Roll No....

Membership No

The Institute of Chartered Accountants of India

Forex & Treasury Management Certificate Course
Evaluation Test Booklet
Paper 2
19th January, 2014
Duration- 3 Hours

Total Marks- 100

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1.

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6.

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7.

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Date
Centre

: 19th January, 2014

: New Delhi/ Mumbai /Chennai/Kolkata/Bangalore/Ahmedabad

(Do not write your Roll No. and Membership number anywhere in the answer sheet except as mentioned
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CERTIFICATION COURSE ON FOREX AND TREASURY MANAGEMENT

S. No.

Total
Number of
Questions

Questions
to be
answered

Total
Marks

Multiple Choice - Section

A

100

100

50

Multiple Choice Section

B

50

50

50

150

150

100

Total

Marks
Obtained

Section A
Number of questions: 100
Marks: 50
Multiple choices: There may be more than one correct answer, but there is at least one.
1. While booking forward contracts under contracted exposure category, if customers are unable to
produce underlying documents due to logistic reasons, maximum period available for producing
such documents to the bank is
a. 7 days
b. 15 days
c. 30 days
d. Three months
2. Hedging exchange rate risk in respect of the market value of overseas direct investments (in
equity and loan)
a. Is not allowed
b. Allowed; but if the contract becomes naked due to shrinking of investment value, it
should be immediately cancelled
c. Allowed; but if the contract becomes naked due to shrinking of investment value, it
may be allowed to continue at customers request
d. Allowed subject to RBI permission
3. While booking a forward contract to a customer,
a. The currency of the contract has to be the same as that of the underlying
b. The maturity of the contract has to be the same as that of the underlying
c. The currency of the contract can be different from that of the underlying if the risk
management policy of the corporate customer permits it
d. Contract in a different currency can be booked subject to RBI permission
4. Where an exporter is bidding for a project export contract, bank can offer FC-INR option contract
subject to:
a. The customer can be resident in India or nonresident
b. Customer can buy only call option
c. Customer can buy only put option
d. Banks can offer only plain vanilla European option
5. Companies can buy cost reduction structures such as simultaneous buy and sell of European
options subject to
a. There is no net receipt of premium
b. There is no net outflow of premium
c. Only if they are listed companies
d. Not being availed to hedge exchange risk arising out of domestically availed FC loans
[FCNR B loans]
6. When a customer desires to convert EEFC balance into rupee,
a. He cannot book a forward contract for such conversion at a future date
b. He can book a forward sale contract with the bank for such conversion at future date
c. He can book a forward purchase contract with the bank for such conversion at
future date
d. If such contract is booked, it can be cancelled
7. Hedging based on probable exposure based on past performance is allowed

8.

9.

10.

11.

12.

13.

14.

15.

16.

a. For importers and exporters of goods and services

b. Only in the form of forward contracts
c. If such forward contract is cancelled, the gain or loss is to be shared with the customer
d. Roll over is allowed of such contracts
Who is a market marker for Cross Currency Options (not involving Rupee):
a. Any AD category 1 bank
b. AD category 1 bank approved by RBI for this purpose
c. Any foreign bank
d. The customer desiring this product
A resident individual anticipating an outward remittance
a. Cannot book forward contract for that exchange risk
b. Can book forward contract only against documentary evidence
c. Can book forward contract up to a maximum tenor of six months
d. Can book forward contract without production of underlying documents upto USD
100,000
A customer not taking multiple hedging against a same underlying is ensured by
a. A declaration from the customer
b. The contract booking bank checking with other banks of the customer
c. Insisting for an auditors certificate while booking the hedging contract
d. Endorsing on the underlying document produced by the customer
Currency futures contracts can be traded on SEBI recognized stock exchanges subject to
a. The maturity of the contract not exceeding six months
b. They being USD-INR, EUR-INR, GBP-INR or JPY-INR contracts
c. The contract shall be quoted and settled in respective FC
d. The size of the contract is prescribed by the exchange
An NRI cannot book a forward contract to hedge the exchange rate risk in respect of
a. Balances in FCNR Account
b. Balances in NRO account
c. Dividend due on shares held in Indian companies
d. Market value of investments under the portfolio investment scheme
Facility for Hedging Trade Exposures, invoiced in Indian Rupees in India
a. Is not available
b. Is needed by nonresident exporter or importer
c. Is needed by the Indian exporter or importer
d. Is available subject to RBI permission
Debit to the INR account of a non-resident bank is in effect
a. An inward remittance in foreign currency
b. An outward remittance in foreign currency
c. An inward remittance in INR
d. An outward remittance in INR
Opening a current account in the name of correspondent bank
a. Is freely allowed
b. Requires RBI permission
c. Requires RBI permission if the bank is from Pakistan
d. Is strictly prohibited
Vostro accounts are funded by
a. Purchasing foreign currency from the account owner correspondent bank

17.

