates up to 30 years
c. Treasury bills have a greater interest rate risk than either Treasury bill
d. Treasury bills have their interest paid in lump sum at maturity.

43. Interest rate spread is equal to?

a. Capital Rate Base Rate
b. Base Rate Current Rate
c. Current Rate
d. Current Rate Base Rate
e. None of Listed Options

44. Universal banks provide commercial banking as well as investment bank services under one head .
State True or False
a. True
b. False

45. Dividend declaration is an example of

a. Corporate Action
b. .
c. .
d. .

46. Identity the services offered by Retail Banks.

a. Sa.
b. All
c. Deb..
d. Pe.

47. VISA involved in which of the following?

I: Provide the interchange systems to transfer data and funds between members
 II: Set credit limits

III: Issue credit cards

a. I Only
b. II only
c. I & II
d. I, II & III

48. Which are true in a BASIC or No Frill Checking Account?

I: Limit the number of check written

II: Interest paid

III: Limit the number of withdrawals made

a. .
b. .
c. .
d. .

49. On a trading day at the NYSE, a broker undertakes the following trades:
Buy 120 DELL shares for $ 10.00 each

Sell 70 DELL shares for $ 10.50 each

Buy 200 CISCO shares for $ 20.00 each

Sell 20 DELL shares for $ 11.00 each

Sell 50 CISCO shares for $ 20.50 each

Sell 10 DELL shares for $ 9.00 each

Given that a net settlement system is being used. Find out the net position of the broker

a. Dell 70 Shares to give out, Cisco 90 shares to receive, $3,000 to pay out to the exchange
b. Dell 20 Shares to pay out, Cisco 150 shares to receive , $3,780 to pay out to the exchange
c. Dell 20 Shares to receive, Cisco 150 shares to receive , $3,130 to pay out to the exchange
d. None of the listed Options
e. Dell 150 shares to receive, Cisco 20 shares to receive, $3130 to receive from the exchange

Solution:

Sock Buy/Sell Quantity Price Amount

DELL Buy 120 $10.00 (1200)

DELL Sell 70 $10.50 735

 CISCO Buy 200 $20.00 (4000)

DELL Sell 20 $11.00 220

CISCO Sell 50 $20.50 1025

DELL Sell 10 $9.00 90

Total (3130)

Net position for DELL: +120 70-20-10 = 20

Net position for CISCO: +200 50 = 150

So exchange will need to deliver 20 DELL & 150 CISCO shares to the broker.

This was what exchange owes to broker.

So the broker has to pay $3130 only and he gets 20 DELL & 70 CISCO shares from the
exchange.

50. Which of the following are involved in the regulation of capital markets in USA?
a. SEC
b. FSA
c. Senate
d. Federal Reserve

51. In syndicate loan, borrowers will be charged even if they dont utilize the committed
fu
a. True
b. False

52. Inflation represents which of the following option?

a. Ver
b. Increase in price
c. Eco
d. Curr
e. Dec

53. Loan Servicing starts after underwriting state True or False

a. True
b. False
54. All of the following investments are examples of debt investments Except
a. Cash Value
b. Gold
c. Certificate of
d. Company Bond
e. Fixed Annuity

55. Which of the following is the most risky asset?

a. Shares of a Bi
b. Investment in N
c. Triple A rated b
d. Investment in R
e. Treasury bills

56. What is a credit union?

a. Operated for the purpose of promoting thrift
b. Providing other financial services to its members
c. Providing credit at reasonable rate
d. A cooperative financial institution that is owned and controlled b
e. All of the listed Options

57. Coming together of BNY and Mellon is an example of __________________

a. Brokerage
b. Takeover
c. Acquisition
d. Merger
e. All of the listed options

58. CIP in the context of anti money laundering

a. Requiring businesses, which were only to report cash transactions involving more than
$1,000,000 to the IRS to file
b. Stands for Suspicious activity reports
c. Stands for customer identification program
d. N
e. eeds to be filled by Securities brokers and dealers as well as commodity merchants
f. All of the listed Options

59. Which among the following is a key feature of letter of credit?

a. All of the listed options
b. Opportunity to receive payment in advance of the due date
c. Basis for devising proper currency hedging strategy and opportunity to receive payment in
advance of the due date
d. Distributes risk between buyer and seller
e. Basis for devising proper currency hedging strategy
60. Find out the one which does NOT come under the retail banking Service
a. Personal Loan
b. Transfer Fund
c. Credit Services
d. Electronic Transfer

61. How would you categorize account activity alerts in mobile banking?
a. Account information
b. Transactions
c. Investment
d. Support

62. Pooling and repackaging of cash-flow-producing financial assets into securities, which are then sold
to investors is called ____________
a. Leveraging
b. Securitization
c. Initial Public Offer
d. Short Selling
e. None of the listed options

63. An investor indulging in short selling on a share expects the share price to decrease. State True or
False
a. True
b. False

64. GE shares are currently selling for $15.00 each. You bought 200 shares one year ago at $12 and
received dividend payments of $2 per share. What was your total capital gain this year?
a. 600
b. 400
c. 1000
d. None of the listed options
e. 200

Solution:

(200*15) + (200*2) (200*12) = 1000

65. Securities with an original maturity of lesser than 1-year are traded on money markets. State True or
False
a. True
 b. False

66. Pick the odd one out

a. .
b. .
c. .
d. .

67. _____________ is the legal and professional proceeding in which a lender, cbtains a court orders
...a borrowers equitable right of redemption.
a. .
b. .
c. .
d. .

