#1
What is the primary function of a bank?
To facilitate monetary policy implementation
ExplanationBanks facilitate monetary policy implementation.
#2
What does 'NPA' stand for in banking?
Non-Performing Asset
ExplanationNPA stands for Non-Performing Asset.
#3
What does 'ALM' stand for in banking?
Asset Liability Management
ExplanationALM stands for Asset Liability Management.
#4
What is the primary role of a credit rating agency?
To assess the creditworthiness of borrowers
ExplanationCredit rating agencies assess the creditworthiness of borrowers.
#5
What is the purpose of the 'know your customer' (KYC) policy in banking?
To identify potential money laundering activities
ExplanationKYC policy in banking aims to identify potential money laundering activities.
#6
Which of the following is a method to manage credit risk?
Credit Scoring
ExplanationCredit Scoring is a method to manage credit risk.
#7
What is 'Basel III' in banking terms?
A global regulatory framework for bank capital adequacy
ExplanationBasel III is a global regulatory framework for bank capital adequacy.
#8
What is the purpose of stress testing in financial risk management?
To assess the impact of extreme market conditions on a financial institution
ExplanationStress testing assesses the impact of extreme market conditions on financial institutions.
#9
What is the main objective of liquidity risk management?
To ensure a sufficient level of cash to meet obligations
ExplanationLiquidity risk management aims to ensure sufficient cash to meet obligations.
#10
Which financial ratio measures a bank's ability to cover its short-term liabilities with its short-term assets?
Current Ratio
ExplanationCurrent Ratio measures a bank's ability to cover short-term liabilities with short-term assets.
#11
Which financial risk is associated with changes in interest rates?
Interest rate risk
ExplanationInterest rate risk is associated with changes in interest rates.