Fixed Income Securities Markets Quiz

XIM, Bhubaneswar
Subject: Fixed Income Securities Markets

Quiz 1 (all questions carry 1 mark each)
Rates are per annum. Duration: 45minutes
Name: Regn No.
QUESTION ANSWER
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1. Which instrument is sold as Discounted instrument?
a. CBLO
b. Call
c. Repo
d. G-Secs
2. Find out the Credit Risk Exposure.
Concise Bank Balance Sheet
Capital 9500 Cash Balance 6000
Tier I 3500 Cash 1500
Tier II 6000 Cash in Chest 2000
Deposits 91000 Cash in RBI 2500
Savings 23000 Investment MD 46000
Current 16000 Sov Bonds 6.2 28000 2% (Risk Tolerance Limit)
Recurring 12000 SDL 4.5 4000 2% (Risk Tolerance Limit)
Fixed 40000 Munis 3.6 6000 2% (Risk Tolerance Limit)
Borrowing 44500 Corporate 4.7 8000 2% (Risk Tolerance Limit)
Inter-bank 17000 Loans Risk W 93000
Overnight 9500 Govt 5% 6000 0% Collateral
Term 7500 States 10% 3000 0% Collateral
Notes 27500 Retail 100% 38000 40% Collateral
Short Term 12500 Corporate 100% 46000 30% Collateral
Long Term 15000
145000 145000
GROSS REVENUE 7500
a. 55600
b. 65400
c. 52700
d. 61300
3. Find out the NDTL
Long Term 15000
145000 145000
GROSS REVENUE 7500
a. 126000
b. 128000
c. 145000
d. 135500
4. Find out the SLR Holding (only instruments) percentage.
Long Term 15000
145000 145000
GROSS REVENUE 7500
a. 23%
b. 21%
c. 25%
d. 24%
5. Find out the total Risk Weighted Assets using standard approach of Basel
regulations (Sov Bonds have 5% and State and Munis have 10% and corporates
have 100% Risk Weight )
Long Term 15000
145000 145000
GROSS REVENUE 7500
a. 84000
b. 59000
c. 62000
d. 66000
6. What will be the Capital required using Standard approach (on the basis of RWA)
with a Capital ratio of 9%?
Long Term 15000
145000 145000
GROSS REVENUE 7500
a. 6260
b. 5480
c. 5940
d. 5670
7. Find out the Market Risk Capital using MDs given for the investment types.
Long Term 15000
145000 145000
GROSS REVENUE 7500
a. 5016
b. 5268
c. 5517
d. 5183
8. Find out the Operational Risk Capital
Long Term 15000
145000 145000
GROSS REVENUE 7500
a. 1175
b. 1125
c. 1145
d. 1225
9. What is the Capital Adequacy Ratio of the bank using both Risk weights for
Credit Exposures and MD for investments and standardized approach for OR?
Long Term 15000
145000 145000
GROSS REVENUE 7500
a. 8.0%
b. 7.6%
c. 6.8%
d. 5.3%
10. How much shortage for the bank for meeting CRR at 4% of NDTL?
Long Term 15000
145000 145000
GROSS REVENUE 7500
a. 620Crore
b. 680Crore
c. 570Crore
d. No shortage
11. What will be the Balance Sheet impact of a Borrowing in Inter-Bank Call Market
for the above bank?
a. Lower level of CRR and SLR
b. Higher level of CRR and SLR
c. Increase in Capital requirement for the bank
d. Decrease in capital requirement for the bank
12. Due to tight Cash position and shortage of liquidity in the Market (you would like
to avoid higher CRR/SLR), you would like to avoid paying higher borrowing cost
in the overnight market. You have already crossed the 1% NDTL limit while
borrowing from RBI under LAF window. But you have overnight positions in the
market which needs rolling over. Which pure overnight market product you would
prefer in terms of beneficial impact of lower maintenance of CRR.
a. Market Repo Market
b. Inter-Bank Call Market
c. CBLO Market
d. LAF Reverse Repo
13. What is the difference (for a Bank) between participating in RBI’s Daily Liquidity
Adjustment Facility vis-a-vis Open Market Operation?
a. In LAF, the risk of the security gets transferred to the bank but in OMO, the
risk remains with the original owner.
b. In LAF, the risk of the security remains with the original owner but in
