Financial market is a market for :

lending and borrowing money

facilitate the raising of funds and investment of surplus assets+
OTC exchanges for financial products
deals in primary and secondary market for govt. securities
What is the main driver for transformation of treasuries from mere SLR/CRR keepe
rs into profit centres :
Increase in volumes
sudden increase in expertise in human resources
volatility in interest rates+
regulatory approvals
The following are treasury assets :
cash with Reserve Bank of India
G-sec, CDs, CPs and SLR bonds+
bills purchased and discounted
fixed assets of the bank
Mid office and Back office handle the following functions
day to day dealing
branch account maintenance
MIS , risk management, confirmation and settlements+
arbitrage operations
The following are treasury liabilities :
equity shares
reverse repo
current/saving/fixed deposit accounts+
call/notice/term money
What is current CRR :
7% of net demand and time liabilities
21% of demad and time liabilities
4% of net demand and time liabilities+
3 to 20% at the discretion of bank

What is current SLR :

7% of net demand and time liabilities
21% of demad and time liabilities+
4% of net demand and time liabilities
up to 40% at the discretion of bank
The integrated treasury optimizes profits by exploiting market opportunities in
:
forex market only
forex market and money market only
money market and security market only
forex market, money market and security market+
Treasury of a bank plays important role in allocation of costs to various depar
tment/ branches of a bank, on rational basis. This is called :
fund costing
fund earning
transfer pricing+
transfer earning
Responsibility to monitor the exposure limits and stoploss limits of the treasur
y is the task undertaken by ___________ in a treasury :
back office
front office
head office
middle office+
The benefit that accures to a treasury, which operates in different markets simu
ltaneously for profit is called :
swap
outright deal
arbitrage+
trading
In an integrated market, the premium and discount charged on the currency is dec
ided by :
average interest rate differentials of the currency bought and sold

overnight interest rate differential of the currency bought and sold+

weekly interest rate differentials of the currency bought and sold
overnight interest rate of currency being sold
The interest rate differential is -------from the spot rate for---------interest
yielding currency representing forward discount :
added, high
deducted, high+
added, low
deducted, low
FIMMDA stands for :
Fixed Income and Money Market Derivative Association of India+
Fixed Income and Money Market Dealer Association of India
Fixed Income and Money Market Domestic Association of India
Fixed Income and Money Market Depository Association of India
The raising and deploying short term resources by banks with maturity of one day
is called :
call money+
money market
notice money
term money
The interest on treasury bills is in the form of :
floating rate
fixed rate
by way of discount+
any of the above
The minimum, maximum and multiple amount of certificate of deposit is as under :
min Rs. 1 lac, max. no limit multiple Rs. 1 lac+
min Rs. 5 lac, max. no limit multiple Rs. 1 lac
min Rs. 5 lac, max. no limit multiple Rs. 5 lac
min Rs. 1 lac, max. no limit multiple Rs. 5 lac
The sale of security with a commitment to repurchase the same security at a late
r date is referred as :

CBLO
REPO+
Reverse Repo
Derivative
The RBI makes use of REPO (which one is not correct) :
as a monetary policy tool to regulate liquidity in the interbank market
in case of shortage of funds, bank can sell govt. securities to RBI under REPO
in case of surplus of funds, bank can buy govt. securities from RBI under REPO
due to introduction of REPO, all reference windows have been closed by RBI+
Govt. securities are issued by whom :
Central treasury of Govt. of India
Public debt office of RBI
Issue dept.of RBI+
Issue dept. of Govt. of India
The 7% coupon bond moves from Rs.95 to Rs.98, its yield will :
remain the same
reduce+
increase
no relationship between price of bond and its yield
Why is the price volatility in the case of floating rate instrument is less than
that of fixed rate instrument :
market likes floating rate instruments
fixed rate instruments are more in number in the market
in the floating rate instrument the coupon rate is realigned to the market rate+
the coupon will be less in floating rate bond
A 91 days treasury bill is trading at Rs. 98.59, then its YTM or rear-ended yiel
d will be :
5.60%
5.74%+
5.32%
5.80%

