1 Credit derivative is nothing but____ a) b) c) d) e) Financial instrument Transfers risk Traded over the counter Facilitate greater efficiency

None

2. . Question on calculating CRR. i.e bank deposit is 1000$ and CRR is 10% and it circulate through 2 banks then how much money bank can lend. Formula: Deposit Bank will keep 10% of deposit as CRR(cash reserve ratio) 100 90 81 Loan(deposit CRR) 900 to bank 2 810 to bank 3 729

Bank1 Bank 2 Bank 3

1000 900 810

Conclusion: Total loan generated 2439 Total deposit is 271 Options may include total deposit generated is XXX or total loan generated is XXX so choose your answer accordingly The formula is as above. Soemtimes the initial deposit is given as 5000. So calculate accordingly. 3.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 4. 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 3.. VaR 99%..........2.33sd Please note that there is question where you will be asked about the standard VAR formula. Please remember the answer is 2.33sd. Options are something like 1.99sd etc etc but the answer is 2.33sd 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(10 million * 0.20) The SD of change over 10 days = $200,000 * (10) = $632,456 (formula d where d id the number of days asked for) The 99% VaR over 10 days = 2.33 * 632,456 = $1,473,621 4. Full Form Of ADR -- American Depository Receipts 5. An Underwritter IS ---------------------------a. is Typically A investment Bank b. Decide the insurance Premium 6. NASDAQ Based On 1. Cicago 2. None, 4. BESEL.. Note: NASDAQ is in NewYork 7.Different types of IRA 1. Roth IRA 2. Traditional IRA 3. SEP IRA 4. ALL NOTE: (Types of IRA are Roth IRA, Traditional IRA, SEP IRA, Education IRA, Simple IRA) 8. What is True about EBPP a). The biller may outsource this using BSP b) e biller generates the electronic version of the Consumers Billing information 9. Federal Family Education Loan Program (FFELP) 10. AUTO LOANS 1. Direct Lending: Ans. Federally sponsored loans

2. Dealer financing: 3. Leasing NOTE: sometimes the option is all. If that is given, check if above three options are there, if yes then click all of the above 11. CLASSIFICATION OF DRAWN LOANS Loans are classified and accounted for as follows: AccrualLoans that management has the intent and the ability to hold for the foreseeable future or until maturity/loan payoff. Accrual loans are reported on the balance sheet at the principal amount outstanding, net of charge-offs, allowance for loan losses, unearned income, and any net deferred loan fees. Held-for-saleLoan or loan portfolios that management intends to sell or securitize. TradingLoans where management has the ability and intent to trade or make markets (i.e., sell/hedge the credit risk.) Loans held for trading purposes are included in Trading Assets and are carried at fair value, with the gains and losses included in Trading Revenue provided that the criteria outlined in this policy are met. Very very important question 12. TRADE FINANCE Answer: helps in international transaction (options helps in intercompany transaction, helps in intra company transaction etc etc but the answer is international transaction) Defination: The main objective of trade finance is to facilitate transactions. There are many financing options available to facilitate international trade such as pre-shipment finance to produce or purchase a product, and post-shipment finance of the receivables. 13. Role of Corporate Finance division of Investment banking Ans. Mergers and acquisitions advisory, Underwriting 14. Which of the following holds true for an LC (Letter of Credit) Ans. Shifts credit risk from the Importer to the Importer's Bank (Issuing Bank). 15. Asset securitization refers to Ans - financing vehicle consisting of the pooling financial assets, and the issuance of debt collateralized by these assets 16. Collateral is? Asset put up as security 17. INFLATION Ans :- cost of goods and services over a period of time if the option is just rise in price of goods then click that 18. You have $1000 AND inflation rate 8%. In how many year your buying power become half?