18.

19.

20.

21.

22.

23.

24.

25.

b. Allowing overdraft limit

c. Selling foreign currency to the account owner correspondent bank
d. Local credits
Balance in Vostro account is
a. Repatriable freely
b. Not repatriable
c. Repatriable subject to RBI permission
d. Not transferable to any other Vostro account
The limit on the balance that can be maintained in nostro account by a bank is
a. Fixed and advised by RBI
b. At the discretion of the chief dealer of the bank
c. As per the banks board decision
d. As advised by the nostro correspondent
For a bank, the net open position is arrived at for each currency separately and while aggregating
it for each currency, the following is not included
a. Net spot position
b. Net forward position
c. Net options position
d. Net open position in gold
Overall net foreign exchange position of a bank is
a. The sum of all net short positions
b. The sum of all net long positions
c. The sum of all net short positions & net long positions, whichever is higher
d. The sum of all net short positions & net long positions, whichever is lower
The gap limit for a treasurer refers to
a. Ceiling on the outstanding position at the end of the day
b. Ceiling on the outstanding position in each time bucket
c. Ceiling on the outstanding position any time of the day
d. The exposure limit per each currency
The aggregate gap limit [AGL] of a bank is
a. Fixed by the banks board
b. Fixed by RBI
c. Should not exceed 12 times the total capital of the bank
d. Decided depending on the trading activity of the bank
The forward rate for any two currencies is generally a function of their spot rate and
a. Trade Difference
b. Difference in the exchange rate
c. Interest rate differential between them
d. Both b and c
The first participants who traded in derivatives where those exposed to
a. Exchange rate risk
b. Interest Rate risk
c. Equity price risk
d. Commodity price risk
For stop-loss buy order, the trigger price is ______ the limit price
a. Less than
b. Greater than

26.

27.

28.

29.

30.

31.

32.

33.

34.

c. Equal to
d. double
Swaps can be regarded as portfolios of
a. Futures contracts
b. Options contracts
c. Derivative contracts
d. Forward contracts
Swaption is
a. An option to buy or sell a swap that will become operative at the expiry of the option
b. Buying or selling of an option that will become operative at the expiry of the swap
c. An option on a forward contract
d. An option on a forward sale
The broad categories of participants in the derivatives market do not include
a. Hedgers
b. Speculators
c. Regulators
d. Arbitrageurs
Which is a correct feature of a forward contract?
a. The contract is entered through the Exchange
b. The contract price is decided on the date of contract
c. The quantity to be decided on the date of delivery
d. Settlement date will be mutually decided later
In a Futures contract,
a. Each party is a counter party to the other
b. Exchange is the legal counterparty to both parties
c. The prices are quoted on the central exchange
d. The tick size is decided by the parties to the contract
Which of the following cannot be an underlying asset for a financial derivative contract?
a. Equity index
b. Interest rate
c. Commodities
d. Foreign exchange
In an options contract, the option lies with
a. Buyer
b. Exchange
c. Both buyer, seller and Exchange
d. Seller
A call option at a strike of Rs.76 is selling at a premium of Rs.16. At what price will it break even
for the buyer of the option?
a. Rs.94
b. Rs.85
c. Rs.102
d. Rs.92
Delta is a measure of:
a. change in the premium with respect to the change in the price of underlying
b. return on the instrument
c. safety of an instrument

