CAIIB Discussions thread July 2017

Copun AMT+(redemption Amt - market price)/ term to maturity/(Redemption Amt+market price)/2

 

A bank’s G sec portfolio has 100 day VaR at 95% confidence level of 4% based on yield. What is the worst case scenario over 25 days? a. Increase in yield by 0.4% b. Decrease in yield by 0.4% c. Increase in yield by 2% d. Decrease in yield by 2% Ans -c Solution : 100 day VaR is 4 %. So one day Var is, 4 = one day VaR × square root of 100 4= one day VaR × 10 One day VaR = 0.4 % 25 day VaR = 0.4 × suare root of 25 = 0.4 × 5 = 2% In worst case scenario yield will always increase. Because this will decrease the market price or value. Answer is increase in yield by 2 %

 

Can anyone clarify how to be awarded AIIBF & FIIBF accreditations and what makes us to qualify for these...

 

Mr x is government employee having credit card limit 100000 debit card and father gift him gift card of 15000/- . He purchase gold using credit card. Shopping of rs 30000 by debit card. And use 12000/- on pos by gift card. 1. Can he recharge gift card and for how much? 2. How much amount will be debited to his account?

 

Cleared retail in 2nd attempt with 74 marks First attempt 53 55 41 Thanks to @Kshitiz Agrawal murugan cbi Deepak Hooda sir and all group members.....

 

The 182-day annualized T bills rate is 9%p.a., the return on market is 15% p.a., and the beta of stock B is1.5 the required rate of return from investment in stock B is___________. A. 17% p.a. B. 18% p.a. C. 19% p.a. D. 20% p.a. ANSWER: B Explain

 

Understanding Tier 1 & 2 Capital in Basel III & II The Basel III Accord A. Elements of Tier 1 capital (i) Common shares (paid-up equity capital) issued by the bank (ii) Stock surplus (share premium) resulting from the issue of common shares (iii) Statutory reserves (iv) Revaluation reserves at a discount of 55% (v) Capital reserves representing surplus arising out of sale proceeds of assets (vi) Other disclosed free reserves, if any (vii) Balance in Profit & Loss Account at the end of the previous financial year (vii) Profits in current financial year on a quarterly basis provided the incremental provisions made for non-performing assets at the end of any of the four quarters of the previous financial year have not deviated more than 25% from the average of the four quarters. (ix) Common shares issued by consolidated subsidiaries of the bank and held by third parties (x) Less: Regulatory adjustments / deductions applied in the calculation of Common Equity Tier 1 capital Elements of Additional Tier 1 Capital (i) Perpetual Non-Cumulative Preference Shares (PNCPS) (ii) Stock surplus (share premium) resulting from the issue of instruments included in Additional Tier 1 capital; (iii) Debt capital instruments eligible for inclusion in Additional Tier 1 capital, which comply with the regulatory requirements as specified in Annex 4; (iv) Any other type of instrument generally notified by the Reserve Bank from time to time for inclusion in Additional Tier 1 capital; (v) While calculating capital adequacy at the consolidated level, Additional Tier 1 instruments issued by consolidated subsidiaries of the bank and held by third parties which meet the criteria for inclusion in Additional Tier 1 capital; and (vi) Less: Regulatory adjustments / deductions applied in the calculation of Additional Tier 1 capital [i.e. to be deducted from the sum of items (i) to (v)]. B. Elements of Tier 2 Capital (i) General Provisions and Loss Reserves (ii) Debt Capital Instruments issued by the banks (iii) Preference Share Capital Instruments [Perpetual Cumulative Preference Shares (PCPS) / Redeemable Non-Cumulative Preference Shares (RNCPS) / Redeemable Cumulative Preference Shares (RCPS)] issued by the banks (iv) Stock surplus (share premium) resulting from the issue of instruments included in Tier 2 capital (v) Capital instruments issued by consolidated subsidiaries of the bank and held by third parties which meet the criteria for inclusion in Tier 2 capital (vi) Any other type of instrument generally notified by the Reserve Bank from time to time for inclusion in Tier 2 capital; and (vii) Less: Regulatory adjustments / deductions applied in the calculation of Tier 2 capital The Basel II Accord A. Elements of Tier 1 Capital 1. Equity capital 2. Disclosed reserves 3. Non-cumulative perpetual preferred stock B. Elements of Tier 2 Capital 1. Undisclosed reserves 2. Revaluation reserves 3. General provisions/general loan-loss reserves 4. Hybrid debt capital instruments 5. Subordinated term debt C. Elements of Tier 3 Capital - Subordinated debt with some limitations. Tier 3 capital will be limited to 250% of a bank’s Tier 1 capital --------------------- Basel III Capital Regulations - Revision RBI had allowed below items on the banks’ balance sheets to be included in the Tier-1, or core capital of banks. (i) Revaluation reserves at a discount of 55% (ii) Foreign currency translation reserve (FCTR) at a discount of 25% (iii) Deferred tax assets (DTAs) up to 10% of a bank’s CET1 capital Refer :

 

Given the following, Probability of occurrence = 4, Potential financial impact = 4, Impact of internal controls = 0%. What is the estimated level of operational risk? a. 3 b. 2 c. 0 d. 4 Ans – d Estimate level = √[probability of occurrence*potential financial impact ( 1-% of impact of internal controls )] = √4*4(1-0) = 4

 

Does anyone have complained regarding the mistakes asked in question paper last Sunday in bfm paper to iibf as I too found the same question for which loan was sanctioned in lakhs but answers were given in crores rupees. I too got 49 marks in bfm. If so any reply from the institution?