OMO, the risk gets transferred to the buying entity.
c. In LAF, a bank can borrow only 0.25% of its Gross Time and Demand
Liabilities but in OMO, it can go upto 2% of Gross Time and Demand
Liabilities.
d. LAF borrowing by a bank is a clean borrowing without any collateral but
OMO requires Collaterals for a bank.
14. Which is an indirect instrument of monetary policy?
a. CRR
b. SLR
c. Interest Rate Cap
d. Marginal Standing Facility
15. What will be the impact of a Borrowing position (Cash Borrowing against eligible
collaterals) in the balance sheet of a bank when Repo is used as the tool of
Borrowing?
a. Liability side with increase to match the asset side increase
b. Liability side with fall to match the asset side increase
c. It is a balance sheet neutral position.
d. One component of Liability side will fall while another component of
Liability side will rise.
16. A Bank wants to deal in Derivatives contract and thought of getting into MIFOR
contracts for funding arbitrage between domestic and international markets. The
current 3-month USD LIBOR is 2.5%p.a. and domestic 3-month Forwards are
trading at 6%p.a. A bank has quoted a MIFOR of 8.54%. Which statement is
correct?
a. The Quote of 8.54% is higher than the implied MIFOR of 8.25%.
b. The Quote of 8.54% is lower than the implied MIFOR of 8.75%.
c. The Quote of 8.54% is exact matching of the implied MIFOR of 8.54%.
d. Given the data, it is not possible to infer results.
17. A new security maturing in 2029 is going to be issued by RBI on 30-Jun-2017.
What method it is likely to use for the Auction?
a. YIELD Based
b. PRICE Based
c. Face Value Based
d. Pre-Fixed Coupon Based
18. An existing security 6.79% coupon maturing in 2029 is going to be issued by RBI
on 30-Jun-2017. What method it is likely to use for the Auction?
a. YIELD Based
b. PRICE Based
c. Face Value Based
d. Pre-Fixed Coupon Based
19. Which product does not go through a CCP in Indian market?
a. CBLO
b. Repo
c. G-Secs
d. Call
20. Liquidity Adjustment Facility (LAF) is available to the following category of
market participants:
a. Banks and Primary Dealers
b. Banks
c. Banks, Insurance Companies and Primary Dealers
d. Banks, Insurance Companies, Mutual Funds and Primary Dealers
21. Market Stabilization Scheme (MSS) is used for:
a. Pumping liquidity into the system
b. To raise funds in excess of Ways and Means Advances
c. Absorbing excess liquidity in the system
d. In place of Open Market Operations if securities are not available with RBI
22. Marginal Standing Facility (MSF) can be explained as follows:
a. Any bank having excess cash can deposit with RBI after LAF window
closes but at a lower interest rate
b. Any bank requiring funds in excess of 1% of NDTL can borrow in MSF
upto another 1% of NDTL
c. Any bank borrowing money outside LAF system of RBI through OMO
d. RBI funding temporarily Govt. of India beyond its approved limit
23. The following market participants underwrite Government debt:
a. Banks
b. Insurance Companies
c. RBI
d. Primary Dealers
24. An When Issued market allows
a. Redistribution of the stock before issuance
b. Compulsory Two-way quotes for a PD
c. RBI can directly sell here before actual issuance of a paper
d. Only Primary dealers are allowed
25. Which instrument is a Discounted Instrument?
a. Government dated Securities
b. Coupon Paying Bonds issued by RBI
c. Repo Contracts
d. Cash management Bills

Fixed Income Securities Markets Quiz

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XIM, Bhubaneswar

Subject: Fixed Income Securities Markets

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