d. change in an option value for a unit change in the volatility of the underlying
35. The Black-Scholes model is used for the pricing of:
a. Index futures
b. Options
c. Equity shares
d. Corporate debt
36. The rate of change for delta with respect to the underlying asset's price is called
a. Vega
b. Rho
c. Theta
d. Gamma
37. An American option
a. can be exercised anytime during the life of the Option
b. can be exercised only at maturity
c. is traded only on the American Exchange
d. is one where the underlying currency is US dollar
38. Which of the following options will yield a profit to the purchaser?
a. A call option when the price of the underlying share increases above the options
strike price by an amount greater than the premium paid for the option
b. A call option when the price of the underlying share increases above the options strike
price
c. A put option when the price of the underlying share increases above the options strike
price by an amount greater than the premium paid for the option
d. In all the above cases
39. In a covered call,
a. The writer is long on the underlying asset
b. The writer does not own the underlying asset
c. The investor generally is short on asset but long via option
d. The investor is long on the asset and also long via option
40. All of the following are true regarding futures contracts except
a. they are regulated by RBI
b. they require payment of a margin
c. they are a legally enforceable promise
d. they are marked to market
41. Which of the following is not a derivative transaction?
a. An investor buying index futures in the hope that the index will go up
b. A gold merchant entering into futures contracts to buy his annual requirements
c. A farmer selling his crop at a future date
d. An importer buying Euros in the spot market for six months old bill due today
42. An option to buy an underlying is called
a. Forward
b. Call
c. Put
d. None of the above
43. Which of the following is true?
a. Delta of a call option is positive
b. Delta of a put option is negative

44.

45.

46.

47.

48.

49.

50.

51.

52.

c. Both the above

d. None of the above
In a short call, profit is
a. Unlimited
b. Limited to premium
c. Premium plus Market price minus exercise price
d. Premium minus exercise price
Mean 2 Standard Deviation covers _____% of the area under the curve.
a. 95.45
b. 68.27
c. 99.73
d. 62.50
Commodity exchanges enable producers and consumer to hedge their
a. seasonal risk
b. profit risk
c. production risk
d. price risk
The cash settlement in commodities market is only for the incremental gain/ loss as determined
on the basis of
a. Final settlement price
b. Average price for the day
c. Opening price.
d. Last traded price
Interest rate on FRA determined by using which of the following indexes in offshore markets
a. LIBOR
b. MIBOR
c. MIFID
d. All of them
In the case of settlements culminating into delivery, sales tax at the rates applicable in the State
will be payable where the following is located.
a. Buyer
b. Delivery Center
c. Seller
d. Exchange
Financial Market Infrastructure refers to
a. The infrastructure facilities made available to financial market
b. The financial system including banking system
c. A multilateral system used for the purposes of clearing, settling, or recording
financial transactions
d. The clearing system prevailing in the market
Which is not one of the reinforcing Pillars on which Basel III capital regulations are based on
a. minimum capital requirements
b. supervisory review of capital adequacy
c. market discipline
d. regulatory oversight
Which of the both are having large premiums and also known as Insurance Contracts
a. Buy Put

53.

54.

55.

56.

57.

58.

59.

60.

b. Sell Call
c. Range Forward
d. Participatory Froward
For the purpose of calculating capital while classifying common equity,
a. The net credit balance in the inter-office account with Head Office will not be
reckoned as capital funds
b. The debit balance in the Head Office account will not be set-off against capital
c. The net credit balance in the inter-office account with Head Office will be set off against
debit balance
d. The net balance in the inter-office account with Head Office will be offset against the
revenue
In case of individual loans secured by residential property, the RBI prescribed risk weight is %
varies depending on value of loan from
a. 50 to 75
b. 50 to 100
c. 75 to 100
d. 90 to 100
Operational risk is defined as
a. The risk of loss during the normal operations of the bank
b. The risk of loss beyond the permitted level
c. The risk of loss resulting from inadequate internal processes, people and systems
d. The loss due to Act of God
Under the Basic Indicator Approach, banks must hold capital for operational risk equal to
a. The average over the previous five years of a fixed percentage of positive annual gross
income
b. The average over the previous three years of a fixed percentage of positive annual
gross income
c. The previous years positive annual gross income
d. The average over the previous three years annual gross income
In case of an interbank contract if the fixed date delivery is contracted is a holiday, the contract
shall be delivered
a. On the immediate preceding working day
b. On the immediate succeeding working day
c. On that day itself since electronic funds movement can take place on holidays
d. As mutually agreed
An in the money situation is one where
a. There is no intrinsic value
b. A call option with strike price below the current market price of the underlie
c. A put option with strike price below the current market price of the underlie
d. Profitable situation
A liquidity risk generally means
a. Absence of secondary market
b. Inability to sell an asset
c. A situation of getting into liquidation
d. A situation to avoid
Negotiated Dealing System is

61.

