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7/25/2019 L0 Banking

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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. ecommendations to buy, sell, or hold the company.d. !arget price or performance prediction for the stock in a year.e. Track record of the analyst writing the report.

". " #arksOne should have the ##DA if one is looking for $$$$$$$$$$$$$$$$$$$$$$$.a. %uick, convenient and, fre&uent'access to the moneyb. A high rate of interest

c. (uaranteed rate of interestd. )ow fee

e. *one of the listed Options

+. " #arks$$$$$$$$$$$$$$ for securities lending, which bring lenders and borrowers together,may eliminate $$$$$$$$$$$$$$$.a. holesale intermediaries- *iche intermediariesb. Internet auction systems; custodian and third party intermediaries

c. ustodian and third party intermediaries/ *iche intermediariesd. *iche intermediaries- custodian and third party intermediariese. 0nternet auction systems- *iche intermediaries

. " #arks#oney 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 governmentc. money gained from legitimate sources is hidden to avoid taxesd. the police attempt to investigate organi2ed crimee. *one of the listed Options

3. + #arksA 4.5. importer who has agreed to pay 1 million 6uros to a 7rench exporter in89 days decides to wait the full 89 days before paying. !he importer is$$$$$$$$$$$$$$$$$$$$$$.a. a foreign echange speculator

b. expecting the dollar to depreciate against the 6uroc. a hedger in the foreign exchange marketd. planning to pay a set amount of dollars for the items purchase


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e. *one of the listed Options8. 1 #arks!he term :O: stands for?a. :rivate Offer :riceb. :rivate Option :rice

c. !ublic "ffer !riced. :ublic Option :ricee. :otential Offer :rice

;. 1 #arksontinuous )inked 5ettlement removes which of the following risks primarilya. 6xchange riskb. Temporal risk

c. ountry riskd. All of the listed optionse. *one of the listed Options


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1" 7orfeiture regulation under the 45 patriot act allows$$$$$$$$$$$$$$$$$$$$$$$$$$$$$Answer/ a. permits confiscation of any property derived from or used to facilitatedomestic or international terrorism

b. alls for the sei2ure of correspondent accounts held in foreign financial institutions fordomestic banks who are in turn holding forfeitable assetsc. :ermits foreign enforcement of domestic forfeiture ordersd. All of the listed options


1+.Annual :ercentage ate for a loan takes into account the following?

Answer/a. !he interest rate chargedb. hen and how often the interest must be paid

c. Other charges such as arrangement feed. hen and how often these other charges must be paide. All of the listed options

1.A young investor comes to an 0nvestment onsultant and asks him for advice for hisinvestments. e declares that he doesnBt mind the risk but he would definitely like hismoney to grow as fast as possible. e would like to invest in a #utual 7und which wouldsatisfy these criteria. hat would the consultants choice for his profile?

Answer/a. 0ncome 7undb. )i&uid 7undc. (rowth %und

d. =alanced 7unde. =ank Deposit

13A= corporation is a large client of =ank*ew and maintains C9 million in cash withthe bank.=ank*ew however allows authori2ed representatives off A= to write checks up to 19over the balance maintained. !his is an example of$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. "verdraft

b. Accrual )oanc. eld for 5ale )oansd. 4ndrawn )oane. ommitted )oans

18.hich of the following is associated with the purpose of regulating financialinstitutions?


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a. !o ensure everyone makes money in the marketb. !o ensure companies can cheat small investors in buying their securitiesc. To prevent failure of any financial institution

d. !o ensure that various government departments can be created for regulation thusgiving employment to many people

e. All of the listed options

1;. hich of the following is true about etail =anking business?Answer/a. !he business focuses on small number of high net worth individualsb. The business focuses on large number of individuals each of whom may have a

small amount of money to deposit with the Bank

c. !he business focuses on large corporate bodiesd. !he business focuses on small and medium enterprisese. !he business focuses on giving financial advice to customers to generate maximumreturns on their investments

1


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a. )ash #eserve #atio

b. ommon eserve atioc. ash efund atiod. ash e'service atioe. ash eserve isk

"" 1 #arks!he term )5 stands forAnswer/a. autious )inked 5ettlementb.)ontinuous Linked *ettlement

c. ompetitive )inked 5ettlementd. omparitive )inked 5ettlemente. learing )inked 5ettlement

"+.1 #arks

hich of the following is not a risk management measure?Answer/a. Diversificationb. edgingc. 0nsuranced. Budgeting

e. All are risk management techni&ues

" " #arks!he &uote for !5 in *A5DA% was C +. !he best buyer was at C ".3 and the bestseller at C +.3.EFpGEpG ow much is the bid'ask spread?

