SOLVED CAIIB COMBINED PAPER 43:
1. As per Basel III implementation in India, within total capital of 9%of risk weighted assets, the Tier 2 capital can be:
a. max equal to Tier I capital
b. min equal to Tier I capital
c. max equal to 2% of risk weighted assets
d. min equal to 2% of risk weighted assets
Ans - c
2. Client Jay pays ABC Co. 10,000 in December for ABC to perform services for Jay in 45 days. ABC uses the accrual basis of accounting. In December ABC will debit Cash for 10,000. What will be the other account involved in the December accounting entry prepared by ABC (and what type of account is it)?
a. Accounts Receivable (asset)
b. Prepaid Services (asset)
c. Service Revenues (revenue)
d. Unearned Revenues (liability)
Ans - a
3. Which of the following is not covered under 'Market Discipline' pillar of Basel II ?
a. Ensure maintenance of minimum capital - with PCA for shortfall
b. Core disclosures
c. Enhance Disclosure
d. Supplementary disclosures
Ans - a
4. Asset in doubtful-I category – Rs. 500000/-
Realization value of security – Rs. 400000/-
What will be the provision requirement?
a. Rs. 500000/-
b. Rs. 400000/-
c. Rs. 180000/-
d. Rs. 200000/-
Ans - d
5. If there is an assets of Rs. 120 in the doubtful-I cat and the realization value of security is Rs. 100 only, what will be the provision requirement?
a. Rs. 40
b. Rs. 45
c. Rs. 50
d. Rs. 60
Ans - b
Since it a doubtful-I cat asset, so 25% of realization value Rs.100 i.e Rs. 25 and 100% of short Fall that is 120-100=20 so ans will be 20+25=45
6. The ultimate responsibility for designing and implementation of ICAAP lies with ......
a. Banks' board of directors
b. RBI
c. FEDAI
d. BCBG
Ans - a
7. Which of the following statements is not correct regarding Basel In implementation in India:
a. minimum common equity Tier I ratio should be 5.5% of RWAs
b. capital conservation buffer (CCb. consisting of common equity, should be 2.5% of RWAs
c. maximum additional tier I capital should be 1.5% of RWAs
d. minimum common equity Tier I ratio plus capital conservation buffer should be 7%
Ans - d
8. Deferred credits will appear on the balance sheet with the
a. Assets
b. Liabilities
c. Owner's/Stockholders' Equity
d. None of the above
Ans - b
9. Cumulative negative mismatches maximum charges taken for the period of 8-14 days in ALM risk will be ......
a. 5%
b. 10%
c. 15%
d. 20%
Ans - c
10. On the recommendations of the Finance Manager, the board of directors will accept the project if ......
a. Benefit Cost Ratio is less than one
b. Net Present Value is greater than zero
c. Internal Rate of Return is less than cost of capital
d. Pay Back Period is greater than target period
Ans - b
11.Basel III capital regulations are based on 3 mutually reinforcing pillar. These pillars are
(1) Pillar-1 minimum capital standards
(2) supervisory review of capital adequacy
(3) risk management.
a. all the 3 are correct
b. only 1 and 2 are correct
c. only 1 and 3 are correct
d. only 2 and 3 are correct
Ans - b
12. If there is an assets of Rs. 120 only in the doubtful-II cat and the realization value of security is Rs. 100 only, what will be the provision requirement.
a. Rs. 40
b. Rs. 50
c. Rs. 60
d. Rs. 70
Ans - c
Since it a doubtful-II Cat asset, so 40% realization value of Rs. 100 i.e Rs.40 and 100% of short Fall that is 120-100=20 so ans will be 40+20=60
a. max equal to Tier I capital
b. min equal to Tier I capital
c. max equal to 2% of risk weighted assets
d. min equal to 2% of risk weighted assets
Ans - c
2. Client Jay pays ABC Co. 10,000 in December for ABC to perform services for Jay in 45 days. ABC uses the accrual basis of accounting. In December ABC will debit Cash for 10,000. What will be the other account involved in the December accounting entry prepared by ABC (and what type of account is it)?
a. Accounts Receivable (asset)
b. Prepaid Services (asset)
c. Service Revenues (revenue)
d. Unearned Revenues (liability)
Ans - a
3. Which of the following is not covered under 'Market Discipline' pillar of Basel II ?
a. Ensure maintenance of minimum capital - with PCA for shortfall
b. Core disclosures
c. Enhance Disclosure
d. Supplementary disclosures
Ans - a
4. Asset in doubtful-I category – Rs. 500000/-
Realization value of security – Rs. 400000/-
What will be the provision requirement?
a. Rs. 500000/-
b. Rs. 400000/-
c. Rs. 180000/-
d. Rs. 200000/-
Ans - d
5. If there is an assets of Rs. 120 in the doubtful-I cat and the realization value of security is Rs. 100 only, what will be the provision requirement?
a. Rs. 40
b. Rs. 45
c. Rs. 50
d. Rs. 60
Ans - b
Since it a doubtful-I cat asset, so 25% of realization value Rs.100 i.e Rs. 25 and 100% of short Fall that is 120-100=20 so ans will be 20+25=45
6. The ultimate responsibility for designing and implementation of ICAAP lies with ......
a. Banks' board of directors
b. RBI
c. FEDAI
d. BCBG
Ans - a
7. Which of the following statements is not correct regarding Basel In implementation in India:
a. minimum common equity Tier I ratio should be 5.5% of RWAs
b. capital conservation buffer (CCb. consisting of common equity, should be 2.5% of RWAs
c. maximum additional tier I capital should be 1.5% of RWAs
d. minimum common equity Tier I ratio plus capital conservation buffer should be 7%
Ans - d
8. Deferred credits will appear on the balance sheet with the
a. Assets
b. Liabilities
c. Owner's/Stockholders' Equity
d. None of the above
Ans - b
9. Cumulative negative mismatches maximum charges taken for the period of 8-14 days in ALM risk will be ......
a. 5%
b. 10%
c. 15%
d. 20%
Ans - c
10. On the recommendations of the Finance Manager, the board of directors will accept the project if ......
a. Benefit Cost Ratio is less than one
b. Net Present Value is greater than zero
c. Internal Rate of Return is less than cost of capital
d. Pay Back Period is greater than target period
Ans - b
11.Basel III capital regulations are based on 3 mutually reinforcing pillar. These pillars are
(1) Pillar-1 minimum capital standards
(2) supervisory review of capital adequacy
(3) risk management.
a. all the 3 are correct
b. only 1 and 2 are correct
c. only 1 and 3 are correct
d. only 2 and 3 are correct
Ans - b
12. If there is an assets of Rs. 120 only in the doubtful-II cat and the realization value of security is Rs. 100 only, what will be the provision requirement.
a. Rs. 40
b. Rs. 50
c. Rs. 60
d. Rs. 70
Ans - c
Since it a doubtful-II Cat asset, so 40% realization value of Rs. 100 i.e Rs.40 and 100% of short Fall that is 120-100=20 so ans will be 40+20=60