P. Vijay Kumar

Question and Answer Bank in Financial Markets - Part 1

(200 questions and answers)

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Which of the following are the key functions of financial markets? {Financial Markets}
1. Raising capital for companies
2. Allocate capital efficiently
3. Transfer risk from risk averse to risk seeking investors
4. All of the above

The banking industry facilitates movement of funds from the surplus sector of the economy to the deficit sector. This is an example of ___________ role played by banks. {Banking}
1. Transactional role
2. Transformational role
3. Intermediary role
4. Diversification role

Credit Unions, a type of banks in the USA are similar to ______________ banks in India. {Banking}
1. Commercial banks
2. Cooperative banks
3. Foreign banks
4. Regional rural banks

Monetary policies framed by Central Banks focus on which of the following. {Banking}
1. Income taxes levied on individuals and corporates
2. The surpluses/deficits of the government
3. Controlling liquidity in the evenomy (money supply)
4. 'B' and 'C' above

Interest earned by a bank on the loans made by it are reflected as _______________ in its financials. {Banking}
1. Assets
2. Income
3. Liabilities
4. Expenditure

Which of the following is a role typically not performed by Central Bank? {Banking}
1. Setting the official short-term interest rate
2. Establish tax policies
3. Controlling money supply
4. Acting as banker to the goverment

When there is excess money in the system and the central banker wants to reduce it, the open market operations carried out is to ______________ {Banking}
1. Sell securities
2. Buy securities
3. Create securities
4. Purge securities

Deposits taken by a bank are reflected as _________________ in its financial statements. {Banking}
1. Assets
2. Income
3. Liabilities
4. Expenditure

Which of the following type of bank in India is promoted jointly by Central Government/State Government / Sponsoring Scheduled Bank and focuses on institutional credit for agriculture and rural sectors. {Banking}
1. Public sector bank
2. Private sector bank
3. Regional rural bank
4. Cooperative bank

Which of the following characterises retail banking? {Banking}
1. Relatively higher volumes and lower values of relationships
2. Relatively lower volumes and higher values of relationships
3. Relatively higher volume and higher values of relationships
4. Relatively lower volumes and lower values of relationships

If customers served and delivery channels are two key dimensions of retail banking, the third dimension is ______________ {Banking}
1. Products and services
2. Regulation and compliance
3. Branches and ATMs
4. None of the above

Licensing of banks in India is an important function of RBI. This forms part of which of the following fuction of the banks? {Banking}
1. Regulatory function
2. Monetary function
3. Banker to Banks function
4. Banker to Government function

The Reserve Bank of India requires banks to maintain a certain amount of cash in reserve as a percentage of their deposits. This is known as the _____________ {Banking}
1. Statutory Liquidity Ratio (SLR)
2. Cash Reserve Ratio (CRR)
3. Repo Rate
4. Reverse Repo Rate

The rate at which RBI lends to the banks to provide liquidity to the banking system is the _____________ {Banking}
1. Reverse repo rate
2. Repo Rate
3. CRR
4. SLR

Corporate banking is primarily characterised by ____________ {Banking}
1. Large number of small value relationships
2. Small number of large value relationships
3. Very large number of very large relationships
4. None of the above

Which among the following is a source of working capital funding for a corporate? {Banking}
1. Banks
2. Commercial paper
3. Banker's Acceptance
4. All of the above

_______________ represents the funds required to operate the business of the company. {Banking}
1. Term Finance
2. Working Capital
3. Project Finance
4. Acquisition Finance

Banks offer _____________ type of products to their corporate banking customers. {Banking}
1. Standardised
2. Customised
3. Innovative and Customised
4. None of the above

Which of the following range of offerings reflect the select world of wealth management? {Wealth Management}
1. A narrow range of products
2. A wide range of products
3. A select range of products
4. A few high end products

Which of the following is not the service of wealth management sector? {Wealth Management}
1. Tailored banking products
2. Investment management
3. Investment products in areas such as forex, structured investments, property, etc.
4. Trusts and Estate management

An investment cannot have which of the following cash flows? {Wealth Management, Capital Markets}
1. One cash outflow followed by one cash inflow
2. One cash outflow followed by multiple cash inflows
3. Multiple cash inflows followed by one cash outflow
4. Multiple cash outflows followed by one cash inflow

A technically viable product that has established commercial success and is looking to scale up will need access ___________ for capital. {Wealth Management, Capital Markets}
1. Public Issue
2. Private Equity
3. Venture Capitalist
4. Angel Investor

A technically viable product seeking to establish commercial success will need to access ______________ for capital. {Capital Markets}
1. Angel Investor
2. Venture Capitalist
3. Private Equity
4. Public Issue

When an issuer issues equity, it involves ____________ {Capital Markets, Equity}
1. A promise to repay the principal invested
2. A promise to repay interest on the money invested
3. A guaranteed return
4. None of the above

Which of the following best describes an "investment"? {Capital Markets}
1. Buying shares in the hope the price will rise
2. Investing in real estate
3. An outflow of cash today against an expected future inflow of cash
4. All of the above

