National Institute of

Bank Management

Dashboard  My courses  RSK MGMT  MODULE I : BASIC UNDERSTANDING

OF BANKING RISK  EOM I: TEST: 24-12-2022

Started on Saturday, 24 December 2022, 11:37 AM

State Finished
Completed on Saturday, 24 December 2022, 12:24 PM
Time taken 46 mins 52 secs
Grade 50.00 out of 60.00 (83%)

Question 1 Incorrect Mark 0.00 out of 0.50

ALM indicates the impact of mismatch between the interest

rate characteristics of various assets and liabilities on

Select one:
a. Net worth
b. All the given options
c. Liquidity positions
d. Net interest income
Question 2 Correct Mark 0.50 out of 0.50

An increase in the incidents of regulatory penalties in

respect of violating KYC guidelines imposed on a bank
increases

Select one:
a. Reputation Risk
b. Credit Risk
c. Market Risk
d. Strategic Risk

Question 3 Correct Mark 0.50 out of 0.50

Beta distribution are mostly used in calculations of

Select one:
a. Credit risk
b. Market risk
c. All the given options
d. Operational Risk

Question 4 Correct Mark 0.50 out of 0.50

CASA ratio is related to

Select one:
a. Credit Risk
b. Market Risk
c. Interest Risk
d. Liquidity Risk
Question 5 Correct Mark 0.50 out of 0.50

Correlation analysis is used to test the

Select one:
a. Difference in variances of two different groups
b. Association between variables
c. Causation of a variable on another
d. Difference in means of two different groups

Question 6 Correct Mark 0.50 out of 0.50

Gini Coefficient for a loan portfolio is an indicator of its

Select one:
a. Cash flow risk
b. Concentration risk
c. Collateral risk
d. Correlation risk

Question 7 Correct Mark 0.50 out of 0.50

If a bank is finding itself unable to meet its commitments

on time due to unexpected cash outflow, it is called

Select one:
a. Reputation Risk
b. Operational Risk
c. Liquidity risk
d. Market risk
Question 8 Correct Mark 0.50 out of 0.50

Loss occurred due to adverse changes in the interest rates

creates

Select one:
a. Credit risk
b. Strategic Risk
c. Market risk
d. Liquidity risk

Question 9 Correct Mark 0.50 out of 0.50

The probability of occurrence of any of two mutually

exclusive events having individual probability of Pa and Pb
is

Select one:
a. Pa × Pb
b. Pa + Pb
c. Pa
d. Pb

Question 10 Correct Mark 0.50 out of 0.50

The type of liquidity risk when a bank is unable to pay its

depositor on demand is called as

Select one:
a. Asset liquidity risk
b. Deposit liquidity risk
c. Funding liquidity risk
d. Market liquidity risk
Question 11 Correct Mark 0.50 out of 0.50

The type of market risk which arises from an imperfect

correlation in the adjustment of the rates earned and paid
on different products with otherwise similar repricing
characteristics is

Select one:
a. Optionality risk
b. Basis risk
c. Repricing risk
d. Yield curve risk

Question 12 Correct Mark 0.50 out of 0.50

Two events are said to be conditional when

Select one:
a. They are independent of each other
b. Ocurrence of one precludes the occurrence of the
other
c. Together they comprise the entire set of events
d. Occurrence of one is dependent on the occurrence
of the other
Question 13 Correct Mark 0.50 out of 0.50

Under the Basel II BI Approach, operational risk capital is

measured at the level of the

Select one:
a. Branches
b. Regional operations
c. Lines of business
d. Bank as a whole

Question 14 Correct Mark 0.50 out of 0.50

Weibull, Pareto and Inverse Gaussion distribution are most

used in calculations of

Select one:
a. Operational Risk
b. All the given options
c. Credit Risk
d. Market Risk

Question 15 Correct Mark 0.50 out of 0.50

Which of the following is the purpose of allocation of

capital to business lines

Select one:
a. Enhancing scale efficiency
b. Providing funds for operational expenses
c. Fixation of risk limits
d. Deploying funds for onward lending
Question 16 Correct Mark 0.50 out of 0.50

Which of the following values of kurtosis indicates to a

symmetrical distribution

Select one:
a. Equal to 3
b. Less than 3
c. Equal to 2
d. Less than 2

Question 17 Incorrect Mark 0.00 out of 0.50

Which one of the following is not factor included for

determining the Return on asset (ROA) for a bank

Select one:
a. Treasury transfer prices
b. Unexpected loss
c. Total revenue
d. Cost of operations

Question 18 Correct Mark 0.50 out of 0.50

Which one of the following is not true about standard

deviation

Select one:
a. Reported in same unit as that of the variable
b. It is always negative
c. It is scale free
d. Minimum root square deviation
Question 19 Correct Mark 0.50 out of 0.50

Which one of the following is the denominator in the ratio

RAROC

Select one:
a. Regulatory Capital
b. Book Capital
c. Economic Capital
d. Equity Capital

Question 20 Correct Mark 0.50 out of 0.50

Which one of the following losses are expected to be borne

by provisions?

