Attempt CAIIB BFM Practice Quiz and Download Free PDF

Q1. The following rates are quoted by a bank:
Spot USD/INR: 83.50 / 83.60
Exchange Margin for TT Buying: 0.10%
A customer wants to remit funds from his NRE account back overseas. What TT Buying Rate will the bank apply?

Q2. Spot USD/INR = 83.00. 6-month forward rate = 84.50. What is the annualized forward premium on USD against INR, and what does it indicate?

Q3. Statement 1: Under LRS, a resident individual can remit up to USD 2,50,000 per financial year for permissible transactions.
Statement 2: TCS at 20% is applicable on LRS remittances exceeding Rs.7 lakh in a financial year for non-education/non-medical purposes effective October 2023.
Statement 3: Remittances under LRS for overseas education funded by an education loan attract TCS at 20%. Which statements are correct?

Q4. Which combination of features applies ONLY to FCNR(B) accounts?

Q5. Under UCP 600, which of the following statements about document examination is CORRECT?

Q6. Statement 1: A Nostro account is a foreign currency account maintained by an Indian bank with its correspondent bank overseas.
Statement 2: A Vostro account is the account of a foreign bank held with an Indian bank in Indian Rupees.
Statement 3: Reconciliation of Nostro accounts is critical to prevent forex exposure and fraud in international banking.
Which statements are correct?

Q7. Which of the following money market instruments is issued at a DISCOUNT and redeemed at face value (zero-coupon structure)?

Q8. Assertion (A): Call money transactions are overnight borrowings and lendings in the interbank market, predominantly used by banks to manage daily reserve requirements.
Reasoning (R): Call money rates (MIBOR) are highly volatile as they fluctuate based on the daily demand and supply of funds in the banking system.
Choose the correct option:

Q9. A 10-year Government Security with face value Rs.100 and coupon rate 7.00% (semi-annual) is trading in the market. The current market yield (YTM) is 6.50%. The bond will trade:

Q10. A bond portfolio has a market value of Rs.500 crore and Modified Duration of 5.5 years. What is the Basis Point Value (BPV) of this portfolio?

Q1. Which of the following BEST describes the primary difference between the Capital Market and the Money Market?

Q2. Statement 1: Equity shareholders have a residual claim on the company’s assets after all liabilities are settled.
Statement 2: Debt holders (bondholders) share in the profits of the company as dividends.
Statement 3: The cost of equity is generally higher than the cost of debt because equity holders bear higher risk.
Which statements are correct?

Q3. Assertion (A): When the RBI conducts Open Market Operations (OMO) by purchasing government securities, it injects liquidity into the banking system.
Reasoning (R): Purchasing G-Secs from banks credits their accounts with RBI, increasing their reserves and capacity to lend.
Choose the correct option:

Q4. A bank has a floating-rate loan portfolio and is concerned about falling interest rates reducing its interest income. Which derivative strategy is MOST appropriate to hedge this risk?

Q5. Which of the following functions is NOT performed by a Stock Exchange?

Q6. SBI Bank has NDTL of ₹1,50,000 crore. The RBI increases the CRR from 4% to 5%. What is the additional amount SBI must now maintain with RBI, and what is the likely impact on the banking system?

Q7. Statement 1: Basel III introduced the Liquidity Coverage Ratio (LCR) to ensure banks hold enough High Quality Liquid Assets (HQLA) to survive a 30-day stress scenario.
Statement 2: The Capital Conservation Buffer (CCB) of 2.5% under Basel III must be maintained in the form of Common Equity Tier 1 (CET1) capital.
Statement 3: The Countercyclical Capital Buffer (CCyB) is fixed at 2.5% for all jurisdictions at all times.
Which statements are correct?

Q8. Which of the following BEST describes ‘Maturity Transformation’ in banking and the primary risk it creates?

Q9. Assertion (A): The Standing Deposit Facility (SDF) rate forms the floor of RBI’s liquidity corridor, while the Marginal Standing Facility (MSF) rate forms the ceiling.
Reasoning (R): The SDF allows banks to park excess funds with RBI without any collateral, making it a flexible tool to absorb surplus liquidity.
Choose the correct option:

Q10. Which of the following is NOT a primary function of a commercial bank?