Bank A lends Rs.10 cr. under BRDS at 7% for 90 days. The effective yield to ba
nk A will be :
7.10%
5.74%
7.12%+
7.15%
Liquidity adjustment facility is a facility :
which RBI permits to bank as a refinance
which RBI permits to banks to cover short terms liquidity problem+
Which banks permit to RBI
which RBI permits to govt. for meeting mismatch in receipts and payments
The money in circulation is indicated by which of the following :
CRR
currency with public
M3+
M2
The objective of monetary policy followed by RBI is (1) to control the rate of i
nflation (2) to make available credit to all productive sectors of economy (3)
to ensure stability of financial markets :
1 to 3 all
1 and 2 only
1 and 3 only+
2 and 3 only
The minimum and maximum CRR that banks are required as per RBI act is as under :
min. 3% and max. 20% of NDTL
min. 3% and max. 20% of DTL
no min. and max. 40% of DTL
RBI discretion+
The minimum and maximum SLR that banks are required as per Banking regulation ac
t is as under :
min. 3% and max. 20% of NDTL
min. 3% and max. 20% of DTL

no min. and max. 40% of DTL+

RBI discretion
The daily minimum CRR balances should not fall below-------% of the amount requi
red for CRR :
80%
70%+
55%
no such limit
Which of the following is incorrect statement regarding RTGS :
RBI is settlement authority
IDRBT is the central processor
in India Y shaped modal has been adopted
none of the above+
What is minimum and maximum amount of transactions under NEFT :
there is no minimum and maximum+
the min. is Rs.1 lac and max. is rs. 1 cr.
the min. Rs. 1 lac and max. no limit
the min. and max. is changed frequently by RBI
What type of risk out of the following is taken care of by RTGS :
operational risk and settlement risk
liquidity risk and market risk
settlement risk and systemic risk+
legal risk and interest rate risk
Fx- clear is operated by :
RBI
CCIL+
FEDAI
SEBI
The major risk the treasury is exposed, out of the following :
credit risk

market risk+
operational risk
liquidity risk
Volatility of exchange rate in case of currency means :
large increase in selling price
large increase in buying price
variablity of price, upward or downward+
large variation of price, selling or buying
Which of the following is correct regarding position limits for treasury risk ma
nagement :
position limits are fixed by currency wise
aggregate position is expressed in rupees
for aggregate purpose, the currencywise net position is first calculated in USD,
than converted in rupees
all these are correct statements+
When the bank lends in money market to other bank and the other bank is not able
to make the repayment on due date, what type of the risk takes place :
liquidity risk
default risk+
settlement risk
systemic risk
Due to bankruptcy of bank B , it has failed to meet its repayment commitments to
wards bank A, that had lent money to the bank in a call money market. What type
of risk Bank A is exposed to :
liquidity risk
default risk
settlement risk+
systemic risk
The market risk has 3 main components :
liquidity risk, settlement risk, currency risk
liquidity risk, interest risk, currency risk+
liquidity risk, interest risk, equity risk
commodity risk, interest risk, equity risk

A security dealer purchases a particular security in the expectation of rise in

price, next day. The payment is to be made for this on next day. Next day the ma
rket crashes, due to which he has to borrow the funds, at any cost. In this case
:
the settlement risk has arisen
the liquidity risk has translated into interest rate risk+
the liquidity risk can get converted into settlement risk
the default in payment will create systemic risk
In addition to the liquidity risk, the risk-----------is present where there is
mismatch between the assets and liabilities :
interest rate risk+
counterparty risk
default risk
systemic risk
The overnight VaR of 1 year govt. security yield is 0.20% with a current yield
of 7.50%. At 99% confidence level, there is ---------possibility of loss being h
igher that VaR
0.20%
0.75%
0.95%
1%+
The relationship between the price and the yield to maturity is-----------:
Perverse
Direct
Inverse+
cordial
The rate of discount at which the present value equals the market price of a bon
d is known as the:
coupon rate
interest rate
yield to maturity+
current return
A bond with a face value of Rs.1000 is being sold in the market at Rs. 985. This
indicates that :

