NS Toor School of Banking

App: NS Toor App Email ns.toor@gmail.com Phone 01722665623

1 Some of the risk in banking book is not fully captured by regulatory ratios
i.e. capital adequacy ratio. It can be:
i) interest rate risk in
banking book
ii) credit
concentration risk
iii) strategic risk
iv) risk of weakness
in credit risk
mitigants
v) operational risk
a: i, ii, iii, iv, v
b: i, iii, iv only
c: i, ii, iii, iv
d: ii, iii, v
2 There are 5 guiding principles of Pillar-3 disclosure as per Basel III.
i) 1-disclosure should be clear
ii) 2-disclosure should in consultation with stake holders
iii) 3-disclosure should be comprehensive
iv) 4-disclosure should be meaningful to user
v) 5-disclosures should be consistent over time
vi) 6-disclosure should be comparable across banks
a: i, ii, iii, iv, v, vi
b: i, iii, iv, v, vi
c: i, ii, iii, vi
d: i, ii, iii, v

3. The date of delivery of funds on the date on which the exchange of

currencies actually take place is referred to as :
a: delivery date
b: contract rate
c: value date
d: expiry date

4. Which of the following is not correct regarding foreign exchange rates:

a: spot rate – where the delivery is completed on 2nd working day
b: Tom rate – where the delivery is completed on the next working day
c: Cash rate – where the delivery is completed on the same day

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 NS Toor School of Banking
App: NS Toor App Email ns.toor@gmail.com Phone 01722665623

d: Forward rate – where the delivery is completed on T+2 day.

5. ______ position deals with the over-bought or oversold position arrived after
taking various transactions:
a: currency position
b: forex position
c: funds position
d: speculation position

6. Valuation of foreign exchange profits and losses by dealers is carried on the

basis of :
a: IBA approved accounting guidelines
b: FEDAI prepared Uniform Standard Account Procedure
c: RBI framed valuation norms for foreign exchange transactions
d: DGFT guidelines on valuation

7. John & Co and Infosys Limited entered into a contract but due to some flaw,
Infosys is not able to enforce its claim in a court of law. The risk is called:
a: liquidity risk
b: settlement risk
c: systemic risk
d: legal risk

8. A body that prescribes guidelines and rule for market rates, quotations etc. in
India is called:
a: IBA
b: RBI
c: FEDAI
d: FIMMDAI

9. $ is quoted today at Rs.63.90. But it is being quoted at Rs.63.95 for a two-

months forward deal. Which of the following is correct for forward:
a: foreign currency is at a premium
b: foreign currency is at a discount
c: Indian currency is at a premium
d: none of the above

10. The seller of goods shipped the goods on time but due to some mistake, the
goods have been delivered at some other destination. Such risk to the buyer is
called:

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 NS Toor School of Banking
App: NS Toor App Email ns.toor@gmail.com Phone 01722665623

a: seller risk
b: buyer risk
c: market risk
d: shipping risk

11. A party enters into a contract for sale of dollars and receives the rupees from
the counter party. Due to delay in receipt of expected funds in the NOSTRO
account, it fails to settle. What kind of risk has arisen:
a: settlement risk
b: liquidity risk
c: pre-settlement risk
d: mismatch risk

12. The process of risk management is ____ and is required to remain in constant
focus :
a: static
b: passive
c: active
d: dynamic

13. Which of the following is a correct statement regarding derivatives:

a: exchange traded derivatives are more expensive compared to OTC products.
b: exchange traded derivatives are equally expensive compared to OTC
products.
c: exchange traded derivatives are less expensive compared to OTC products.
d: OTC products are less expensive compared to exchange traded derivatives.

14. A forward rate is function of =

a: spot price + risk cost
b: risk cost + premium
c: spot price + discount
d: spot price + cost of carry

15. A future contract generally is (a) commodity futures (b) financial futures (c)
currency futures (d) index futures (e) derivative futures. Which of these is
correct:
a: a, b, c, e
b: b, c, d, e
c: a, c, d, e
d: a, b, c, d

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 NS Toor School of Banking
App: NS Toor App Email ns.toor@gmail.com Phone 01722665623

16. In an option, the right to sell at a fixed price on or before a fixed date is
called:
a: option
b: call option
c: put option
d: direct option

17. The price at which the option may be exercised and the underlying asset is
bought or sold is called:
a: sale price
b: buy price
c: sale or buy price
d: strike or exercise price

18. A transaction in foreign exchange where one currency is sold and purchased
for another currency simultaneously, is called:
a: arbitrage
b: option
c: swap
d: futures
19 In case of interest swaps, where the floating rates based on one bench mark is
exchanged with floating rates based on another bench mark, these are called:
a: index or basis swaps b: floating rate swaps
c: coupon swaps d: financial swaps
20. The correspondent banking is beneficial since it (a) allows the bank to take
advantage of business opportunities in other countries (b) without having a
branch net work (c) with minimum cost. Which of these is correct:
a: a, b only
b: b, c only
c: a, c only
d: a, b, c all
21. ‘Your account with us’ refers to what kind of account out of the following:
a: NOSTRO
b: VOSTRO
c: LORO
d: Mirror

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 NS Toor School of Banking
App: NS Toor App Email ns.toor@gmail.com Phone 01722665623

22. CHIPS that stands for Clearing House Inter-bank Payment System is a ____
system in ____.
a: clearing, UK b: payment, UK
c: settlement, US d: payment, US

23. Interest and principal can be repatriated by an NRI, in the following accounts
?
a FCNR b NRE
c EEFC d a&b
e all the above
24 As per FEMA 1999, foreign exchange means foreign currency and include
(a) all deposits
(b) credits and balances payable in foreign currency
(c) any drafts, travellers’ cheques, LCs and Bill of exchange, payable in
foreign currency. Which of the following is correct out of the above:
a: a and b only b: a and c only
c: b and c only d: a, b, c all
25 There are a large no. of participants in forex market that may include
(a) Central Banks
(b) commercial
banks
(c) investment
banks
(d) forex brokers
(e) companies
(f) individuals.
Which of the
following
combination is
correct in the above
context:
a: a, b, c, d, e only b: a, b, c, d, f only
c: a, b, c, e, f only d: a, b, c, d, e, f all

1. C 2. B 3. C 4. D 5. A 6. B 7. D 8. C 9. A 10. D
11. B 12. D 13. C 14. D 15. D 16. C 17. D 18. C 19. A 20. D
21. B 22. D 23. D 24. D 25. D