62.

63.

64.

65.

66.

67.

a. An electronic platform for facilitating dealing in Government Securities and Money

Market Instruments
b. A system where sale takes place after negotiation
c. The same as Reuters dealing screen
d. An electronic system for putting through deals by dealers
Which does not fit into the description of Primary Dealer
a. Merchant bankers to the Government of India
b. First tier of the government securities market
c. Second tier of the government securities market
d. Works in tandem with satellite dealers
Technical analysis means
a. An effort to forecast prices by analyzing exclusively historical price trends
b. An effort to forecast prices by analyzing economy of the country
c. An effort to forecast prices by analyzing the economic fundamentals
d. An effort to forecast prices by analyzing market data
In case of futures contract, a tick size means
a. The smallest increment in which the price can move
b. The smallest time duration in which the price moves
c. The smallest size of the security that can be dealt
d. All the above
Which is not one of the categories of investments held, as per RBI circular on investment
portfolio of banks?
a. Held for Trading
b. Held to Maturity
c. Held for sale
d. Available for Sale
What is a non performing investment?
a. There is nothing named non performing investment
b. An investment in shares of companies, advances to which are NPAs
c. An investment in which there are dividend arrears
d. An investment in which there are interest arrears
A member of the Institute of Chartered Accountants of India, carrying out an internal audit
activity of a treasury, would apart from other requirements, additionally be governed by [mark the
incorrect one]
a. the requirements of the Chartered Accountants Act, 1949;
b. the Code of Ethics issued by the Institute of Chartered Accountants of India
c. other relevant pronouncements of the Institute of Chartered
d. the code of conduct for dealers
Which of the following statement is untrue in the context of guidelines on internal audit of
treasury functions of a bank?
a. After completing the preliminary review, the internal auditor performs the procedures
outlined in the audit program
b. After completing the procedures outlined in the audit program, the internal auditor
performs the preliminary review
c. The internal audit procedures usually test the internal controls and the accuracy of the
transactions
d. The audit procedure includes observation

68. In connection with internal audit of treasury functions of banks, the following is true
a. The internal auditor should be independent from the internal control process
b. The internal audit head should not report to any authority below the level of the Board of
Directors/Audit Committee
c. The internal auditor should not be assigned the responsibility of performing other
accounting or operational functions
d. All the above
69. The scope of risk-based internal audit does not include
a. review of the systems in place for ensuring compliance with money laundering controls
b. the guidelines for appraising large credit proposals
c. identifying potential inherent business risks and control risks, if any
d. suggesting various corrective measures and undertaking follow up reviews to monitor the
action taken thereon
70. The internal audit of treasury operations have different stages and following is the correct flow of
the stages:
a. Pre-commencement Work, Audit Programme, Audit Documentation, Audit
Procedures, Internal Audit Report
b. Pre-commencement Work, Audit Documentation, Audit Procedures, Audit Programme,
Internal Audit Report
c. Pre-commencement Work, Audit Programme, Audit Procedures, Audit Documentation,
Internal Audit Report
d. Pre-commencement Work, Internal Audit Report, Audit Programme, Audit
Documentation, Audit Procedures
71. The points to be considered before commencing the internal audit include
a. Decision on whether the engagement should be accepted based on capability
b. Decision on whether the engagement should be accepted based on time and resources
availability
c. Whether it satisfies ethical requirements
d. All the above
72. Asset liability management
a. Is concerned with assets & liabilities only on the balance sheet
b. Is concerned with assets & liabilities both on and off the balance sheet
c. Does not involve altering the portfolio
d. Does not have a framework for assessing the commodity price risks
73. Which is not one of the pillars on which the ALM process rests as per RBI Guidelines
a. ALM risk management system
b. ALM information system
c. ALM organization
d. ALM process
74. Successful implementation of the risk management process require strong commitment on the
part of the senior management in the bank
a. To have risk policies
b. To adhere to defined tolerance limits
c. To integrate basic operations and strategic decision making with risk management
d. All the above
75. Responsibility of ALCO of the bank does not include
a. According clearance for large value credit proposals

76.