Answer/a. C9.39b. HC9.39Ic. +,.00

d. HC1.99Ie. C


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Kou invest s.3999 at 19 p.a. compound interest compounded annually in a bank. After" years, what is the amount you have received from the bank?Answer/a. s. 1"+8b. s. ;999

c. s. "+8d.#s. /00e. s. ;38

"; 1 #arks

!he central bank in the 45 is called $$$$$$$$$$$$$$$$.Answer/a. %ederal #eserve

b. 7ederal eserve =oardc. eserve =ank of 4nited 5tates

d. entral =ank of 4nited 5tatese. eserve =ank of America

"< A= corporation is a large client of =ank*ew. =ank*ew extends a loan to LKMcorporation which is a supplier of A=. !his is an example of$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. =ill Discountingb.*upplier Loan

c. Asset 5ecuriti2ation )oand. orking apital )oane. evolving )ine of redit

" " #arks!he act of a loan amount being handed over to the borrower by the =ank is know as?

Answer/a. 1isbursement

b. Distributionc. Displacementd. Dispersemente. Diversification

+9 1 #arks

#omentum investingN would refer to $$$$$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. follow fundamental financial ratios to make decisionsb. invest in high dividend yield stocksc. following charts and indicators to trade


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d. create portfolio similar to indexe. try best to market

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:rivate clients trade in $$$$$$$$$$$$ volumes and $$$$$$$$$$$ fees and commissions.Answer/a. larger; larger

b. small- largerc. small- smalld. larger- smalle. 6ither small- larger or larger- small

+" 1 #arks=id'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 assetc. difference between the buying and selling price of the same assetd. both difference in price between buying one asset and another similar one anddifference in opinion between the seller and buyer on the price of an assete. *one of the listed Options

++ 1 #arks!he process in which a privately held company offers its shares to public for the first timeis known as?a. :ublic Offeringb. orporate Actionc. 4nderwritingd. Initial !ublic "ffering


+ + #arks*ot all possible services that might be provided by the auditing firm are expresslyprohibited by 5arbanes'Oxley. 0f a non'audit service is not expressly prohibited, theauditing firm may provide that service $$$$$$$$$$$$$$$$$$$$$$$$$$$Answer/a. 0f no one on the board obects.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 findanother accounting firm to provide this service after making a good'faith effort.d. ithout any prohibitions or pre'conditions whatsoever.e. *one of the listed Options.

+3 1 #arks!he performance of an internationally diversified portfolio may be affected by$$$$$$$$$$$$$$$$$$$$$$$$.


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Answer/a. currency selectionb. country selectionc. stock selectiond.All of the listed options


+8 1 #arks:rimary 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 toanother.d. are markets in which newly issued claims are sold to initial buyers.

e. are markets in which shares are actively traded.

+; + #arkshat does the P7ederal eserve 5upervisory )etterB define private banking as?Answer/a. 2personali3ed services such as money management4 financial advice4 and

investment services for high net worth clientsNb. Qpersonali2ed services such as che&ue collection and other retail banking services forhigh net worth clientsNc. Qservice provided by private banks to all clientsNd. Qpersonali2ed services provided by private and public banks to all clientsNe. *one of the listed Options

+< 1 #arks!he term :!A refers to $$$$$$$$$$$$$$$$$$$$$$.Answer/a. :ermission to Actb. :ayable !hrough Automated #eansc. :ayment !o Automated. !ayable Through Account


+ 1 #arks!he city of =asel is located in which country?Answer/a. 45Ab. 0ndiac. Japand. 4Re. *wit3erland


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9 1 #arks0nflation represents which of the following?Answer/a. Increase in prices

b. Decrease in prices

c. Sery high change in pricesd. 6conomic crisise. urrency crisis

1 1 #arks7inancial intermediaries exist because small investors cannot efficiently$$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. gather informationb. advertise for needed investmentsc. monitor their portfolios

d. diversify their portfoliose. All of the listed options

" 1 #arkshich is not a banking account?Answer/a. hecking Accountsb. #oney #arket Deposit Accountsc. 1emat Account

d. !ime Depositse. *one of the listed Options

+ 1 #arks:ick the odd one out.Answer/a. arren =uffetb. :eter )ynchc. (eorge 5orosd. *achin Tendulkar

e. akesh Jhunhunwala

1 #arks0n a economy where inflation is 3, future value of 199 units of money after 1 yearwould be which of the following?a. #ore than 199b.Less than ,00

