CAIIB BFME Module B & C By Ashish Sir Class 3
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 66 rapid-fire Q&A cards.
What is the primary objective of Risk Management in Bank Financial Management?
The primary objective is to identify, measure, monitor, and control risks to protect the bank's capital and earnings while ensuring sustainable profitability.
What is the Net Stable Funding Ratio (NSFR) designed to measure?
Long-term structural liquidity over a one-year horizon.
What are the three pillars of Basel II framework relevant to bank risk management?
The three pillars are Minimum Capital Requirements (Pillar 1), Supervisory Review Process (Pillar 2), and Market Discipline through disclosure (Pillar 3).
What does the Liquidity Coverage Ratio (LCR) require banks to maintain?
Sufficient high-quality liquid assets to cover 30-day net cash outflows.
What does VaR (Value at Risk) measure in the context of market risk?
VaR measures the maximum potential loss in the value of a portfolio over a defined period for a given confidence interval, typically 99% over a 10-day horizon for regulatory capital.
What is the Leverage Ratio introduced under Basel III?
Tier 1 capital divided by total exposure, minimum 3%.
What is the difference between expected loss and unexpected loss in credit risk?
Expected loss is the average loss anticipated over a period and is covered by loan loss provisions, while unexpected loss is the deviation above expected loss and must be covered by regulatory capital.
What is the purpose of the Internal Capital Adequacy Assessment Process (ICAAP)?
Banks self-assess capital needs for all material risks beyond Pillar 1.
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