MGT604 (BNK604): Mangmnt of Financial Institutions MGT604 Midterm 2010 Paper Shared by Mehreen Humayun MGT604 Midterm 2010 Paper Shared by Mehreen Humayun
MIDTERM EXAMINATION
Question No: 2 ( Marks: 1 ) - Please choose one
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Question No: 10 ( Marks: 1 ) - Please choose one
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Question No: 15 ( Marks: 1 ) - Please choose one
Question No: 16 ( Marks: 1 ) - Please choose one
Question No: 17 ( Marks: 1 ) - Please choose one
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Question No: 19 ( Marks: 3 )
MGT604 (BNK604): Mangmnt of Financial Institutions MGT604 Midterm 2010 Paper Shared by Mehreen Humayun 
MGT604 (BNK604): Mangmnt of Financial Institutions BNK604 Midterm 2010 Paper Shared by Mehreen Humayun BNK604 Midterm 2010 Paper Shared by Mehreen Humayun
BNK604 Midterm 2010 Paper Shared by Mehreen Humayun
Fall 2010
BNK604 - Management of Financial Institutions
Shared by Mehreen Humayun ( mehreen@vuzs.net)
http://groups.google.com/groups/vuzs
Time: 60 min
Marks: 39
Question No: 1 ( Marks: 1 ) - Please choose one
Pension funds are the example of:
►Financial intermediaries
► Financial markets
► Borrowers
► Lenders
Question No: 2 ( Marks: 1 ) - Please choose one
In Pakistan regulation and supervision of the banking industry is settled by:
► National bank
► SECP
►State bank
► Ministry of finance
Question No: 3 ( Marks: 1 ) - Please choose one
Through which one of the following central bank influences the money supply in an economy:
► Monetary policy
► Prudential regulations
►Open market operation
► Banking ordinance
Question No: 4 ( Marks: 1 ) - Please choose one
Buying of securities results in printing of new money and lowering the supply of specific security this process is known as:
► Purchase of securities
►Repurchase of securities
► Discounting of securities
► Rediscounting of securities
Question No: 5 ( Marks: 1 ) - Please choose one
Financial regulators, such as the______________ supervises the capital markets in their respective countries to ensure that investors are protected against frauds.
► State bank
► International chamber of commerce
►Security & exchange commission
► Banking inspection department
Question No: 6 ( Marks: 1 ) - Please choose one
Which one of the following is NOT the division of exchange policy department?
► Policy division
► Exchange companies division
► Investment division
►Recruitment division
Question No: 7 ( Marks: 1 ) - Please choose one
Banks seek to maximize____________ for a given amount of risk on their balance sheet.
► Profitability
► Loans
► Deposits
►Securities
Lecture # 28
Banks seek to maximize profitability for a given amount of risk on their balance sheet.
Question No: 8 ( Marks: 1 ) - Please choose one
The amount of capital a bank is required to hold is the function of which one of the following?
►The amount of required reserve
► The credit rating requirement
► The amount and quality of assets
► Leverage requirement
Lecture # 16
The amount of capital a bank is required to hold is a function of the amount and quality of its assets.
Question No: 9 ( Marks: 1 ) - Please choose one
Mutual funds belong to a group of financial intermediaries known as:
►Investment companies
► Banks
► Pension funds
► Insurance companies
Question No: 10 ( Marks: 1 ) - Please choose one
Which one of the following is responsible for overall governance of the mutual funds?
► Directors
►Government
► Government's agent
► Shareholders
Lecture # 22
The directors of the fund are responsible for overall governance of the fund.
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Question No: 11 ( Marks: 1 ) - Please choose one
ACAC is the acronym of which of the following?
► Access customer advocate center
►Agricultural credit advisory committee
► Agricultural credit accounting committee
► Agricultural credit accounting commission
Question No: 12 ( Marks: 1 ) - Please choose one
Which of the following functions is NOT performed by the audit department?
► Financial audit
► Operational audit
► Information technology audit
►Research & development
Question No: 13 ( Marks: 1 ) - Please choose one
Which of the following stands for GFS?
► Government Finance Statistics
► Global Field Services
►Global Financial System
► Global Forecast System
Question No: 14 ( Marks: 1 ) - Please choose one
Which of the following countries got the first loan from World Bank?
