image

Solution of Assignment Synopsis & Project Dissertation Report


PRODUCT DETAILS

Online-Typing-and-Filling

Title Name Amity Solved Assignment MFM 4th Sem for Treasury Management
University AMITY
Service Type Assignment
Course Master-in-Finance-Management-(MFM)
Semister Semester-IV Cource: Master-in-Finance-Management-(MFM)
Short Name or Subject Code Treasury Management
Commerce line item Type Semester-IV Cource: Master-in-Finance-Management-(MFM)
Product Assignment of Master-in-Finance-Management-(MFM) Semester-IV (AMITY)

Solved Assignment


  Questions :-

                                                                                                   Treasury Management

SECTION-A

  1. What do you understand by integred treasury ? What are the functions of integrated treasury ?
  2. Discuss and explain the role of RBI. And, what are the guidelines given by RBI for risk management.
  3. What are the different types of netting Systems ?
  4. What is the role of information technology intreasury management ? What is the likely future trend of IT Applications in Banks for improving treasury Operations ?
  5. Define treasury management . Describe treasury responsibilities.

 

 

 

SECTION-B

Case Detail:                                                                  Case study

(a) A newly opened bank with paid-up capital of Rs. 500/- crores and deposits amounting to Rs. 500/- crores wants to take up treasury operations. Outline the organizational set-up for the purpose.

(b) State whether the following statements are true or false:-

(i) A perfect hedge of asset A requires an asset B that is perfectly correlated with

(ii) Purchase of a future contract involves payment now for delivery at a future date.

(iii) Holder of a financial futures contract misses out on any dividend or interest payment made on the underlying security.

Question No.  

  1. What is RTGS ? What is the most important risk associated with the netsettlement system? How does RTGS overcome this risk?
  2. Define rate sensitive asset and liability. State the components of interest rate risk. 
  3. What are different kinds of treasury instruments? How are forwards different from future. Explain with example.                                                                                       

 

 

SECTION-C

Question No: 1

Treasury is a values-based organisation and our decisions and behaviours are guided by

  1. INTEGRITY
  2. RESPECT
  3. PASSION
  4. ALL

 

 

Question No: 2

The Department of Treasury and Finance is responsible to both the Treasurer and the Minister for Finance.

  1. TRUE
  2. FALSE
  3. depends on the company
  4. can´t say

 

 

Question No: 3

For liquidity management, the main aims were for establishment and maintenance of an access to ………. term financing options

  1. short
  2. long
  3. medium
  4. all

 

 

Question No: 4

The main objective of yield management is to optimise ………... resources

  1. cash
  2. capital
  3. stock
  4. securities

 

 

Question No: 5

Loan syndication helps

  1. companies
  2. Government
  3. SEBI
  4. stock exchange

 

 

Question No: 6

It entails management of an enterprise´s holdings and entails activities such as trading in bonds, currencies, financial derivatives and also encompasses the associated financial risk management

  1. Treasury mgmt.
  2. syndication
  3. counselling
  4. book building

 

 

Question No: 7

The main objectives of treasury management are to ………..down the complicated formulae involved in the service.

  1. break
  2. join
  3. merger
  4. hire purchase

 

 

Question No: 8

………..includes management of an enterprise´s holdings, with the ultimate goal of maximizing the firm´s liquidity and mitigating its operational, financial and reputational risk.

  1. Treasury mgmt.
  2. syndication
  3. counselling
  4. book building

 

 

Question No: 9

Treasury management includes

  1. Liquidity mgmt.
  2. Yield mgmt.
  3. both of the above
  4. none of the above

 

 

Question No: 10

SEBI regulates

  1. price of securities
  2. buying and selling of securities
  3. buyers of securities
  4. TYPES OF SECURITIES

 

 

Question No: 11

Treasury Management includes

  1. firm´s collections
  2. disbursements
  3. funding
  4. all

 

 

Question No: 12

GDR is

  1. global deposits record
  2. global depository receipts
  3. gross domestic record
  4. gross deposit receipts

 

 

Question No: 13

GDR is used to

  1. invest in assets
  2. Raise money from public
  3. Issue stocks
  4. sell products

 

 

Question No: 14

Feasibility study includes:

  1. economic feasibility
  2. technical feasibility
  3. commercial feasibility
  4. all of the above

 

 

Question No: 15

Credit rating

  1. reduces default risk
  2. helps issuers ensure their creditworthiness
  3. helps investors inform about company´s credentials
  4. all of the above

 

 

Question No: 16

…………. is essentially a process used by companies raising capital through Public Offerings

  1. Book Building
  2. Loan syndication
  3. venture capital
  4. mergers

 

 

Question No: 17

Price band is used for which process?