68. 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. Secondary custodian
b. Global Custodian
c. Sub Custodian
d. None of the listed Options
e. Main Custodian

69. In Trade Finance, Which of the following factors are considered while choosing made of financing?
a. Time frame, cost of financing, Buyer trade associates
b. Government Guarantee Program, Seller Preference
c. None of the listed options
d. Exporters Fund, Risk Factors, Cost of financing, Time frame

70. Company ABC has a gross profit of $50000. The operating expenses amounts to $10000. The interest
on loans availed amounts to $5000 and the taxes to be paid amounts to $5000. Calculate the EPS if
there are total of 20000 shares.
a. 2.5
b. 2
c. 1.25
d. 1.5

Solution:

Operating Income = Gross Profit - Operating Expenses

 EPS (Earnings Per Share) = (Operating Income Interest on Loan Taxes Paid) /
Number of shares

= (50000-10000-5000-5000) / 20000 = 1.5

71. The risk that a given security or asset cannot be traded quickly enough in the ..the required
profit) is
a. .
b. .
c. .
d. .

72. Identify the core risk that a securities lending firm faces
a. .
b. .
c. .
d. .
e. .

73. Netting reduces the number of settlements needed by more than 95% state True or False
a. True
b. False

74. The Components to determine the rate of exchange in a Forward Contract are
a. Cross Currency Rate and forward rate
b. Current Spot Rate and Forward rate a
c. Current Spot Rate, amount of currency
d. Forward rate adjustment and amount

75. High-Net worth individuals generally have ____________________.

a. Net worth greater than $500,000
b. Household income greater than $500,000
c. Market capitalization more than $200,000
d. Household income of maximum $50,000

76. Product development in sales and marketing refers to which of the following option?
a. Developing and differentiating deposits, loans etc
b. Products that are bought using online payment such as e-commence
c. All of the listed Options
d. Identifying products such as SAP, Oracle for the bank
e. Collateral e.g. Cars in case of car loans, houses in case of mortg
77. Which of the following methods of payment is most risky to the Buyer?
a. Open Account
b. Documentary Collection
c. Letter of Credit
d. Counter trade
e. Cash in advance

Methods of payment is most risky to the Seller Open Account

78. on a trading day at the NYSE, a broker undertakes the following trades
Buy 100 IBM shares for $11.00 each

Sell 50 IBM shares for $10.50 each

Buy 100 MSFT shares for $20.00 each

Sell 20 IBM shares for $11.00 each

Sell 10 MSFT shares for $20.50 each

Sell 30 IBM shares for $9.00 each

How much did the broker pay out to the exchange in total in case of (a) gross settlement (b) Net
settlement system?

a. None of the Listed Option

b. (a) $1880 (b)$ 3100
c. (a) $1,780 (b) 0 for IBM, $1795 for MSFT
d. (a) 0 for IBM, $1795 for MSFT (b) $1880
e. (a) $3100 (b) $1880

Solution:

Sock Buy/Sell Quantity Price Amount

IBM Buy 100 $11.00 (1100)

IBM Sell 50 $10.50 525

MSFT Buy 100 $20.00 (2000)

IBM Sell 20 $11.00 220

MSFT Sell 10 $20.50 205

 IBM Sell 30 $9.00 270

Total (1880)

Net position for IBM: +100 50-20-30 = 0

Net position for MSFT: +100 10 = 90

So broker would not receive any IBM shares from the exchange as he sold all the shares that he
bought during the day. But exchange will need to deliver 90 MSFT shares to the broker.

This was what exchange owes to broker.

So the broker has to pay $1880 only and he gets 90 MSFT shares from the exchange

0 for IBM, $1,795 for MSFT,

It is worth understanding that, we have some markets where settlement happens on a gross
basis, meaning no netting is done and all the transactions need to be settled individually. This is
prevalent in Fixed Income markets in the US and the settlement mechanism is known as Real
Time Gross Settlement (RTGS). - (Page No 181 in BFS PDF)

79. How much will be the 1% legal fee on 30M USD

a. 0.03M
b. 30M
c. None of listed Option
d. 3M
e. 0.3M

80. The arrangement fee paid by the borrower will be paid to:
a. Facility manager / agent
b. Every participant expect lead manager
c. Will be retained by lead manager
d. Underwriting bank
e. Every participant

81. In a securities lending transaction, if the buyer of securities provides cash as collateral, then the
seller of securities has to provide the buyer with a interest amount for the cash. What is this interest
amount called?
 a. Rebate rate
b. Collateral Interest
c. Interest Rate
d. None of the listed Options
e. Return Rate

82. Corporate Loans are.

a. Never unsecured
b. Never secured
c. Always secured
d. Always unsecured
e. Secured or unsecured

83. Who is a underwriting Bank?

a. Bank which underwrites a IPO
b. Bank which commits supply of funds in a syndicated loan
c. Bank which does not insures a loan
d. Bank which underwrites a insurance
e. Bank which insures a loan

84. The amount owed by a company to suppliers in the next one year will be categorized under
__________________
a. Annual liabilities
b. Deferred Liabilities
c. Accrued Liabilities
d. Current Liabilities

85. What is a mutual fund?

a. A pool of funds used to purchase securities on behalf of investors
b. A collective investment vehicle
c. All of the listed options
d. A portfolio of stocks, bonds and other securities

86. The Advising bank is used as a trusted bridge between the ____________ and _____________ when
they do not have an active relationship
a. Reimbursing bank; beneficiary bank
b. Issuing bank; Confirming bank
c. Importer; Exporter
d. Applicant bank; Beneficiary bank (Issuing bank; Beneficiary bank)
e. Beneficiary bank; Reimbursing bank

87. Which of the following debt instrument involves lowest risk?

a. Munis
b. Junk Bonds
 c. Corporate bonds
d. Treasury Bills
e. Yarkee Bonds

88. Following are the types of market risks except

a. Currency Risk
b. Commodity Risk
c. Interest Rate Risk
d. Credit Risk
e. Equity Risk

89. When the Central Bank of a country decides to change the interest rates, it is a manifestation of
which of the following?
a. Money Policy
b. Money Making
c. Money Market
d. .Monetary Policy
e. .

