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3. A bank suffers loss due to adverse market movement of a security. The security was
however held beyond the defeasance period. What is the type of the risk that the bank
has suffered ?
(i) 12%
(ii) 9.6%
(iii) 6.7%
(iv) 8%
(i)Decrease in cash
(ii) Increase in assets
(iii)No change in assets
(iv)Increase in cash
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7. A company declares RS 2/- dividend on the equity share of face value of RS 5/-. The
share is quoted in the market at RS 80/- the dividend yield will be----
(i) 20%
(ii) 4%
(iii) 40%
(iv) 2.5%
9. A debenture of face value of As. 100 carries a coupon of 15%. If the current yield is
12.5%. What is the current market price ?
(i) Rs.100
(ii) Rs.120
(iii) Rs.150
(iv) Rs.125
10. In order to develop an capability to actively manage an credit portfolio one must have
in place the following:
Credit Rating Model (or models for different categories of loans and advances)
Develop and maintain necessary data on defaults of borrowers rating category wise, i.e.,
‘Rating Migration’.
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12. An increase in cash reserve ratio will cause yield curve to
13. A bank holds a security that is rated A+. The rating of the security migrates to A.
What is the risk that the bank has faced ?
14. A transaction where financial securities are issued against the cash flow generated
from a pool of assets is called
(i) Securitization
(ii) Credit Default Swaps
(iii) Credit Linked Notes
(iv) Total Return Swaps
16. Sunset Torus has aRs 3500 account receivable from Mohan.On Jan 20,the Rotary
makes a paratial payment of Rs 2100 to Sunset Torus.The journal entry made on Jan 20
by Sunset to record this transaction includes:-
(i) A credit to the cash received account of Rs.2100
(ii) A credit the account receivable account of Rs2100
(iii) A debit to the cash account of Rs 1400
(iv)Adebit to the account recevvable account of Rs1400
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17 . Operational Risk arises from
19. A decline in cash reserve ratio will cause the yield curve to
(i) (a)
(ii) None of them
(iii) (c)
(iv) (b)
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23. 12% Government of India security is quoted at Rs.120. If interest rates go down by
1%, the market price of the security will be.....
26. A fall in long term interest rates on Government securities will make the yield curve
become
(i) flatter
(ii) steeper
(iii) shift downward
27.A bank expects fall in price of a security if it sells it in the market. What is the risk
that the bank is facing ?
28. 11% Government of India security is quoted at Rs. 110, the yield will be –
(i) 11%
(ii) 10%
(iii) 9%
(iv) None of these
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29. 1 day VaR of a portfolio is Rs.500,000 with 95% confidence level. In a period of six
months (125 working days) how many times the loss on the portfolio may exceed
Rs.500,000 ?
(i) 4 days
(ii) 5 days
(iii) 6 days
(iv) 7 days
(i) Go down
(ii) Go up
(iii) Remain unchanged
(iv) None of these
31. Cash book is type of _____but can also treated as part of ____
(i)Subsidiary book, Principal book
(ii) Principal book, Subsidiary book
(iii)Subsidiary book, Subsidiary book
(iv) Principal book, Principal book
33. If the yield on long dated Govt. securities falls, then the yield curve will became:-
(i) Steeper
(ii) Flatter
(iii) Shift downward
34. 11% Govt. of India security is quoted at Rs.110. If the interest rates go down by 1%
the market price of the security will be
(i) Rs.110
(ii) Rs.109
(iii) Rs.122.2
(iv) Rs.130
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35. Balanced fund is a mutual fund that
40. Capital charge for credit risk requires input for PD, LGD, EAD and M. Under
advanced IRB approach, who provide the input for LGD.
(i) Bank
(ii) Supervisor
(iii) Function provided by BCBS
(iv) None of the above
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41. A debenture of Rs.100 carrying 15% coupon rate is quoted in the market at Rs.135/-.