Primary markets provide _____________ {Capital Markets}
1. Liquidity to the issuer
2. Capital to the issuer
3. Liquidity to the issuer
4. Capital to the issuer

A financial asset derives value from its _____________ {Capital Markets}
1. Physical form
2. Contractual claim
3. Market perception
4. Demand and Supply

The record date is important from which perspective __________________ {Capital Markets, Corporate Actions}
1. This is the last chance for holders to register securities in thier name
2. Those whose name appears in the register on this date qualify for receiving investment benefits
3. It is the data on which record number of investors contact the company
4. It is the date on which the management chooses to record certain facts

Derivatives are ____________ {Derivatives}
1. Independent market
2. Derived from underlying
3. Derived from a structured product
4. Both (b) and (c)

Structured investment products are ______________ {Derivatives, Structured Products}
1. Independent market
2. Derived from underlying
3. Derived from derivative
4. Both (b) and (c)

The main component in structured product is _____________ {Derivatives, Structured Products}
1. Bond
2. Equity
3. Forex
4. None of the above

Collateralised Debt Obligations is an example of ____________ {Securitization}
1. Derivative
2. Structured credit product
3. Structured investment product
4. None of the above

Equity linked note is an example of ______________ {Derivatives, Structured Products}
1. Equity
2. Bond
3. Structured Investment
4. None of the above

Which of the following trade type offers guaranteed settlement? {Capital Markets, Trading}
1. Exchange trade
2. OTC trade
3. Both (a) and (b)
4. None of the above

Which of the following trades are more complex by nature? {Capital Markets, Trading}
1. Exchange trades
2. OTC trades
3. Both (a) and (b)
4. None of the above

The term "Sell Side" firm refers to _____________ {General, Trading}
1. Dealers
2. Funds
3. End Users
4. None of the above

An equity investor puts money in a project which fails. He is likely to face ____________ {Capital Markets, Equity}
1. No further losses than his initial investment
2. Unlimited losses
3. Many legal cases from suppliers to the company

A distribution of cash profits of a company is ____________ {Corporate Actions}
1. Bonus
2. Dividend
3. Kind

The true reason why a long term investor buys a stock is _____________ {Capital Markets, Equity}
1. To benefit from short term price movements
2. To benefit from corporate performance

The real reason for issuance of equity is ______________ {Capital Markets, Equity}
1. To provide trading opportunities
2. To create a market
3. To fund projects and economic activity
4. To provide a basis for analysis in the business media

The borrowing capacity of a firm increases if ______________ {Capital Markets, Equity}
1. Profits are distributed as dividends
2. Profits are retained in the business
3. The company goes for a stock-split
4. None of the above

The market price of a share is likely to fall if ___________ {Capital Markets, Equity, Trading}
1. The earnings/profit of the company increases
2. The company reduces the number of shares through a "buy back" scheme
3. The market assigns a lower P/E ratio to the stock
4. The market assigns a higher P/E ratio to the stock

Preference shareholders have ________________________ {Capital Markets, Equity}
1. A preference over equity shareholders at the time of liquidation
2. A right to receive their dividend at the time of liquidation before any other payments
3. A preference over bond holders
4. A right to receive their dividend irrespective of company preference

Mr. Fursat Ali Khan holds 100 shares of M/s. KPMK (Khao Piyo Maze Karo) Ltd. He attends the Annual General Meeting (AGM) of shareholders. The company seeks the approval of shareholders on a proposal through a formal voting process (not by show of hand). Which of the followign statement is true, in this particular instance? {Capital Markets, Corporate Actions, Equity}
1. Mr. Khan is entitled to 100 votes
2. Mr. Khan is entitled to 1 vote
3. The number of votes he has is dependent on the total number of shareholders present in the meeting
4. The number of votes he has is dependent on the number of shares issued by the company

Common stock represents _______________ in a corporation {Capital Markets, Equity}
1. Liability
2. Ownership
3. Employment
4. Speculation

Holding shares in a company means _________________ {Capital Markets, Equity}
1. Bearing full liability towards the company's debts
2. Having an ownership stake in that company
3. Having full ownership
4. All of the above

In the event a company being liquidated, who will be paid last ____________ {Capital Markets, Corporate Actions, Equity}
1. Preferred stockholders
2. Bank loans
3. Common stockholders
4. Bond holders

The feature that distinguishes a bond from any other kind of loan is that ____________ {Capital Markets, Debt}
1. Bonds have interest rates than other loans
2. Bonds are less risky than other loans
3. Bonds offer repayment guarantee
4. Bonds are tradeable

The issuer of bond is taking a ___________ {Capital Markets, Debt}
1. Long term loan
2. Short term risk
3. Long term risk
4. Short term loan

Interest rate on bonds when issued at par is known as _____________ {Capital Markets, Debt}
1. Yield
2. Dividend
3. Coupon
4. All of the above

If the market interest rates are rising what happens to the bond prices? {Capital Markets, Debt}
1. Decreases
2. Increases
3. Remains the same
4. Cannot say

