Banking Expected Questions

.;Fundamentals of Banking

Concept Of Money
1. What is inflation? Options: Increase in Prices, Decrease in Prices, Varying Prices
2. There is a person getting x salary. Inflation is 20% but his salary raise is 5%. What is the impact? Options: his standard of living goes down, he gets paid some y salary, he quits his job.
3. currency is: Option: practical form of money
4. Full form of IRR, CRR, NPV,

Financial Instruments
5. Commercial Paper
6. Money Market instruments
7. ADR – example based question.
8. What are warrants? Options: Equity and Call Option

Financial Markets
9. List of stock exchanges is given. Pick the one which is not a stock exchange. Options: LSE, BSE, NSE
10. How many stock exchanges are there in India? Options: 2, 4, more than 4
11. Central Bank is also called Options: Banker’s Bank
12. Regulatory Balance Sheet: some question on what is included in this

Risk Management
13. A person who wants to minimize risk would do what? Options: Always consider the risk involved, always consider the rate of return, would invest in low risk-low return instrument
14. A student willing to take maximum risks for high returns would invest in: Options: Stock, Bond
15. Legal risk is: Options: possibility of loss when contract cannot be enforced.

Introduction to Banking
16. If there is a change in interest rate, it refers to: Options: Monetary Policy/ Money Policy/ Multiplier Effect
17. Chinese wall was built to separate: Options: analysts and bankers

Retail Banking
18. Which of the following is not a part of retail banking? Options: Personal Loan, Trade Finance, Home Loan, Car Loan.
19. Where do banks make most money? Options: Customer who pays in time, Customer who never pays, Customer who pays but late
20. FNMA, GNMA, FHLMC functions include: Options: buy mortgages from bank and pool them into bonds to be held or sold.
21. Pick the odd one out. Options: Visa, MasterCard, Discover, HSBC Bank
22. Which of the following is not a banking account: Checking Account, Demat Account, Savings Account, MMDA

Electronic Banking
23. The loss of which of the following can cause maximum harm to customer? Options: ATM Card, Debit Card, Gift Voucher.
24. How does CHIPS use FedWire? Options: over FED New York, over Federal Reserve
25. An example where in some transfers from two accounts are given. Question was that what will happen end of day in case of CHIPS? Options: Difference will get credited, Individual Balances will get credited to both accounts
26. Which of the following is likely to use FedWire? Options: SWIFT, ATM, Debit Card, ACH, Credit Card

Private Banking
27. Net worth is: Options: Household Income, No of shares, Household income + no of shares
28. Full form of PTA
29. ICICI is Options: Investment Bank, Private Bank, Public sector Bank


Asset Management
30. Those using Active Approach for Asset Allocation follow Options: Market Timing
31. The person using diversification strategy for minimizing risks would Options: create portfolio looking similar to the market index
32. Bid-Ask Spread Options: difference in buy and sell price of the same asset, difference in opinion of buyers and sellers on the same asset

Corporate Lending
33. Definition of corporate lending. Question was something like, what will the lending type be if the company requires loans for buying modern equipment.
34. Who is likely to get a loan? Options: Company with BB rating, Company with D rating
35. Conceptual question on working capital.
36. Full form of CP and meaning.

Trade Finance
37. Which is the riskiest form of payment for buyer/seller?
38. Which is the most secure way of payment? Options: LC, Documentary Collection
39. Who issues/ applies for an LC? Options: Buyer’s Bank, Seller’s Bank, Buyer, Seller

Treasury Services and cash management
40. Collections and Payments is a function of which department? Options: Treasury
41. CLS full form.