ANS.) 1000/(1+.08)^n=500 , here n=9(year) Formula: FV = PV(1+ r/100)^n where FV = future value (here 1000/2 = 500), PV = present value (1000 here) r = rate of inflation = 8%, n = required no of years 19. Coupon rate on a bond represents which of the following a) Financial performance of the bond issuer d) Maturity duration of the bond e) Face value of the bond a. credit rating of the bond b. interest paid to the bond holders 20. Capital adequacy ratio decrease means ______ ______________________ Answer: Not available but here is a hint. Make a guess based on this info or search google if more info needed

Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[1], is a ratio of a bank's capital to its risk
21. Which of the following is function of the central bank? a. Acts as a regulator for other banks b. is the government's bank c. influnces the exchange rate of the currency d. All 22. BankNew is a global custodian for ABC corp. ABC corp uses BankGreat as a custodian in a market where BankNew is not present directly.What would be the term best used to describe BankGreat? a. b. c. d. e. Sub custodian Secondary custodian Global custodian None of the above Main custodian main custodian

23. IRR stands for ans:- Internal rate of return 24. 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 25. 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 26. ___ Ans Goodwill ____ is that intangible possession which enables a business to continue to earn a profit that is in excess of the normal or basic rate of profit earned by other businesses of similar type. 27. Profit And Loss Statement (P&L) shows business revenue and expenses for a specific period of time and the balance sheet show information as of a specific date Ans True 28. True for Basic or No Frill Banking Accounts a.limited set of services for a low price b.limited the number of checks written c.limited number of deposits and withdrawals made d all 29.Open ended loan allow the borrower to borrow additional amount subject to the maximum amount less than a set value. Ans True 30. Cards, which are associated with a particular firm like an airlines or retail outlet. Ans. CO BRANDED CARD 31. Example of ACH Direct deposit of payroll, where the bank debits the corporate account and credits employee accounts on the basis of a electronic file transmitted/provided by the corporate Corporate Disbursement Service, where the bank debits a client's account to initiate payments to vendors on their behalf Corporate Collection Service, where the bank enables its clients to collect payments and remittance data from vendors or trading partners. Collection of consumer payments over the telephone, through the Internet or via check-to-ACH conversion. ACH Accounts Receivable Check Conversion enables converting checks collected at a lockbox or remittance-processing center to ACH electronic debits, speeding payment collections and improving funds availability.

32. Most costly payment --

Ans. commarcial Letter of Credit

33. PRIVATE BANKING PRODUCTS Ans. PERSONAL INVESTMENT COMPANIES (PICS),PAYABLE THROUGH ACCOUNT (PTA), HEDGE FUNDS 37.The mutual fund schemes can be classified according to both their investment objective (like income, growth, tax saving) as well as the number of units (if these are unlimited then the fund is an open-ended one while if there are limited units then the fund is close-ended). 38. VISA involves in.. Ans: Provide interchange system to transfer fund 39.Interest Rate Spread is..Ans: Current rate

Base Rate

40. Core banking is known as Ans: Multi branch banking

41. Annuities are________

Discounted loan True discounted loan A loan that can be paid in periodic equated installments with capitalized interest Amortized loan Capitalized loan 42. Spread Varying Loan is known as Ans: Floating Rate Loan 43. True & False Question based on P&L And balance Sheet. ( for which period it is created ?) ans : TRUE But read the question carefully. 44. question based on EBPP (not full form) Electronic bill presentment & payment (EBPP) is a form of electronic billing in which a company presents (sends) its bills and customers pay these electronically over the Internet

45.question based on Basic or No Frill Banking Accounts

Basic or No Frill Banking Accounts Many institutions offer a type of bank account that provides you with a limited set of services for a low price (often referred to as "basic" or "no frill" accounts). Basic accounts give you a convenient way to pay bills and cash checks for less than you might pay without an account. They are usually checking accounts, but they may limit the number of checks you can write and the number of deposits and withdrawals you can make. Interest generally is not paid on basic accounts. Compare basic and regular checking accounts for the best deal in low fees or low minimum balance requirements. 46.Normal T+3 settlement cycle. When are confirmation /affirmation completed?