The amount of interest that a bond holder receives expressed as a percentage of its market value is known as __________ {Capital Markets, Debt}
1. Coupon
2. Yield
3. Dividend
4. Premium

Most trading in bonds in the United States and throughout the world occurs on _____________ {Capital Markets, Debt, Trading}
1. Exchanges
2. OTC markets
3. Specially Designated Office
4. At the place of bond issuers registrar

A bond issuers priviledge of redeeming its bonds early is referred to as __________ {Capital Markets, Debt}
1. Call option on the bond
2. Put option on the bond
3. Convertibility of bond
4. Disability of bond

______________ are the types of bonds issued by foreign domiciled issuers who register with the SEC and borrow dollars via issues underwritten by a U.S syndicate for delivery in the United States. {Capital Markets, Debt}
1. Samurai bonds
2. Yankee bonds
3. Bulldog bonds
4. Crimped bonds

______________ are Eurobonds that have their coupon levels reset periodically with reference to a money market rate usually LIBOR (London Interbank Offer Rate) {Capital Markets, Debt}
1. Medium Term Notes
2. Floating Rate Notes
3. Fixed Rate Notes
4. All of the above

Bonds rated AAA to BBB are considered as ______________ {Capital Markets, Debt}
1. Speculative
2. Investment grade
3. Junk bonds
4. Non return

_____________ are the ones where the coupon and the redemption amount are increased by the amount of inflation over the life of the bond. {Capital Markets, Debt}
1. Conventional gilts
2. STRIPS
3. Index Linked Bonds
4. Trips

A convertible bond is attractive for an investor because of ______________ {Capital Markets, Debt}
1. It converts the coupon to match the current market interest rates
2. If the company prospers its share price will rise and if it does so sufficiently, conversion may lead to capital gains
3. Investors will pay a lower price for a bond that is convertible because of the possibility of a capital gain
4. All of the above

Bonds issued by USA government are known as ___________ {Capital Markets, Debt}
1. Gilts
2. Treasury bonds
3. Government bonds
4. Federal bonds

Junk bonds are also known as _____________ {Capital Markets, Debt}
1. Accrual bonds
2. Registered bonds
3. High yield bonds
4. Surety bonds

Money market instruments typically have the following maturity period ___________ {Capital Markets, Debt}
1. Less than 1 year
2. 1 to 10 years
3. Greater than 10 years

Who among the following can issue commercial paper? {Capital Markets, Debt}
1. Governments
2. Corporates
3. Central banks

_______________ money market instruments has its principal and interest paid at maturity {Capital Markets, Debt}
1. CP
2. US Treasury Bills
3. Certificate of Deposits

A bond with a par value of $1,000 being quoted at 91.75, what is the current price of the bond in dollar terms? {Capital Markets, Debt}
1. 913.40
2. 917.50
3. 916.66

Which of the following most accurately describes a derivative security; a derivative ______________ {Derivatives}
1. Always increases risk
2. Has no expiration date
3. Has a payoff based on another asset
4. None of the above

Derivatives are least likely to provide or improve ______________ {Derivatives}
1. Liquidity
2. Price discovery
3. Inflation reduction
4. None of the above

Which of the following is most likely to be a purpose served by derivative markets? {Derivatives}
1. Arbitrage
2. Price discovery
3. Risk management
4. Speculation

I have a very specific requirement for a derivatives contract, I should go for ____________ {Derivatives}
1. Exchange trade
2. OTC trade
3. No choices available for specific requirement
4. Go to the respective government

A ______________ is a legally binding obligation between two parties, for one to buy and the other to sell a pre-specified amount of an asset at a pre-specified price on a pre-specified future date. {Derivatives}
1. Forward contract
2. Call option
3. Put option
4. Futures contract

A margin used in certain types of derivative transaction is an example of __________ {Derivatives}
1. A cost
2. A deposit
3. A profit
4. None of the above

For which reason would an investment manager most likely use a derivative to reduce the impact of adverse price movements? {Derivatives, Wealth Management}
1. Anticipating future cash flows
2. Arbitrage
3. Asset allocation changes
4. Hedging

Which of the following constritutes market abuse? {Capital Markets, Equity}
1. The behaviour is based on information that is not generally available to those using the market and, if it were available, it would have an impact on the price.
2. The behaviour is likely to give a false or misleading impression of the supply, demand or value of the investments concerned
3. The behaivour is likely to distort the market in the investments
4. All of the above

The director of a company is buying shares of the same company and it is in his knowledge that the company's last six months of trade was better than the market expected. The director of the company is most likely involved in __________. {Capital Markets, Equity}
1. Riding the information
2. Inside dealing
3. Rougue trading
4. Opportunist trading

Specific performance data of a company has been not made public, if made public it would likely have a significant effect on the price of the securities. This data is most likely ________________. {Capital Markets, Equity}
1. Private price sensitive information
2. Company price sensitive information
3. Unpublished price sensitive information
4. Secret price sensitive information

The interface between client and the investment firm forms part of ____________ {Trading}
1. Sales management
2. Firm client management
3. Marketing management