Select one:
a. Unexpected loss
b. Extreme loss
c. Expected loss
d. Tail loss

Question 21 Correct Mark 1.00 out of 1.00

A bag contains 6 white and 4 black balls. One ball is drawn

at random, what is the probability that it is black?

Select one:
a. 0.6
b. 1
c. 0.2
d. 0.4
Question 22 Correct Mark 1.00 out of 1.00

A frequency distribution gives the following results:

Coeffiient of variation=5, Variance=4, find the mean of the
distribution

Select one:
a. 39
b. 38
c. 40
d. 42

Question 23 Correct Mark 1.00 out of 1.00

A high F value and low p value (less than 0.01)

Select one:
a. Rejects bad fit of model
b. Accepts bad fit of model
c. Rejects good fit of model
d. Cannot decide on model fitness

Question 24 Correct Mark 1.00 out of 1.00

ANOVA is used to test the difference between

Select one:
a. Variances of more than two different groups
b. Means of more than two different groups
c. Means of two different groups
d. Variances of two different groups
Question 25 Correct Mark 1.00 out of 1.00

As reported by PSBs in their Basel 3 disclosures, which risk

has the highest regulatory capital requirements?

Select one:
a. Operational risk
b. Market risk
c. Liquidity risk
d. Credit risk

Question 26 Correct Mark 1.00 out of 1.00

Economic capital is future loss at a given level of

confidence. What does the level of confidence refer to?

Select one:
a. Credit rating of the bank
b. Reliability of risk model used
c. Veracity of loss data used
d. Accuracy of the calculation

Question 27 Correct Mark 1.00 out of 1.00

For capital computation under TSA, Banks need data of

Gross Income

Select one:
a. Business line wise
b. Facility wise
c. Segment wise
d. None of the given options
Question 28 Incorrect Mark 0.00 out of 1.00

If loans are not equally distributed across all the

borrowers, Gini coefficient value will be

Select one:
a. Equal to 1
b. Equal to 0
c. Greater than 0
d. Less than 1

Question 29 Correct Mark 1.00 out of 1.00

If the average value of a series is 50 and Median and Mode

are 60 and 70 respectively, the estimated skewness would
be

Select one:
a. Zero
b. Infinity
c. Negative
d. Positive

Question 30 Incorrect Mark 0.00 out of 1.00

If the explained sum square of a regression model = 300

and Residual sum square=100, the R square statistic would
be

Select one:
a. 0.75
b. 0.25
c. 0.33
d. 3
Question 31 Incorrect Mark 0.00 out of 1.00

In a regression equation, a statistically significant influence

of the independent variable on the dependent variable is
concluded when

Select one:
a. Only the t statistics is high
b. Both t statistics as well as p value is high
c. Neither t statistics nor p value is high
d. Only the p value is high

Question 32 Correct Mark 1.00 out of 1.00

In a standard normal series, the value of Z Score = 2.0

represents

Select one:
a. 2 standard deviations away from mean
b. Confidence level of test statistics as 0.002
c. Significance level of a test statistics as 0.02
d. Coefficient of variation as 2.0

Question 33 Correct Mark 1.00 out of 1.00

In which of the following distribution, the mean is equal to

the variance

Select one:
a. Exponential
b. Binomial
c. Normal
d. Poission
Question 34 Correct Mark 1.00 out of 1.00

Regression analysis is used to test the

Select one:
a. Difference in variances of two different groups
b. Association between variables
c. Dependence of a variable on another
d. Difference in means of two different groups

Question 35 Correct Mark 1.00 out of 1.00

Risk related to documentation of policies and process is

part of

Select one:
a. ALM risk
b. Operational risk
c. Reputation risk
d. Compliance risk

Question 36 Correct Mark 1.00 out of 1.00

Risks in decisions related to choice of entry into a new line

of business in a bank is related to

Select one:
a. Liquidity risk
b. Credit Risk
c. Strategic Risk
d. Market Risk
Question 37 Correct Mark 1.00 out of 1.00

ROA is measured by dividing the amount of net profit by

Select one:
a. Gross fixed assets
b. Total assets
c. Average assets
d. Net assets

Question 38 Correct Mark 1.00 out of 1.00

T-test is used for the purpose of comparing

Select one:
a. Means between two groups
b. Means between more than two groups
c. Variance between more than two groups
d. Variance between two groups

Question 39 Correct Mark 1.00 out of 1.00

The coefficient of variation (CV) is:

Select one:
a. Standard Deviation/Mean
b. Mean/Standard Deviation
c. Standard Deviation×Mean
d. Standard Deviation+Mean
Question 40 Correct Mark 1.00 out of 1.00

The inability to sell assets at normal market prices because

of size of the trade being larger than normal lots is called
as

Select one:
a. Optionality risk
b. Cash flow liquidity risk
c. Basis risk
d. Market liquidity risk

Question 41 Correct Mark 1.00 out of 1.00

The level of significance of a statistical test refers to its

Select one:
a. Level of importance
b. Level of error
c. Level of confidence
d. Level of explanation