77.

78.

79.

80.

81.

82.

83.

b. Ensuring adherence to limits set by the board

c. Deciding business strategy of the bank on the assets & liabilities
d. Aligning the business with the decided risk management objectives
The basic analytical models for ALM analysis and scientific decision making does not include
a. GAP Analysis Model
b. Black Scholes Model
c. Scenario Analysis Model
d. Value at Risk Model
Repricing gaps are calculated
a. for assets and liabilities of differing maturities
b. for assets and liabilities with differing interest rates
c. which will show that a negative gap means assets get repriced before liabilities
d. which will show that a positive gap means assets get repriced after liabilities
Duration used in bond mathematics has the following characteristic
a. The larger the value of the duration, the more sensitive is the price of that asset or
liability to changes in interest rates
b. The larger the value of the duration, the less sensitive is the price of that asset or liability
to changes in interest rates
c. The larger the value of the duration, the more sensitive is the price of that asset or
liability to changes in period
d. The larger the value of the duration, the less sensitive is the price of that asset or liability
to changes in period
ALCO is a
a. Decision making unit
b. Recommendatory body
c. Reviewing authority
d. Al the above
The business issues that would come up before ALCO include
a. Product pricing for assets
b. Product pricing for liabilities
c. Desired maturity profile of the incremental assets & liabilities
d. Allocation for directed credit
The frequency of holding ALCO meeting is
a. Decided by individual banks
b. Advised by RBI
c. Advised by SEBI
d. Monthly
The number of members of ALCO of any bank is
a. Eight
b. Varying with the bank
c. Advised by RBI
d. Not dependent on business complexity of the bank
Who is not a member of ALCO in the bank?
a. Head of credit
b. Head of investments
c. RBI nominee on the banks board
d. Chief of Economic Research

84. The liquidity shortfall of one bank can

a. Affect that bank only
b. Affect the entire banking system
c. Affect neighbouring banks
d. Affect the Central Banking system
85. For the purpose of ALM, the investments in SLR Securities are considered as
a. Liquid as they are in Government securities
b. Illiquid due to lack of depth in secondary market
c. Excluded category
d. Liquid to the extent of defined percentage
86. In case of Government securities, Defeasance period is
a. The time taken to liquidate the position
b. The shut period
c. The period for which it is held
d. The maturity period
87. The Statement of Structural Liquidity for purpose of ALM shows
a. all cash inflows in the maturity ladder according to the expected timing of cash flows
b. all cash outflows in the maturity ladder according to the expected timing of cash flows
c. all cash inflows & outflows in the maturity ladder according to the expected timing
of cash flows
d. the Banks liquidity position on any given date
88. Indian banks with large branch network can afford to have
a. Larger tolerance levels in mismatches in the long-term if their term deposit base is
quite high
b. Larger tolerance levels in mismatches in the short-term if their term deposit base is quite
high
c. Lower tolerance levels in mismatches in the long-term if their term deposit base is quite
high
d. Lower tolerance levels in mismatches in the long-term if their term deposit base is low
89. In the context of ALM, mismatched currency position exposes the balance sheet to
a. movements in exchange rate
b. country risk
c. legal risk
d. settlement risk
90. The interest rate risk to a bank has two perspectives viz.:
a. earnings perspective which is immediate impact of changes in interest rates on
reported profits
b. earnings perspective which is immediate impact of changes in banks Market Value of
Equity
c. economic value perspective which is immediate impact of changes in interest rates on
reported profits
d. economic value perspective which is long range impact of changes in interest rates on
reported profits
91. The risk from the earnings perspective can be measured as changes in
a. Net Interest Income
b. Net Interest Margin
c. Net interest revenue
d. a or b above