90. In terms of computation, which of the following is the fastest method for calculating VaR?
a. All would take equal time if done using a software
b. Variance-Covariance Matrix
c. Morte carlo Simulation
d. Historical Simulation
e. A combination of Morte Carlo and Historical Simulation

91. ABC co. wants to identity the best way for making salary credits to its huge employee base. Can you
select the best option?
a. Paper Checks
b. Automated Clearing House
c. Cash
d. Contactless Payments

92. In a economy where inflation is 4%, future value of 100 units of money after 2 year would be which
of the following option?
a. Exactly 108
b. None of the listed options
c. Exactly 100
d. Around Rs. 104
e. 108.16

Solution:
 FV = PV*(1 + i)n = 100(1+0.04)2 = 108.16

FV: Future Value at the end of n time periods,

PV: Beginning value OR Present Value

i: Interest rate per unit time period

n: Number of time periods

93. if R is the real rate of interest, N is the norminal rate of interest and I is the rate of inflation, then:
a. R = N I
b. R = N * I
c. R = N + I
d. R = N/I

94. FFELP or the Federal Family Education Loan Program can be of which type?
a. Federal Stafford
b. Consolidation loans
c. Federal PLUS
d. Graduate Plus (its not their in FFELP type)
e. All of the listed Options

95. What is the settlement standard followed in the US?

a. T+1
b. T+4
c. T+2
d. T+3

Normal T+3 settlement cycle. When confirmation /affirmation completed are -> T+2

96. P&L Statements represent transactions over a period of time while the balance sheet shows
information as on Specific date. State True or False.
a. True
b. False

97. Which of the following is not the example of options?

a. Put Option
b. Oil Futures
c. Swaption
d. Call Option
e. LEAPS (Long Term Options)
98. What are Yankee bonds also Know as?
a. Junk bonds
b. None of the listed Options
c. Shares
d. Call Options
e. T-Bills

99. The share price of a company may drop considerably from its current levels. In this scenario, what
type of risk are the investors facing?
a. Market Risk
b. Business Risk
c. Credit Risk
d. Company Risk
e. Liquidity Risk

100. From the following options, find what type of risks that a software export company may face?
a. Operational Risk
b. It can face all the risks
c. Legal Risk
d. Currency Risk
e. Credit Risk

101. The Federal funds rate

a. Is the rate commercial banks use as a benchmark for evaluating their largest borrowers
b. Is inversely related to the prime rate
c. None of the listed Options
d. Is a primary policy target of the Fed in conducting monetary policy
e. Is the rate the Fed charges on overnight loans to commercial banks

102. A bank has a portfolio of $50 million worth of loans out of which it wants to sell $20 million
worth of loan to another financial institution. What is this process called?
a. Held for Sale Loans
b. Trading Loans
c. Accrual Loans
d. Undrawn Loan
e. Committed Loans

103. You purchased a stock for $40. One year later you received $2 as dividend and sold the share for
$48. How much is the return of holding period?
a. 50 percentage
b. 45 percentage
c. 10 percentage
d. 25 percentage
e. None of the listed options
104. Money laundering refers to which of the following option?
a. All of the listed options
b. Extending loans to corporate
c. Short term borrowing & placements
d. Converting the profits from criminal activities into legitimate funds

105. Banks are financial institutions that are licensed to accept deposits and issue loans. State True or
False
a. True
b. False

106. In FOP mode of Settlement, there is no simultaneous exchange of securities and payment State
True or False
a. True
b. False

107. The type of loan in which spread varities over the life of the loan is called ___________.
a. Positive spread loan
b. Fixed rate loan
c. Semi-fixed rate loan
d. Negative spread loan
e. Floating rate loan

108. Which of the following combination holds true?

a. wire transfer, more costly than other payment alternatives
b. commercial letter of credit, Improves applicants credit facilities
c. Foreign Checks Not useful for cross border trade
d. Documentary collection, Strict compliance rules apply
e. Standby letter of credit, less costly than documentary collection

109. Which of the following type of loan requires the amount of interest that would be earned on the
amount of interest paid upfront by the borrower?
a. Demand loan
b. True discounted Loan
c. Capitalized loan
d. Amortized loan
e. Discounted loan

110. Which of the following is not a derivative?

a. Bonds
b. Futures
c. Options
 d. Swaps
e. Forwards

111. TARP stands for which of the following options?

a. Term Assets Reform Program
b. None of the Listed options
c. Term Assets Relief Program
d. Troubled Assets Relief Program
e. Troubled Assets Reform Program

112. If the Limit = $2000, Margin = 20% and Asset value = $2000, then Drawing Power for an Open
ended loan is equal to
a. 2200
b. 2000
c. 1600
d. 2400
e. None of the listed options

Solution:

Limit (L) max outstanding allowed

Margin (M) percentage of limit that can be drawn

Asset value (AV) value of underlying asset

Drawing Power (DP) - lower of L and (1-M)*AV

DP = (1-0.20)*2000 = 1600

113. ..
a. 20000
b. 17000
c. 18000
d. 15000

114. Customers usually interact extensively with the banks mid and back offices. State True or False
a. True
b. False

115. In Normal Distribution 99% confidence interval corresponds to __________

 a. 2.33 Sd
b. 1.65 Sd
c. 1.96 sd
d. 3 Sd
e. 1 Sd

116. At the end of an active trading day, a broker sees that he has a net position in 6 securities, and
owes the system some money. How many settlement transactions will take place at the end of the
settlement cycle?
a. 6 any 5 as transfer of securities and 1 as securities-versus-cash
b. Neither the number of securities nor the number of cash tranactions can be determined
c. 7, 6 as transfers of securities and 1 as transfer of cash
d. 6, all 6 as securities-verus-cash
e. 1 as transfer of cash, but the number of transactions for securities cannot be determined.

117. A person purchases a share at $50. After 2 years, the price is at $75 and he decides to sell the
share at that price. What is the annualized return that the person has earned?
a. 0.6667
b. 0.3333
c. 0.5
d. 0.2247
e. None of the listed options

118. Which of the following operations cannot be done on a LC (Letter of Credit)?

a. Purchase
b. Discount
c. Acceptance
d. None of the Listed options

119. Which of the following is a treasury management system?

a. TS2
b. Front Arena
c. .
d. .
e. ..

120. Which of the following are involved in the retail brokerage business in US?
a. Freddie Mae
b. E-Trade
c. Ginnie Mae
d. Sallie Mae
e. Federal Reserve

121. Which of the following methods eliminate county risk and commercial risk upon confirmation?
 a. Back to back Letter of Credit. Documentary collection
b. Documentary Collection, Letter of Credit
c. Letter of Credit, Back to back Letter of credit
d. Standby Letter of credit, Letter Credit
e. Documentary Collection, Stand by letter of Credit

122. All of the following are valid means for a custody client to communicate trade instructions to its
custodian, EXCEPT
a. SWIFT networks
b. FEDWIRE
c. By Fax
d. By Telephone

123. SPV means

a. Security Purpose vehicle
b. None of the listed options
c. Securitized planning Vehicle
d. Special principal vehicle
e. Special purpose vehicle

124. NPV stands for

a. Net Present Value
b. New Present Value
c. No Present Value
d. Net Past Value

125. SMA offers investors a customized approach to investing. Rather than a generic product. State
True or False
a. True
b. False

126. If total Spread on underwriting is $ 500000 and Managers fee is $100000. What is the amount
which will be disturbed in the syndicate?
a. Cannot be determined
b. 600000
c. 400000
d. 100000
e. 500000

127. An investor has multiple investment options yielding various dollar returns at various points of
time, while he is comfortable with a return of X% p.a. Which method should he use to compare the
various investments?
a. External Rate of Return
b. Compound Interest
 c. Simple Interest
d. Internal Rate of Return
e. Net present value

128. In case of Auto finance, monthly lease payments are usually lower than monthly loan payments
because of which reason?
a. Customer is paying only for depreciation
b. Customer is paying only for Fees
c. All of the listed Options
d. Customer is paying only for Taxes
e. Customer is paying only for Rent Charges

129. In Electronic Check Conversion (ECC). What happens once the check is processed?
a. The customer can present a check to a store cashier
b. The customer signs a receipt authorizing the store to present the check to the bank
electronically and deposit the funds into the bank account
c. Receive Cash immediately
d. All of the Listed options
Missing Question

1. Which of the following represents the correct hierarchy of corporate ratings (highest to lowest)?

a. AAA, AA+, BBB, D

b. AAA, AA-, D, BBB
c. D,C,B,A
d. D, AA-, B, AAA
e. AAA, AA+, D, AA-
Mutual funds can not invest in

a. Bond
b. Equity
c. Share
d. None

2. There are five participant A, B, C, D, E and A is a manager. Profit is 500000 and operating charges is
100000. Then how the profit will be distributed among all?
Ans: 20000

3. 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
4. Among which is Issuer as well as Acquirer
a. Amex
b. T-sys
c. Elavon
d. Front Data Company

14. 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

15. 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 dealers skill
e. Equal to offer

16. Which of the following is usually not participant in stock market

a. Small individuals investors
b. Central banks
c. Companies
d. Financial institutions

17. In an account saving simple interest from the first year is reinvented at the beginning of the
second year?
a. True b. False

18. 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

19. 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.
20. Retail loans are asset product offered by the bank
a. True b. False

21. 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

22. Account maintained in the home currency by one bank is 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

23. 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

24. The process of transferring obligation from one party to another is called

25. The purchase of any stock for immediate delivery is a __ market transaction.
a. Futures
b. Spot
c. Forward
d. Stock
e. Option

26. 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:

f. Bond prices increase

g. Bond prices decrease
h. Bond prices do not change
i. Economy goes into deflation
j. 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

f. -2%
g. 2%
h. -1.96%
i. Very high
j. 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?

f. $1225
g. None of listed option
h. $1000
i. $1070
j. $1270

17. The trade finance the term LC stands for;

f. Letter of commercials
g. Letter of credit worthiness
h. Letter of credit
i. Letter of commerce
j. Letter of complaints

18. What is need for banks in the society?

e. Small investor are protected, hence it is a low risk investment avenue.

f. Banks are in the best position to lend out money at competitive
 g. Depositors are participant in primary and secondary markets.
h. All of listed options.

