Risk Management in Banks Quiz | Risk Management in Banks Objective Type Questions and Answers

(21) Rule of 72 as a short cut method is explained by the formula:

[A] 72 divided by (annual interest rate multiplied by discount factor)

[B] Annual interest rate dividend by 72

[C] 72 divided by the annual interest rate

[D] None of these

Answer: 72 divided by the annual interest rate

(22) Under Cash Budget System method employed for construction activities the working capital is determined by:

[A] Ascertaining level of current assets

[B] Ascertaining level of current liabilities

[C] Finding cash gap after taking into account projected periodical cash inflows and outflows

[D] All of the above

Answer: Finding cash gap after taking into account projected periodical cash inflows and outflows

(23) The formula to calculate the present value of a single cash flow is given by:

[A] C0 + C (1+r)n

[B] C2 / (1+r)

[C] CF1 / (1+r)n

[D] None of these

Answer: CF1 / (1+r)n

(24) When there is a risk of loss resulting from inadequate or failed internal processes, people and systems or from external event, it is called

[A] Liquidity risk

[B] Systemic risk

[C] Moral Hazard

[D] Operational risk

Answer: Operational risk

(25) Which of the following is not a major component of Market Risk?

[A] Interest rate risk

[B] Equity risk

[C] Foreign exchange risk

[D] Credit risk

Answer: Credit risk