MODEL QUESTION PAPER

SUBJECT CODE:

SUBJECT : Treasury Management

SECTION A

1. A Depository Receipt is a financial security issued by ________, traded on a

________ stock exchange.

a. local company, foreign

b. local company, local

c. foreign company, local

d. foreign company, foreign

2. Functions of Treasury Management includes: Choose the odd choice

a. Framing Treasury Policies

b. Establishing a Treasury System

c. Funds Management

d.Liquidity Planning

3. Planning for Organic and Inorganic growth is the function of:

a. Integrated treasury of the bank

b. Treasury Management

c. Bank Management

d. Corportate general management

4. Expand CBLO:

a. Collaborated borrowings & lending Operations

b. Collateralized debt obligations

c. Collateralized borrowing & lending Obligations

d. Collateralized bank's lending Operations

5. The treasury operations are inefficient in

PSUs. They seldom

a. lend their surplus funds

b. borrow from money market

c. hold large cash reserves

d. none

6. Banks maintain two types of accounts with RBI:

a. Savings a/c and current a/c

b. Current a/c and subsidiary general ledger a/c

c. Fixed deposit a/c and Current a/c

d. Savings a/c and subsidiary general ledger a/c

7. Cash assets or near cash items are highly liquid and

____________.

a. They providing additional comfort & operational convenience

b. Bur they drag down operational profit

c. They provide additional income & operational convenience

d. None of the above

8. Which motive for holding cash deals with day to day, hour to hour

regular payments, taxes to the government etc?

a. precautionary motive

b. Speculative motive

c. Transaction motive

d. Survival motive

9. Parkinson's law says " If something can go wrong it will go

wrong" This statement relative ______________motive.

a. Precautionary

b. Transaction

c. Image-building

d. Statutory compliance

10. When the interest rate increase saving rate____________.

a. Decreases

b. Also increases

c. Remain stable

d. None

11. Cost-push inflation may result in stagnation in the economy

coupled with inflation is called .

a. Deflation

b. Hyper inflation

c. Stagflation

d. Normal inflation

12. _____________rate of interest encourage production function &

consumption function.

a. Low

b. High

c. Stable

d. None

13. How foreign exchange reserves of a country are created?

a. Exports

b. Imports

c. Remittance from foreign countries

d. Funds bought in by foreign investor

14. The value of the currency of the country is largely depends

on external & internal stability. Internal stability is influenced by.

a. Fiscal and monetary policies

b. FEMA

c. Foreign policies

d, Political issues

15. Risk related to natural factors like drought cyclones earth quakes

are termed to .

a. Un systematic or firm specific risk

b. Systematic risk

c. Diversifiable risk

d. Commodity risk

16. Loans to fictitious borrowers, borrowers of doubtful integrity,

collateral of dubious quality leads to .

a. High level of NPA

b. High level of frauds

c. High level of comption

d. High level of mismanagement

17. Which bank collapsed in the year 1995 due to unexpected loss in

derivative market?

a. Global trust bank

b. Freddie Maa

c. Barings bank

d. UTI bank

18. How to measure and determine the risk involved in the

loan and investment portfolio?

a. Classification of good & bad loans

b. Classification according to the age of loan

c. Classification according to grades & use of symbols

d. All of the above

19. The risk weight age for the loan given to movie- making

real estate or any speculative activity is:

a. 75% of loan amount as tier / capital

b. 100% of loan amount as tier / capital

c. 125% of loan amount as tier / capital

d. 150% of loan amount as tier / capital

20. RBI in its credit policy announced on April 23, 2007

reduced the risk weight age for housing loan from:

a. 150% to 100%

b. 150% to 75%

c. 75% to 50%

d. 100% to 50%

SECTION B

21. Foreign companies raising funds in India is:

a. ADRs

b. GDRs

c. IDRs

d. Equity shares

22. The new sources of funding agencies are ________,________ and

___________

a. Equity shares, derivatives & private equity

b. Venture capital, private equity and HNI individuals

c. Venture capital, derivatives & equity shares

d. Hedge funds, equity shares, derivatives

23. C Ds are similar to FDs. They are issued by banks for the receipt of deposit.

The main difference is:

a. CDs are negotiable certificate & transferable

b. FDs are negotiable certificate & transferable

c. CDs are not subject to restrictions

d. FDs are subject to restrictions

24. Well developed capital market attracts

a. Green field investments

b. FDI and FPI

c. Aid & Subsidies

d. Long term loans

25. The CRR is a good monetary tool in the hands of RBI during the period of inflacics

the RBI

a. Increase the CRR in order to drain the excess liquidity from the banking system

b. Increase the CRR in order to bring in excess liquidity from the banking system

c. Decrease the CRR in order to drain the excess liquidity from the banking system

d. Decrease the CRR in order to bring in excess liquidity from the banking system