_____________ refers to any platform or method by which the firm completes buy/sell orders in the market place. {Trading}
1. Order system
2. Trading system
3. Listing system

The process of taking data from different sources and producing one set of cogent intelligble reports is done under _____________. {Trading}
1. Client management system
2. Client reporting system
3. Client reporting management

Under the EU regulation known as MiFID, all clients must be classified into _____ number of broad categories at the time of onboarding. {Regulation}
1. 2
2. 3
3. 4
4. 5

Terms such as SEDOL, CUSIP refers to ___________ {Trading, Equity, Trade Lifecycle}
1. Securities regulators
2. Security identifiers
3. Security numbers

DTC in the USA and CSDL/NSDL in India are examples of ____________ {Trading, Equity, Trade Lifecycle}
1. Commodity exchanges
2. Stock exchanges
3. Futures and options exchanges
4. Depositories

Trade Capture is ___________ process/function {Trade Lifecycle}
1. Front office
2. Middle office
3. Back office
4. Head office

Settlement as a process is always handled by ___________ {Trade Lifecycle}
1. Front office
2. Middle office
3. Back office
4. Head office

Trade confirmation is a __________ process {Trade Lifecycle}
1. Pre-trade
2. Pre-settlement
3. Post-settlement
4. 'b' and 'c' both

Straight through processing refers to _____________ {Trade Lifecycle}
1. Automated processing of orders and trade execution with the goal of eliminating manual intervention
2. Execution and booking of trade is simultaneous
3. All activities related to a trade are working with the same business date
4. All of the above

Which among the following is typically not a Buy Side firm? {Trade Lifecycle}
1. Pension funds
2. Mutual funds
3. Investment banks
4. Insurance comapnies

Which parties are involved in the clearing and settlement process? {Equity, Debt, Trade Lifecycle, Trading}
1. Exchange and clearing corporation
2. Depositories / Banks
3. Clearing members
4. All of the above

The first layer which must maintain market discipline is ___________ {Trading}
1. The broker
2. The customer
3. The exchange
4. The regulator

The ____________ is the first formal document that reflects the details of a trade. {Trade Lifecycle, ISDA}
1. Agreement
2. Confirmation
3. Settlement date
4. Deal reference number

Which of the following functions is carried out by the custodian? {Trade Lifecycle, Custodial Services}
1. Confirmation and settlement
2. Asset servicing
3. Both (a) and (b)
4. None of the above

Trade matching can be carried out at __________ {Trade Lifecycle, Trading}
1. At the level of the trading platform
2. By specialist providers of matching facilities prior to submission for clearing and settlement
3. By the relevant clearing and settlement system itself
4. Any of the above

_____________ is a process which involves one party providing the relevant details of the trade to the other, which then verifies that information, resulting in an agreed trade? {Trade Lifecycle}
1. Trade matching
2. Trade verification
3. Trade affirmation
4. A and C

Trade enrichment exists to add specific trade data to the basic trade details to allow downstream processing. {Trade Lifecycle}
1. True
2. False

Which of the following is usually not associated with OTC trades? {Trade Lifecycle}
1. Trade confirmation
2. Trade settlement
3. Trade clearing
4. Trade capture

The institution of Central Clearing Counterparty (CCP) is being championed in OTC markets to reduce ____________. {Trade Lifecycle}
1. Operational risk
2. Market risk
3. Liquidity risk
4. Counterparty credit risk

With respect of Standard Settlement Instructions, which of the following is most accurate? {Trade Lifecycle}
1. Causes delay in the confirmation process
2. Reduction in the likelihood of errors in settlement
3. Increase in processing costs
4. Increased vulnerability to fraud

When a bank gives SSIs to a counterparty, it should be in ___________ {Trade Lifecycle}
1. Exchange format
2. Bank format
3. SWIFT format
4. Trade format

What is the first step in the reconciliation process? {Trade Lifecycle}
1. Knowing the item-wise causes of difference
2. Matching the balances
3. Preparation of balance in bank/securities account as per our books
4. None of the above

An example of exchange traded product is ____________ {Trading}
1. Commercial paper
2. Spot dollars
3. Commodity derivatives
4. All of the above

Trades fail for which of the following reasons {Trade Lifecycle}
1. Insufficient securities
2. Insufficient time for settlement
3. Instructions not received by the custodian
4. A and C

When the firm's traders actively trade financial instruments with its own money as opposed to its customer's money so as to make a profit for itself; this is referred to as _____________ {Trading}
1. Self trading
2. Trader trading
3. Proprietary trading
4. Profit trading

Which among the following activities are crucial for reconciliation to be successful/completed? {Trade Lifecycle}
1. Straight through processing
2. Manual matching
3. Investigation
4. All of the above

There are two parties, in which A lent securities to B, and those are returnable by B to A. Which of the following business situations implies to the above statement? {Trade Lifecycle, Securities Lending and Borrowing}
1. Securities/Stock lending
2. Margin trading
3. OTC trades

The life-cycle of an OTC trade is different from that of an exchange in terms of ____________ {Trade Lifecycle}
1. Trading systems could be electronic or manual
2. Every trade needs to be backed by an agreement and hence the need for standards in documentation
3. Clearing and settlement system needs to be done by the parties one and one
4. All of the above

The settlement risk in OTC trades is being mitigated by ____________ {Trade Lifecycle, Derivatives, Trading}
1. Making the exchange guarantee OTC trades for a fee
2. The clearing corporation takes the responsibility for clearing the OTC trades in addition to exchange trades
3. Using the services of the Central Clearing Counterparty (CCP)
4. Traders in OTC market restrict deals to only those counterparties who deposit 100% margin with them.