19. A is more risk averse investor than B .therefore.

e. For the same return, B tolerates lesser risk than B.

f. For the same return, A tolerates higher rate of return.
g. For the same return, A tolerates lower rate of return.
h. For the same return, A takes higher risk.

20. Liquidity issues of credit can be addressed by:-

f. Sweep facility
g. Structured lending to client
h. All
i. Short term credit facilities
j. Overdraft

21. Which is associated with purpose of regulating financial institution?

f. None
g. To provide stability of money supply.
h. To serve certain social objectives.
i. To prevent failure of any financial institution.
j. To offset moral hazard incentive provided by deposit insurance and other guarantees.

22. Fastest method for calculating VaR.

e. Monte- Carlo simulation.

f. All equal time with software.
g. Variance-Covariance matrix.
h. Combination of Monte- Carlo and Historical Simulation.

23. Which is not banks primary use for deposits?

f. Payment to employers
g. None
h. Investment
i. Loan
j. 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.

b. True b. False

26. If the corporate isnt able to raise money from the market to pay off some loans the risk can be
refer.

f. Market risk
g. Interest rate risk
h. Commodity risk
i. Operational risk
j. 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?

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
 F) $2500
G) $3000
H) $300
I) none
J) $250

29. Operational risk is defined as?

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

B) Attrition

C) Credit risk

D) All of the above

E) Protective legislation by US/UK

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

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

F) IBM no exchange of shares ; MFST 90 shares to receive ; $1780 to pay out to the exchange
G) None of these
 H) IBM no exchange of shares ; MFST 90 share to receive ; $3000 to pay out to exchange
I) IBM 70 shares to given out ; MFST 90 shares to receive ; $3000 to pat out to exchange
J) IBM no exchange of shares ; MFST 90 share to receive ; $1780 receive from the exchange

40. ACH transaction involves the transmission of _________

F) All of the listed option

G) Documents
H) Physical instrument like check and draft
I) Electronic data files
J) Cash

41. What should one use while using comparing mortgages?

F) APR
G) None
H) IRR
I) NPV
J) Rate of interest applicable for the loan

43. Which one of the following is not offered by investment banking division of a bank?

F) learning services
G) None
H) Merger and Acquisition
I) Valuation of firm
J) 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?

F) 500000
G) 100000
H) 400000
I) 600000
J) Can not be determined

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
 F) 200
G) 500
H) None
I) 300
J) 400

46. The brokerage firm is regulated by

E) State regularity agency

F) SEC
G) Industry wide SRO
H) 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

F) Monetary policy
G) None
H) Money multiplier effect
I) Profit making tendency of a bank
J) Fiscal policy

49. Capital adequacy ratio refers to

F) Amount of bank capital expressed as % of the risk weighted credit exposure & market risk.
G) Amount of bank capital expressed as % of the risk weighted credit exposure
H) Amount of bank capital expressed as % of the risk weighted credit exposure & operational risk.
I) Amount of bank capital expressed as % of the risk weighted credit exposure operational risk &
market risk.
J) None

50. Which of the following is not a treasury management system?

F) Calypso
G) Summit
H) Wall street system
I) Front arena
J) Flex cube
51. Syndicate helps in all of the following activity but

F) Managing large bond issues

G) Raising huge money from the bank
H) Managing large capital raising act
I) Managing conflict between investment banks.
J) IPO distribution.

52. All of the following statements concerning US govt securities are correct EXCEPT

F) Treasury bills have their interest paid in a lump sum at maturity

G) None
H) Treasury bills have greater interest risk than either treasury bond or treasury note
I) Treasury note has maturity dates up to 10 yrs
J) 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 ________

F) Account balance , Annuity

G) Annuity , Annuity
H) Account balance , Account balance
I) None
J) Annuity , Account balance

54. What is the term used to indicate the arrangement of LARGE borrowing for a corporate by a group
as lenders

F) none
G) Syndicate
H) Allocation
I) Assignment
J) Secondary

55. Card associate provide which of the following service

F) issue card
G) Set credit limits
H) Set interest rates
I) Set card fees
 J) Security/ Risk management

56. in an international securities transaction, which of the following participant will not be involved

F) Global custodian , domestic sub custodian , depository in foreign country and sometime stock
exchange in foreign country
G) Depository in foreign country
H) Global Custodian
I) stock exchange in foreign country
J) 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

F) Cash projection
G) Investment manages universe
H) Asset allocation
I) Fund administration
J) Asset / liabilities analysis

58 Trade finance helps in

F) Facilitating international transaction

G) Facilitating intra company transaction
H) Facilitating international transaction , corporate lending and settling up of new factories
I) Facilitating corporate lending
J) Facilitating setting up of new factories

59. A choice quote is

E) a price at which a firm is ready to buy or sell

F) When bid is equal to offer
G) When the firm has a choice of deciding the securities to take
H) 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?

F) 6 month deposit of min balance of $1000

G) 3 month deposit of min balance of $4000
H) 12 month deposit of min balance of $1000
I) None
J) 6 month deposit of min balance of $2000
61. If 1 day VaR is $1 million, 9 day Var is

F) $3mn
G) $4.5 mn
H) $9mn
I) $4.4mn
J) $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

F) Loan of $2439
G) Loan of $1710
H) None
I) Create a reserve of $100
J) 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?

