Explanation: Forward rates are based on the spot rate, adjusted for the cost of carry and refer to the rate that will be used to deliver a currency, bond or commodity at some future time. So, option(4) is correct.
Explanation: Preceding banking day is the business day before the business day on which or during which the event that is being spoken of is to occur. In case of national holiday that is Jan 26 from the given question, the documents for negotiation can be submitted to the negotiating bank on the preceding banking day.
Explanation: In Irrevocable letter of credit, it is not possible to revoked or amended a credit without the agreement of the issuing bank, the confirming bank, and the beneficiary. Form an exporters point of view it is believed to be more beneficial. An irrevocable letter of credit from the issuing bank insures the beneficiary that if the required documents are presented and the terms and conditions are complied with, payment will be made.
Explanation: The Asian Monetary Units (AMUs) is the common unit of account of ACU and is denominated as ACU Dollar and ACU Euro, which is equivalent in value to one US Dollar and one Euro respectively. All instruments of payments under ACU have to be denominated in AMUs. Settlement of such instruments may be made by AD Category-I banks through the ACU Dollar Accounts and ACU Euro Accounts, which should be distinct from the other US Dollar and Euro accounts respectively maintained for non ACU transactions. So, option(4) is correct.
Explanation: Post Shipment Finance is a kind of loan provided by a financial institution to an exporter or seller against a shipment that has already been made and converted in the form of receivables. This type of export finance is granted from the date of extending the credit after shipment of the goods to the realization date of the exporter proceeds. So, option(2) is correct.
Explanation: A global depositary receipt (GDR) is a bank certificate issued in more than one country for shares in a foreign company. The shares are held by a foreign branch of an international bank. The shares trade as domestic shares but are offered for sale globally through the various bank branches. Few companies listed on BSE/NSE are also listed on foreign stock exchanges. These are not listed on GDR.
Explanation: There is no compulsion for you to get your passport endorsed with the foreign exchange purchased for travel outside India. Should you desire to get your passport endorsed, the bank/money changer releasing foreign exchange would do it. Since for selling foreign exchange to a person, endorsement on the passport can be on the request of the person concerned. So, option(3) is correct.
Explanation: On return from a foreign trip, travellers are required to surrender unspent foreign exchange held in the form of currency notes and travellers cheques within 180 days of return. However, they are free to retain foreign exchange upto USD 2,000, in the form of foreign currency notes or TCs for future use or credit to their RFC(Domestic) Accounts without any limit. So, option(3) is correct.
Explanation: Commercial Banks of India who are authorised to deal in Foreign Exchange can rediscount, their short term export bills with EXIM bank, for an unexpired usance period of not more than 90 days. Export Bills Re-discounting facilities are allowed by EXIM Bank to Banks in India. So, option(4) is correct.
Explanation: Under the External Commercial Borrowings (ECB) framework, ECBs can be raised either under the automatic route or under the approval route. For the automatic route, the cases are examined by the Authorised Dealer Category-I (AD Category-I) banks. Under the approval route, the prospective borrowers are required to send their requests to the RBI through their ADs for examination. So, option(4) is correct.
Explanation: Risk-adjusted return on capital (RAROC) is a risk-based profitability measurement framework for analysing risk-adjusted financial performance and providing a consistent view of profitability across businesses. It is the key ratio used in investment decisions.
Explanation: Risk-adjusted return on capital (RAROC) is a risk-based profitability measurement framework for analysing risk-adjusted financial performance and providing a consistent view of profitability across businesses.
Explanation: Downside Potential Risk materializes only when earnings deviate adversely. Volatility captures both upside and downside deviations. Downside potential only captures possible losses ignoring profit potential.
Explanation: Banks with an international presence are required to hold capital equal to 8% of their risk-weighted assets (RWA). The tier 1 capital ratio = tier 1 capital / all RWA.
Explanation: The supervisory review process is a central component of the new Capital Requirements Directive (CRD). It is designed to enhance the link between the risks taken on by credit institutions and investment firms, their management of those risks, and the capital they hold.
Explanation: Basel-II accord has 3 pillars, namely: The first pillar: Minimum capital requirements; The second pillar: Supervisory review; The third pillar: The Market Discipline
Explanation: Trading book
Explanation: A derivative is an instrument whose value is derived from the value of one or more underlying, which can be commodities, precious metals, currency, bonds, stocks, stocks indices, etc. Four most common examples of derivative instruments are Forwards, Futures, Options and Swaps.
Explanation: The purpose of the risk management committee of the Board of Directors (the "Board") of Infosys Limited (the "Company") shall be to assist the Board in fulfilling its corporate governance oversight responsibilities with regard to the identification, evaluation and mitigation of strategic, operational, and external environment risks.
Explanation: The Board decides the level of credit risk for the bank as a whole keeping in view its profit objective and capital planning. The Risk Management Committee is a Board level Sub-Committee.