Banking Awareness Set 80 (Risks in Banking Sector)

Shubhra

Important questions on Risks in Banking Sector for upcoming banks and insurance exams SBI PO, Dena bank, IBPS PO, IBPS Clerk, RRB PO and Clerk, RBI.

  1. When a bank borrower, or counter party, fails to meet its payment obligations regarding the terms agreed with the bank, it is called
    A) Credit Risk
    B) Operational risk
    C) Market Risk
    D) Liquidity risk
    View Answer
     Option A
    Some Extra:
    When the customers show their inability to pay the loan amounts taken from bank – is called credit risk
  2. When the risk of losses in on- or off-balance sheet positions arise from movement in market prices, it is called
    A) Liquidity risk
    B) Systemic risk
    C) Market Risk
    D) Liquidity risk
    View Answer
     Option C
    Some Extra:
    The market is always fluctuating so there are always market risks in the banking systems. So it can go up and down, and when down banks will charge more interest rates from the customers.
  3. Which of the following is not a major component of Market Risk?
    A) Interest rate risk
    B) Equity risk
    C) Credit risk
    D) Foreign exchange risk
    View Answer
     Option C
    The major components of Market risk are::
    Interest rate risk
    Equity risk
    Foreign exchange risk
    Commodity risk
     
  4. When there is a risk of loss resulting from inadequate or failed internal processes, people and systems or from external event, it is called
    A) Liquidity risk
    B) Systemic risk
    C) Operational risk
    D) Moral Hazard
    View Answer
     Option C
    Some Extra:
    The Basel Committee on Banking Supervision defines operational risk “as the risk of loss resulting from inadequate or failed internal processes, people and systems or from external events. This definition includes legal risk, but excludes strategic and reputation risk.”
  5. When the bank is not able to have enough cash to carry out its day-to-day operations, it is called 
    A) Liquidity risk
    B) Systemic risk
    C) Operational risk
    D) Liquidity risk
    View Answer
     Option A
    Some Extra:
    Liquidity means a bank has the ability to meet payment obligations primarily from its depositors and has enough money to give loans. So liquidity risk is the risk of a bank not being able to have enough cash to carry out its day-to-day operations.
  6. When bank’s image and public standing is in doubt and leads to public’s loss of confidence in a bank, it is called
    A) Reputational risk
    B) Moral Hazard
    C) Operational risk
    D) Market risk
    View Answer
     Option A
    Some Extra:
    Reputational risk is the risk of damage to a bank’s image and public standing that occurs due to some dubious actions taken by the bank.
  7. When a bank chooses the wrong strategy or follow a long-term business strategy which might lead to its failure, it is called
    A) Credit risk
    B) Business risk
    C) Operational risk
    D) Market risk
    View Answer
     Option B
     
  8. When the actions can lead to the entire financial system coming to a standstill, it is called
    A) Systematic risk
    B) Market risk
    C) Equity risk
    D) Business risk
    View Answer
     Option A
    Some Extra:
    It can also be stated as the possibility that default or failure by one financial institution can cause domino effects among its counter parties and others, threatening the stability of the financial system as a whole.
     
  9. What is the risk called when one bank makes the decision about how much risk to take, while someone else (like government) bears the costs if things go badly?
    A) Systematic risk
    B) Moral Hazard
    C) Equity risk
    D) Market risk
    View Answer
     Option B
    Some Extra:
    Example:: Too Big Too Fail Banks can fall into these category. Like last year in India, SBI and ICICI Bank were declared systematically important banks (too big too fail). So if they fail, government and RBI will provide them support.
  10. When there is a financial loss to bank arising from legal suits filed against the bank or by a bank for applying a law wrongly, it is called
    A) Systematic risk
    B) Legal Risk
    C) Equity risk
    D) Market risk
    View Answer
     Option B

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22 Thoughts to “Banking Awareness Set 80 (Risks in Banking Sector)”

  1. AMAZON
    June 29, 2017 at 3:07 pm

    THANKYOU

    Reply
  2. Sachin Shukla
    June 29, 2017 at 4:09 pm

    thankuu:Az)))

    Reply
    1. Ravi Upadhyay
      June 29, 2017 at 6:28 pm

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      Reply
      1. Sachin Shukla
        June 29, 2017 at 6:33 pm

        yes yes its real mai UP se & U

        Reply
        1. Ravi Upadhyay
          June 29, 2017 at 9:58 pm

          bs mai bhi wahin se bharunga … uttarakhand me ayi ni is br… khn se bhrna h yr btana jara

          Reply
          1. Sachin Shukla
            June 29, 2017 at 10:41 pm

            up ka hu bhai yahi se bharuga apna home state…

          2. Ravi Upadhyay
            June 30, 2017 at 11:36 am

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          3. Sachin Shukla
            June 30, 2017 at 11:53 am

            hahaha…aaao wlcm

          4. Ravi Upadhyay
            June 30, 2017 at 6:59 pm

            hehehehehe krna bhi kya h sala is br apne state ne dhoka de diya

  3. Ittu Si Barbie (｡♥‿♥｡)
    June 29, 2017 at 8:54 pm

    AZ is best :))

    It is the need of hour :))

    ye question aa rhe aaj kal exams me :))

    Thanx again :))

    Reply
    1. Shubhra
      June 29, 2017 at 11:48 pm

      🙂

      Reply
  4. Jeetesh Chandra
    June 29, 2017 at 10:46 pm

    thanks AZ..

    Reply
  5. Face The Real World$$
    June 29, 2017 at 10:59 pm

    Thanks team.

    Reply
  6. AVI™ (Sinchen loveR)
    June 29, 2017 at 11:23 pm

    7/10
    :)))) very gud question

    Reply
  7. swati
    June 30, 2017 at 1:58 pm

    thank you….so much…

    Reply
  8. EKTA
    June 30, 2017 at 2:50 pm

    thanks mam. mam jo trend me he questions pls vo b ek quiz post kar do. it will be very helpful

    Reply
    1. Shubhra
      July 4, 2017 at 6:02 pm

      Yes finding the topics which arein trend nowa days.
      This is one of the topics

      Reply
  9. PHENOMENAL
    July 4, 2017 at 5:55 pm

    Thank you , plzz tell from where I can read or cover entire banking and financial awareness

    Reply
    1. Shubhra
      July 4, 2017 at 6:03 pm

      Cover these 800 questions in 80 sets.
      We will post more and articles too asap to cover all

      Reply
      1. happy :)
        July 26, 2017 at 6:55 pm

        thank u 🙂
        plz provide with every topic…. these are really commendable 🙂

        Reply
  10. Ravi Upadhyay
    October 29, 2017 at 1:03 am

    amaziinng thnnkxxxx

    Reply
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