JAIIB AFM MARATHON 6
Chapter notes, video classes, MCQ practice tests and quick-revision one-liners for Accounting and Financial Management for Bankers — JAIIB.
One-liners from this chapter
Free sample — 8 of 66 rapid-fire Q&A cards.
What is the primary objective of financial management in a bank?
The primary objective is to maximize shareholder wealth while maintaining adequate liquidity, solvency, and profitability within the regulatory framework set by RBI.
What is the meaning of 'yield to maturity' (YTM) for a bank's bond portfolio?
Total return expected if bond is held till maturity.
What does RAROC stand for and why is it important for banks?
RAROC stands for Risk-Adjusted Return on Capital. It helps banks measure profitability by adjusting returns for the risk undertaken, enabling better capital allocation decisions.
What is the difference between fixed-rate and floating-rate loans in banking?
Fixed rate is constant; floating rate changes with benchmark rate.
What is the difference between book value and market value of equity?
Book value is the net worth recorded in the balance sheet (paid-up capital plus reserves), while market value is the price at which shares trade in the stock market, reflecting investor expectations.
What is 'duration' of a bond and why is it important for banks?
Weighted average time to receive bond cash flows; measures interest rate risk.
What is Economic Value Added (EVA) in the context of banking?
EVA is net operating profit after tax minus the cost of capital employed. A positive EVA indicates the bank is creating value above its cost of capital, signifying true economic profit.
What is the 'Treynor ratio' used to measure in portfolio management?
Return earned per unit of systematic (market) risk taken.
Video classes for this chapter
Master the full AFM syllabus
Every chapter of Accounting and Financial Management for Bankers — videos, tests, notes and one-liner decks in one place.