  1. Appraisal
  2. syndication
  3. counselling
  4. book building

 

 

Question No: 18

One difference between a financial lease and operating lease is that:

  1. There is an often a call option in a financial lease.
  2. there is often an option to buy in an operating lease
  3. An operating lease is often cancellable by the lessee.
  4. A financial lease is often cancellable by the lessee.

 

 

Question No: 19

What is a trust that pools the savings of a number of investors who share a common financial goal?

  1. lease
  2. venture capital
  3. mutual fund
  4. syndication

 

 

Question No: 20

SPV in securitisation is

  1. Special purpose van
  2. special purpose vehicle
  3. special public vehicle
  4. specific purpose van

 

 

Question No: 21

Which lease is commonly used to acquire equipment on a relatively short-term basis?

  1. Operating
  2. Financial
  3. Cancellable
  4. non-cancellable

 

 

Question No: 22

Credit rating is assigned to

  1. company
  2. group
  3. financial instrument
  4. managers

 

 

Question No: 23

Breakeven is a point of

  1. no profits
  2. no losses
  3. no profits no losses
  4. all losses

 

 

Question No: 24

Advantages of mutual funds

  1. professional diversification
  2. liquidity
  3. flexibility
  4. all of the above

 

 

Question No: 25

What is the price at which units under open-ended schemes are repurchased by the Mutual Fund?

  1. NAV
  2. repurchase price
  3. redemption price
  4. sales load

 

 

Question No: 26

What is a charge collected by a scheme when it buys back the units from the unit holders.

  1. Front end load
  2. repurchase price
  3. redemption price
  4. back end load

 

 

Question No: 27

Close ended schemes have

  1. no entry load
  2. no exit load
  3. both of the above
  4. none of the above

 

 

Question No: 28

Balanced funds have the features of

  1. income funds
  2. growth funds
  3. both of the above
  4. none of the above

 

 

Question No: 29

Money collected from mutual fund is invested in

  1. shares
  2. debentures
  3. tax saving bonds
  4. all of the above

 

 

Question No: 30

In larger firms, it may also include trading in bonds, currencies, financial derivatives and the associated financial risk management.

  1. TRUE
  2. FALSE
  3. depends on the company
  4. can´t say

 

 

Question No: 31

A poor credit rating indicates

  1. high risk of default
  2. low risk of default
  3. high creditworthiness
  4. high net worth

 

 

Question No: 32

Credit ratings are calculated from financial history and ……….

  1. current assets
  2. current liabilities
  3. current assets and liabilities
  4. fixed assets

 

 

Question No: 33

Which is the financial practice of pooling various types of contractual debt such as residential mortgages?

  1. Securitization
  2. credit rating
  3. lease
  4. hire purchase

 

 

Question No: 34

Which of the following is the credit rating of a sovereign entity, i.e. a national government?

  1. A sovereign credit rating
  2. bond credit rating
  3. corporate credit rating
  4. debtor credit rating

 

 

Question No: 35

Public issue of common shares is essentially carried out in two ways:

  1. current price and syndication
  2. Fixed price and book building
  3. corporate counselling
  4. lease

 

 

Question No: 36

IPO helps issue

  1. shares
  2. debentures
  3. fixed deposits
  4. loans

 

 

Question No: 37

IPOs are issued in

  1. capital market
  2. bond markets
  3. debt markets
  4. Companies

 

 

Question No: 38

Factoring helps selling

  1. receivables
  2. payables
  3. products
  4. services

 

 

Question No: 39

Mutual funds are checked by

  1. SEBI
  2. AMFI
  3. NCLT
  4. CLB

 

 

Question No: 40

Investment in mutual funds is

  1. common portfolio
  2. diversified portfolio
  3. single portfolio
  4. single security

 

  Answers :-

                                                                                              Treasury Management

SECTION-A

1. What do you understand by integred treasury ? What are the functions of integrated treasury ?

Ans.