E) Mutual Fund
F) Mortgage Company
G) None
H) 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?

f. 45%
g. 10%
h. 25%
i. 50%
j. None

65. A formal Legal commitment to extend credit to some max amount over a state period of time is
description of

f. Trade Credit
g. Revolving Credit agreement
h. Agreement Irrevocable Credit
i. Line of Credit
j. Letter of Credit

66. Odd 1 out

f. Warren Buffet
 g. George Soros
h. Bill Gates
i. Ben Graham
j. Peter Lynch

67. Development of Investment Objective and Investment policy falls under the Purview of

f. Investment manager Universe

g. Asset Allocation
h. Asset Liability Analysis
i. Fund Admin
j. Compliance Reporting
68. Interest Rate Spread is equal to

e. Current rate Base Rate

f. Cap Current Rate
g. Current Rate Floor
h. Base Rate Floor

69. Which of the following factors affect the choice of Payment Method?

f. Exporters Fund
g. All
h. Government Guarantee Program
i. Time Frame
j. Cost of Financing

70. The NYSE is a large financial market in which the initial issue receives the proceeds for the Sale of
securities.

b. True b. False

71. Which of the following trading services reduces the trading cost for institutional investors?

f. Stock Repurchase Program

g. Transition Management
h. Transition Management & Commission Recapture
i. Commission Recapture
j. None

72. A CALL option on futures gives the buyer

f. the obligation to buy a futures contract

g. the obligation to sell a futures contract
h. the right & obligation to buy a futures contract
i. the right but not the obligation to buy a futures contract
 j. the right but not the obligation to sell a futures contract

73. Which is not an example of Option?

f. Call Option
g. Swaption
h. Leaps
i. Oil Futures
j. Put Options

74. Some banks pay interest on Checking A/c while many do not.

c. True
d. False

75. The advising bank is called as trusted bridge between the ___________ & __________ when they
do not have active relationship. Options wrong

e. Beneficiary Bank & Reimbursing Bank

f. Importer Exporter
g. Reimbursing Bank & Beneficiary Bank
h. Issuing Bank & Confirming Bank

The advising bank is used as a trusted bridge between the applicants bank and the beneficiarys
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

e. DC plans fix the monthly contribution from the employee making his financial planning easier.
f. DC plans are seen by employees as investment which to accumulate retirement income.
g. All
h. 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

f. Salary
g. Manager fee
h. Wage
i. Concession
j. Underwriter
78. NASD is not an SRO for

e. Listed market
f. Over the counter market
g. Third market
h. Fourth market

79. High net worth individuals generally have ____________.

e. Market capitalization more than $200000

f. All
g. Net worth greater than $500000
h. Household income of max $50000 year.

80. Which is true about retail banking?

e. The business focuses on small no. of high net worth individuals.

f. The business focuses on small and medium enterprises.
g. The business focuses on large no. of individuals.
h. The business focuses on large no. of corporation bodies.

81. Offer is price at which a firm

f. Trades in securities
g. Quotes to its bets customer
h. Intends to buy
i. Intends to sell
j. Quotes when it does not want to trade.

82. Securities with original maturity greater than 1 year are traded on money market.

b. True b. False
83. Which is not a banking service?

e. Stock market
f. Retail banking
g. Corporate banking
h. Customer lending
84. Which is true?

e. Financer owns the asset both in case of Lease and hire Purchase.
f. Tax deduction cab be claimed fro the full value of the rental paid in case of lease
g. All
h. 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?

f. Global custodian,
g. None
h. Main custodian
i. Sub custodian
j. Secondary custodian

97.99. 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?
F) Capitalized loan
G) True Discounted loan
H) Amortized loan
I) Demand loan
J) Discounted loan

98.100. Who are involved in the preparation of prospectus of IPO?

F) Commercial bankers
G) Investment Bankers
H) None
I) Company Management
J) Company Management and Investment Bankers

99.101. Bankers Acceptance differs from Sight Draft in that

F) Bankers Acceptance reduces lending capacity
G) Sight Drafts are negotiable instruments
H) Bankers Acceptance demands immediate payment.
I) None
J) Banks can raise funds by selling acceptance.
100.102. Clients of a private banker are generally not segregated on the basis of
F) Investible assets
G) Location
H) Age
I) Net worth
J) Name

101.103. The initial sale of the security is in the market, while subsequent trading in the
security is in the .. market
F) Spot, futures
G) Debt , Equity
H) Primary , Secondary
I) Money, Capital
 J) Secondary, Primary

102.104. 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?
F) Investment Management
G) Asset Servicing
H) None
I) Trading
J) Investor Services.

103.105. CIP in the context of anti-money laundering is

E) All
F) Stands for Suspicious Activity Reports
G) Customer Identification Program
H) Requiring Businesses, which were only to report cash transactions involving more than
1.00,000?

104.106. 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

At the end of the day, the broker owes 1780 to the exchange while exchange owes him 90 shares
of MSFT. Is it possible?

D) Yes under RTGS

E) No
F) Yes under net-settlement system

105.107. Dow Jones industrial average is made of

F) 30 stocks
G) 20 stocks
H) 40 stocks
I) 10 stocks
J) 50 stocks

106.108. Which is the key feature of Letter of Credit?

A) basis for devising proper currency hedging strategy
 B) Distributes risk between buyer n sellers.

C) basis for devising proper currency hedging strategy and opportunity for receiving payment in
advance of the due date.

D) All

E) Opportunity for receiving payment in advance of the due date.

