RB- Module D : Other Issue Related to Banking MCQ
Q.322. What is securitisation?
(a) Process of converting and breaking definable asset classes into tradeable units
(b) Process of pooling of individual long term loans which are packed and solid to various investors
(c) Both (a) + (b)
(d) It is a structured process and effected only for standard assets and rated to enable the buyers to take a call on investing on the PTCs.
Q.323. Asset backed securitisation is -
(a) Backed by retail loans
(b) Backed by retail loans other than housing loans
(c) Both (a) + (b)
(d) None
Q.324. What is the formula for calculation of EMI?
(a) Principal x Rate of interest x time 100 x 12
(b) p x rx (1+r) / [(1+r)-1]
c)Both (a) + (b), d)None
Q.325. Securitisation process involves -
a) Lender selects the assets for securitisation
b) Issuer (SPV) make payment of lender
c) Assets are converted into a pool of securities by issuer for issuing pass through certificates which are sold to other investors d) All above
Q.326. Who can securitise?
a) Banks and financial institutions only by unlocking the blocked loan funds
b) Securitisation can be only one type of assets of similar maturity which are transferred to SPV to act as intermediary
c) Securitisation issued by special purpose vehicle are known as pass through certificate, it is an alternative to corporate debt or equity for meeting originator's fund requirements.
d) all above
Q.327. Who can be investors to pass though certificates?
a) Banks, mutual funds, other financial institutions i.e customer
b) Government and semi-government bodies
c) Qualified institutional buyers only/provident funds
d) Both (a) + (c)
Q.328. Special types of securitisation includes -
a) Master trust to handle revolving credit card balances/issurance Trust credit card backed securities/grantor trust-for automobile backed securities/owner trust-both interest and principal due to subordinate securities used for payment to senior securities
b) Mater Trust and Insurance Trust
c) Owner Trust and Insurance Trust
d) Both (a) + (b)
Q.329. Advantages of securitisation to issuer are
a) Reduce, funding costs/asset liability mismatch/lower capital needs/locking in profits
b) Transfer of risks/off-balance sheet derivatives/boost earnings/ admissibility of future surpluses/availability of immediate liquidity
c) Both (a) + (b)
d) Large size structuring and (a) all above
Q.330. Advantages to investors of securitisation are -
a) Potentially earning a higher rate of return/portfolio diversification/Isolation of credit risk from parent entity (originating)
b) Portfolio diversification/liquidity availability/early amortisation
c) Isolation of credit risk from parent entity/fluctuations in interest rates does not effect fixed rate
d) Both (b) + (c)
Q.331. There are various risks to investors under securitisation as
a) Reduces portfolio quality/expensive/large size structuring/risks of impairment
b) Liquidity risk/early amortisation/currency interest ratefluctuation temptation to markup prices/servicer becoming insolvent
c) Reduces portfolio quality/liquidity risk/expensive/early amortisation
d) Both (a) + (c)
Q.332. Public offer and listing of Securities Debt Instruments (SDI) Regulations have been passed for regulations in 2008 who has passed it
a) RBI
b) SEBI
c) Special purpose vehicle (SPV)
d) Parliament
Q.333. Who are the main players under new regulatory environment of listing of securitised/debt instruments?
a) Originator/obligor/sponsor
b) Originator/special purpose distinct entity (SPDE) trustee/service provider
c) Isolation of credit risk from parent entity/fluctuations in interest rates does not effect fixed rate
d) Both (b) + (c)
Q.334. Under SDI the procedure of cash flow streams originates-
a) Originator is the original owner of cashflow from mortgage/ NPA/ inventory receivables-Originator transfer it to SPDE, a registered Trust-Trustees are registered with SEBI as recognised intermediaries
b) The contract assigning cash flows between originator and trustees/trustees sign contracts for services in behalf of investor/for ensuring that cash flows are properly received and distributed
c) This includes liquidity provider for correcting shortfall in cashflows/credit enhancer improves credit of asset pool
d) All above
Q.335. What is the nature of business of the public listed securities debt instrument (SDI)? It enables -
a) Transfer cash flows and replaced them by cash by selling the assets pool to-investors
b) Banks to concentrate on core business/large investors have chance to invest with reasonable returns
c) Both (a) + (b)
d) Some of (a) and some of (b)
Q.336. Need for securitistion is -
a) Funds for new housing loans to next 5 years plan
b) Long term lending for housing for 15 years
c) Liquidity of Pass through certificates
d) All above
Q.337. Mortgage backed securitisation (MBS) features are -
a) Pool of receivables sold to SPV supported by mortgaged home loans
b) Passing of cash flows from payments to investors
c) Third party guarantees investment
d) All above
Q.338. Basic Methods of securitisation are -
a) Originator does not actually sell the assets to SPV/There is agreement to assign with trustee hence only beneficial interest in the receivable held
b) The originator sells the assets to SPV. SPV becomes legal owner of the assets and it issue certificates in the form of promissory notes
c) Both (a) + (b)
d) Originator issues receipt which are negotiable
Q.339. The conditions for development of secondary market mortgage backed securitisation are -
a) Risk identification/rating of mortgage pool/off balance sheet item/Tax treatment and tax incidence amongst the originatorSPV and investors
b) Effective foreclosure systems/reduction in stamp duty on transfer/standardisation in under writing practices/declaration of investment as approved under insurance-banking and provident fund Acts.