ACI Integrated Treasury Management (ITM) eases interchange management for you by removing the risks, uncertainties, complexities and delays inherent with most in-house systems.

It includes management of an enterprise´s holdings, with the ultimate goal of managing the firm´s liquidity and mitigating its operational, financial and reputational risk. Treasury Management includes a firm´s collections, disbursements, concentration, investment and funding activities. In larger firms, it may also include trading in bonds, currencies, financial derivatives and the associated financial risk management.

Treasury function was restricted to fund or liquid management. Fund management includes maintaining adequate cash balances to meet the daily requirements, implementing the surplus funds in other operations, sourcing the funds to even the gaps in cash flow. The treasury departments in banks are responsible to meet the Cash Reserve Requirement (CRR) and invest the funds in securities under Statutory Liquid Ratio (SLR). Treasury basically deals with short-term cash flows(less than one year), but investment in some securities exceeds more than one year. Integrated treasury came into existence as a result of financial reforms, the most important being the deregulation of rupee and partial convertibility of rupee. Rupee is freely convertible on current account. Due to the relaxations of RBI in Foreign Direct Investment (FDI), rupee is now partially convertible on capital account. Banks are permitted a larger limit in terms of their net worth, and overseas borrowing and lending.

The major functions of integrated treasury are as follows:

  • Performing reserve management, which involves meeting CRR and SLR obligations.
  • Deploying surplus funds in securities which have low risk and earn profits.
  • Performing global cash management.
  • Providing effective and efficient merchant services.
  • Improving the profit by exploring market opportunities in money market, securities market and forex market.
  • Assisting the banks in Asset-Liability Management (ALM)
  • Managing market risk for the entire bank.

 

 

  1. Discuss and explain the role of RBI. And, what are the guidelines given by RBI for risk management.

Ans

The main role of RBI is related to the Indian economy, and the banks are an instrument to help RBI make changes according to different macroeconomic facets of the Indian economy.

There are 3 ultimate goals of RBI -

  • Growth - higher the better, but should be sustainable
  • Inflation - under control (RBI feels comfortable at 4-5% inflation rate, but in US even 2-3% in considered high)
  • Unemployment - at the natural rate of unemployment (Not 0%! There is always an average level of unemployment in the long term, called natural rate of unemployment)

To achieve these ´Ultimate Goals´, RBI changes/adjusts its intermediate goals according to current levels of growth, inflation, unemployment and fiscal policies (i.e. the policy of the ruling government). These intermediate goals are -

  • Money Supply
  • Interest Rate
  • Credit
  • Exchange Rate

All of these intermediate goals, which contribute to achieve the ultimate goals, are to be controlled by the central bank.

Now, to control these ´Intermediate Goals´, RBI or any central bank for that matter, have some short term ways which can lead to achieving the intermediate goals of RBI. These ways are called ´Instruments of Monetary Policy´, which are -

  • Cash Reserve Ratio (CRR)
  • Repo Rate & Reverse Repo Rate
  • Open Market Operations
  • Marginal Cost of Funds Lending Rate (MCLR)

All these are directly linked to the banking sector, hence RBI governing the basic rules of lending for the banking sector. It DOES NOT guide banks HOW to do business (not being a regulator), but it DOES give a structure and basic rules of doing business (being a facilitator), heavily impacting strategies pursued by the banks in the country.

Hence RBI is a FACILITATOR of the Indian banking system & not a REGULATOR.

GUIDELINES GIVEN BY RBI FOR RISK MANAGEMENT

  • Banks to set up a comprehensive risk rating systems for counter parties.
  • Banks have to fix a definite time frame for moving over to value at risk.
  • By Mar 2001 banks with international presence have to develop methodologies for estimating and maintaining economic capital.
  • Banks should evaluate portfolio quality on an on-going basis instead of near balance sheet date.
  • Investment proposals to be subjected to same credit risk analysis as in the case of loan proposals.
  • Investment proposals to be included in the total risk evaluation.
  • For off balance sheet exposure the current and potential credit exposure to be measured on a daily basis.
  • Activities of ALCO and credit policy committee should be integrated.
  • For managing liquidity risk banks should place limits on inter bank borrowings.
  • Banks have to provide a contingency plan to meet adverse swings in liquidity conditions.

