1. JRD lent Rs.400/- to X for 2 years and Rs’250 to Y for4 years and received altogether from both Rs,360 as intt’ Find the rate of intt. Being calculation. Ans 20%2. A certain sum of money at simple intt. Amount to rs.1012 in two and half years and toRs.1067/20 in 4 years rate of intt p.a is Ans:- 3.633. Difference between simple interest and compound interest for 3 years @10% is Rs.93. the sum is, Ans 30004. Simple interest on a certain sum for 4 years is Rs. 200/-and 5 years is Rs.250 find the sum5. If a sum at compound intt becomes rs.16900 in 2years and rs.17576 in 3 years find the rate of intt Ans 4%6. Difference between compound intt. And simple intt. On sum of rs.4000/-for 3 years at 5%p.a. is7. A sum of money doubles itself at compound intt’ in 15 years it will become 8 times in Ans 45 Years8. A sum of money amount to Rs.1180 and rs.1300 in 3 years and 5 years respectively at simple intt.p.a. the sum is rs.----- Ans 180/-Bond Valuation1. What are bonds2. Who issues bonds3. Types of bonds· Straight Bonds· Zero Coupon Bonds· Deep Discount BondsTerms related to BondsØ Face value -----Straight bonds and face value of Zero Coupon bondsØ Coupon rateØ MaturityØ Term to MaturityØ Market ValueØ Discount rateØ YieldØ Current YieldØ Yield To MaturityØ Market value4. Bond Valuation5. Present value method of Bond valuation6. Bond value with Semi –annual Coupons (Interest)7. Yield to Maturity Assumption at the time of calculation of YTMBond once purchased will be held till maturityCash flow will be received and there will be no defaultAll cash flow are immediately reinvested (else where) at the rate which is equal to the promised Y T MMarket value or Present value:-CURRENT YIELD ON BONDSCoupon Interest every Year-------------------------------------------Current Market PriceYTM Vs Current YieldTheorems for bonds valueRequired rate of return is denote with symbol =Kd
Theorem 1. When Kd= coupon rate result price is = par value 2. When Kd > Coupon rate result value of bond is < par value 3. When Kd<coupon rate value of bond is > par value 4. When Kd >coupon rate discount on bond declines as maturity comes near 5. When Kd < coupon rate Premium on bonds reduces as maturity comes near 6. Bond prices is inverselyproportional to its yields maturity BONDS Valuation1) Bond holders are ------ of the business (Bond Issuer)2) A bond with face value Rs’5000/-carrries a coupon rate of 12% Market price of this bond is quoted at Rs.4500/- what is the current yield of the bond3) Bond is a type of long term,interest bearing note payable on maturity4) When the require rate of return (kd) is greater than the coupon rate bond price will trading at discount to face value5) An secure bond is a debenture bond6) A convertible bond is a bond that can be converted to cash at any given time7) A major advantage of raising capital through the sale of bonds is that the interest paid on bonds is a tax deductible item8) The value which bond holder gets on maturity is called Redemption value9) When the expected rate of return(market discount rate)is lesser than coupon rate bond price will rise10) Zero coupon bonds do not promise periodical intt.11) Zero coupon bonds normally are available at discount to their face value12) Zero coupon bonds face value = redemption value13) In perpetual bonds , --no maturity date, and no maturity value but intt, is promised at definite rate perpetually14) Current yield on bonds is measured using the current price and coupon .15) YTM of a bond is its internal rate of interest16) The concept of Duration is also called Macaulay’s duration17) Duration of bond is less than its maturity period Or termAns:-1 creditor 2. 13.33% 3. False 4.True 5.True 6. True 7. False 8. TO 17 TRUECAPITAL ADEQUACY NORMSTEST YOUR UNDERSTANDINGQ1. The RBI has asked banks in India having overseas presence to implement the Basle Capital Accord II from --------.Q2. The Basle Committee on Banking Supervision came out with the Basle Accord II during the year___Q3. The capital required to be maintained by a bank as per the Capital Adequacy requirement is called the___ capital.Q4. The Basle Accord II rests on three pillars namely Minimum Capital Requirement, Supervisory Review and___Q5. The total amount of Tier II capital can be maximum___% the total amount of the Tier I Capital.Q6. For the purpose of including in Tier II capital the Revaluation reserve should be discounted at_____________________________________________________ ___%.Q7. The maximum subordinated debt to be included in Tier II Capital is % of the Tier II capital.Q8. The maximum amount a bank can invest in the subordinated debt capital of other banks is restricted to % of its capital.Q9. The maximum amount of perpetual bonds [IPDI] should not exceed ___Capital of the issuing bank.Q10. For computing capital requirement against Credit risk, RBI has stipulated that banks should follow the Approach.Q11. For computing capital requirement against operational risk, RBI has stipulated that banks should follow the Approach.Q12. The committee which recommended for maintenance of capital adequacy norms by banks in all countries is known as committee.Q13. Banks in India have been directed by RBI to maintain a minimum capital adequacy ratio of___________________________________________________________ %.Q14. As per RBI guideline, banks are required to maintain a risk weight of__ % in respect of personal loans and credit card exposures.
Q15. As per RBI guideline, banks are required to maintain a risk weight of --------- % in respect of their exposure to commercial real estates.
Q16. As per RBI guideline, banks are required to maintain a minimum haircut of-------------% in case of gold and main index equity which are taken as credit risk mitigants.Q17. As per RBI guideline, out of these securities namely Gold, Term Deposit, KVP and NSC the one which cannot be considered as a credit risk mitigant is .Q18. Name the four external credit rating agencies which are in the approved list of the RBI for providing rating of accounts for the purpose of capital adequacy.Q19. Name the three external credit rating agencies which are in the approved list of the RBI forproviding international rating of accounts for the purpose of capital adequacy.Q20. In case of cash credit account the credit conversion factor [CCF] for the un-drawn amount is_________________________________________________________ __%.Q21. As per the Basle II accepted by RBI all loans to staff fully covered by superannuation benefit or mortgage of house will attract a risk weight of %.Q22. As per the Basle II accepted by RBI, a credit account to be included in Regulatory Retail Portfolio will be maximum limit of Rs. .Q23. As per the Basle II accepted by RBI, all loans for purchase of residential property with a Loan to Value Ratio of more than 75% will carry risk weight of___.Q24. As per the RBI guidelines all Indian banks having operational presence outside India have to operationalise the Internal Capital Adequacy Assessment Process [ICAAP] from .ANS.1-31.3.08, 2-2004, 3- regulatory, 4- market disclosure, 5-100%,6-55%, 7- 50%, 8-10%, 9-15%, 10-Standardised approach,11- Basic Indicator Approach, 12- Basle Committee on Banking Supervision,13- 9%, 14- 125%, 15- 100%, 16- 15%, 17- NSC,18-CARE, CRISIL, FITCH India, ICRA, 19-Fitch, Moody's, Standard and Poor,20-20%, 21-20%, 22-five crore, 23-100%, 24-March 31, 2008.In case of housing loan
LTV Ratio Sanction amount of Loan Risk weight LTV =< 75% Upto Rs.30 lac 50% LTV=<75% >30lac <75 Lac 75% LTV > 75% Loan amount is less than rs.75 lac 100% Irrespective of LTV Loan > Rs.75 lac 125%LTV IN CASE OF Housing loan should not exceed 80%