► Germany
► Norway
►France
► United States of America
Question No: 15 ( Marks: 1 ) - Please choose one
Which of the following channels of commercial banks is known as computerized telecommunications device?
► Branch
►Automated teller machine
► Telephone banking
► Online banking
Question No: 16 ( Marks: 1 ) - Please choose one
Which of the following role is played by the board of directors of a bank?
► Make deposits
► Make loans
►Oversee bank activities
► Handle withdrawals
Question No: 17 ( Marks: 1 ) - Please choose one
Which one of the following is responsible for the supervision of non banking financial institutions?
► Securities & exchange commission
►State Bank
► Chamber of commerce
► Ministry of finance
Lecture # 19
The responsibility for supervision of nonbank finance companies has been separated and transferred to Securities Exchange Commission.
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Question No: 18 ( Marks: 1 ) - Please choose one
In which of the following forms the National Investment Trust units are traded?
►Share
► Debenture
► Bond
► Certificate
Lecture # 23
Mutual Funds were introduced in Pakistan in 1962, with the public offering of National
Investment (Unit) Trust (NIT) which is an open-end mutual fund in the public sector.
Question No: 19 ( Marks: 3 )
For investment purpose customers always judge the profitability of the bank. To attract more customers how a bank can enhance its profitability?
Answer:
Banks can increase their customer base and their profitability by providing all services under one roof namely traditional banking services and the more modern financaial services like investment banking, credit card services, mutual fund services, life insurance products. Also by charging customers based on their credit profie i.e higher charges for low credit worthy clients they can increase their charges and fees. Also by developing new products which will be used by people in their everyday life and than charging a small fee for the same the banks can increase their profits.
Question No: 20 ( Marks: 3 )
Define merchant banks.
Answer:
Merchant banks are those banks which are involved in any type of trading. These kind of banks also provide shares to customers. They also buy and sell companies. They raise capital for the companies in various ways like IPO, Debt instruments and convertible instruments.
Question No: 21 ( Marks: 5 )
Pakistan is not able to sustain growth over the long term. Do you agree with this statement? Give reasons to support your answer.
Answer:
Pakistan has been trying like all its neighbours to achieve a growth in excess of 7%however there have been multiple of factors that has pegged it back namely, the US led war in Afghanistan, the earthquakes, which have happened, the riots that have taken place in Karachi, global slowdown, the ever present threat of a war with India. Inspite of all these factors Pakistan economy has shown great strength and determination in achieving growth of 7% in few years.
Question No: 22 ( Marks: 5 )
Banks provide investment facilities to its customers. How customers can judge the management soundness and profitability of the banks?
Answer:
The financial statements of the banks are not easy for everyone to interpret. As a result in order to judge the management soundness what one can do is check the various operational and profitability ratios of the concerned banks against the ones shown by the good banks and against the averages for the banking industry. One of the ratio is the amount of income generated against the expenses incurred to earn the same. This will enable us to know the margin of safety. Another way can be to compare the interest income against interest expense. Also one can compare how much fixed expenses are being incurred, how much are the overheads etc and compare with other banks to see the soundness of management.
Question No: 23 ( Marks: 5 )
If State Bank has capital shortage and wants to borrow, what are the possible sources through which it can get loan?
Answer:
In order to raise liquidity the SBP can do the following:
1) Sell securities in the open market and raise cash.
2) Change the reserve requirements of the bank.
3) Borrow from domestic lenders and financial institutions.
4) Issue new domestic bonds.
5) Borrow from external agencies like the IMF or ADB.
6) Issue foreign bonds to Pakistanis residing abroad.
7) Issue foreign bonds to the world markets.