 

 

 

3. What are the different types of netting Systems ?

Ans.

In general, netting means to allow a positive and a negative value to set-off and partially or entirely cancel each other out.

In the context of credit risk, there are at least three specific types of netting:

  • Close-out netting: In the counterparty bankruptcy or any other relevant event of default specified in the relevant agreement if accelerated (i.e. effected), all transactions or all of a given type are netted (i.e. set off against each other) at market value or, if otherwise specified in the contract or if it is not possible to obtain a market value, at an amount equal to the loss suffered by the non-defaulting party in replacing the relevant contract. The alternative would allow the liquidator to choose which contracts to enforce and which not to (and thus potentially "cherry pick"). There are international jurisdictions where the enforceability of netting in bankruptcy has not been legally tested.
  • Netting by novation: The legal obligations of the parties to make required payments under one or more series of related transactions are cancelled and a new obligation to make only the net payments is created.
  • Settlement or payment netting: For cash settled trades, this can be applied either bilaterally or multilaterally and on related or unrelated transactions.
  • Bilateral Net Settlement System: A settlement system in which every individual bilateral combination of participants settles its net settlement position on a bilateral basis.
  • Multilateral Net Settlement System: A settlement system in which each settling participant settles its own multilateral net settlement position (typically by means of a single payment or receipt).

Netting decreases credit exposure and reduces both operational and settlement risk and operational costs.

 

 

 

4. What is the role of information technology intreasury management ? What is the likely future trend of IT Applications in Banks for improving treasury Operations ?

Ans.

ROLE OF INFORMATION TECHNOLOGY IN TREASURY MANAGEMENT

With cash visibility and control more important than ever, and with risk management becoming an increasing part of the corporate treasurer’s job, technology is playing an ever more pivotal role. As its sophistication grows, treasury technology can help treasurers better manage cash, accounts, FX and transaction flows.

One of the more recent and exciting developments in the treasury management space is the introduction of mobile corporate banking. The past year has seen banks and financial software vendors launch a number of mobile corporate banking applications that enable treasurers to remotely authorize payments, view trade documentation such as letters of credit and conduct electronic invoice presentment and payment on a mobile device. Mobile corporate banking is still in its infancy, and not every bank is convinced of its value. More important, perhaps, mobile network operators and the banks are still drawing the lines of engagement in the tussle over who owns the customer and who can deliver the greatest value.

Corporates are increasingly looking to implement treasury technology solutions, particularly in the recent period of economic decline, in recognition of the added value that they can bring to the company over traditional spread sheet solutions and proprietary banking systems. This added value may take the form of improved visibility of cash across the company, tighter control over financial risk management and greater treasury efficiency, including the elimination of manual operations and the increased speed and accuracy of reporting.

FUTURE TREND OF IT APPLICATIONS IN BANK FOR IMPROVING TREASURE MANAGEMENT

Currently, bilaterally agreed formats (such as SWIFT FIN messages, EDIFACT or bespoke formats) dominate the landscape and no standard with regard to global payment initiation has been implemented across all providers in the market. We expect a single, global standard for payment initiation, status and feedback messages as well as account information to emerge by 2007. The XML payment kernel (published under ISO and SWIFT) has a good chance of fulfilling this role. A key aspect of this development is also which standard the European Commission will accept for the Single European Payments Area and the EBA Step 2 clearing.

From a bank viewpoint, the main driver is to satisfy clients’ (i.e. treasury) demands and provide the functionality that will be required in future requests for proposals. In addition to this very basic rationale, the ease of an implementation – which will be supported by a global transaction initiation standard – improves the chances of winning new mandates. Quickly implementing new deals or enhancements is important in order to shorten the sales-to-revenue cycles.

 

 

5. Define treasury management . Describe treasury responsibilities.

Ans.

Treasury management (or treasury operations) includes management of an enterprise´s holdings, with the ultimate goal of managing the firm´s liquidity and mitigating its operational, financial and reputational risk. Treasury Management includes a firm´s collections, disbursements, concentration, investment and funding activities. In larger firms, it may also include trading in bonds, currencies, financial derivatives and the associated financial risk management.