 

A 10 year 7% semi-annual bond @market yield of 8% has a price of Rs.97.80, which rises to 98.60 at yield of 7.92 %, what is the BPV of the bond ? a. 10 b. 12 c. 14 d. 16 Ans – a Solution BPV=CHANGE IN VALUE / CHANGE IN YIELD =(97.80-98.60)/(8.00-7.92) =0.80/0.08 = 10% if 1% = 100 BPV then 10% =1000 BPV per mio of face value

 

sir please send me the detail explaination of my query

 

i have cleared first 2 paper in caiib. please provide me some e-material or any hard copy book name etc for retail banking

 

A company equity capital of Rs.10 crores ( Face Value of Rs. 10 makes PBIDT of Rs.10 crores and PAT of Rs.5 crores.if the market price of the share is Rs. 50, the PE ratio will be ...... a. Rs.5 b. Rs.10 c. Rs.20 d. Rs.15 Ans - b Solution PE = Market price / EPS EPS=NPAT/paid up capital* face value = 5/10*10 = 5 P/E ratio = price per share / earnings per share (EPS) =50/5 = 10

 

Cleared CAIIB in first attempt...48-45-63 Thanks alot sir your materials helped me alot...

 

A bond having duration of 8 Yr is yielding 10% at present. If yield increase by .60%, what would be the impact on price of the bond? a) Bond price would go up by 4.36% b) Bond price would fall by 4.36% c) Bond price would go up by 2.82% d) Bond price would fall by 2.82% Ans - b Modified duration is McCauley's duration discounted by one period yield to maturity Here we are talking McCauley's duration is 8 years. Modified duration =McCauley's duration / ( 1 + yield ) = 8 /(1 + 10%) = 8/(1 +0.1) = 8/(1.1) = 7.2727 % change in price =- modified duration × yield change = - 7.2727× (0.60%) = (-)4.3636 % = (-) 4.36% ( - )means decrease in price 4.36 % decrease in price.

 

The ANS of the said question is Rs 11 lakh which is wrongly given as 11 crore

 

Iibf have also said that sylabus will contain updates upto 31st dec but there was a question related to 2017 budget

 

12% government of India security is quoted at RS 120. If interest rates go down by 1%, the market price of the security will be? a. 120 b. 133.3 c. 109 d. 140 Ans – b Explanation : Current Yield = Coupon Rate x 100/CMP Current Yield = 12 x 100/120 = 10% Now, Interest rate goes down by 1% (That is 9%). By applying the same formula, we get : 9 = 12 x 100/CMP CMP = 1200/9 = 133.3

 

Understanding Options The strike price is the price at which the holder of an options can buy (in the case of a call option) or sell (in the case of a put option) the underlying security when the option is exercised. Spot rate is the rate prevailing on the date (market price). At the money (ATM) - if the strike price is the same as the market price of the underlying security. In the money - a call option with a strike price that is below the market price of the underlying asset or a put option with a strike price that is above the market price of the underlying asset. Out of the money (OTM) - a call option with a strike price that is higher than the market price of the underlying asset, or a put option with a strike price that is lower than the market price of the underlying asset. Example : If Mr. A buys a call or put option on ABC stock with a strike price of Rs. 200, and the market price of the stock is Rs. 200, the option is considered to be "At the money" If Mr. A buys a call option on ABC stock with a strike price of Rs. 200, and the market price of the stock is Rs. 240, the option is considered to be "In the money" If Mr. A buys a call option on ABC stock with a strike price of Rs. 200, and the market price of the stock is Rs. 180, the option is considered to be "Out of the money" If Mr. A buys a put option on ABC stock with a strike price of Rs. 200, and the market price of the stock is Rs. 240, the option is considered to be "Out of the money" If Mr. A buys a put option on ABC stock with a strike price of Rs. 200, and the market price of the stock is Rs. 180, the option is considered to be "In the money"

 

what are the latest provisioning norms in doubtful cat 1,2,3

 

Can anyone pls guide me regarding what typ of questions come in RISK MGMT elective subject?@ sir. pls share some questions or mock tests.

 

Dear friends If anybody having corporate banking material... Please share with me.

 

bat sahi hai bhai...ab le liya hai to exam to dena padega

 

Questions regarding basel 3... diff types of operational risk