Question 42 Correct Mark 1.00 out of 1.00

The null hypothesis in a t Test to compare the population

means Pa and Pb is

Select one:
a. Pa is greater than Pb
b. Pa is not equal to Pb
c. Pa is equal to Pb
d. None of the given options
Question 43 Incorrect Mark 0.00 out of 1.00

The probability of getting two heads, while tossing two

unbiased coins would be

Select one:
a. 1
b. 0.25
c. 0.75
d. 0.5

Question 44 Correct Mark 1.00 out of 1.00

The quartile of a ranked data series helps us to estimate

Select one:
a. Skewness
b. Mean
c. Mode
d. Standard Deviation

Question 45 Correct Mark 1.00 out of 1.00

The second quartile of a ranked data series is termed as

Select one:
a. Standard Deviation
b. Median
c. Mode
d. Mean
Question 46 Correct Mark 1.00 out of 1.00

The Z value refers to the distance of a data or observation

Select one:
a. From the maximum value of the distribution
b. From the mean of the distribution
c. From the minimum value of the distribution
d. From the standard deviation of the distribution

Question 47 Correct Mark 1.00 out of 1.00

Type I error rate refers to when

Select one:
a. A null hypothesis is rejected when it is false
b. A null hypothesis is accepted when it is false
c. A null hypothesis is accepted when it is true
d. A null hypothesis is rejected when it is true

Question 48 Incorrect Mark 0.00 out of 1.00

Which one of the following is a probability based VaR

measurement technique

Select one:
a. Variance Covariance VaR
b. All the given options
c. Monte Carlo Simulation VaR
d. Historical Simulation VaR
Question 49 Correct Mark 1.00 out of 1.00

Which one of the following is not addressed in the risk

appetite statement of a bank

Select one:
a. Business size
b. Maximum loss
c. Earnings volatility
d. Target debt rating

Question 50 Correct Mark 1.00 out of 1.00

Which one of the folowing indicates to the overall

significance of a regression equation

Select one:
a. T value
b. P value
c. F statistics
d. R square

Question 51 Correct Mark 2.00 out of 2.00

99.73% of area of a Normal distribution is covered by:

Select one:
a. 2.56 Standard Deviation
b. 2.99 Standard Deviation
c. 1 Standard Deviation
d. 1.96 Standard Deviation
Question 52 Correct Mark 2.00 out of 2.00

A loan portfolio contains 8 AA and 6 BB categories of assets.

If 5 accounts are drawn by the auditor at random, what is
the probability that 3 are AA and 2 are BB?

Select one:
a. 50%-75%
b. 0%-25%
c. 25%-50%
d. 0

Question 53 Correct Mark 2.00 out of 2.00

Higher the value z statistic, greater the chance that the null
hypothesis of equal mean between two groups will be

Select one:
a. Rejected
b. Uncertain
c. Undefined
d. Accepted

Question 54 Correct Mark 2.00 out of 2.00

If a bank usues the following regression equation to link

LGD and PD: LGD = 1.16 + 0.16 log(default rate) estimate
LGD when PD = 2%

Select one:
a. Greater than 70%
b. Between 60%-70%
c. Between 50% to 60%
d. Less than 50%
Question 55 Correct Mark 2.00 out of 2.00

If a portfolio of stocks has a one-day 5% VaR of Rs 10

million, a loss of Rs 10 million or more on this portfolio is
expected on

Select one:
a. 1 day out of 100 days
b. 1 day out of 20 days
c. 1 day out of 10 days
d. 1 day out of 50 days

Question 56 Correct Mark 2.00 out of 2.00

If the probability of backoffice people leaving the job is

0.40, probability of transaction error=0.60; and probability
of both fail=0.30. Then, the probability of transaction error
conditional on backoffice people leaving the job is=

Select one:
a. 50% to 60%
b. Less than 40%
c. Greater than 60%
d. 40% to 50%
Question 57 Incorrect Mark 0.00 out of 2.00

The standard deviation of the population (STDp) is equal to

standard deviation of the sample (STDs) having n
observations multiplied by

Select one:
a. SQRT((n-1)/n)
b. SQRT(n/(n+1))
c. SQRT((n+1)/n)
d. SQRT(n/(n-1))

Question 58 Correct Mark 2.00 out of 2.00

The statistical technique on which the methodology of

credit scoring is based is

Select one:
a. Correlation analysis
b. Factor analysis
c. Regression analysis
d. Discriminant analysis
Question 59 Correct Mark 2.00 out of 2.00

VaR of $11 million at 95% confidence and a 1-day horizon

means

Select one:
a. On average, we may expect a loss of more than $
11 million only 1 day in 5 days
b. On average, we may expect a loss of more than $
11 million only 1 day in 20 days
c. On average, we may expect a loss of less than $ 11
million only 1 day in 20 days
d. On average, we may expect a loss of less than $ 11
million only 1 day in 5 days

Question 60 Incorrect Mark 0.00 out of 2.00

Which one of the following covers 95% of the area under

the normal distribution curve

Select one:
a. 2.99 Standard Deviation
b. 1 Standard Deviation
c. 1.96 Standard Deviation
d. 2.56 Standard Deviation