ISDA's focus has been in making ____________ safe and efficient. {Trade Lifecycle, ISDA}
1. The accounting and reconciliation
2. The over-the-counter (OTC) derivatives markets
3. Stock exchanges
4. Trading in commodities

Bank and Nostro Account reconciliation refers to cash activity and balance reconciliation of an organisation against the accounts held with ____________. {Trade Lifecycle}
1. Brokers
2. Dealers
3. Banks
4. Exchanges

Information that reconciliation tools cannot automatically match, results in, what is known as ___________. {Trade Lifecycle}
1. Blips
2. Bridges
3. Breaks
4. Bumps

Breaks can occur for which of the following reasons. {Trade Lifecycle}
1. Data records missing from either of the data sources
2. Changes to the external or internal data sources
3. Errors in the compare process
4. All of the above

The reconciliation process requires ________ data sources. {Trade Lifecycle}
1. One
2. Two
3. Two or more
4. At least three

Records from the two data sources are compared using a set of data elements called ___________ {Trade Lifecycle}
1. Source data
2. Prime data
3. Key data
4. Critical data

Which of the following is the feature of "static data"? {Trade Lifecycle}
1. Trade specific
2. Counterparty specific
3. Externally generated
4. Universally applicable

Which of the following is the feature of "reference data"? {Trade Lifecycle}
1. Externally generated and universally applicable
2. Changes everyday
3. Both A and B
4. None of the above

Which of the following is the feature of "market data"? {Trade Lifecycle}
1. Externally generated and universally accepted
2. Changes everyday
3. Both A and B
4. None of the above

A trade occurs on __________ {Trade Lifecycle}
1. Asset class
2. Product
3. Instrument
4. Any of the above

The capital market consists of which of the following asset classes? {Trade Lifecycle, Capital Markets}
1. Money and bond
2. Money and equity
3. Debt and equity
4. Money and FX

In exchange market, brokers are involved for ___________ {Trade Lifecycle, Trading}
1. Trade execution
2. Trade settlement
3. Both A and B
4. None of the above

The bifurcation of OTC market into Cleared OTC and Un-Cleared OTC (bilateral) is mandated by __________. {Trade Lifecycle, Derivatives}
1. Dodd-Frank Act
2. EMIR
3. Both A and B
4. None of the above

Which of the following work is outsourced to investment manager by institutional investors? {Trade Lifecycle}
1. Front office
2. Back office
3. Both A and B
4. None of the above

Which of the following can be a party to the trade? {Trading}
1. Exchange
2. Custodian
3. Depository
4. None of the above

The 'give-up' occurs between which two parties? {Trade Lifecycle, Trading}
1. From executing broker to prime broker
2. From executing broker to clearing broker
3. Both A and B
4. None of the above

The static data from back office system is merged with trade data from front office system during which of the following processes? {Trade Lifecycle}
1. Trade review/validation
2. Trade enrichment
3. Pre-settlement confirmation
4. Post-netting confirmation

What is the most serious risk from the counterparty in a derivative trade? {Trade Lifecycle, Derivatives}
1. Credit risk
2. Settlement risk
3. Market risk
4. Counterparty credit risk

Consider the following statements. (I) Size of settlement risk is equal to principal plus interest, (II) Size of credit risk is equal to settlement amount, (III) Size of counterparty credit risk is equal to the maximum of (Zero, replacement cost). Which of the above statement is correct? {Trade Lifecycle, Derivatives}
1. (I)
2. (II)
3. (III)
4. None of the above

In which of the following markets are the derivatives products traded? {Derivatives}
1. Exchange
2. Cleared OTC
3. Bilateral (or non-cleared) OTC
4. All of the above

Bank of America Merrill Lynch, a major derivative dealer and member of "Fed 16" and a globally and systematically important bank (G-SIB) has done a trade with Alliance Bernstein, which is an integrated investment management and research firm that also runs retail funds. This trade will be classified as ______________. {Trade Lifecycle}
1. Inter-dealer trade
2. Institutional trade
3. Commercial trade
4. Retail trade

Which of the following statements is true? (I) Trade data varies with trade, (II) Static data varies with counterparties, (III) Reference data and market data are universally accepted, (IV) Reference data and market data are externally generated, (V) Reference data is almost constant over time but market data varies for every trading date. {Trade Lifecycle}
1. (I), (II) and (III)
2. (I), (III) and (IV)
3. (II), (III) and (V)
4. All of the above

