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Sunday, September 16, 2018

CAIIB BFM Module D Unit 22: Components of Assets and Liabilities In Bank's Balance Sheet and Management

Here sharing some questions. Hope you find it useful

1. The strategy of actively managing the composition and mix of assets and liabilities poortfolio is ......??
Ans- Balance Sheet Restructuring

2. .............. is defined as net interest income divided by average total assets.
Ans- NIM - Net Interest margin

3.Which of the following is not a liability?
a.Loan from Nabard
b. Loan to cooperative bank
c. Provision for Bad Debts
d. NRI Deposits

Ans- b

4. What is the significance of liquidity
a. liquidity is the capacity to produce cash on demand
b. the depositors will feel confident if they get required cash on demand
c. cash balance is most liquid asset
d. all the above
Ans-d

5. Economic equity ratio implies
a. This is the ratio of shareholders funds to the total assets
b. It measures the shifts in the ratio of owned funds to total funds
c. This indicates the subtenance capacity of a bank
d all the above
Ans-d

6. Net Interest Margin signifies:
a. It is the result of Net Interest Income divided by average total assets
b. It can be viewed as spread on earning assets
c. The higher the spread , more will be the Net Interest Margin
d. all the above
Ans- d

7. What are the basic parameters required for stabilizing ALm of Banks?
a. Net Interest Income
b. Net Interest Margin
c. Economic Equity Ratio
d. All the above
Ans- d

8. Net Interest Income formulae?
Ans- Interest Income - Interest Expenses

9. Change in interest rates will not affect..i)Net Interest income, ii) Other Income, iii) Staff expense
a. only i and ii
b. only i and iii
c only ii and iii
d. i,ii, and iii
Ans- c

10. Net Interest Income is
a. Interest earned on advances
b. Interest earned on investment
c. Total interest on advances and investment
d. Difference between interest earned and interest paid
Ans- d

11. ALM is required to match the assets and liabilities to ..... liquidity risk as well as market risk.
Ans- minimize

12. Net Interest margin is defined as net interest income divided by ...?
Ans- Average total assets

13. The ratio of the shareholders' funds to total assets is called ....?
Ans- Economic equity ratio

14. liquidity is ensured by grouping the assets/liabilities based on their...?
Ans maturity

15. The institution is in a position to benefit from rising interest rates when assets are... than liabilities.
Ans- more

16. Assets represents source of funds whereas liabilities denote the use of funds in a balance sheet, Trur/false
Ans- False

17. Deregulated environment has narrowed spreads of the banks, True/false
Ans- True

18. Net Interest margin is also known as spread , true/ False
Ans- True

19. Alm achive profitability through-----?
Ans- Price Matching

20. Asset Liability management is only management of maturity mismatch and has no bearing on profit augmentation.True/ False
Ans- False

Correct me for any mistake

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