The current yield on this debenture will be
(i) 13.5%
(ii) 15%
(iii) 11.11%
(iv) 10%
43. If the short term interest rates are temporarily higher than the long term interest rates,
the yield curve will be
44. Premature payment of a term loan will result in interest rate risk of type
46. A company with equity capital of Rs.50 crores (Face Value of Rs.10/- per share)
makes gross profit of Rs.70 crores and net profit after tax of Rs.25 crores. If the market
price of its equity share is Rs.50, the PE ratio will be
(i) 50
(ii) 5
(iii) 10
(iv) 20
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47. Daily volatility of a stock is 1%. What is its 10 days volatility approximately ?
(i) 3%
(ii) 10%
(iii) 1%
(iv) 4%
48. If call money rates are temporarily higher than the long term interest rates, the yield
curve will be
1) Cost of capital
2) Internal generation of capital
3) Loss provision
51. Under inflationary conditions ,which of the methods will not show greatest value of
cost of goods sold?
(i) FIFO
(ii)LIFO
(iii)Weighted Average
(iv)Both a and c
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53 A bank funds its assets from a pool of composite liabilities. Apart from credit and
operational risks, it faces
54. A branch sanctions Rs.1 core loan to a borrower, which of the following risks the
branch is taking
1) Liquidity risk
2) Interest rate risk
3) Market risk
4) Credit risk
5) Operational risk
55. For charging depreation on which of the following assets ,the depletion method is
adopted?
(i) Plant and machinery
(ii) land and building
(iii) goodwill
(iv) wasting assets like mines and quarries
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(ii) Both the statements are not correct
(iii) Statement 1 is correct
(iv) Statement 2 is correct
59. 9% Government of India security is quoted at Rs.120. The current yield on the
security will be –
(i) 12%
(ii) 9%
(iii) 7.5%
(iv) 13.3%
61. Written down value method of depreciation machinery year after year due to
(i) Comparability
(ii) convenience
(iii)consistency
(iv) all of the above
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64. A mutual fund charges 1% entry load and no exit load. Its NAV is Rs.16; its sale and
repurchase price will -----
65.Rectifying the error of a credit purchase of goods worth #10000 recorded as credit sale
to Mr A, discovered 2 month later will be in:
(i)Journal Proper
(ii)sales book
(iii)cash book
(iv)Purchase book
68. Trial balance as on 31.03.05 shows sundry debtors as Rs.50,500. Also Write off Rs.
500 as bad debts. The amount of provision for Bad and Doubtful debts at5% will be
________
a). Rs. 2525 b). Rs. 2600 c). Rs. 2500
a). profit and loss a/c b). Fixed asset A/c c). Depreciation A/C
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72. Under Written down Value Method, depreciation _____________
a). increase every year b). is constant every year c). decrease
every year.
75.The total of the purchases day book is posted periodically to the debit of:-
(i) Purchase book
(ii) cash book
(iii)journal proper
(iv) nona of these
77. The opening balance of cash in January is Rs. 15,000. The estimated cash receipts are
Rs. 20,000 and the estimated cash payments are Rs. 10,000. The opening balance
of cash in February will be ____________
a). 25,000 b). Rs. 35,000 c). Rs. 45,000
78. The new partner does not bring in cash for his share of goodwill under ___________
a). Revalution method b). premium method
c). memorandum revaluation method.
79. Purchases of office furniture Rs.1200 has been debited to General Exp.A/C.It is:-
(i) Clerical error
(ii) error of principle
(iii) error of omission
(iv) compensating error
80. Decrease in the value of liabilities, at the time of admission of a new partner, results
in ____________ to old partners
a).profit b). loss c). expenses.
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82. Capital Reserve is shown on the __________ side of the balance sheet.
a). liability b). asset c). both.
83. The amount credited to share forfeiture account is Rs. 3,000. The discount on reissue
of forfeited share is Rs. 1,500. capital Reserve will be ____________
a). Rs. 2,500 b). Rs. 4,500 c). Rs. 1500.
84.Which of the following method the cost of the asset is spread over in equal proportion
during its useful economic life:-
(i) straight line method
(ii) written down value method
(iii)units of production method
(iv)all above
86.Sales return of amount Rs.1000 from Vijay was wrongly entered in purchase book.