Most banks have whole departments devoted to treasury management and supporting their clients´ needs in this area. Until recently, large banks had the stronghold on the provision of treasury management products and services. However, smaller banks are increasingly launching and/or expanding their treasury management functions and offerings, because of the market opportunity afforded by the recent economic environment (with banks of all sizes focusing on the clients they serve best), availability of (recently displaced) highly seasoned treasury management professionals, access to industry standard, third-party technology providers´ products and services tiered according to the needs of smaller clients, and investment in education and other best practices. A number of independent treasury management systems (TMS) are available, allowing enterprises to conduct treasury management internally.

For non-banking entities, the terms Treasury Management and Cash Management are sometimes used interchangeably, while, in fact, the scope of treasury management is larger (and includes funding and investment activities mentioned above).

TREASURY RESPONSIBILITIES

  • Elicit and analyse proposals for banking and financing services.
  • Provide everyday cash position, estimate and analysis.
  • Maintain correct estimate of cash/CP balances.
  • Supervise and manage all international cash balances efficiently.
  • Present monthly cash along with accounting reports to Accounting personnel.
  • Manage corporate card, ACH debits, merchant credit card and lockbox.
  • Ensure to check outsourcing as well as electronic payments.
  • Manage international credit lines, letters of credit and corporate guarantees.
  • Assist Tax plus Law departments on transactions and banking associated to international entity establishment or restructurings.
  • Supervise maintenance and update signatories on every global bank account.
  • Assist SOX compliance plus testing for entire Treasury department.
  • Perform as security administrator for entire 5 bank software tools.
  • Develop, monitor and upgrade Treasury department budget.
  • Develop everyday cash position report comprising of forecasting every week cash receipts plus disbursements.
  • Support to manage short-term investment balances along with interest recording.

 

 

 

 

 

SECTION-B

Case Detail:                                                                  Case study

(a) A newly opened bank with paid-up capital of Rs. 500/- crores and deposits amounting to Rs. 500/- crores wants to take up treasury operations. Outline the organizational set-up for the purpose.

(b) State whether the following statements are true or false:-

(i) A perfect hedge of asset A requires an asset B that is perfectly correlated with

A.

(ii) Purchase of a future contract involves payment now for delivery at a future date.

(iii) Holder of a financial futures contract misses out on any dividend or interest payment made on the underlying security.

 

 

  1. What is RTGS ? What is the most important risk associated with the netsettlement system? How does RTGS overcome this risk?

Ans.

RTGS

Real-time gross settlement systems (RTGS) are specialist funds transfer systems where transfer of money or securities takes place from one bank to another on a "real time" and on "gross" basis. Settlement in "real time" means payment transaction is not subjected to any waiting period. The transactions are settled as soon as they are processed. "Gross settlement" means the transaction is settled on one to one basis without bundling or netting with any other transaction. Once processed, payments are final and irrevocable.

RTGS systems are typically used for high-value transactions that require immediate clearing. In some countries the RTGS systems may be the only way to get same day cleared funds and so may be used when payments need to be settled urgently. However, most regular payments would not use a RTGS system, but instead would use a national payment system or network that allows participants to batch and net payments.

RISK ASSOCIATED WITH NETSETTLEMENT SYSTEM

The debate on risks in large-value payment systems is increasingly concerned with critical factors affecting the functioning of RTGS systems when linked to settlement systems with different timing of intraday finality or with different operating hours and legal rules. The systematic analysis of “linking problems” for RTGS systems is relatively recent, deriving from the interconnections between national settlements systems for large value payments.

Settlement delay cost (SDC) may be due to: i) inadequacy, at the level of the individual bank, of the technical structure or staff needed to optimise the management of incoming and outgoing payments in RTGSS; ii) absence or weakness, at the system level, of mechanisms for improving the transmission network for interlinked settlement systems. For each participant, a settlement delay in RTGSS affects intraday liquidity requirements; the SDC is one of the two main components of the cost of intraday liquidity, the other being the cost of obtaining liquidity from the central bank.