T+1 T+3 true T+2 47. A borrower agrees to pay pre-payment fees of 1% in a syndicated loan of 30 M the loan is disbursed, the prepayment loan will be paid to whom. 48. Component to determine rate of exchange in a forward contact ans: current spot rate n forward rate adjustment(A forward contract is an agreement, usually with a bank, to exchange a specific amount of currencies sometime in the future for a specific ratethe forward exchange rate.) 49. What is financial leveraging? financial leverage ===================== Use of borrowed money to increase production volume, and thus sales and earnings. It is measured as the ratio of total debt to total assets 50. What is the steps in settlement and clearing USD . When

Trade matching, trade execution, trade confirmation, clearing and settlement (M-E-C-C&S) 51. Which is not a function of retail banking Ans:includes -savings and transactional accounts, mortgages, personal loans, debit cards, credit cards 52. 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 53. What would be the most accurate VaR estimation method? Monte Carlo Simulation Historical Simulation

Variance-Covariance Matrix Cannot Say Analytical Methods

54. What happens when interest rate fall:

Bond prices increase Bond prices decrease Bond prices do not change Economy goes into deflation Interest rate never fall, they always go up.

55 Fastest method for calculating VaR.

Monte- Carlo simulation. All equal time with software. Variance-Covariance matrix. Combination of Monte- Carlo and Historical Simulation. 56. On the trading day at the NYSE a broker undertakes the following trades Buy 100 IBM shares for $10.00 each Buy -> 100*10.00 -> 1000

Sell 50 IBM shares for $10.50 each -> Sell -> 50*10.50 = 525 Buy 100 MFST share for $20.00 each -> Buy-> 100* 20.00 = 2000 Sell 20 IBM shares $11 each -> Sell -> 20*11 = 220 Sell 10 MFST share at 20.50 each -> Sell -> 10* 20.50 = 205 Sell 30 IBM shares for 9.00 each-> Sell -> 30*9 = 270 How much did the broker pay out to the exchange in total in case of (i) Gross settlement system (ii) Net Settlement System?

Formula: gross settlement -> Sum of all buys Net settlement -> (sum of all buys) (sum of all sells) if money involved on buy side is more than sell side or (sum of all sells) (sum of all buys) if money involved in sell side is more than buy side

57. If total spread on underwriting is $500000 and manager fee is $100000. What is the amount which will be distributed in the syndicate? A) B) C) D) E) 500000 100000 400000 600000 Can not be determined

58. 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) B) C) D) E) 200 500 (200*(25-24) + 200*1.5) None 300 400

59. Which of the following is not a treasury management system? A) B) C) D) Calypso Summit Wall street system Front arena

E) Flex cube Rest all are treasury management systems. U should remember which are the treasury management system as the question can be reversed 60. Which is not an example of Option? a. b. c. d. e. Call Option Swaption Leaps Oil Futures Put Options

61. High net worth individuals generally have ____________. a. Market capitalization more than $200000

b. c. d.

All Net worth greater than $500000 Household income of max $50000 year.

62. CIP in the context of anti-money laundering is

A) B) C) D) All Stands for Suspicious Activity Reports Customer Identification Program Requiring Businesses, which were only to report cash transactions involving more than 1.00,000?

63. If the limit = $2000, margin = 20% and asset value = $2000 then drawing power for an open
ended loan is equal to? a. b. c. d. e. None $1600 $2200 $2400 $2000

64. 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

65. ABC corporation is a large client of BankNew and maintains $40 million in cash with the bank.
BankNew however allows authorized representatives off ABC to write checks up to 10% over the balance maintained. This is an example of ____________________________________. Answer: -a. Overdraft b. Accrual Loan

c. Held for Sale Loans d. Undrawn Loan e. Committed Loans 66.. 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 67. 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

68. Company Rating hierarchy

Ans: AAA, AA+, BBB, D

69. 50% chance to pay 20%, and 50% chance to pay 60%, expected return ..?
Ans : 0.4 (Calculation: 50% X 20% + 50% X 60%) 70. Yankee bonds are JUNK bond 71. Dividend declare is known as Corporate Action 72. full form SPV -> special purpose vehicle 73. TARP full form -> Troubled Asset Relief Program 74. Counter party in future Contract Options: Government, Bank, External Party, buyer or seller, Broker --- The counterparty in future contract are always 2 parties ..one who buys and the other who sells.