Which of the following statements is true? (I) Brokers are always involved in clearing OTC trades, (II) Brokers are always involved in exchange trades, (III) Brokers may or may not be involved in bilateral OTC trades. {Trade Lifecycle}
1. (I) and (II)
2. (II) and (III)
3. (I) and (III)
4. All of the above

In the novation of CCP clearing, who novates to whom? {Trade Lifecycle}
1. Buyer to CCP
2. Seller to CCP
3. Both (A) and (B)
4. None of the above

Which of the following forms of clearing provides trade guarantee? {Trade Lifecycle, Trading}
1. Ring clearing
2. CCP clearing
3. Both (A) and (B)
4. None of the above

Which of the following services are provided by custodian? {Trade Lifecycle, Cusotidal Services}
1. High end mid office services
2. Cash lending to client
3. Securities lending to client
4. None of the above

Which of the following utility is involved in processing of every trade in both cash and derivatives markets? {Trade Lifecycle, Trading}
1. Depository
2. Trade Repository
3. Payment System
4. Clearing Corporation

In CCP clearing, for a particular settlement day, Party A has to pay 1,000 to Party B; pay 2,500 to Party C; and receive 3,000 from Party D. What is the net obligation of Party A after clearing? {Trade Lifecycle, Derivatives, Trading}
1. Pay 500 to Party B
2. Pay 500 to Party D
3. Pay 500 to Clearing Corporation
4. Receive 500 from Clearing Corporation

Which of the following is the correct sequence of processes in trade lifecycle? (I) Trade amendment, Trade review/validation, Trade allocation; (II) Trade allocation, Trade Booking, Trade Enrichment; (III) Trade confirmation, Trade Review/Validation, Pre-Settlement confirmation; (IV) Position reconciliation, Accounts Reconciliation, Settlement Accounting; (V) Trade Reconciliation, Position and Gap Reconciliation, Accounts reconciliation? {Trade Lifecycle}
1. (I) and (III)
2. (II) and (IV)
3. (II) and (V)
4. (I) and (V)

Which of the following processes occur during client onboarding stage? {Trade Lifecycle}
1. Due dilligence
2. Documentation
3. Accounts setup
4. All of the above

Checking various limits and product suitability is carried out in which of the following stages?
1. Pre-trade analytics
2. Trade review/validation
3. Both (A) and (B) by indepedent teams
4. None of the above

The process in which of the following stages in trade lifecycle are mostly internal with little interaction with external entities? {Trade Lifecycle}
1. Client onboarding
2. Pre trade
3. Post-trade Pre-settlement
4. Post-settlement

Which of the following is true about position? {Trade Lifecycle}
1. It is a measure or market risk
2. It is the holding in instrument
3. It is a measure of exposure to market risk
4. None of the above

Consider the following statements about position, gap and P/L. (I) Positon arises immediately after trade execution, (II) Gap arises only on settlement, (III) Presence of position necessarily implies that there will be gap, but the presence of gap does not necessarily imply that there will be position, (IV) Net P/L is allowed only after ensuring that both position and gap are square. Which of the following statements above are true?
1. (I) and (II)
2. (III) and (IV)
3. Both (A) and (B)
4. None of the above

We post the accounting entries in ledger on the settlement date as follows. {Trade Lifecycle}
1. Payments as debits and receipts as credits
2. Payments as credits and receipts as debits
3. Entries are posted not on settlement date but after confirmation, and payment and receipts are actually made.
4. None of the above

In ISDA documentation, which of the following contain provisions to mitigate counterparty credit risk? {Trade Lifecycle, ISDA}
1. Schedule
2. Credit Support Annex
3. Both (A) and (B)
4. None of the above

The economic purpose of an exchange is to ___________ {Trading, Equity, Debt}
1. Provide liquidity to investors
2. Indicate the rate at which a company can plan and FPO
3. To access the policies of the government
4. All of the above

Which of the following statements is true? {Trading, Equity}
1. Imposition of market discipline is easier through brokers than directly through investors
2. Competence is required to deal on the exchange
3. Both A and B
4. Investors cannot buy or sell securities except through an exchange

Delivery of securities is part of ____________ {Trade Lifecycle, Trading}
1. Clearing
2. Settlement
3. Payment systems
4. Reporting

In OTC agreements, the terms and conditions that are specific to the particular transactions are a part of __________. {Trade Lifecycle, ISDA}
1. Confirmations
2. Schedule
3. Master
4. Standards

Trade guarantee from CCP eliminates which of the following risks? {Trade Lifecycle, Trading}
1. Counterparty credit risk
2. Settlement risk
3. Both (A) and (B)
4. None of the above

Which of the following is true about cash settlement method? {Trade Lifecycle, Trading, Equity, Derivatives}
1. It eliminates settlement risk
2. It converts settlement risk into replacement cost
3. It eliminates counterparty credit risk
4. It reduces counterparty credit risk

The clearing process is _____________ {Trade Lifecycle, Trading}
1. Always with trade guarantee
2. Always without trade guarantee
3. With or without trade guarantee
4. None of the above