RTGS is now regarded by central banks as essential to the reduction of counterparty credit risk. According to the International Bank for Reconstruction and Development (IBRD, or World Bank) the volume of payments settled by major RTGS systems doubled between 2006 and 2009, while the average value of RTGS payments increased by two fifths.

An HVP represents a significant credit risk if one party defaults. By guaranteeing final and irrevocable settlement at the central bank, RTGS mitigates this risk. By settling payments between multiple banks, it also eliminates the need for banks to settle transactions bilaterally. Banks are the principal users of RTGS, and most connect directly, though smaller banks often connect indirectly through a larger bank.

But the benefits of credit risk mitigation through RTGS are not restricted to banks. They extend to all participants in financial markets, whether they are active in the money or securities markets, and whether they are linked to the RTGS system directly or indirectly.

 

 

  1. Define rate sensitive asset and liability. State the components of interest rate risk.                                                                                           

Ans.

RATE SENSITIVE ASSET

Rate sensitive assets are assets held by a bank that are vulnerable to changes in interest rates. This change can occur either when the asset matures or when it is reprised according to an index rate. The value of these assets is adjusted according to the rise or fall of a published rate or index.

There are several types of rate sensitive assets such as adjustable rate mortgages (ARMs) and variable rate consumer and demand loans. The benchmarks that their pricing adjustments are tied to can include the 6-month T-Bill rate, the LIBOR and the prime rate. The sensitivity of these assets to interest rate changes can negatively affect the customers more than the bank itself.

LIABILITY

Liability management is the use and management of liabilities, such as customer deposits, by a bank in order to facilitate lending and allow for balanced growth. Management of money accepted from depositors as well as funds secured from other institutions constitute liability management. It also involves hedging against changes in interest rates and controlling the gap between the maturities of assets and liabilities.

Banks began to actively manage liabilities in the 1960s with the issuance of negotiable CDs. These could be sold in the secondary market, prior to maturity in order to raise additional capital in the money market. Liability management constitutes an important part of a bank´s bottom line.

COMPONENTS OF INTEREST RISK RATE

  • Real Risk-Free Rate - This assumes no risk or uncertainty, simply reflecting differences in timing: the preference to spend now/pay back later versus lend now/collect later.
  • Expected Inflation - The market expects aggregate prices to rise, and the currency´s purchasing power is reduced by a rate known as the inflation rate. Inflation makes real dollars less valuable in the future and is factored into determining the nominal interest rate (from the economics material: nominal rate = real rate + inflation rate).
  • Default-Risk Premium - What is the chance that the borrower won´t make payments on time, or will be unable to pay what is owed? This component will be high or low depending on the creditworthiness of the person or entity involved.
  • Liquidity Premium- Some investments are highly liquid, meaning they are easily exchanged for cash (U.S. Treasury debt, for example). Other securities are less liquid, and there may be a certain loss expected if it´s an issue that trades infrequently. Holding other factors equal, a less liquid security must compensate the holder by offering a higher interest rate.
  • Maturity Premium - All else being equal, a bond obligation will be more sensitive to interest rate fluctuations the longer to maturity it is.

 

 

  1. What are different kinds of treasury instruments? How are forwards different from future. Explain with example.

Ans.

DIFFERENT KINDS OF TREASURY INSTRUMENTS-

When it comes to conservative investments, nothing says safety of principal like treasury securities. These instruments have stood for decades as a bastion of safety in the turbulence of the investment markets - the last line of defines against any possible loss of principal

Treasury securities are divided into three categories according to their lengths of maturities. These three types of bonds share many common characteristics, but also have some key differences. The categories and key features of treasury securities include:

  • T-Bills – These have the shortest range of maturities of all government bonds at 4, 13, 26 and 52 weeks. They are the only type of treasury security found in both the capital and money markets, as three of the maturity terms fall under the 270-day dividing line between them. T-Bills are issued at a discount and mature at par value, with the difference between the purchase and sale prices constituting the interest paid on the bill.
  • T-Notes – These notes represent the middle range of maturities in the treasury family, with maturity terms of 2, 3, 5, 7 and 10 years currently available. Treasury notes are issued at a $1,000 par value and mature at the same price. They pay interest semi-annually.
  • T-Bonds – Commonly referred to in the investment community as the “long bond”, T-Bonds are essentially identical to T-Notes except that they mature in 30 years. T-Bonds are also issued at and mature at a $1,000 par value and pay interest semi-annually

