SOLVED CAIIB COMBINED PAPER 32:
1. Risk of having to compensate for non-receipt of expected cash flows by a bank is called ......
(i) Time risk, (ii) Credit risk
a. Only (i)
b. Only (ii)
c. Either (i) or (ii)
d. Both (i) and (ii)
Ans - a
2. 'Time risk' in the context of liquidity risk of an institution is not caused due to ......
(i) Systematic risk,
(ii) Swaps and options,
(iii) Temporary problems in recovery
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - a
3. Tier – II capital should not be more than ......% of Total Capital.
a. 25
b. 50
c. 75
d. 100
Ans - b
4. What is the most critical function of Risk Management?
a. Measurement of risk
b. Identification of risks
c. Estimating the costs of risk
d. Controlling the level of risk to an organization's capacity
Ans - d
5. What kind of risk on settlements is covered by 'Herstatt Risk' for which BCBS was formed?
a. Exchange rate risk
b. Time difference risk
c. Interest rate risk
d. None
Ans - b
6. A bank has computed its
Tier I capital -Rs. 1000 Crores.
Tier-II Capital -Rs 1200 Crores.
RWAs for Credit Risk -Rs 15,000 Crores.
Capital charge for market risk -Rs 600 Crores.
Capital charge for operational risk -Rs 400 Crores.
What would be the bank's total RWAs?
a. 18,889 Crores
b. 21,161 Crores
c. 26,111 Crores
d. 26,141 Crores
Ans - c
Solution :
RWAs for Credit Risk = Rs 15,000 Crores
RWAs for Market Risk = Rs 600/.09 = Rs 6,667 Crores
RWAs for Operational Risk = Rs 400/.09 = Rs 4,444 Crores
Total RWAs = Rs 26,111 Crores
7. Crystallization of contingent liabilities in a bank is called ......
(i) Call risk, (ii) Credit risk
a. Only (i)
b. Only (ii)
c. Either (i) or (ii)
d. Both (i) and (ii)
Ans - a
8. A bank has computed its
Tier I capital -Rs. 1000 Crores.
Tier-II Capital -Rs 1200 Crores.
RWAs for Credit Risk -Rs 15,000 Crores.
Capital charge for market risk -Rs 600 Crores.
Capital charge for operational risk -Rs 400 Crores.
What would be the bank's Tier-I CRAR?
a. 2.83
b. 3.83
c. 6.77
d. 7.66
Ans - b
Solution
RWAs for Credit Risk = Rs 15,000 Crores
RWAs for Market Risk = Rs 600/.09 = Rs 6,667 Crores
RWAs for Operational Risk = Rs 400/.09 = Rs 4,444 Crores
Total RWAs = Rs 26,111 Crores
Tier I Capital = Rs 1,000 Crores
Tier II Capital = Rs 1,200 Crores
Total Capital = Rs 2,000 Crores
Maximum tier II capital that can be taken into account for the purpose of CRAR is 100% of tier I capital.
Tier-I CRAR = (Eligible Tier I capital funds)/(Total RWAs) = 1000/26111 = 3.83%.
9. In case of Domestic banks risk weights are assigned depends on?
a. CRAR
b. ECA
c. CSU
d. None
Ans - a
10. A company with equity capital of Rs.50 crores (Face Value of Rs.10/- per share) makes gross profit of Rs.70 crores and net profit after tax of Rs.25 crores. If the market price of its equity share is Rs.50, the PE ratio will be...................
a. 50
b. 5
c. 10
d. 20
c
11. Counter party Risk is a type of ......
a. Interest Rate Risk
b. Market Risk
c. Credit Risk
d. Operational Risk
Ans - c
12. Redeemable Cumulative Preference shares comes under ......
a. Tier – I Capital
b. Tier – II Capital
c. Tier – III Capital
d. None of the above
Ans - b
(i) Time risk, (ii) Credit risk
a. Only (i)
b. Only (ii)
c. Either (i) or (ii)
d. Both (i) and (ii)
Ans - a
2. 'Time risk' in the context of liquidity risk of an institution is not caused due to ......
(i) Systematic risk,
(ii) Swaps and options,
(iii) Temporary problems in recovery
a. Only (i) and (ii)
b. Only (i) and (iii)
c. Only (ii) and (iii)
d. (i), (ii) and (iii)
Ans - a
3. Tier – II capital should not be more than ......% of Total Capital.
a. 25
b. 50
c. 75
d. 100
Ans - b
4. What is the most critical function of Risk Management?
a. Measurement of risk
b. Identification of risks
c. Estimating the costs of risk
d. Controlling the level of risk to an organization's capacity
Ans - d
5. What kind of risk on settlements is covered by 'Herstatt Risk' for which BCBS was formed?
a. Exchange rate risk
b. Time difference risk
c. Interest rate risk
d. None
Ans - b
6. A bank has computed its
Tier I capital -Rs. 1000 Crores.
Tier-II Capital -Rs 1200 Crores.
RWAs for Credit Risk -Rs 15,000 Crores.
Capital charge for market risk -Rs 600 Crores.
Capital charge for operational risk -Rs 400 Crores.
What would be the bank's total RWAs?
a. 18,889 Crores
b. 21,161 Crores
c. 26,111 Crores
d. 26,141 Crores
Ans - c
Solution :
RWAs for Credit Risk = Rs 15,000 Crores
RWAs for Market Risk = Rs 600/.09 = Rs 6,667 Crores
RWAs for Operational Risk = Rs 400/.09 = Rs 4,444 Crores
Total RWAs = Rs 26,111 Crores
7. Crystallization of contingent liabilities in a bank is called ......
(i) Call risk, (ii) Credit risk
a. Only (i)
b. Only (ii)
c. Either (i) or (ii)
d. Both (i) and (ii)
Ans - a
8. A bank has computed its
Tier I capital -Rs. 1000 Crores.
Tier-II Capital -Rs 1200 Crores.
RWAs for Credit Risk -Rs 15,000 Crores.
Capital charge for market risk -Rs 600 Crores.
Capital charge for operational risk -Rs 400 Crores.
What would be the bank's Tier-I CRAR?
a. 2.83
b. 3.83
c. 6.77
d. 7.66
Ans - b
Solution
RWAs for Credit Risk = Rs 15,000 Crores
RWAs for Market Risk = Rs 600/.09 = Rs 6,667 Crores
RWAs for Operational Risk = Rs 400/.09 = Rs 4,444 Crores
Total RWAs = Rs 26,111 Crores
Tier I Capital = Rs 1,000 Crores
Tier II Capital = Rs 1,200 Crores
Total Capital = Rs 2,000 Crores
Maximum tier II capital that can be taken into account for the purpose of CRAR is 100% of tier I capital.
Tier-I CRAR = (Eligible Tier I capital funds)/(Total RWAs) = 1000/26111 = 3.83%.
9. In case of Domestic banks risk weights are assigned depends on?
a. CRAR
b. ECA
c. CSU
d. None
Ans - a
10. A company with equity capital of Rs.50 crores (Face Value of Rs.10/- per share) makes gross profit of Rs.70 crores and net profit after tax of Rs.25 crores. If the market price of its equity share is Rs.50, the PE ratio will be...................
a. 50
b. 5
c. 10
d. 20
c
11. Counter party Risk is a type of ......
a. Interest Rate Risk
b. Market Risk
c. Credit Risk
d. Operational Risk
Ans - c
12. Redeemable Cumulative Preference shares comes under ......
a. Tier – I Capital
b. Tier – II Capital
c. Tier – III Capital
d. None of the above
Ans - b