Investment Banking
42. Pick the odd one out. Which of the following is not an investment bank.
43. Amongst a list of stock exchanges, which one is the Japanese Stock Exchange?
44. Footsie is the stock exchange for which country?
45. In which underwriting do the unsold securities remain with the issuer?
46. Example based question on Limit Order/ Stop Order

Recent Developments
47. What are the three pillars of Basel 2
48. Which of the following is not a pillar of Basel 2 (confusing options, have to know exactly)
49. Difference between Standardized and Internal ratings Based approach.
50. What were the technology challenges for banks in Check 21 act

Infosys declared dividends. Which of the following statements can be linked to this fact. Options:

Questions by Bivek
51. NYSE
Ans) Largest OTC
52. What is NOSTRO acc
Ans) acc in one place having tie up with some foreign bank
53. One question from Hire Purchase

54. maximum benefit to investor by giving money to which bank . Options è (a) Private (b) Asset Manag (c) ? (d) ?

answer Private
55. Odd man out for mode of payments.
56. Oil Grill company takes loan … etc
answer Asset Securitisation
57. BAFT full form
Ans) Banker’s Association for foreign trade
58. IRR full form
Ans) Internal Rate of Return
59. SWIFT –
Ans) society of worldwide interbank financial telecommunication.
60. CRR full form è Cash Reserve Ratio
61. CPI Full form è Consumer’s Price Index
62. FOTSEC ???? which country’s index Ans) Singapore/Switzerland.
63. One question from Chip Cards (Clearing House Interbank Payment System It is a private sector for wire transfer just like fed where all the transaction cleared at the end of day but in fedwire it takes only few minutes(differences).
64. One simple question (numerical) from Compound Interest
(future value = principal ( 1 + r)^t and present value = f.v. / p(1 + r)^t
65. Risk Management à what is VAR è Measurement of Risk (Value at Risk)

66. One 3 mark question from US Patriot ACT
67. Due diligence is?
68. what is Risk averse?
69. which is not the top 10 bank?
70. PTA,ACH,IRR,CLS,POP full form
71. 3 quesitons on custodian
72. settlement,safekeeping,reporting is related to
Ans) custodian
73. If one bank want to deal with another bank which don’t have any relationship wants to keep funds secure etc…
Ans) global custodian services,
74. superDOT ?
Ans) NYSE.
75. In Trade finance which account will have maximum risk for seller
Ans) open account.
76. In Trade finance which one holds true
Ans) distribute risk between buyer and seller.
77. Reserve Bank related question? Generally what kind of bank it is?
78. question related to money market etc
Ans) Monetary policy.
79. full form of EMI. Ans) Equated Monthly Installment.
80. full form of NASDAQ. Ans) National association of security dealers automated quotation.
81. full form of LIBOR,LEAP. London interbank offered rate , long term equity anticipation security.

82. what is APR (annul percentage rate) Interest rate calculation

Amount of interest when & how it should be paid, any other charges when & how it should be paid.
83. Which bank is not an associated bank? any of American Express, Diner’s club, Discover.
84. Which is the point of sale transfer ans) Debit card.
85. If lost which card have maximum risk ans) Debit /ATM card if option is gift voucher then you have to think.
86. Which is know as the Tax haven ans) it could be cayman island & Bermuda.
87. difference between private & Asset management ans) private bank targets Individual & asset management targets institution.
88. contrarian investing -> implied questions
89. sight draft - > implied questions.
90. which are not investment banks.
91. Which underwriting is rights offering Ans) standby.
92. what happens in a stop limit order, choose one from the option.
93. one calculation based on CLS(continuous linked settlement) transaction like A transfer to B then B transfer to A so on
94. What is Chinese wall
Ans) separates research analyst from both bankers and sales & Trading.
95. US Patriot Act four options which one is false
96. Sarbanes Oxley Act four options which one is false.
97. Check 21 four options which one is true.
98. What do you mean by Dealers par excellence?
Ans) Act as a principal and trade for his own interest.
99. Which is the new Risk in Basel2 ans) Operational risk.
100. What is the risk related to cognizant ans) all.
101. if attrition is there what kind of risk it is ans) operational risk.
102. oil company related one question ans) Asset Securitization.
103. One question having Sachin Tendulkar name ans) Sachin Tendulkar.
104. What is leverage financing
Ans) debt/equity ratio but in option it will not be present so the answer will be “use of dept”.
105. which bank initiates the LC ans) buyers bank.
106. Warrants cannot be options can be Traded, Exercise , Expires , etc ans) this three are true so the 4th one is the answer.
107. fannie mae,fannie mac,genie mae are related to ans) options are confusing but option b is the ans. This all are related to Mortgage for US.
108. What is cp?
Ans) commercial papers which is an unsecured short term loans maturity 1 – 270 generally < 30 days.
What is ADR?
Ans) American Deposit Receipt, It has the voting rights(important).
What is RTGS?
Ans) Real Time Gross Settlement which provides online settlement of payments between financial institutions.
111. There is one question on the 13 steps involve during letter of credit in Trade finance,
five options will be given and we have to arrange them in sequential order.