92. The foreign exchange policy of a corporate does not address

a. Names of authorized traders
b. The marketing strategy involving usage of currency
c. The levels of authority
d. Electronic platform and usage
93. As per the accounting standard for financial instruments, following is a nonfinancial asset
a. Refund of taxes
b. Cash
c. Investment
d. Loans
94. As per the accounting standard for financial instruments, following is a financial liability
a. Forward contracts
b. Own equity
c. Warranty obligations
d. Insurance contracts
95. Historical cost is the main accounting convention in
a. Case of IFRS
b. US GAAP except prohibition of revaluation generally
c. Indian GAAP except that AS 30 & 31 allows fair value in some cases
d. All the above are true
96. Accounting guidance in India are issued
a. Exclusively by ICAI
b. Ministry of Corporate Affairs
c. Also by the concerned regulators on industry specific areas
d. RBI
97. Consolidation of Financial statements of subsidiaries is
a. Mandatory under US GAAP
b. Mandatory under IFRS
c. Mandatory under Indian GAAP
d. Not mandatory under any accounting standards
98. As per MF regulations 1996, in India, a mutual fund can be
a. Constituted in the form of trust or society
b. Constituted in the form of trust only
c. The instrument of constitution should be in the form of an agreement
d. The instrument of constitution should be in favour of the sponsors
99. Auditing of the annual statement of accounts of a mutual fund
a. Is compulsory
b. Should be by an auditor not associated with the AMC
c. By an auditor appointed by the trustees
d. All the above are true
100. As per The Prevention of Money-Laundering Act, 2002, money laundering includes
a. Involved in any process or activity connected with the proceeds of crime and projecting it
as untainted property
b. Such act could be directly or indirectly
c. Knowingly assists or knowingly is a party
d. All these acts

Section B
Number of questions: 50
Marks: 50
Multiple choices: There may be more than one correct answer, but there is at least one.
101. Banks are required to maintain records attracting provisions of PMLA 2002 for a period of
a. Ten years from the date of transaction
b. Ten years from the date of cessation of transaction
c. Twelve years from the date of transaction
d. Twelve years from the date of cessation of transaction
102. As per SEBI regulations, features of book building process:
a. Means a process undertaken to elicit demand and to assess the price
b. Is not undertaken by the book runner
c. Public issue cannot be made through this process
d. Price of security cannot be determined through this
103. As per ICDR regulations 2009, convertible debt instrument means
a. an instrument which does not create any indebtedness
b. is convertible into equity shares of the issuer at a later date
c. the option of the holder of the instrument is a must for such conversion
d. it invariably constitutes a charge on the assets of the issuer
104. For making an initial public offer, the issuing company must have had a track record of
distributable profits
a. for at least three preceding years
b. for at least preceding five years
c. for at least three out of the immediately preceding five years
d. for at least two out of the immediately preceding three years
105. An issuer shall not make an allotment pursuant to a public issue if the number of prospective
allottees is
a. less than one thousand
b. one thousand
c. one hundred
d. less than one hundred
106. According to Foreign Exchange Management Act, capital account transaction
a. Alters the assets outside India of persons resident in India
b. Alters the income outside India of persons resident in India
c. Does not alter the contingent liability outside India of persons resident in India
d. Does not include export of currency note
107. According to FEMA 1999, London branch of State Bank of India
a. Is a nonresident entity
b. Resident entity
c. Is a foreign entity

d. Is an Indian entity
108. Though Indian rupee is convertible on current account, reasonable restrictions may be imposed on
current account transactions in public interest
a. By RBI
b. By Central Government
c. By Central Government in consultation with RBI
d. By RBI in consultation with Central Government
109. A businessman can draw foreign exchange to the following extent for business travel abroad
a. USD 10000 per visit
b. USD 25000 per visit
c. USD 10000 per annum
d. USD 25000 per annum
110. An NRI can buy & sell residential properties & repatriate the proceeds
a. Freely without any restrictions on the number and amount
b. Repatriate proceeds upto US dollar one million
c. Repatriate the proceeds of maximum two residential properties
d. Subject to RBI permission
111. As per SEBI Rules 1993, who is a discretionary portfolio manager?
a. There is a concept of portfolio manager and not Discretionary Portfolio Manager
b. A wealth manager with enough discretion
c. Discretionary Portfolio Manager is defined as a portfolio manager appointed at the
discretion of the client
d. A portfolio manager who exercises any degree of discretion on management of the
portfolio of securities of the client
112. Working as portfolio manager
a. Requires certificate from SEBI
b. Can be continued if was working prior to the enactment of SEBI regulations
c. Is allowed by authorized merchant bankers
d. All the above are true
113. Treasurer enters into a FRA and simultaneously enters into opposite position in Euro Dollar
futures contracts, the net effect (ignoring margins)
a. Zero, if the period of both of the contracts are same
b. Zero even if the period of both are contracts are not same portfolio management services
c. Depends upon current Interest rates
d. All of them
114. As per the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013,
a. There is a shift from the product-centric model to a customer-centric one
b. It governs those who are in the business of providing investment advice
c. It governs those who are in the business of providing investment advice for consideration
d. a & c above
115. According to SEBI guidelines, investment advice
a. Includes financial planning
b. Does not include advice selling securities
c. Does not include oral advice