DIFFERENCE BETWEEN FORWARD AND FUTURE CONTRACT

1) FORWARD CONTRACT-

  • A forward contract is an agreement between two parties to buy or sell an asset (which can be of any kind) at a pre-agreed future point in time at a specified price.
  • Customized to customer needs. Usually no initial payment required. Usually used for hedging.
  • Transaction method is customized to customer needs. Usually no initial payment required. Usually used for hedging.
  • Market regulations are not regulated
  • No guarantee of settlement until the date of maturity only the forward price, based on the spot price of the underlying asset is paid
  • Forward contracts generally mature by delivering the commodity.
  • Expiry date is depending on the transaction
  • Contract size is depending on the transaction and the requirements of the contracting parties.

2) FUTURE CONTRACT

  • A futures contract is a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a specified price.
  • Initial margin payment required. Usually used for speculation.
  • Transaction method is Quoted and traded on the Exchange
  • They are government regulated market (the Commodity Futures Trading Commission or CFTC is the governing body)
  • Both parties must deposit an initial guarantee (margin). The value of the operation is marked to market rates with daily settlement of profits and losses.
  • Future contracts may not necessarily mature by delivery of commodity.
  • Expiry date is standardized.
  • Contract size is standardized

 

 

 

 

 

 

 

SECTION-C

Question No: 1

Treasury is a values-based organisation and our decisions and behaviours are guided by

  1. INTEGRITY
  2. RESPECT
  3. PASSION
  4. ALL

 

 

Question No: 2

The Department of Treasury and Finance is responsible to both the Treasurer and the Minister for Finance.

  1. TRUE
  2. FALSE
  3. depends on the company
  4. can´t say

 

 

Question No: 3

For liquidity management, the main aims were for establishment and maintenance of an access to ………. term financing options

  1. short
  2. long
  3. medium
  4. all

 

 

Question No: 4

The main objective of yield management is to optimise ………... resources

  1. cash
  2. capital
  3. stock
  4. securities

 

 

Question No: 5

Loan syndication helps

  1. companies
  2. Government
  3. SEBI
  4. stock exchange

 

 

Question No: 6

It entails management of an enterprise´s holdings and entails activities such as trading in bonds, currencies, financial derivatives and also encompasses the associated financial risk management

  1. Treasury mgmt.
  2. syndication
  3. counselling
  4. book building

 

 

Question No: 7

The main objectives of treasury management are to ………..down the complicated formulae involved in the service.

  1. break
  2. join
  3. merger
  4. hire purchase

 

 

Question No: 8

………..includes management of an enterprise´s holdings, with the ultimate goal of maximizing the firm´s liquidity and mitigating its operational, financial and reputational risk.

  1. Treasury mgmt.
  2. syndication
  3. counselling
  4. book building

 

 

Question No: 9

Treasury management includes

  1. Liquidity mgmt.
  2. Yield mgmt.
  3. both of the above
  4. none of the above

 

 

Question No: 10

SEBI regulates

  1. price of securities
  2. buying and selling of securities
  3. buyers of securities
  4. TYPES OF SECURITIES

 

 

Question No: 11

Treasury Management includes

  1. firm´s collections
  2. disbursements
  3. funding
  4. all

 

 

Question No: 12

GDR is

  1. global deposits record
  2. global depository receipts
  3. gross domestic record
  4. gross deposit receipts

 

 

Question No: 13

GDR is used to

  1. invest in assets
  2. Raise money from public
  3. Issue stocks
  4. sell products

 

 

Question No: 14

Feasibility study includes:

  1. economic feasibility
  2. technical feasibility
  3. commercial feasibility
  4. all of the above

 

 

Question No: 15

Credit rating

  1. reduces default risk
  2. helps issuers ensure their creditworthiness
  3. helps investors inform about company´s credentials
  4. all of the above

 

 

Question No: 16

…………. is essentially a process used by companies raising capital through Public Offerings

  1. Book Building
  2. Loan syndication
  3. venture capital
  4. mergers

 

 

Question No: 17

Price band is used for which process?

