CAIIB · BFM · Chapter 2

Treasury Products

Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial Management — CAIIB.

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Q

What are the three core markets where treasury operates?

A

Foreign exchange market, money market, and securities market.

Q

What is the standard settlement convention for spot forex trades?

A

T+2 — two working days from trade date.

Q

Are forward rates predictions of future spot rates?

A

No. Derived from interest rate differential between two currencies.

Q

Define a swap in forex.

A

Combination of spot + forward (or two forwards) in opposite directions.

Q

What is mandatory before any foreign currency loan is sanctioned?

A

Treasury clearance confirming availability and cost of FCY funds.

Q

Why is rediscounting of foreign bills a 'clean' treasury product?

A

With recourse to originating bank; credit risk does not transfer.

Q

Name three standard tenors of Treasury Bills issued by Government of India.

A

91-day, 182-day, and 364-day T-Bills.

Q

What type of security is a Treasury Bill?

A

Zero-coupon security issued at discount, redeemed at par.

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