ONE LINER QUESTIONS
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Bank Financial 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 currency, thereby protecting net interest income and economic value.
What is the primary purpose of the Statutory Liquidity Ratio (SLR) maintained by Indian banks?
To ensure banks hold liquid assets as a safety buffer.
What does the term 'Duration Gap' indicate in bank financial management?
Duration Gap measures the difference between the weighted average duration of assets and liabilities, indicating the bank's sensitivity of net worth to changes in interest rates.
What is the Cash Reserve Ratio (CRR) and where must banks maintain it?
Minimum cash deposit banks must maintain with RBI.
Which RBI committee laid the foundation for ALM guidelines for Indian banks?
The RBI's internal working group and the recommendations of the Narasimham Committee laid the foundation, with formal ALM guidelines issued by RBI in 1999 for banks in India.
What is the meaning of 'Modified Duration' in bond portfolio management?
Price sensitivity of a bond to interest rate changes.
What is Net Interest Margin (NIM) and why is it important for banks?
NIM is the difference between interest income earned and interest paid out, expressed as a percentage of average earning assets. It is a key profitability indicator reflecting the efficiency of a bank's core lending and borrowing operations.
What is the difference between interest rate risk and reinvestment risk for banks?
Interest rate risk affects bond prices; reinvestment risk affects coupon income.
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