CAIIB ABFM By Ashish Sir Class 5
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Advanced Business and Financial Management — CAIIB.
One-liners from this chapter
Free sample — 8 of 65 rapid-fire Q&A cards.
What is the primary objective of Advanced Business and Financial Management (ABFM) in banking?
ABFM aims to equip bankers with skills to manage financial resources efficiently, optimize capital allocation, and ensure sustainable profitability while maintaining regulatory compliance.
What is the concept of Interest Rate Risk in the Banking Book (IRRBB)?
Risk of loss from interest rate changes affecting banking book positions
How is Return on Equity (ROE) calculated for a bank?
ROE is calculated as Net Profit After Tax divided by Average Shareholders' Equity, expressed as a percentage, indicating how effectively the bank generates profit from equity capital.
What is the Earning at Risk (EaR) measure used for in banks?
Measures potential decline in Net Interest Income due to rate changes
What does the DuPont analysis decompose ROE into for banks?
DuPont analysis decomposes ROE into Net Profit Margin, Asset Turnover, and Equity Multiplier (leverage), helping identify which component drives or drags overall returns.
What is Modified Duration and how does it differ from Macaulay Duration?
Modified Duration adjusts Macaulay Duration by dividing by (1 + yield)
What is the significance of the Capital Adequacy Ratio (CAR) under Basel III norms?
CAR ensures that banks hold sufficient capital to absorb potential losses; under Basel III, the minimum CAR is 11.5% for Indian banks (including capital conservation buffer of 2.5%).
What is the concept of Funds Transfer Pricing (FTP) in banks?
Internal mechanism allocating interest income and cost across business units
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