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 meet the capital expenditure relates to: 2. For banking institutions, the dimension regulators are: to Fin Mgt. 3. Sarbanes -Oxley Act was Treasury policy 4. Treasury Management scandals a. 1c, 2a, 3b,4d b. 1c,2a, 3d,4b c. 1a,2c,3d,4b d. 1a,2c, 3b, 4d d. Accounting c. Framing b. strategic a. SEBI & the RBI

33. Match the following 1. C Ps banks 2. Banker's acceptance 3. C Ds 4. call money a. 1c,2a,3d,4b b. 1c,2d,3a,4b c. 1b,2d,3a,4c d. 1b2d,3a,4c c. issued by large corporate d. Bill of exchange a. Issued by comm. banks b. It is the money lent for 1 day

34. Match the following 1. Lock box system a. Digital image of the cheque to the paying 'banker'

2. In truncation process the collecting banker sends 3. Electronic clearance of cheques is done through 4. Quick credit of cheques is arrangement with bank

b. EFT & RTGS

c. To credit the proceeds even before collection of cheques. d. A arrangement with post office to 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 3. Systematic cash inflow risk means 4. The collapse of Barings bank in 1995 was engineered by d. Negotiable instrument issued 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 b. Very short term borrow c. Nick lesson

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