75. BNY and Mellon comes together is known as Merger 76. not a feature of Private bank Deposit Mobilization 77. Close ended bond and Open Ended Bond Open ended bond: one offer new shares and redeems existing shares continuously, requiring their managers to invest cash coming into the fund and liquidate positions when they need cash to meet redemptions. Closed ended bond: have a fixed number of shares that trade on exchanges similar to stocks at a price that may be above or below net asset value depending on supply and demand. 78. Which operations can not be done on a LC? Options: None of listed option, Acceptance, Purchase, Discount Answer: Discount (but not sure 100%) 79.a commercial bank would be able to make money in which of the following ways? 80.an investor has multiple investment options yeilding various doller return at various points of time,while he is comfortable with x% p.a. which method should he like to compare the various investment?

82.risk management is a feature of __Mid office_______ 83.in which of the following cases can the securities lending service of a custodian be used 84.the term EMI stands for? Equated monthly installments
85.what is the purpose of rebalancing? Please read page 151/152 of pdf Portfolio rebalancing

Rebalancing is the process of buying and selling portions of one s portfolio in order to set the weight of each asset class back to its original state.
86.which of the following type of loan requires the amount of interest that would be earned on amount of interest paid upfront by the borrower?

87.banknew is a retail bank, which of these services is it most least likely is offer
88.following are the tools/measures used by an organisation to manage risk except 89.with reference to settlement . DVP stand for? Delivery versus payment 90 Countrys finance policy is decided by the central bank 91. Profit And Loss Statement (P&L) shows business revenue and expenses for a specific period of time and the balance sheet show information as of a specific date true 92: credit derivative can be used ______________ regulatory capital requirement and ---------------------- credit risk

a) increase/transfer b) improve/eliminate c) estimate/access 93) In defined benefit plans investment management of funds is done by______________ and in defined contribution, it is done by__________ Answer: employer/employee 94)In defined benefit plans, amount is expressed by______________ and in defined contribution, it is expressed by__________ Ans: Annuities/ Account balance 95 In defined benefit The employer bears the investment risk (the potential for investment gain or

loss). But in defined contribution The participant bears the investment risk.
In defined benefit , The final benefit is defined as it is formula driven taking definite parameters (like

salary, number of years of service etc.) as input data But in defined contribution The final retirement benefit is unknown as it is decided by the performance of participant selected investment funds.
Note: There are multiple questions on defined benefit and defined contribution plans. Please read it carefully from google and pdf. There are 3 questions on this and the answers are very confusion. Read page 240,241,242,243 of pdf chapter corporate services -> benefit administration

96) In electronic check conversion(ECC), whathappens once the check is processed

Answer: Customer signs a receipt authorize the store and present the check to bank electronically and deposit the fund into store account. 97) Form buyer and seller prespective, which payment method distributes risk evenly -> LC 98) At the end of the trade cycle, the trades are ___netted____ to determine the obligation of trading members to deliver securities fund as per settlement schedule. 99) Company ABC has a gross profit of 50K. the operating expenses amount are 10K. the interest on loans availed amount to 5k and taxes to be paid amount 5k. calculate EPS if there is 20K share a) 1.5 b) 2.5 c) 2 d) 1.25 100) Central bank is usually not a participant of stock markets 101) ABC wants to identify best way to make salary credits to its huge employee base best option for ABC is Automated clearing house 102) Hedge funds charge fee has component based on portfolio performance -> True 103) CIP -> customer identification programme

104) Product development in sales and marketing refers to Developing and differentiating deposits and loans 105) The risk that given security or asset cannot be traded quickly enough in the market to prevent a loss -> liquidity risk 106) Asset of company that are reasonably expected to be realized in cash ro sold or consumed in next one year is called current assests 107) Which of the following risk for the investor is associated with corporate bonds but not US treasury security? Credit rating risk 108) The buying and selling of securities with the hope of profits from confidential company information is called insider trading 109) Befits of netting Reduces chances of systematic risk, reduces no of settlement 110) when a bank goes to Fed reserve to borrow funds, the interest rate charged by Fed is known as Discount rate 111) who is a drawer of a check -> person who received the payment(not sure 100%) other options are clearing house, the person who received the check. Please cross check for the correct option 112) In US prospectus for new issue in field with SEC 113) What are the three Cs of underwriting ? Credit, collateral, Capacity 114) Call option right but not obligation to buy Put option: right but not obligation to sell 115_ spread formula: Interest rate on loans deposit interest rate 116) 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? Net present value 117) Difference between bankers acceptance and right draft Bank can raise funds by selling the acceptance