Solved by Mehreen Humayun
A foreign correspondent of issuing bank that advises the beneficiary of letter of credit is known as:
An advising bank, usually a foreign correspondent bank of the issuing bank will advise the beneficiary.
The headquarter of Sate Bank of Pakistan was initially established in:
The headquarters are located in the financial capital of Pakistan, Karachi with its second headquarters in the capital, Islamabad.
The word letter of credit has been derived from which language?
Letter of Credit is an English name, which is derived from a French word.
Which of the following party must evaluate the credibility of the customers?
Any agent of bank
The discounting rate of the first class bills by the State Bank is called:
Prime lending rate
Which of the following is the reason of increasing investment in foreign markets?
Removal of trade barriers
Opening a foreign bank account
State Bank uses CAMEL as a supervisory framework to judge the financial health of financial institutions. This analysis involves _____ indicators.
CAMELS Rating System
The six factors examined are as follows:
C - Capital adequacy
A - Asset quality
M - Management quality
E - Earnings
L - Liquidity
S - Sensitivity to Market Risk.
Through which of the following we can lower the average cost of production?
Economies of scale
Economies of supply
Foreign exchange risk
If there are economies of scale, the increase can lower the average cost of production of a good.
All of the following are included in financial system EXCEPT:
The financial system is the system that allows the transfer of money between savers and borrowers. It comprises a set of complex and closely interconnected financial institutions, markets, instruments, services, practices, and transactions.
AIL refers to which of the following?
Audio interface library
Aggregate investment in leasing
Asset interchange language
Automated integrated language
Which of the following is a form of risk that arises from the change in price of one money against another?
Currency risk is a form of risk that arises from the change in price of one currency against another.
Which one of the following is the best describes the word ISC?
Buy when exchange rate is high sell when rate is too low
Buy & sell when exchange rate is at moderate level
Buy when exchange rate is low sell when rate is too high
Buy & sell when exchange rate is too high.
Which of the following is the market which facilitates the redistribution of various risks?
Insurance markets – which facilitates the redistribution of various risks.
Which one of the following is charged to strive for soundness & stability of the financial system and safeguard interest of stakeholders?
Banking surveillance department
Islamic banking department
Banking Surveillance Department: To promote soundness and stability of the Banking System through proactive and effective supervision.
In which of the following year SWIFT was established?
Swift was established in 1973 as a cooperative association in Belgium between financial institutions in Europe.
SWIFT was established in which country?
Ownership of asset is transferred to the lessee in which form of the lease?
Financial lease: ownership of the asset is transferred to the lessee at the end of the lease term.
All are the benefits attached with of foreign currency account for a customer EXCEPT:
Limited cash withdrawals
Profit accrued on a daily basis
Automatic rollover of deposits
A banking transaction through ATM costs ______ as much a transaction conducted over the counter in a traditional branch.
It has been estimated that a banking transaction through ATM costs one fourth as much a transaction conducted over the counter in a traditional branch.
Which of the following factor is important for the growth of Pakistan’s economy?
All of the given options
Initially how many banks supported the SWIFT?
It was founded in Brussels in 1973, supported by 239 banks in 15 countries.
Short-term financial instrument used in the money market is known as:
Commercial paper provides a liquid, short-term investment for savers and a source of funds for corporations.
Damage or any loss to a property during construction is called:
Retrospectively rated insurance
Builder’s risk insurance
Builder’s risk insurance: Builders risk coverage is a property insurance policy design to provide protection from loss to property during construction.
Enron Corporation was dealing in:
Which country has introduced the mutual funds for the first time?
The idea of Mutual Fund first came from a Dutch Merchant ling back in 1774.
Under the provisions of which of the following law, banks are given a reasonable time after receipt of documents to honor the draft?
Company ordinance 1984
Banking company ordinance 1962
Uniform customs and practice for documentary credits
Under the provisions of the Uniform Customs and Practice for Documentary Credits, the bank is given a reasonable amount of time after receipt of the documents to honor the draft.
Which of the following strategies should give recognition to the goals of credit quality, earnings and growth?
The intensive strategy
The integration strategy
The diversification strategy
The credit risk strategy
The credit risk strategy should give recognition to the goals of credit quality, earnings and growth.
The letter of credit includes all the following documents, EXCEPT:
A commercial invoice
A transport document
A certificate of origin
A certificate of investment
Documents requested in a Letter of Credit would often include: a commercial invoice; a transport document such as a Bill of lading or Airway bill; an insurance document; an inspection certificate; and/or a certificate of origin. Other documents could be required, depending on the underlying transaction.
