20. The risk arising out of crystallization of contingent liabilities is called _____ risk.
a) Call Risk
b) Funding Risk
c) Time Risk
d) None of these
21. Measuring and managing liquidity can be done through:
a) Stock approach
b) Flow approach
c) Both of these
d) None of these
22. Liquid assets of a bank are:
a) Bank balances, money at call & short notice, inter-bank placements due within one month, securities placed under AFS and HFT.
b) Bank balances, money at call & short notice, inter-bank placements due within one month, securities placed under AFS and HFT having a ready market.
c) Bank balances, money at call & short notice, inter-bank placements, securities placed under AFS and HFT.
d) Bank balances, money at call & short notice, Demand loans, securities placed under AFS and HFT.
23 Effective liquidity management should address the following scenarios:
a) General market conditions, Bank specific crisis & General market crisis
b) General market conditions & Bank specific crisis
c) General market conditions & General market crisis
d) Only Bank specific crisis
24. If rate sensitive assets (RSA) are more than rate sensitive liabilities (RSL), then a rise in interest rate would cause
a) Increase in interest income
b) Decrease in interest income
c) No change in interest income
d) None of the above
25 If rate sensitive assets (RSA) are more than rate sensitive liabilities (RSL), then a fall in interest rate would cause
a) Increase in interest income
b) decrease in interest income
c) No change in interest income
d) none of the above
26. Estimates derived from a standard duration generally focus on just one form of interest rate risk exposure i.e. _________ .
a) repricing risk b) embedded option risk
c) Gap risk
d) None of these
27 Following are some of the strategies applied for management of Interest rate Risk management.
i) Reduce investment portfolio maturities
ii) Increase investment portfolio maturities
iii) Increase floating rate assets
iv) Increase fixed rate loans
v) Increase short term assets
vi) Increase long term deposits / borrowings
vii) Increase short term deposits / borrowings
viii) Sell fixed rate assets
ix) Increase floating rate deposits
In a rising interest rate scenario, Interest rate Risk management would comprise of:
a) vi), vii), viii), ix)
b) i), ii), v), iv)
c) i), iii), v), vi), viii)
d) ii), iv), vii), ix)
In a falling interest rate scenario, Interest rate Risk management would comprise of:
a) i), iii), v), viii)
b) ii), iv), vii), ix)
c) ii), iii), vi)
d) vi), vii), viii), ix)
28. Securities held in ‘Trading Book’ by a bank are subject to
a) prescription of Cut-loss limit
b) Defeasance period
c) holding period not exceeding 90 days
d) all of them
e) none of them
29. Pre-payment of a term loan will result interest rate risk of type
a) Basis risk
b) Embedded option risk
c) Yield curve risk
d) Gap risk
30. For interest rate risk management, the following strategies are used.
i) Decrease RSL
ii) Increase RSL
iii) Increase RSA
iv) Decrease RSA
v) Buy an IRS
vi) Sell an IRS
Other Parts
Risk Management Part 1
Risk Management Part 2
Risk Management Part 4
Risk Management Part 5
Risk Management Part 6
Risk Management Part 7
Risk Management Part 8
a) Call Risk
b) Funding Risk
c) Time Risk
d) None of these
21. Measuring and managing liquidity can be done through:
a) Stock approach
b) Flow approach
c) Both of these
d) None of these
22. Liquid assets of a bank are:
a) Bank balances, money at call & short notice, inter-bank placements due within one month, securities placed under AFS and HFT.
b) Bank balances, money at call & short notice, inter-bank placements due within one month, securities placed under AFS and HFT having a ready market.
c) Bank balances, money at call & short notice, inter-bank placements, securities placed under AFS and HFT.
d) Bank balances, money at call & short notice, Demand loans, securities placed under AFS and HFT.
23 Effective liquidity management should address the following scenarios:
a) General market conditions, Bank specific crisis & General market crisis
b) General market conditions & Bank specific crisis
c) General market conditions & General market crisis
d) Only Bank specific crisis
24. If rate sensitive assets (RSA) are more than rate sensitive liabilities (RSL), then a rise in interest rate would cause
a) Increase in interest income
b) Decrease in interest income
c) No change in interest income
d) None of the above
25 If rate sensitive assets (RSA) are more than rate sensitive liabilities (RSL), then a fall in interest rate would cause
a) Increase in interest income
b) decrease in interest income
c) No change in interest income
d) none of the above
26. Estimates derived from a standard duration generally focus on just one form of interest rate risk exposure i.e. _________ .
a) repricing risk b) embedded option risk
c) Gap risk
d) None of these
27 Following are some of the strategies applied for management of Interest rate Risk management.
i) Reduce investment portfolio maturities
ii) Increase investment portfolio maturities
iii) Increase floating rate assets
iv) Increase fixed rate loans
v) Increase short term assets
vi) Increase long term deposits / borrowings
vii) Increase short term deposits / borrowings
viii) Sell fixed rate assets
ix) Increase floating rate deposits
In a rising interest rate scenario, Interest rate Risk management would comprise of:
a) vi), vii), viii), ix)
b) i), ii), v), iv)
c) i), iii), v), vi), viii)
d) ii), iv), vii), ix)
In a falling interest rate scenario, Interest rate Risk management would comprise of:
a) i), iii), v), viii)
b) ii), iv), vii), ix)
c) ii), iii), vi)
d) vi), vii), viii), ix)
28. Securities held in ‘Trading Book’ by a bank are subject to
a) prescription of Cut-loss limit
b) Defeasance period
c) holding period not exceeding 90 days
d) all of them
e) none of them
29. Pre-payment of a term loan will result interest rate risk of type
a) Basis risk
b) Embedded option risk
c) Yield curve risk
d) Gap risk
30. For interest rate risk management, the following strategies are used.
i) Decrease RSL
ii) Increase RSL
iii) Increase RSA
iv) Decrease RSA
v) Buy an IRS
vi) Sell an IRS
Other Parts
Risk Management Part 1
Risk Management Part 2
Risk Management Part 4
Risk Management Part 5
Risk Management Part 6
Risk Management Part 7
Risk Management Part 8
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Risk Management
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