c. 6xactly 199d. 193, as inflation is 3e. *one of the listed Options


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3 " #arkshat term is used to describe an ) that remains valid for years thereby eliminating thecost of separate )s for each transaction with a regular client?Answer/a. $vergreen )lause

b. ed lausec. 0rrevocable )d. !ransferable )e. *one of the listed Options

8 " #arkshen the entral =ank of a country decides to change the interest rates, it is amanifestation of which of the following?Answer/a. #oney :olicyb. #oney #arket

c. #oney #ultiplier 6ffectd. -onetary !olicye. #oney making

; + #arkshich of the following is not a rating agency?Answer/a. 5T:b. #eserve Bank of India

c. #oody>sd. 7itche. risil

< " #arkshen you deposit C"99 in currency into your bank $$$$$$$$$$$$$$$$$Answer/a. its assets decline by C"99.b. its reserves decline by C"99.c.its liabilities increase by +500.

d. each of the above occur.e. its assets decline by C"99 and its reserves decline by C"99.

1 #arks!rade 7inance helps in $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. %acilitating International transactions

b. 7acilitating intra'compamy transactionsc. 7acilitating corpoate lendingd. 7acilitating setting up of new factories


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e. 7acilitating 0nternational transactions,7acilitating corpoate lending and 7acilitatingsetting up of new factories

39 " #arks=ank of America charges a lower rate of interest to )ockheed #artin than to (eneral

6lectric.!his can be attributed to lower $$$$$$$$ risk from )ockheed as compared to (6 for=ank of America.Answer/a. #arket iskb. )redit #isk

c. )i&uidity iskd. )egal iske. *one of the listed Options

31 1 #arks

T&uot-Don>t put all your eggs in one basketT&uot- is a phrase used to describe which ofthe following?a. risk averseb.diversification

c. riskFreturn tradeoffd. time value of moneye. budgeting

3" 1 #arks:ick the odd one out.Answer/a. Sisab. #astercardc. Amexd. Discovere. 6*B) Bank

3+ 1 #arkshich of the following is not likely to be an electronic banking function?Answer/a. Direct Debitb. 5tanding Orderc. 5tanding 0nstructiond.Account opening

e. ire transfer

3 1 #arkshich division provides services to igh *et orth individuals?Answer/a. orporate banking


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b. 0nvestment bankingc. etail bankingd. !rivate banking


33 1 #arkshich term refers to securities that are sold by the issuer to investors?Answer/a. 5econdary Offeringb. Outright 5alec. !rimary "ffering

d. 5elect 5alee. *one of the listed Options

38 " #arksA bank that is earning ; on its earning assets and is paying on its interest'earning

liabilities is said to $$$$$$$$$$$$$$$$$$Answer/a. have a negative spread.b. have a positive (A: 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.

3; 1 #arks

Due Diligence is performed to $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. assess the risk

b. performed by the buyerc. performed on the sellerd. executed after contract is signede. All of the listed options

3< 1 #arks$$$$$$$$$$$$$$ preauthori2es banks to pay recurring bills like insurance premium,utility bills automatically.a. :ay'by':hone 5ystemb. 67!c. 1irect 1ebit

d. Direct redite. Direct Deposit

3 1 #arks


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=ank*ew has a portfolio of C+9 million worth of loans, which it wants to hedge. !his isan example of what kind of drawn loans?Answer/a. Accrual )oansb. !rading )oans

c. 6eld for *ale Loansd. 4ndrawn )oane. ommitted )oans

89 + #arksegulatory balance sheet restrictions are designed to $$$$$$$$$$$$$$$$$Answer/a. limit the si2e of depository institutions.b. limit risktaking and to encourage diversification.

c. limit excessive diversification.d. to promote 4niversal =anking.

e. encourage high risk'taking by proper diversification.

81 + #arksapital ade&uacy ratio refers to $$$$$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. Amount of bankBs capital expressed as percentage of the risk weighted credit exposureb. Amount of bankBs capital expressed as percentage of the risk weighted credit exposureT operational riskc. Amount of bankBs capital expressed as percentage of the risk weighted credit exposure,T market riskd. Amount of bank7s capital epressed as percentage of the risk weighted credit

eposure4 operational risk 8 market risk


8" !he term : is used in orporate )ending for $$$$$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. lient :artnerb. redit :rovisionc. )ommercial !aper

d. ollateral :rovisione. ommodity :ut Option

8+ 1 #arksQDealerN in broking parlance refers to which one of the following?Answer/a. 6mployee of stock exchangeb. #atches customer orders with other brokersc. Acts as a 2!rincipal9 and eecutes trades for his:her personal account

d. Only person authori2ed to buy or sell a particular stocke. harges commission for trades