Which of the following is NOT the essential of a cheque?
It must be in writing
It must by signed by drawer
The amount must be certain amount
It must not have date of issue
Essentials of a Cheque:
A cheque must fulfill the following requirements:
- It must be in writing
- It should contained unconditional order
- It must by signed by drawer
- Cheque is always payable on demand
- The cheque is always drawn on a specified banker
- As a matter of practice, cheque leaves are in printed form
- The amount payable should be specified in the form of legal tender money and is paid accordingly.
- The amount must be certain amount
- The cheque is payable to specified person or order of or to bearer.
- Date of issue must be mentioned on the cheque.
When prudential regulations were introduced for the first time?
These regulations were made effective from 1st of July, 1992.
In the financial marketplace, SWIFT services fall under four areas that are Securities, Treasury & Derivatives, Payments & Cash Management and________.
None of the given options
As of 2010, SWIFT offers services in four different areas that are crucial in the financial world. These four areas are:
- Treasury and Derivatives
- Cash Management
- Trade Services
Which of the following is TRUE for a commercial invoice?
A commercial invoice must appear to have been issued by the beneficiary (except as provided in article 38)
A commercial invoice must be made out in the name of the applicant (except as provided in sub-article 38 (g))
A commercial invoice must be made out in the same currency as the credit
All of the given options
According to URR525, which of the following is a bank that has issued a Credit and the Reimbursement Authorization under that credit?
Which of the following is TRUE for potential future exposures?
These should be calculated over multiple space horizons
These should be calculated over single time horizon
These should be calculated over single space horizon
These should be calculated over multiple time horizons
Potential future exposure quantifies the counterparty risk/credit risk by evaluating existing trades done against the possible market prices in future during the lifetime of transactions. It can be called sensitivity of risk w.r.t market prices. Potential future exposures should therefore be calculated over multiple time horizons.
Which of the following exposures poses special challenges to the credit processed at banks?
Digital and light sensitive
Market and liquidity sensitive
Activity and profitability sensitive
Debt and activity sensitive
Growing liquidity on the secondary market are special challenges to credit risk management at the present time.
The credit information bureau (CIB) is a part of banking Surveillance Department of which of the following?
State Bank of Pakistan
Government of Pakistan
Institute of Bankers Pakistan
Central Board of Revenue, Pakistan
According to URR525, which of the following is a bank instructed and/or authorized to provide reimbursement pursuant to a Reimbursement Authorization issued by the Issuing Bank?
According to Prudential Regulations, which of the following refers to “loans to individuals for the payment of goods, services and expenses and include Running Finance / Revolving Credit to individuals”?
According to Prudential Regulations, which of the following refers to “the assets which are readily convertible into cash without recourse to a court of law”?
Which of the following is opened in Pak rupees and advised through local branch of issuing bank?
Inland letter of credit
Irrevocable confirmed letter of credit
Transferable letter of credit
Inland Letter of Credit: Procedure for inland letter of credit is same as for international letter of credit. Inland letter of credit is opened in Pak rupees and advised through local branch of issuing bank.
According to Prudential Regulations for auto loan, which of the following is classified as “Doubtful”?
Where interest or principal is overdue by 45 days or more from the due date
Where interest or principal is overdue by 90 days or more from the due date
Where interest or principal is overdue by 180 days or more from the due date
Where interest or principal is overdue by one year or more from the due date
According to Prudential Regulations, unless there has been no transaction or no outstanding balance on the account, the Banks / DFIs shall provide statement of account to the credit card holders on:
Half yearly basis
Which of the following international trade financing methods refers to “that the goods are shipped and delivered before payment is due, usually in 30 to 90 days”?
Letter of credit
Payment in advance
Under hire-purchase, at the time of delivery and possession of goods, which of the following is issued by the bank?
Physical delivery of goods
According to URR525, which of the following is the bank that pays, incurs a deferred payment undertaking, accepts draft(s), or negotiates under a Credit and presents a Reimbursement Claim to the Reimbursing Bank?
Who, among the following should setting prudential limits to restrict bank exposures to single borrower or groups of connected counterparties?
Top level mangers
Lower level managers
Middle level managers
Ref: Supervisors should consider setting prudential limits to restrict bank exposures to single borrowers or groups of connected counterparties.