26. According to which theory the rate of savings is

assumed to be function of rate of interest?

a. Loanable fund theory

b. Classical theory

c. Liquidity preference theory

d. Bond dynamics

27. The world foreign exchange market never sleeps

and works throughout the day and night . When

________market closes, _________ market is open.

a. New York , Frankfurt

b. London , Sydney

c. New York , Sydney

d. New York , London

28. What measures surplus or shortage of funds at specific maturity

data?

a. Time buckets

b. Maturity profile

c. Maturity ladder

d. Defeasance period

29. Each time span selected for calculating the maturity profile is

called a

a. Time bucket

b. Time span

c. Maturity ladder

d. Maturity profile

30. RBI to upgrade information infrastructure for ALM

introduced RTGS for:

a. Transfer of funds from one place to another

b. Quick clearance of cheques

c. Facilitating loan dispersal

d. Maintaining healthy credit-deposit ratio

31. What is key to the success of ALM?

a. Framing policies and procedures

b. Analyzing the credit risk

c. Proper implementation of the policies

d. Credit rate portfolio management

SECTION C

32. Match The Following

1. Borrowing long term funds to a. SEBI & the RBI

meet the capital expenditure

relates to:

2. For banking institutions, the b. strategic

dimension regulators are:

to Fin Mgt.

3. Sarbanes -Oxley Act was c. Framing

Treasury policy

4. Treasury Management d. Accounting

scandals

a. 1c, 2a, 3b,4d

b. 1c,2a, 3d,4b

c. 1a,2c,3d,4b

d. 1a,2c, 3b, 4d

33. Match the following

1. C Ps banks a. Issued by comm. banks

2. Banker's b. It is the money lent for 1 day

acceptance

3. C Ds c. issued by large corporate

4. call money d. Bill of exchange

a. 1c,2a,3d,4b

b. 1c,2d,3a,4b

c. 1b,2d,3a,4c

d. 1b2d,3a,4c

34. Match the following

1. Lock box system a. Digital image of the cheque to

the paying 'banker'

2. In truncation process the b. EFT & RTGS

collecting banker sends

3. Electronic clearance of c. To credit the proceeds even before

cheques is done through collection of cheques.

4. Quick credit of cheques d. A arrangement with post office to

is arrangement with bank collect the cheques directly to avoid

Delay in collection.

a. 1b, 2a, 3d, 4c

b. 1b, 2d, 3c, 4a

c. 1d, 2a, 3b, 4c

d. 1d, 2c, 3a, 4b

35. State True or False

a. Income funds are those mutual fund schemes that are offered to investor who

desire higher return than the interest rate offered by the banks, but are not

ready to take the risk arising out of the market fluctuation

b. Banks have to maintain 30 % of their time and demand liabilities in approved

securities SLR

c. The secondary market has is well developed for perpetual bond market.

d. When the interest rate goes up the market price of the bonds falls down.

a. T, F, F, T

b. F, F, F, T

c. T, F, T, T

d. T, T, F, T

36. State True or False:

1. The overseas investment limit for the Indian companies has been enhanced to

300 % of their net worth.

2. The overseas investment limit for the Indian companies has been enhanced to

200 % of their net worth.

3. According to FEMA, loans can be given to resident of foreign countries

4. Purchase or sale of immovable property outside India resident was permitted in

FERA act.

a. F, T, T, F

b. T, T, T, F

c. T, F, F, T

d. F, T, F, F

37. Match the following

1. CBLO market is for a. Reduction in cash receipts due to

external function

2. Corticated of deposit b. Very short term borrow

3. Systematic cash inflow c. Nick lesson

risk means

4. The collapse of Barings bank d. Negotiable instrument issued by

in 1995 was engineered by banks to borrow a huge amount

from a corporate.

a. 1b, 2d, 3c, 4a

b. 1d, 2a, 3a, 4c

c. 1b, 2d, 3a, 4c

d. 1a, 2b, 3c, 4d

38. State True or False:

1. In Basel regime, RBI increased the share capital of the banks substantially.

2. Banks are allowed to issue preference shares.

3. The biggest item on the liabilities side of a bank's balance sheet is deposits

4. Savings Bank deposit is also known as Time Deposit

a. T,T,T,T

B. T,F,F,F

c. T,T,T,F

d. T,F,T,F