Banking Awareness Based on Economic Survey| Daily Banking Awareness Quiz

Banking Awareness Based on Economic Survey

 | Daily Banking Awareness Quiz 

Banking Awareness is the most important subject in the mains examinations of bank and insurance exams.  Economic Survey Quiz is a very vital topic of the Banking awareness section. Economic Survey Quiz is a very scoring topic. We are providing  Economic Survey quiz based on the banking awareness syllabus. This  Economic Survey Quiz provided on our website can be helpful for different exams such as IBPS PO, SBI PO, RRB PO, IBPS clerk, SBI clerk. This Economic Survey Quiz on our website comes with analysis and explanation highlighting important areas of Banking awareness.

Q1. A business in which there is very high risk, the capital requirement would be:

(a) Lower

(b) Higher

(c) No requirement of capital

(d) None of the above

Answer & Explanation
Ans.1.(b)

Exp.

Q2. Which of the following is incorrect regarding risk?

(a) Zero-Risk would imply no variation in net cash flow.

(b) Lower risk implies lower variability in net cash flow with lower side potential and downside potential.

(c) Higher risk would imply higher upside and downside potential

(d) Return on zero-risk investment would be higher as compared to other opportunities available in the market.

Answer & Explanation
Ans.2.(d)

Exp.

Q3. Which of the following risk may arise in banks if they indulge in funding long term assets by short term liabilities?

(a) Liquidity Risk

(b) Interest Rate Risk

(c) Market Risk

(d) Credit Risk

Answer & Explanation
Ans.3.(a)

Exp.

Q4. ____ risk is defined as the potential of a bank borrower or counterparty to fail to meet its obligations in accordance with the agreed terms.

(a) Liquidity Risk

(b) Interest Rate Risk

(c) Market Risk

(d) Credit Risk

Answer & Explanation
Ans.4.(d)

Exp.

Q5. Which of the following bank business line includes all the assets that are marketable, i.e., they can be traded in the market?

(a) Banking Book

(b) Trading Book

(c) Off- Balance Sheet Exposures

(d) None of the above

Answer & Explanation
Ans.5.(b)

Exp. The trading book line includes all the assets that are marketable, i.e., they can be traded in the market.

Q6. On perusal of banking records of a bank, you find that its Net Interest Margin is negative. This means that: –

(a) Banking firm made optimal decisions

(b) Banking firm did not make optimal decisions

(c) Banking firm is bankrupt

(d) None of the above

Answer & Explanation
Ans.6.(b)

Exp Net interest margin (NIM) is a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example, deposits), relative to the amount of their (interest-earning) assets. A negative value denotes that the firm has not made an optimal investment decision because interest expenses exceed the amount of returns generated by investments. Net interest margin is expressed a percentage. It is one of the profitability indicators of an organization, showing how much it earns on interest from its credit products—loans, mortgages—compared to the interest it pays out on things like savings accounts and certificates of deposit (CDs).v

Q7. Which of the following is incorrect regarding compliance risk?

(a) Compliance risk is the risk of legal or regulatory sanction, financial loss or reputation loss that a bank may suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory organization standards, and codes of conduct applicable to its banking activities.

(b) It is also called integrity risk since a bank’s reputation is closely linked to its adherence to principles of integrity and fair dealing.

(c) It is a part of operational risk that bank faces.

(d) None of the above.

Answer & Explanation
Ans.7.(a)

Exp. Compliance risk is the risk of legal or regulatory sanction, financial loss or reputation loss that a bank may suffer as a result of its failure to comply with laws, regulations, rules, related self-regulatory organization standards, and codes of conduct applicable to its banking activities.

Q8. Which of the following bank business line includes swaps, futures, forward contracts, foreign currency contracts, options etc. that a bank enters?

(a) Banking Book

(b) Trading Book

(c) Off- Balance Sheet Exposures

(d) None of the above

Answer & Explanation
Ans.8.(c)

Exp. Off-balance sheet exposures refer to activities that are effectively assets or liabilities of a company but do not appear on the company’s balance sheet. Off-balance sheet items are detectable as they are appearing in the notes to financial statement of the organization. Off-balance sheet items example – Financial derivatives which include swaps, options, forwards, and futures for interest rates, currencies, stocks, bonds, indexes, and commodities.