MGT604 (BNK604): Mangmnt of Financial Institutions BNK604 Midterm 2010 Paper Shared by Mehreen Humayun 
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Management of Financial Institutions
| Sept 1, 1947 |
| July 1, 1948 |
| July 1, 1949 |
| August 1, 1964 LESSON 6 |
| Technological expertise |
| Material |
| Electricity |
| All of the given options LESSON 14 Ref: |
| 2 |
| 3 |
| 4 |
| 5 |
| Capital requirement |
| Reserve requirement |
| Loan quality |
| Value of security Lecture # 16 Loans are a bank's primary asset category and when loan quality becomes suspect, the foundation of a bank is shaken to the core. |
| 1 |
| 3 |
| 5 |
| 7 |
| International security conference |
| International standards council |
| Integrated satellite control |
| Investment service cell |
| A financial instrument |
| A central bank |
| A financial market |
| A Financial institution |
| Economic Policy Department |
| Bank inspection department |
| Domestic market & monetary management department |
| Banking surveillance department |
| Asian development bank |
| Asian domestic bank |
| Agricultural development bank |
| African development bank |
| Foreign direct investment |
| Foreign debts |
| Foreign exchange reserves |
| New relations Lecture # 14 Foreign remittances will help in building up the foreign exchange reserves, thereby reducing the demand on the public debt. |
| Life insurance |
| Annuities |
| Pension funds |
| Voyage |
| World Bank |
| World trade organization |
| International monetary fund |
| Asian development bank |
| Liquidity risk |
| Credit risk |
| Interest rate risk |
| Capital adequacy risk |
| 15 |
| 17 |
| 19 |
| 20 |
| Banks |
| Money managers |
| Insurance companies |
| Leasing companies Lecture # 22 |
Fiscal policy is the responsibility of:
Ministry of economic affairs
Ministry of finance
State bank of Pakistan
Ministry of trade & commerce
The market which facilitates the trading of short term debt financing is:
Capital market
Derivative market
Money market
Forex market
GDP can be defined as:
A measure of the total flow of goods and services produced over a specified time period, usually a year
Sum of the money values of all the final goods and services produced in a year by the residents
A measure of the money value of goods and services available to a nation from economic activity
How much the average person makes in that country
MGT604 (BNK604): Mangmnt of Financial Institutions BNK604-MCQ Solved with Ref-Mehreen Humayun-01 
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BNK604-MCQ
- Legal independence
- Goal independence
- Operational independence
- Management independence
| Banking inspection department Finance department Legal services department Economic policy department |
| Print money Make loans Take deposits Invest money | |||
| Which of the following source contributes more towards profit generation for banks? Lending services ATM services Locker services Ancillary services Lecture # 15 Many banks offer ancillary financial services to make additional profit; for example, most banks also rent safe deposit boxes in their branches. All are the international donor agencies in Pakistan EXCEPT:
|
MGT604 (BNK604): Mangmnt of Financial Institutions BNK604-MCQ Solved with Ref-Mehreen Humayun-02 
MGT604 (BNK604): Mangmnt of Financial Institutions BNK604-MCQ Solved with Ref-Mehreen Humayun-03 BNK604-MCQ Solved with Ref-Mehreen Humayun-03
BNK604-MCQ
| |
| Buying of securities results in printing of new money and lowered the supply of specific security this process is known as: Purchase of securities Repurchase of securities Discounting of securities Rediscounting of securities Banks assess the position of their customers from: Marketing & promotion expenditures Total value of capital Total value of assets Overall financial condition of business |
| Stock market Equity market Commodity market Primary market Ref: Commodity markets are markets where raw or primary products are exchanged. |
| National Finance Commission National Economic Council The Council of Common Interest All of the given options |
| Albarka group Alfalah group Al-habib group Saudi Pak group Lecture # 18 Which of the following banking reform has been introduced with an aim to facilitate the depositors to decide in which bank to deposit their saving? Credit rating Debit rating E-banking Taxation |
| Analysis of lending rates Preparing credit plans Inflation watch Analyze developments in the financial markets |
| Family representation on the Board of Directors of the banks where they hold majority ownership has been limited to which of the following? 15% 20% 25% 30% Lecture # 18 |
| |
| Currency Coins Banknotes Bills Lecture # 2 Which one of the following also known as the debt, credit, or fixed income market? Equity Market Bond Market Forex Market Stock Market Ref: The bond market (also known as the debt, credit, or fixed income market) is a financial market where participants buy and sell debt securities, usually in the form of bonds. |
| The market where primary products are exchanged is known as: Stock Market Equity Market Commodity Market Primary Market Ref: Commodities are agreements to buy and sell virtually anything except, for some reason. The primary commodities that are traded are oil, gold and agricultural products. |
| |
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