c) Some of (a) and (b)
d) Both (a) + (b)
Q.340. Name asset reconstruction and securitisation companies which are registered with RBI since, 2003
a) ASCIL/ASREC (India) Ltd./Assets Care Enterprises Ltd. (ACE)/ Pegasus Reconstruction Co. Ltd./International ARC Pvt. Ltd.
b) Alchemist ARC Ltd./Pridhvi ARC Co. Ltd./JM financial ARC Pvt. Ltd./Invent ARC Pvt. Ltd/Phonix ARC Pvt. Ltd.
c) Reliance ARC Ltd./India SME ARC Ltd./Edelweiss ARC
d) All above
Q.341. Which asset reconstruction Co. is the biggest in India and in its market share?
(a) ARCIL-50%
(b) ASREC (India) Ltd. -5%
(c) Asset Care Enterprises Ltd. (ACE)-4%
(d) Pegasus Reconstruction Co. Ltd. - 80%
Q.342. Key strengths of Asset Reconstruction Co. of India Ltd. (ARCIL) are -
(a) First to operate in area of acquisition and resolution of stressed financial assets
(b) Largest ARC in terms of assets under management (AUMs) capital and profitability
(c) Managed 11.879 crore of AUMs with total dues of 47375 crores/Arcil generated net IRR of 81% on existed cares. Overall IRR net of 14%
(d) All above
Q.343. ARCH. is sponsored by
(a) SBI, ICICI bank, IDBI Bank and Punjab National Bank
(b) SBI, Bank of India, Indian Bank, HSBC
(c) HSBC Bank, ICICI Bank, Bank of Baroda, Central Bank of India
(d) Indian Overseas Bank/Allahabad Bank/HDFC/ICICI Bank
Q.344. In asset backed securitisation the assets included are-
(a) Commercial vehicles/cars/construction equipments
(b) Small and medium Enterprises loans/tractor loan/two-three vehicle loans/gold loans
(c) Some of (a) and some of (b)
(d) All above
Q.345. In equated monthly installments at the initial period the features would be -
(a) Principal component is less and interest more
(b) Principal component is more and interest less
(c) Principal component and interest reduces
(d) Both (b) (c)
(a) Process of converting and breaking definable asset classes into tradeable units
(b) Process of pooling of individual long term loans which are packed and solid to various investors
(c) Both (a) + (b)
(d) It is a structured process and effected only for standard assets and rated to enable the buyers to take a call on investing on the PTCs.
Q.323. Asset backed securitisation is -
(a) Backed by retail loans
(b) Backed by retail loans other than housing loans
(c) Both (a) + (b)
(d) None
Q.324. What is the formula for calculation of EMI?
(a) Principal x Rate of interest x time 100 x 12
(b) p x rx (1+r) / [(1+r)-1]
c)Both (a) + (b), d)None
Q.325. Securitisation process involves -
a) Lender selects the assets for securitisation
b) Issuer (SPV) make payment of lender
c) Assets are converted into a pool of securities by issuer for issuing pass through certificates which are sold to other investors d) All above
Q.326. Who can securitise?
a) Banks and financial institutions only by unlocking the blocked loan funds
b) Securitisation can be only one type of assets of similar maturity which are transferred to SPV to act as intermediary
c) Securitisation issued by special purpose vehicle are known as pass through certificate, it is an alternative to corporate debt or equity for meeting originator's fund requirements.
d) all above
Q.327. Who can be investors to pass though certificates?
a) Banks, mutual funds, other financial institutions i.e customer
b) Government and semi-government bodies
c) Qualified institutional buyers only/provident funds
d) Both (a) + (c)
Q.328. Special types of securitisation includes -
a) Master trust to handle revolving credit card balances/issurance Trust credit card backed securities/grantor trust-for automobile backed securities/owner trust-both interest and principal due to subordinate securities used for payment to senior securities
b) Mater Trust and Insurance Trust
c) Owner Trust and Insurance Trust
d) Both (a) + (b)
Q.329. Advantages of securitisation to issuer are
a) Reduce, funding costs/asset liability mismatch/lower capital needs/locking in profits
b) Transfer of risks/off-balance sheet derivatives/boost earnings/ admissibility of future surpluses/availability of immediate liquidity
c) Both (a) + (b)
d) Large size structuring and (a) all above
Q.330. Advantages to investors of securitisation are -
a) Potentially earning a higher rate of return/portfolio diversification/Isolation of credit risk from parent entity (originating)
b) Portfolio diversification/liquidity availability/early amortisation
c) Isolation of credit risk from parent entity/fluctuations in interest rates does not effect fixed rate
d) Both (b) + (c)
Q.331. There are various risks to investors under securitisation as
a) Reduces portfolio quality/expensive/large size structuring/risks of impairment
b) Liquidity risk/early amortisation/currency interest ratefluctuation temptation to markup prices/servicer becoming insolvent
c) Reduces portfolio quality/liquidity risk/expensive/early amortisation
d) Both (a) + (c)
Q.332. Public offer and listing of Securities Debt Instruments (SDI) Regulations have been passed for regulations in 2008 who has passed it
a) RBI
b) SEBI
c) Special purpose vehicle (SPV)
d) Parliament
Q.333. Who are the main players under new regulatory environment of listing of securitised/debt instruments?