Q9. Which of the following authority/group is responsible for overall management of risk in every organization?

(a) Board of Directors

(b) Risk Management Committee of Board

(c) Committee of senior level executives

(d) None of the above

Answer & Explanation
Ans.9.(a)

Exp. The Board of Directors is responsible for overall management of risk in every organization. Boards of Directors have held the responsibility of risk management oversight, ensuring that risk management processes are clearly defined and appropriately enacted.

Q10. If daily volatility of stock were 3% then monthly volatility would be:

(a) 15.32

(b) 16.44

(c) 10.22

(d) None of these

Answer & Explanation
Ans.10.(b)

Exp. Volatility over a time horizon = Daily Volatility * Square root of T

Daily Volatility – 3

Time – 30 days

Volatility = 3*Square Root of 30

= 3* 5.48

= 16.44

Q11. Portfolio diversification is a means to:

(a) Mitigate risk

(b) Enhance risk

(c) Transfer risk

(d) Both 1 and 2

Answer & Explanation
Ans.11.(a)

Exp. The definition of diversification is the act of, or the result of, achieving variety. In finance and investment planning, portfolio diversification is the risk management strategy of combining a variety of assets to reduce the overall risk of an investment portfolio.

Q12. Higher risk is associated with greater probability of higher return and lower risk with a greater probability of smaller return. This trade off which an investor faces between risk and return while considering investment decisions is called the ______.

(a) Risk sensitivity trade off

(b) Risk return trade off

(c) Capital return trade off

(d) None of these

Answer & Explanation
Ans.12.(a)

Exp. Higher risk is associated with greater probability of higher return and lower risk with a greater probability of smaller return. This trade off which an investor faces between risk and return while considering investment decisions is called the risk return trade off.

Q13. In finance ______ is a measure of a stock's volatility in relation to the market.

(a) Beta

(b) Alpha

(c) Gamma

(d) None of these

Answer & Explanation
Ans.13.(a)

Exp. Beta is a measure of a stock’s volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0. If a stock moves less than the market, the stock’s beta is less than 1.0. High-beta stocks are supposed to be riskier but provide a potential for higher returns; low-beta stocks pose less risk but also lower returns.

Q14. If a stock moves less than the market, the stock's beta is _____.

(a) less than 1

(b) More than 1

(c) Equal to 1

(d) None of these

Answer & Explanation
Ans.14.(a)

Exp. Beta is a measure of a stock’s volatility in relation to the market. By definition, the market has a beta of 1.0, and individual stocks are ranked according to how much they deviate from the market. A stock that swings more than the market over time has a beta above 1.0. If a stock moves less than the market, the stock’s beta is less than 1.0. High-beta stocks are supposed to be riskier but provide a potential for higher returns; low-beta stocks pose less risk but also lower returns.

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Attempt More Banking Awareness Quiz Topic wise

Recommended PDF’s:

2020 Preparation Kit PDF

Most important PDF’s for Bank, SSC, Railway and Other Government Exam : Download PDF Now

AATMA-NIRBHAR Series- Static GK/Awareness Practice Ebook PDF Get PDF here
The Banking Awareness 500 MCQs E-book| Bilingual (Hindi + English) Get PDF here
AATMA-NIRBHAR Series- Banking Awareness Practice Ebook PDF Get PDF here
Computer Awareness Capsule 2.O Get PDF here
AATMA-NIRBHAR Series Quantitative Aptitude Topic-Wise PDF 2020 Get PDF here
Memory Based Puzzle E-book | 2016-19 Exams Covered Get PDF here
Caselet Data Interpretation 200 Questions Get PDF here
Puzzle & Seating Arrangement E-Book for BANK PO MAINS (Vol-1) Get PDF here
ARITHMETIC DATA INTERPRETATION 2.O E-book Get PDF here

 

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