d. Includes advice given through newspapers

116. Investment adviser has to obtain registration certificate under the regulations which is valid [from
the date of issue] for
a. One year
b. Three years
c. Five years
d. Ever
117. Registration as investment adviser is compulsory except the following:
a. advocates advising their clients on legal matters
b. insurance agents giving investment advice solely on insurance products
c. both a & b above
d. portfolio managers
118. As per SEBI regulations, Investment advisors
a. do not have any capital adequacy requirements
b. should have minimum networth of Rs 25 lakhs if body corporate
c. should have minimum networth of Rs 5 lakhs if body corporate
d. should have minimum net tangible assets of Rs 5 lakhs if individual
119. Mis-selling of products does not include
a. Products unsuitable to the client are sold
b. Bank selling products linking to its own products
c. Making available complementary products
d. Advisor having extraneous interest in the product
120. As per The Chit Funds Act, 1982, chit means a transaction
a. In which subscribers get money as and when they want during the period when they have
subscribed
b. In which subscribers pool money to help each other during the period when they have
subscribed
c. In which subscribers earn high interest during the period when they have subscribed
d. In which persons subscribe periodically during definite period and each by lot or
auction is eligible for a prize amount
121. In the pricing of Original Issue Discount [OID] bond, following is not true
a. The original issue discount is the difference between issue price and face value
b. It is issued this way to entice the buyers
c. Zero coupon bond will often have the lowest original issue discount
d. The lower the interest rate, the greater the original issue discount
122. A bank has issued a compounded interest deposit receipt in which the amount deposited is Rs
10000 and the maturity value after five years is Rs 15000. The Original Issue Discount in this case
is
a. Rs 10000
b. Rs 15000
c. Rs 5000
d. Cannot say unless the interest rate is known
123. An investor being bearish sells ten one-month XYZ Ltd. futures contracts at Rs.100, 000. On the
last Thursday of the month, ABC Ltd. closes at Rs.110. He makes a (assume one lot = 100)

a. profit of Rs. 10,000

b. loss of Rs. 10,000
c. loss of Rs. 1,100
d. profit of Rs. 1,100
124. You buy 100 calls on a stock with a strike of Rs.1,200 and pay a premium of Rs.50/call. A month
later the stock trades in the market at Rs.1,300. Upon exercise the amount received will be
a. Rs.10,000
b. Rs.1,200
c. Rs.6,000
d. Rs.5,000
125. Chit funds are governed by
a. RBI
b. Ministry of Finance, Government of India
c. SEBI
d. State Government
126. Centralisation of treasury function in a multidivision corporation
a. Increases the effectiveness of cash management through netting
b. Increases the total amount of cash to be maintained
c. Allows the corporation to benefit from leading and / or lagging
d. Both a & b above
127. In hedge accounting, functional currency is
a. The currency in which a transaction takes place
b. The currency of the primary economic environment in which the entity operates
c. The Indian rupee
d. The currency of conversion
128. Which statement is incorrect relating to Banking cash transaction tax [BCTT] in India
a. It was withdrawn effective from April 2009
b. The tax rate is 0.01% on all cash withdrawal in a single day of cash exceeding specified
limit
c. Its purpose is to track unaccounted money
d. It has been replaced by another tax on all banking transactions
129. If a Treasurer will foresee an Interest rate liability in balance sheet and booked FRA amounting
Euro 1 Million at an agreed rate of 6% which is 6 months Euribor from now. The liability will
come after one month for next 6 months. Then what would be the convention used for that
Treasurer
a. Treasurer bought FRA 1X7 at 6 % ( 6 months Euribor)
b. Treasurer sold FRA 1X7 at 6 % ( 6 months Euribor)
c. It is an forward contract booked at an Interest rate of 6% for 6 months period starting one
month from now
d. None of these
130. With reference to Question No 96 what would be the receipt and payment of Interest rate if after
6 months Euribor settled at 8%
a. Treasurer will get 2% from the bank on notional amount of Euro 1 Million
b. Treasurer will pay 2% to bank on notional amount of Euro 1 Million