a) Originator/obligor/sponsor
b) Originator/special purpose distinct entity (SPDE) trustee/service provider
c) Isolation of credit risk from parent entity/fluctuations in interest rates does not effect fixed rate
d) Both (b) + (c)
Q.334. Under SDI the procedure of cash flow streams originates-
a) Originator is the original owner of cashflow from mortgage/ NPA/ inventory receivables-Originator transfer it to SPDE, a registered Trust-Trustees are registered with SEBI as recognised intermediaries
b) The contract assigning cash flows between originator and trustees/trustees sign contracts for services in behalf of investor/for ensuring that cash flows are properly received and distributed
c) This includes liquidity provider for correcting shortfall in cashflows/credit enhancer improves credit of asset pool
d) All above
Q.335. What is the nature of business of the public listed securities debt instrument (SDI)? It enables -
a) Transfer cash flows and replaced them by cash by selling the assets pool to-investors
b) Banks to concentrate on core business/large investors have chance to invest with reasonable returns
c) Both (a) + (b)
d) Some of (a) and some of (b)
Q.336. Need for securitistion is -
a) Funds for new housing loans to next 5 years plan
b) Long term lending for housing for 15 years
c) Liquidity of Pass through certificates
d) All above
Q.337. Mortgage backed securitisation (MBS) features are -
a) Pool of receivables sold to SPV supported by mortgaged home loans
b) Passing of cash flows from payments to investors
c) Third party guarantees investment
d) All above
Q.338. Basic Methods of securitisation are -
a) Originator does not actually sell the assets to SPV/There is agreement to assign with trustee hence only beneficial interest in the receivable held
b) The originator sells the assets to SPV. SPV becomes legal owner of the assets and it issue certificates in the form of promissory notes
c) Both (a) + (b)
d) Originator issues receipt which are negotiable
Q.339. The conditions for development of secondary market mortgage backed securitisation are -
a) Risk identification/rating of mortgage pool/off balance sheet item/Tax treatment and tax incidence amongst the originatorSPV and investors
b) Effective foreclosure systems/reduction in stamp duty on transfer/standardisation in under writing practices/declaration of investment as approved under insurance-banking and provident fund Acts.
c) Some of (a) and (b)
d) Both (a) + (b)
Q.340. Name asset reconstruction and securitisation companies which are registered with RBI since, 2003
a) ASCIL/ASREC (India) Ltd./Assets Care Enterprises Ltd. (ACE)/ Pegasus Reconstruction Co. Ltd./International ARC Pvt. Ltd.
b) Alchemist ARC Ltd./Pridhvi ARC Co. Ltd./JM financial ARC Pvt. Ltd./Invent ARC Pvt. Ltd/Phonix ARC Pvt. Ltd.
c) Reliance ARC Ltd./India SME ARC Ltd./Edelweiss ARC
d) All above
Q.341. Which asset reconstruction Co. is the biggest in India and in its market share?
(a) ARCIL-50%
(b) ASREC (India) Ltd. -5%
(c) Asset Care Enterprises Ltd. (ACE)-4%
(d) Pegasus Reconstruction Co. Ltd. - 80%
Q.342. Key strengths of Asset Reconstruction Co. of India Ltd. (ARCIL) are -
(a) First to operate in area of acquisition and resolution of stressed financial assets
(b) Largest ARC in terms of assets under management (AUMs) capital and profitability
(c) Managed 11.879 crore of AUMs with total dues of 47375 crores/Arcil generated net IRR of 81% on existed cares. Overall IRR net of 14%
(d) All above
Q.343. ARCH. is sponsored by
(a) SBI, ICICI bank, IDBI Bank and Punjab National Bank
(b) SBI, Bank of India, Indian Bank, HSBC
(c) HSBC Bank, ICICI Bank, Bank of Baroda, Central Bank of India
(d) Indian Overseas Bank/Allahabad Bank/HDFC/ICICI Bank
Q.344. In asset backed securitisation the assets included are-
(a) Commercial vehicles/cars/construction equipments
(b) Small and medium Enterprises loans/tractor loan/two-three vehicle loans/gold loans
(c) Some of (a) and some of (b)
(d) All above
Q.345. In equated monthly installments at the initial period the features would be -
(a) Principal component is less and interest more
(b) Principal component is more and interest less
(c) Principal component and interest reduces
(d) Both (b) (c)
ANSWER-
322 B 323 A 324 B
325 D 326 D 327 D
328 A 329 C 330 A
331-B
332 B 333 C 334 D
335 C 336 D 337 D
338 C 339 D 340 D
341-A
342 D 343 A 344 D
345 A
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