Trade documentation applies to ____________ {Trade Lifecycle, ISDA}
1. OTC derivatives
2. Exchange traded derivatives
3. Both (A) and (B)
4. None of the above

Mitigation of counterparty credit risk is the motive of which of the following novations? {Trade Lifecycle, Derivatives}
1. Novation in CCP clearing
2. Novation in mark-to-market
3. Both (A) and (B)
4. None of the above

Settlement fails occur more commonly due to shortage of ____________ {Trade Lifecycle, Trading}
1. Cash
2. Securities
3. Both (A) and (B)
4. None of the above

Continuous linked settlement (CLS) applies to which of the following trades? {Trade Lifecycle, Foreign Exchange}
1. Fixed Income
2. Equity
3. FX
4. Commodities

Which of the following are meant for mitigating settlement risk? {Trade Lifecycle, Trading}
1. Cash settlement method and DvP settlement style
2. Netting and Escrow account
3. Both (A) and (B)
4. None of the above

Organisations had accepted __________ risk as an unavoidable cost of doing business, and tended to consider any risk that wasn't market or credit risk. {Trade Lifecycle}
1. Interest rate
2. Operational
3. Reputation
4. Business

Operational risk is cause-based, providing a breakdown of operational risk into _______ {Trade Lifecycle}
1. People
2. Processes
3. Systems and external events
4. All of the above

Consequential effects of operational risk include __________ {Trade Lifecycle}
1. Compliance and Reputational risk
2. Market and Credit risk
3. Both of the above
4. None of the above

The process of developing an operational risk policy is __________ {Trade Lifecycle}
1. Cyclical and continuous
2. Annual
3. Monthly
4. Weekly

The most reliable measure to calculate the potential future exposure is known as __________ {Trade Lifecycle}
1. Marking to market of exposure risk
2. Value at risk model
3. Stress testing of the credit risk management software
4. Black-Scholes model

The risk that a company with whom the bank does business declares bankruptcy before settlement is due can be broadly described as ___________ {Trade Lifecycle}
1. Settlement risk
2. Counterparty risk
3. Issuer risk
4. Operations risk

The credit risk premium is directly proportional to _________ {Trade Lifecycle}
1. The credit rating
2. The asset quality
3. The risk of default
4. Value at risk

Which of the following is the reason for using Corporate Actions in a company? {Corporate Actions}
1. Return profits to shareholders
2. Influence the share price
3. Corporate restructuring
4. A & B
5. A & C
6. A, B & C

Which of the following corporate actions is related to ownership of shares? {Corporate Actions}
1. Payment of interest (coupon)
2. Redemption at maturity
3. Declaration of dividends
4. None of the above

Which of the following statements relates to the term Corporate Actions? {Corporate Actions}
1. It describes the entitlement of a security holder
2. It is the action a corporate takes on various matters
3. It is the action by a corporate required under securities regulation acts
4. It is the action against the corporate by the regulator

Voluntary corporate actions/events are described as _____________ {Corporate Actions}
1. Events which will go ahead regardless of views and actions of the investor
2. No obligation on investors part to take up any offer made to him
3. Corporate actions which can arise from regulatory requirements
4. Events will go ahead; investor has to make some choices in the matter

A distribution of profits of a company in ___________ {Corporate Actions}
1. Cash is called bonus
2. Cash is called dividend
3. Kind is called dividend
4. A and B

Coupon payment on bonds is an example of ____________ {Corporate Actions}
1. Mandatory event
2. Voluntary event
3. Voluntary event with action

Which of the following corporate actions is related to the ownership of bonds? {Corporate Actions}
1. Declaration of dividends
2. Announcement of a bonus issue
3. Payment of interest (coupon)
4. Announcement of rights issue

A declaration by the corporate which involves the flow of cash to the holder of the security is known as ___________. {Corporate Actions}
1. Cash corporate actions
2. Non-cash corporate actions

Which of the following options is not an example of cash corporate actions? {Corporate Actions}
1. Dividends
2. Interest payments
3. Mergers and Acquisition actions
4. Redemption of matured investments

The increase in number of shares owned by existing shareholders in equal proportion as a result of new shares being issued is called ______________. {Corporate Actions}
1. Rights
2. Bonus
3. Stock split
4. Dilution

The offer document for the purpose of a rights issue is called ______________. {Corporate Actions}
1. Prospectus
2. Red Herring Prospectus
3. Letter of Offer
4. Placement Document

The maximum amount of dividend declared cannot be greater than ___________ {Corporate Actions}
1. Amount of cash with the company
2. Amount of reserves in the balance sheet
3. Both A and B
4. Amount of reserves or cash whichever is higher

______________ does not result in a change in the percentage ownership of shares of a company. {Corporate Actions}
1. Initial public offer
2. Follow on public offer
3. Bonus issue
4. Buy back of shares as treasury stock

Stage II of bankruptcy is a ___________ {Corporate Actions}
1. Mandatory event
2. Mandatory event with options
3. Voluntary event
4. None of the above

Corporate action is based on ___________ {Corporate Actions}
1. Country of issuer
2. Security type
3. Nature of event
4. All of the above