c. Treasurer will let the trade worthless after 6 months

d. None of these
131. In the context of applicability of service tax to chit fund business, following is not true:
a. Chit fund business is in the nature of cash management service
b. Business Chit Funds offer service for consideration
c. Business Chit Funds are liable to pay service tax
d. Simple Chit Funds are also liable to pay service tax
132. Money changers change foreign currency into Indian rupee or vice versa.
a. There is no service tax applicable for this service
b. Service tax is to be levied on the conversion price from FC to INR
c. Service tax is to be levied on both conversions
d. Service tax is levied on conversion price from INR to FC only
133. Whether the amount charged as entry and exit load from the investor by a mutual fund is liable
to service tax?
a. Entry load attracts service tax
b. Exit load attracts service tax
c. Both entry & exit loads do not attract service tax
d. Both entry & exit loads attract service tax
134. For the purpose of levying service tax, the following services are considered as Banking and
Other Financial Services
a. Merchant banking services
b. foreign exchange broking
c. Both a & b above
d. Export of services
135. The following guideline does not relate to debt restructuring
a. London Approach
b. INSOL International Statement
c. CDR guidelines
d. G 20 principles
136. The legal basis to the debt restructuring system is provided by
a. RBI Act
b. The Debtor-Creditor Agreement
c. Inter-Creditor Agreement
d. Both b & c above
137. The CDR mechanism does not cover
a. Amount outstanding less than Rs ten crores
b. DRT cases
c. BIFR cases
d. Suit filed accounts
138. Under CDR principle, if the following lenders agree, others have to necessarily agree with the
decision
a. 75% of the creditors by value
b. 2/3rd of the creditors by value
c. 75% of the creditors in number

d. 90% of the creditors in number

139. A trader buys three-month put options on 1 unit of gold with a strike of Rs.27000/10 gms at a
premium of Rs.70. Unit of trading is 1kg. On the day of expiration, the spot price of gold is
Rs.26800/10 gms. What is his net payoff?
a. (+) 13,000
b. (+) 20,000
c. (-) 13,000
d. (-) 20,000
140. A trader sells 5 units of gold futures at Rs.16500 per 10 grams. What is the value of his open
short position? Unit of trading is 1 Kg and delivery unit is one Kg.
a. Rs.82,500
b. Rs.82,50,000
c. Rs.8,25,000
d. Rs.82,000
141. In CDR mechanism, the method of reorganization of the outstanding obligations does not include
a. Increasing the tenure of the loan
b. reducing the rate of interest
c. conversion of equity into debt
d. one time settlement
142.
The structure on which CDR Mechanism in India stands does not include
a. CDR Standing Forum
b. CDR secretariat
c. CDR Empowered Group
d. CDR Cell
143. Foreign companies can set up business in the form of
a. A company as JV or WOS.
b. Liaison / Representative Office
c. Project or Branch Office
d. All the above
144. The concept of sectoral cap is applied in case of
a. Investment abroad
b. FDI
c. FII
d. All investments
145. Foreign Direct Investment in Chit Funds business in India is
a. Banned
b. Allowed freely
c. Allowed subject to RBI permission in each case
d. Allowed subject to ceiling on investment
146. Issuing American Depository Receipt [ADR]
a. Is not equivalent to FDI
b. Results in foreign inward remittance
c. Results in outward remittance
d. Is banned presently

147. If a client has bought USD put at 45 on USD/INR currency pair on a notional amount of $ 1
Million and sold a call at 50 for equal maturities, the premiums are getting offset on the same.
Then the strategy is known as
a. Range forward
b. Risk reversal
c. Zero cost collar
d. All of the above
148. Which of the following is a natural hedging?
a. Booking a Forward contract
b. Buying a Futures contract
c. Buying Options
d. Sourcing
149. What is a merchant quote?
a. Rate quoted by RBI
b. Rate quoted by bank to its customer
c. Rate quoted by bank to another bank
d. Rate quoted by bank to its trader customer
150. Negotiated Dealing System (NDS) is intended to help
a. Elimination of investment brokers
b. Stabilize the securities market
c. Minimize counterparty risk
d. Price discovery in the market