107.109. Which risks bring gain and losses?

F) Interest rate and foreign exchange
G) Liquidity and credit
H) Credit and Interest rate
I) Credit and Foreign exchange
J) All

110. 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

111. 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

101. The term CP is used in corporate lending for ____. Marks: 1

1. Collateral provision

2. Client Partner
3. Commercial Paper

4. Commodity Put options

5. Credit Provision

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 30indicates that _____. Marks: 3

f. 2% discount is offered if payment is made within 15 days.

e.g. 15% discount is offered if payment is made within 2 days; the payment should however be
made in 30 days.
f.h. 30% discount is offered if payment is made before 15 of the month.
g.i. 15% discount is offered if payment is made between 2 & 30 days;
h.j. 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.

b. True b. False

105 What term is used to describe n LC that remains valid for years thereby eliminating the cost of
separate LCs for each transaction with a regular client?(not sure bout the answer)

f. Irrevocable LC
g. None
h. Red clause
i. Revolving LC
j. Evergreen clause
106 Who appoints investment manager to manage a benefit plan?

f. Plan sponsor
g. Plan administrator
h. Fund trustee
i. None
j. Government

107 A company would pay the interest on what portion of loan?

f. Committed amount
g. Either disbursed or committed loan
h. Unused amount of loan
i. Disbursed amount
j. 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.

d. Yes
e. No
f. 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?

f. None
g. $1600
h. $2200
i. $2400
j. $2000
110 Risk cannot be migrated by

f. Setting risk limits

g. Hedging
h. Diversification
i. Arbitrage
j. Insurance

111 A fixed income analyst will analyze all but

f. Municipal bonds
g. Bonds of govt. sponsed enterprise
h. Corporate bonds
 i. US treasuries
j. Shares

112 In benefit administration what are the relationships that exits between the plan administrator
and the investment manager, and between Trustee and the investment manager.

f. None
g. Plan administrator & trustee both have outsourced plan administration as well as fund
management to investment manager
h. Any
i. Plan administrator gives investment instruction to investment manager while trustee appoints
the investment manager.
j. 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?

f. Issuer processor
g. Collection agency
h. Issuing bank
i. Authorization engine
j. Credit bureau.

114 CPI stands for which of the following?

f. Consolidated Price index

g. Consument popularity index
h. Consumer product index
i. Consumer price index
j. 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

f. Credit scoring
g. Credit increase
h. Credit incrementation
i. Credit revision
j. Credit enhancement.

116 FX spot deal assumes maturity of how many business days ahead ?

f) 4
g) 5
h) 3
 i) 1
j) 2

117 Which of the following is best VaR estimation Model?

e) Monte- Carlo
f) Historical
g) Variance-Covariance
h) Variance-Covariance and Monte- Carlo

118 Which of them represent company is incorporated in USA?

e) Plc
f) Pte
g) Ltd
h) Inc

119 Which of the factors affect the choice of payment methods?

f) Govt. guarantee Program

g) Time frame
h) All
i) Cost of financing
j) Exporter fund.

120 Organization level risk appetite is determined by:

f) Risk management
g) Front office
h) Back office
i) Trade
j) Board of director

121 Risk management is function of:

f) Traders
g) Back office
h) Specialist
i) Front office
j) Mid office

122 Purely competitive financial market is not characterized by

e) Govt. regulation
 f) Many traders
g) Full info
h) Cost effective trading

123 NOT player in typical trade cycle;

f) Custodian bank
g) Clearing bank
h) Clearing member
i) Trading member
j) Regulator

124 Once syndicate has sold all other trades participant, sub participant and assignment are
considered trade in what market?

f) Primary
g) Secondary
h) Participant
i) OTC
j) Index

125 Question relates to price weighted index?

6. DJIA
7. Hangseng
8. EAFE index
9. NASDAQ composite index
10. S&P 500

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 dont remember the
question/

Answer: option having TRANSFER

132 Question related to non-discretionary Investment Management

Answer: the bank offers investment recommendations based on the Clients approval.

133 Question having few options like Income Processing, Tax Information Services, Cash Sweep

Answer: ASSET SERVICING

134 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
Answer is ALL the listed option

46. Risk Matrices was developed by:- JP Morgan, Bank of California, Credit Suisse, SBI
47. Research analyst may recommend to :- buy, hold and sell
48. Reducing CRR for banks would have impact on:-
a. Increased money supply
b. Reduced interest rates
c. Reduced money supply in the economy
d. Profitability of firms
e. None
49. Under corporate stock repurchase program
a. Corporate purchase their own shares from shareholders

50. 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
f.
51. One would go for bank deposits because
a. Money easily available
b. Interest earned
c. Insurance cover available
d. All

52. Basic 4 parties involved in any transaction using letter of credit are following except
a. Issuing bank
b. Buyer
c. Reimbursement bank
d. Seller
e. Beneficiary bank

53. From sellers point of view which method has least risk
a. LC
b. Direct debit
c. Documentary collection
d. Counter trade
e. Cash in advance
54. 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

55. Which is not the settlement method for bank loans?

a. Pre-closure
b. Assignment
c. Participation
d. Sub participation
e. Securities repository

56. Which is correct hierarchy of corporate ratings (high to low)?

a. AAA,AA+,BBB,D

57. 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

58. Brokerage firms are regulated by

a. SEC
b. Industry wide SROs
c. State regulatory Agency
d. All

59. Odd man out:-

a. SEC
b. NYSE
c. NASDAQ
d. LSE
e. NSE

60. 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
61. Risk associated with hedge funds:-
a. High exposure in derivatives
b. All
c. High speculation
d. High leveraging

62. 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

63. Which of the following affects the choice of payment method

a. All
b. Government guarantee method
c. Exporters fund
d. Time frame
e. Cost of financing