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8 1 #arks:ick the odd one out with respect to :rivate =anking services.Answer/a. 5wit2erland

b. )uxembourgc. aymen 0slandsd. -umbai

e. #auritius

83 hy do we need banks?Answer/a. =anks are in the best position to lend out money at competitive rates to businesses andindividualsb. Deposits are participants in primary and secondary marketsc. =anks are in the best position to lend out money at competitive rates to businesses and

individualsd. 5mall investors are protected, hence it is a low risk investment avenuee. All of the listed options

88 !he key feature of letter of credit is $$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. basis for devising proper currency hedging strategyb. distributes risk between buyer and seller

c. opportunity to receive payment in advance of the due dated. basis for devising proper currency hedging strategy and Opportunity to receivepayment in advance of the due datee. All of the listed options

8; hich of the following is not a function of a ustodian?Answer/a. ore ustodyb. Asset 5ervicingc. )orporate Lending

d. 5ecurities )endinge. orporate Actions8< 1 #arks!he treasury services department performs all of the following functions 6L6:!$$$$$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. esearch market factors e.g., 0nterest rate monitoringb. #anaging corporate collections and paymentsc. #anaging li&uidity and cash positiond. isk #anagement servicese.one of the listed "ptions


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8 1 #arkshich of the following is not covered under retail operations of a =ank?Answer/a. )oan for onsumer durablesb. ire :urchase

c. Bill 1iscountingd. )easee. Auto )oans

;9 0 stands for which of the following?Answer/a. 0nternational ate of #alaysian ingitb. 0nternational ating of wandac. Internal #ate of #eturn

d. 0ndian ate of eturne. 0nternational ate of eturn

;1 + #arks0nter District 5ettlement 7und is a $$$$$$$$$$$$$.Answer/a. %und Transfer *ystem

b. 6lectronic =ill :resentment 5ystemc. 5ettlement Accountd. =ooking 5ysteme. !ransaction 5ystem

;" 7ollowing are the list of risks that ogni2ant faces at an organi2ation level 6L6:!$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$.Answer/a. 6xchange rate fluctuationb. :rotective legislation by 4.5F4.Rc. Attritiond. :ayment defaulte. )ogni3ant faces all of the risks mentioned in the listed options

;+ 1 #arkshich of the following is not a etail =anking service?Answer/a. urrent accountsb. 5avings accountsc. he&ue book facilityd. Investment advice

e. A!# facility

; arrants are the combination of which of these instruments?Answer/


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a. $


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b. right to vote in important matters of the companyc. an instrument whose value might appreciate in secondary marketd. an instrument which can potentially earn dividendse. All of the listed options


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Answer/a. Investor looking for capital gains

b. 0nvestor looking for li&uidityc. Arbitrageurd. 0nvestor looking for regular income


" 507! is a $$$$$$$$$$$$$$$$$$$$$$.Answer/a. :roprietary network interfaceb. Open standard network interfacec. #essage based network interfaced. =oth open standard network interface A*D message based network interfacee. Both proprietary network interface 8 message based network interface

+ !wo 7inancial 0nstitutions A Tamp- = conducted the following transactions over

0:5 on +9th Jan "99.A transferred C3m to = at /3 A# = transferred C19m to A at11/+9 A# A transferred C1"m to = at ":# = transferred C13m to A at +/+9:# hich ofthe following holds true?

Answer/a. At the end of the day, C1;m will be transferred to =b. UAt the end of the day, C"3m will be transferred to Ac. At the end of the day, C


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a. 7ace value of the bondb. #aturity duration of the bondc. redit rating of the bondd. Interest paid to the bondholders

e. 7inancial performance of the bond issuer

; hich of the following is not a characteristic of money markets?Answera. They trade in a central location.

b. !hey have an active secondary market.c. !hey are wholesale markets.d. !hey are beyond the reach of small investors.e. !hey trade in short term instruments.

< Sa is used for which of the following?Answer/

a. #isk -easurementb. isk #itigationc. isk !akingd. isk Assumptione. *one of the listed Options

!he Japanese 0ndex is known as?Answer/a. 5traits !imesb. ikkei

c. 7ootsied. DALe. A

199 hich of the following is the most profitable for redit ard ompany?Answer/a. ustomers who always pay in timeb. ustomers who never payc. )ustomers who default but finally pay

d. All of the listed optionse. *one of the listed Options

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