The rectification is
a) Debit sales to the extent of Rs.2000.
b) Credit purchases to the extent of Rs.2000
c) Credit Vijay Rs.2000, debit sales and purchases to the extent Rs.1000, each.
d) Debit sales return by Rs.1000 and credit purchases by Rs.1000
87.A withdrawal of cash from business by the proprietor should be credited to:-
(i) Drawing A/C
(ii) Capital A/C
(iii) cash A/C
(iv) purchase A/C
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89. In purchases book the record is in respect of:-
(i) cash purchase of good
(ii) credit purchase of goods dealt in
(iii)All purchases of goods
92. Technique of finding the net balance of an a/c after considering the total of both
debits and credits appearing in the a/c is known as:-
(i) posting
(ii) purchase
(iii)balancing of an a/c
(iv) Arithmetically accuracy test
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96. For an expense to be classified as revenue or capital depends on
a) Kind of expense
b) Duration of the benefit of the expenditure
c) Effect on revenue earning capacity
d) All of the above
100.Bills receivable of Rs.1000,which was received from a debtor in full settlement for a
claim of Rs 1100 is dishonoured:-
(i) Purchase return book
(ii)Bills receivable book
(iii) Purchase book
(iv) journal book
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103.Subsidy os $ 40000 received from the govt. by a manufacturing concern can be best
treated as :-
(i) capital receipt
(ii) Revenue receipt
(iii)capital expenditures
(iv) Revenue expenditures
104. As per accounting standards which of the following is not a preferred method
a) LIFO
b) FIFO
c) WACM
d) All of them
In the books of ‘A’, Bills receivable a/c is debited and B’s a/c is credited, then
a) Bill accepted by ‘A’
b) Bill accepted by ‘ B’
c) Bill retired by ‘B’
d) None of the above
In the books of B , Bills payable a/c is debited and bank account is credited
a) Bill accepted by ‘B’
b) Bill retired by ‘B’
c) Bill dishonoured by ‘B’
d) Bill sent by ‘A’ for payment
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107. Which of the following is not true
a) there is no difference in appearance between trade
and accommodation bill.
b) A bill of exchange must be accepted
c) Drawee is maker of a bill
d) Accommodation bill is for an imaginary transaction
109. If purchase return of Rs 84 has been wrongly posted to the debit of sales return a/c,
but had been correctly entered in the suppliers a/c the total of the trial balance would be:-
(i) credit side to be Rs84 more than debit side
(ii) debit side to be Rs84 more than credit side
(iii)debit side to be Rs168 more than credit side
(iv)cresit side to be Rs168 more than debit side
110.Due to heavy flooding a truck carrying consignment goods sinks. This loss is called
a) contingent loss
b) Nominal loss
c) Abnormal loss
d) Casual loss
111. Which of the following is true for leasing and hire purchase
a) Lessor and vendor can claim depreciation.
b) Lessor and hirer can claim depreciation.
c) Lessee and hirer can claim depreciation.
d) Lessee and vendor can claim depreciation.
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d) Cost of the asset = total lease rent + residual value + total finance income
114.In comparing lease & hire purchase (H P) there are differences & similarities.
Of the following which one is not true?
a) In lease the user of the asset does not retain it, while in H P he does.
b) In lease the user does not claim depreciation while he does in H P.
c) Payment of rentals is on instalment basis in both.
d) The users of assets in both lease & H P run the risk of obsolescence.
116. For a Non- Trading Organization, a P & L A/c called an Income & Expenditure A/c
because.
(a) They often make losses.
(b) They are forbidden by statute to make profits
(c) By object of their association they are non profit making bodies.
(d) Their income & expenditure statement are a combination of capital & revenue
receipts.
118. Under written down value method of Depn., the W D V of the asset is always
a) equal to zero
b) < zero
c) > zero
119.Which of the following items would not appear in a debtors control account?
A. Cash received
B. Returns inwards
C. Discount received
D. Interest charged on overdue accounts.
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120.In a bank reconciliation, deposits in transit are:
A. deducted from the cash book balance.
B. added to the cash book balance.
C. added to the bank statement balance.
D. deducted from the bank statement balance.
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