Vipul

112 Cognizant stock is going to increase in next one month , what should we do ?
Option: sell put option, sell call option, buy put option, buy call option
,buy put and call both option at different strike rate.

Answer : for this question answer is both 'buy call option' or 'sell put option' . Buying call option will give you unlimited gains for rise in cognizant stock (because you have the option to buy at the strike price) whereas selling put option would result in you retaining the premium when cognizant stock rises.

113 footsie(FTSE) is related with
Option : UK, Switzerland, Singapore, JAPAN, US
114 due diligence
115 Risk averse
116 stardardize approach
117 US PATRICAT ACT
118 Trade finance—letter of credit.
119 Work of central bank
120 Arbitrage
121 ACH related one question
122 Money market related one question.
123 Which is not a repayment method?
124 Option: direct debit, direct receipt,PDC, one another option which is answer
125 CP full form.
126 what is NYSE option: OTC, primary market, secondary market
127 CLS full form
128 APR contains what ? answer—all the given in list.
129 lost of which contains maximum risk option: ATM card, debit card, credit card, gift
voucher.
130 Which one of following is not a private
Option: Fed wire, CHIPS answer—Fed wire.
131. work of custodian option: settlement, Trading, Aution, netting
132 simple interest is calculated on ?
133 keep the odd term out ? option: visa, mastercard,discover,HDFC bank
134 which is not a top 10 bank ?
135 IRR full form
136 High net work ? option: net worth, Household, no. of share, household + no. of share
137 A brokerage or analyst report will contain all of the following except?
a) a detailed description of the company, and its industry.
b) an opinionated thesis on why the analyst believes the company will succeed orfail.
c) a recommendation to buy, sell, or hold the company.
d) a target price or performance prediction for the stock in a year.
e) a track record of the analyst writing the report.
138 Nikkie is which country’s market indices. ?
139 VaR is used for what ? option: identifying risk, mesure the risk, avoid the risk
140 don’t put all eggs in one basket is used for what ? answer – diversification
141 one question of dealer’s work
142 which type of underwriting is used most probably ?
143 full form of POP
144 with which client (custodian)cognizant is having a old relation shop ?
answer – JPMC-IX
145 Active approach related one question.
146 find the odd term ? option : American express, discover, diner’s club.
147 one question of nostro account.
148 one question of banker’s acceptance.
149 which one is not a payment method is trade finance
150 currency swap related one question.
151 why CRR is required. Answer: manage the liquidity risk.
152 High purchase related one question.
153 overdraft related one question.
154 full form of EFT.
155 question related money multiplier effect.
156 main work of bank ? answer: provide linked between lender and borrower.
157 primary market related one question.
158 convertible bonds related one question.
159 There is a person getting x salary. Inflation is 20% but his salary raise is 5%. What is the
impact? Options: his standard of living goes down, he gets paid some y salary, he quits
his job.
160 it new company established which of the following risk occurs
Option: operational risk, credit risk, market risk, all of the above

Answer: answer is mainly 'operational risk'. There is no question of credit risk as the company has not lent money to someone from whom getting back is doubtful. As for market risk, that term is more used for fluctuation in prices of any thing. If the company is in the business of selling some commodity then we can say it also faces market risk due to fluctuation in selling price of that commodity.