interest rate in the market and coupon rate of the bank are equal
interest rate in the market is more than the coupon rate of the bond+
interest rate in the market is less than thecoupon rate of the bond
interest rate and coupon rates have not relation with the price of bond
A bond with a face value of Rs100 is being sold in the market for Rs.98. If the
coupon rate is 5%, what is the current yield of the bond :
5.10%+
5%
4.90 %
6%
If the change in yield of a bond is given and modified duration is also given,
the percentage change in the price of the bond can be calculated as :
change in the yield / modified duration
change in the yield x modified duration+
change in the yield + modified duration
change in the yield

modified duration

For an effective risk management of treasury operations, it is expected of bank

s to ensure functional segregation between :
zonal office head office and branches
branches, zonal office, mid office
mid office, head office, back office
front office, mid office and back office+
For controlling market risk in treasury, which of the following limits are fixed
: (1) counterparty exposure limit (2) pre-settlement limit (3) intra day ,overn
ight open position and stoploss limit (4) forex borrowing limit :
1 and 3 only
2 and 4 only
1 only
3 only+
The derivative products that can be directly obtained from banks are called :
exchange products
over the counter products+

exchange traded products

counterparty products
Which of the following statement is correct regarding the settlement of OTC and
exchange traded derivatives :
OTC derivatives and exchange traded derivatives are mostly settled by cash
OTC derivatives and exchange traded derivatives are mostly settled by physical d
elivery
OTC derivatives and exchange traded derivatives are mostly settled by cash on ne
t settlement basis+
OTC derivatives and exchange traded derivatives are mostly settled by cash and p
hysical delivery respectively
USD is carrying higher rate of interest while rupee is carrying lower rate of in
terest :
the rupee will be at premium and USD will be at discount
the rupee will be at discount and USD will be at premium
the rupee and USD will be at premium
the rupee and USD will be at discount+
The holder of a forward contract cannot get the benefit of market rate if it is
better than the contracted rate, on the date of utilization. This advantage is c
alled :
opportunity cost+
hedging cost
transfer cost
risk cost
A company has raised a loan at floating interest rate and it is of the view that
due to tight liquidity position, the market interest rates are likely to increa
se. It can go for which type of interest rate swap :
fixed rate to floating rate
floating rate to fixed rate+
one floating rate to another floating rate
any of these
What is the no. of maturity buckets and what is the min. and max. period of thes
e buckets:
8, min. 1 day max. 5 years
8 min. 1 day max. 10 years

11 from next day to more than 5 years+

10, min. 1 day max. over 10 years
What is the purpose of above maturity buckets :
measuring and monitoring the credit risk
measuring and monitoring the settlement risk
measuring and monitoring the liquidity risk+
measuring and monitoring the market risk
Forward contracts are used to hedge the following risk :
reputational risk
legal risk
exchange rate risk+
operational risk
T bills are valued at :
T bills are valued at acquisition cost
T bills are valued at book cost
T bills are valued at carrying cost+
T bills are valued at repurchase cost
Under the exchange control regulations, brokers are prohibited from doing what :
from doing long term swap
from doing short term swap
from doing spot transaction
from maintaining exchange position+
A treasury bill maturing on 28/06/2015 is trading in the market on 03/07/2014 at
a price of Rs. 92.8918. What is the discount rate inherent in this price :
7.7925
7.7584+
7.7834
more information required
Which of the following participant in the call markets are allowed to lend as we
ll as borrow :
mutual funds

banks and primary dealers+

corporates
financial institutions
XYZ Ltd.is planning to issue a CP of Rs.25 lac. The following additional details
are provided : Maturity period 3 months i.e. 90 days, Effective rate of interes
t i.e. 10.5%. Calculate the issue price :
Rs.42,42,837
Rs.24,36,908+
Rs. 24,52,752
more information required
If the RBI announces that it has done repos of Rs.3000/- cr. ,what does this imp
ly :
RBI has lent securities worth Rs.3000 cr. through the repo markets to the partic
ipants
RBI has reversed the repo deals of participants who entered ionto a repo with RB
I
RBI has inducted funds amounting to Rs.3000 cr. into the market+
RBI has borrowed securities from the banking system, and lent them onward into t
he repo market
A 364 days CP, maturing on28/06 2015 is trading on 17/072014, at a price of Rs.
93.3375. What is the yield inherent in this price : ( No. of days taken as 346)
7.5500%
7.53oo%+
7.7400%
More information required