CAIIB ABM Module A & C By Ashish Sir Class 11
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Bank Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary objective of Asset Liability Management (ALM) in banks?
ALM aims to manage the risk arising from mismatches between assets and liabilities in terms of maturity, interest rate, and liquidity, thereby protecting the bank's net interest income and economic value.
What is the difference between Interest Rate Risk and Market Risk in banking?
Interest rate risk is a subset of market risk affecting banking book.
What does the Net Interest Margin (NIM) measure in a bank?
NIM measures the difference between interest income earned and interest paid out relative to earning assets, expressed as a percentage, and reflects the profitability of a bank's core lending activity.
What is the meaning of Yield to Maturity (YTM) for a bond?
YTM is the total return expected if bond is held until maturity.
How is the Capital Adequacy Ratio (CAR) calculated under Basel norms?
CAR is calculated as Total Capital (Tier 1 + Tier 2) divided by Risk-Weighted Assets, and under Basel III it must be maintained at a minimum of 8% (with India's RBI requiring 9%).
What is the Internal Rate of Return (IRR) used for in capital budgeting?
IRR is the discount rate that makes NPV of a project equal to zero.
What is the concept of Duration in bond management?
Duration measures the weighted average time to receive a bond's cash flows and is used to estimate the sensitivity of a bond's price to changes in interest rates; a higher duration implies greater price volatility.
What does the term 'Negative Gap' signify in ALM?
Negative gap means rate-sensitive liabilities exceed rate-sensitive assets.
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