  1. Appraisal
  2. syndication
  3. counselling
  4. book building

 

 

Question No: 18

One difference between a financial lease and operating lease is that:

  1. There is an often a call option in a financial lease.
  2. there is often an option to buy in an operating lease
  3. An operating lease is often cancellable by the lessee.
  4. A financial lease is often cancellable by the lessee.

 

 

Question No: 19

What is a trust that pools the savings of a number of investors who share a common financial goal?

  1. lease
  2. venture capital
  3. mutual fund
  4. syndication

 

 

Question No: 20

SPV in securitisation is

  1. Special purpose van
  2. special purpose vehicle
  3. special public vehicle
  4. specific purpose van

 

 

Question No: 21

Which lease is commonly used to acquire equipment on a relatively short-term basis?

  1. Operating
  2. Financial
  3. Cancellable
  4. non-cancellable

 

 

Question No: 22

Credit rating is assigned to

  1. company
  2. group
  3. financial instrument
  4. managers

 

 

Question No: 23

Breakeven is a point of

  1. no profits
  2. no losses
  3. no profits no losses
  4. all losses

 

 

Question No: 24

Advantages of mutual funds

  1. professional diversification
  2. liquidity
  3. flexibility
  4. all of the above

 

 

Question No: 25

What is the price at which units under open-ended schemes are repurchased by the Mutual Fund?

  1. NAV
  2. repurchase price
  3. redemption price
  4. sales load

 

 

Question No: 26

What is a charge collected by a scheme when it buys back the units from the unit holders.

  1. Front end load
  2. repurchase price
  3. redemption price
  4. back end load

 

 

Question No: 27

Close ended schemes have

  1. no entry load
  2. no exit load
  3. both of the above
  4. none of the above

 

 

Question No: 28

Balanced funds have the features of

  1. income funds
  2. growth funds
  3. both of the above
  4. none of the above

 

 

Question No: 29

Money collected from mutual fund is invested in

  1. shares
  2. debentures
  3. tax saving bonds
  4. all of the above

 

 

Question No: 30

In larger firms, it may also include trading in bonds, currencies, financial derivatives and the associated financial risk management.

  1. TRUE
  2. FALSE
  3. depends on the company
  4. can´t say

 

 

Question No: 31

A poor credit rating indicates

  1. high risk of default
  2. low risk of default
  3. high creditworthiness
  4. high net worth

 

 

Question No: 32

Credit ratings are calculated from financial history and ……….

  1. current assets
  2. current liabilities
  3. current assets and liabilities
  4. fixed assets

 

 

Question No: 33

Which is the financial practice of pooling various types of contractual debt such as residential mortgages?

  1. Securitization
  2. credit rating
  3. lease
  4. hire purchase

 

 

Question No: 34

Which of the following is the credit rating of a sovereign entity, i.e. a national government?

  1. A sovereign credit rating
  2. bond credit rating
  3. corporate credit rating
  4. debtor credit rating

 

 

Question No: 35

Public issue of common shares is essentially carried out in two ways:

  1. current price and syndication
  2. Fixed price and book building
  3. corporate counselling
  4. lease

 

 

Question No: 36

IPO helps issue

  1. shares
  2. debentures
  3. fixed deposits
  4. loans

 

 

Question No: 37

IPOs are issued in

  1. capital market
  2. bond markets
  3. debt markets
  4. Companies

 

 

Question No: 38

Factoring helps selling

  1. receivables
  2. payables
  3. products
  4. services

 

 

Question No: 39

Mutual funds are checked by

  1. SEBI
  2. AMFI
  3. NCLT
  4. CLB

 

 

Question No: 40

Investment in mutual funds is

  1. common portfolio
  2. diversified portfolio
  3. single portfolio
  4. single security

 

Review

Average user rating

4.8 / 5

Rating breakdown

5
80% Complete (danger)
1
4
80% Complete (danger)
1
3
80% Complete (danger)
0
2
80% Complete (danger)
0
1
80% Complete (danger)
0

January 29, 2015
This was nice in buy
Assignment from solve zone is probably one of the first preference of students.

October 09, 2016
This was nice in buy
I recommend a website that was really helpful throughout your session.

March 19, 2017
Some day ago
This was nice in buy
This was good in buy . I found all the answer correct and meaningful and had scored good marks
Back to top