64. Which risk may bring gains and losses?

a. Credit risk and interest rate risk
b. All
c. Liquidity risk and foreign exchange risk
d. Credit risk and foreign exchange risk

65. Bankers acceptance differs from sight draft in that

a. Sight drafts are negotiable instruments
b. Bankers acceptance demand immediate payments
c. Bank can raise funds by selling acceptance
d. Bank acceptance reduces banks lending capacity
e. None

66. Formal legal commitment to extend credit up to some maximum amount over a period of time is a
description of
a. Line of credit
b. Irrevocable credit
c. Letter of credit
d. Revolving credit agreement
e. Trade credit

67. Security settlement is function of

a. Specialist
b. Traders
 c. Back office
d. Front office
e. Mid office

68. 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

69. 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

70. 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
e. Up/down market analysis

71. Interest rate spread:-

a. Current rate floor
b. Cap current rate
c. Current rate-base rate
d. Base rate-floor rate
e. None

72. Who insures stocks in stock market

a. Security and exchange commission
b. Federal deposit insurance corporation
c. Us department of treasury
d. None

73. NASD is not an SRO for

a. 4th market
b. 3rd market
c. Listed market
d. 2nd market
 e. OTC market

74. Which of the following loan requires the amount of interest that would be earned on the loan to
be paid upfront by borrower:-
a. Discounted loans
b. True discount check not sure
c. Capitalized
d. Demand
e. Amortized

75. Limit = $2000 Margin=20% Asset value=2000

a. Drawing power = 1600

76. Over the counter market is also called

a. Unlisted market
b. 2nd , unlisted and OTC market
c. Unlisted
d. Super
e. 2nd market

77. 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

78. Standby letter is _____ secure than documentary collection and cheaper than ____
a. More, commercial LOC

79. Which is not an option

a. Call
b. Put
c. Swaption
d. Oil futures
e. Leaps

80. question on top 10 US bank REBO

81. ACH transaction involves

a. Cash
 b. Electronic data
c. Docs
d. Checks and drafts
e. All
82. Interest rates falls
a. Bond prices increase
b. Bond prices decrease
c. Do not change
d. Economy goes to deflation
83. Rate at which bank purchases US dollars against home currency is :-
a. Bid
b. Indirect
c. Direct
d. Cross currency
e. Ask rate

39 Offer price is the price at which the firm

f. Intends to buy
g. Intends to sell
h. Trades in securities
i. None
84. 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
85. Company would pay interest on what portion of the loan?
a. Disbursed amount
b. Committed amount
c. Both
d. Either
e. None
86. Odd man out?
a. Equity
b. Stocks
c. Shares
d. Convertible bonds
e. Common stock
87. A bank cannot cover the money demanded by depositor, then it goes out to
a. Federal reserve bank
88. Institutions involved in benefit administration process, discussing plans
 a. Sponsor
b. Custodian
c. Plan administration
d. Record keeper
e. Participant
89. Which of the following eliminates both country risk and commercial risk?
a. Both standby LOC and LOC
90. 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

L0 Banking

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

e. None of the listed Options

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

e. None of the listed Options

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

e. None of the listed Options

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

d. All of the listed options

e. None of the listed Options

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 doesnt 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 the consultants
choice for his profile?

Answer:

a. Income Fund

b. Liquid Fund

c. Growth Fund

d. Balanced Fund

e. Bank Deposit

15ABC 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

e. None of the listed Options

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

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

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

e. None of the listed Options

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

e. None of the listed Options

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

e. None 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

e. None of the listed Options

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

e. None of the listed Options

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

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

e. All of the listed options

42 1 Marks

Which is not a banking account?

Answer:

a. Checking Accounts

b. Money Market Deposit Accounts

c. Demat Account

d. Time Deposits

e. None of the listed Options

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%

e. None of the listed Options

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

e. None of the listed Options

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

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.

49 1 Marks

Trade Finance helps in ________________________________.

Answer:

a. Facilitating International transactions

b. Facilitating intra-compamy transactions

c. Facilitating corpoate lending

d. Facilitating setting up of new factories

e. Facilitating International transactions,Facilitating corpoate lending and Facilitating setting up of new

factories

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

e. None of the listed Options

51 1 Marks

&quot;Don't put all your eggs in one basket&quot; 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?

Answer:

a. Corporate banking

b. Investment banking

c. Retail banking

d. Private banking

e. None of the listed Options

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

e. None of the listed Options

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

e. All of the listed options

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.

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.

61 3 Marks

Capital adequacy ratio refers to ___________________________.

Answer:

a. Amount of banks capital expressed as percentage of the risk weighted credit exposure

b. Amount of banks capital expressed as percentage of the risk weighted credit exposure & operational
risk

c. Amount of banks capital expressed as percentage of the risk weighted credit exposure, & market risk

d. Amount of banks capital expressed as percentage of the risk weighted credit exposure, operational
risk & market risk

e. None of the listed Options

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

e. All of the listed options

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

e. All of the listed options

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

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 ________________________.

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

e. None of the listed Options

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

e. None of the listed Options

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:

a. Limited Borrowing

b. Limited International Banking Operations

c. London Interbank Offered Rate

d. Lending to International Borrowers

e. None of the listed Options

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

e. All of the listed options

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. Coroprate Bonds

b. Debentures

c. Shares

d. Loans

e. Government Bonds

90 Electronic banking doesnt covers 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

e. None of the listed Options

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 &amp; 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 of 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

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

e. None of the listed Options

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

d. All of the listed options

e. None of the listed Options

101. Beta cellphone

Ans: 2090000