In the context of corporate actions, DTC is an example of _____________ {Corporate Actions}
1. Entitlement party
2. Service provider
3. Information provider
4. Event initiator

A shareholder entitled to subscribe for rights shares can __________ {Corporate Actions}
1. Sell the rights
2. Subscribe to the entitled shares by paying for the same
3. Apply for additional shares
4. All the above

From a custodian's perspective, which of the following events would involve relatively lesser risk? {Corporate Actions}
1. Voluntary risk
2. Mandatory event with options
3. Mandatory event
4. All the event involve the same risk

In case of scrip dividend, ______________________________ {Corporate Actions}
1. Investors can choose either to collect cash as dividend or additional shares as per their choice
2. Investors are allowed to automatcially reinvest the dividend received into additional shares of the company
3. The company can either pay cash or issue additional shares in lieu of dividend as per its choice
4. None of the above

Corporate actions is an important part of ____________ {Corporate Actions}
1. Order management
2. Clearing
3. Settlement
4. Asset servicing

Offer by the issuing company to existing shareholders to repurchase the company's own shares or other securities convertible into shares at the same price irrespective of the prices at which different holders have offered the shares is called ___________. {Corporate Actions}
1. Buyback with Dutch option
2. Repurchase offer
3. Buyback
4. Tender offer

An offer to existing shareholders to subscribe to new stock or convertible bonds is called ____________ {Corporate Actions}
1. Voluntary exchange
2. Optional conversion
3. Odd lot tender
4. Subscription offer

In a _______________, the bond issuer redeems selected holdings before the maturity date. {Corporate Actions}
1. Early redemption
2. Partial redemption
3. Lottery
4. All of the above

Some of the recommendations to resolve problems pertaining to corporate actions are _____________ {Corporate Actions}
1. Adopt a single global standard
2. Issuer to tag corporate actions documents
3. Deliver electronic message to end customers in near time after public release
4. All of the above

Customer Identification Program (CIP) requirement includes ____________ {Trade Lifecycle}
1. Implementation of reasonable procedures to verify the identity of any person seeking to open an account
2. Maintaining records of the information used to verify the person's identity
3. Determining whether the person appears on any lists of known or suspected terrorists or terrorist organisations
4. All of the above

The regulator that administers and enforces economic and trade sanctions based on U.S foreign policy and national security goals against targetted foreign states, organisations, and individuals is ___________ {Trade Lifecycle}
1. OFAC
2. SEC
3. Federal Reserve
4. FDIC

The first date at which any trade does not include the Entitlement is called ____________ {Corporate Actions}
1. Announcement date
2. Cum date
3. Ex date
4. Record date

Long coupon means the first coupon payment will be _____________ {Corporate Actions}
1. The coupon period is greater than 3 months
2. It has nothing to do with coupon period
3. More than the normal coupon amount
4. Less than the normal coupon amount

Stage III bankruptcy is a ____________ {Corporate Actions}
1. Voluntary event
2. Mandatory event with options
3. Mandatory event
4. None of the above

Corporate actions is not based on ______________ {Corporate Actions}
1. Country of issuer
2. Security type
3. Nature of event
4. Status of investor

In the context of corporate actions, Bloomberg is an example of _____________ {Corporate Actions}
1. Event initiator
2. Market info provider
3. Service provider
4. Entitlement party

From a custodian's perspective, which of the following events would involve more risk? {Corporate Actions}
1. Mandatory event
2. Mandatory event with options
3. Voluntary event
4. All the events involve the same risk

A takeover bid is an example of ___________ {Corporate Actions}
1. Mandatory corporate action
2. Mandatory with options corporate action
3. Voluntary corporate action
4. None of the above

Bonus issue is also known as ___________ {Corporate Actions}
1. Paid issue
2. Scrip issue
3. Non capitalisation issue
4. Bumper issue

The reason for having a bonus issue is to bring about _____________ {Corporate Actions}
1. A lower share price
2. A higher share price
3. Decrease marketability of the share
4. Increase profitability of shares

XYZ Inc., shares are trading at $54 per share. When subjected to a 2:1 scrip issue, what will be the share price of XYZ Inc.? {Corporate Actions}
1. $27
2. $18
3. $36
4. $32

When rights are renounceable it means the rights entitlement is _____________ {Corporate Actions}
1. Not transferable
2. Fully transferable
3. Partially transferable
4. Conditionally transferable

A _______________ is a transaction where the two companies are of similar size and agree to merge their interests. {Corporate Actions}
1. Takeover
2. Merger
3. Buyback
4. Acquisition

Which of the following is not the service of Wealth Management sector? {Wealth Management}
1. Tailored banking products
2. Investment Management
3. Trusts and Estate Management
4. Tax and Estate Planning

The record date is important from which perspective ____________________ {Corporate Actions}
1. This is the last chance for holders to register securities in their name
2. Only those investors whose names appear in the register on this date qualify for receiving investment benefits
3. It is the date on which record number of investors contact the company
4. It is the date on which the management chooses to record certain facts