Download 101 Questions & Answers-Interview for Bank Promotions-VRK100-08Nov2010 PDF

Title101 Questions & Answers-Interview for Bank Promotions-VRK100-08Nov2010
TagsInternational Financial Reporting Standards Value Added Tax Reserve Bank Of India Exchange Traded Fund Gold As An Investment
File Size344.8 KB
Total Pages26
Document Text Contents
Page 14

Compiled by: Rama Krishna Vadlamudi, Hyderabad November 8, 2010

PAGE 14 OF 26


33. What is CDS?

A CDS is short for Credit Default Swap. Its features are:


� It is a financial instrument used for hedging
� It is an OTC derivative product
� Internationally, majority of CDS are cash-settled
� It provides insurance to the creditor (or investor in a bond) against credit

default by an issuer/debtor
� It is like a guarantee against a default of a loan/bond
� As an insurance, it serves a genuine economic purpose
� Now, RBI has released a draft for introduction of CDS in India
� In 2003 and 2007, RBI proposed introducing CDS but later withdrew the

draft guidelines
� Naked CDS transactions may create problems for credit markets as had

happened during the global financial crisis of 2007/2008

43. What is the capital adequacy ratio of our Bank?

As at the end of September 30, 2010, the capital adequacy ratio of State Bank
of Mysore is 11.72 per cent.

94. What is SBI’s BPLR?

In October 2010, State Bank of India raised its benchmark PLR by 25
basis points to 12.50 per cent.

84. What is an FCCB?

FCCB is an acronym for Foreign Currency Convertible Bond. Its features are:


� It is a financial instrument through which companies raise money
� It is a hybrid instrument – it has features of both a bond and a stock
� It is a bond that can be converted at the option of the bondholder in to an

equity share at a predetermined price and after a specific period. During
the period it provides regular yield to the bondholder.

� As the name suggests, it is denominated in a foreign currency


74. What is the minimum maturity period of a Certificate of Deposit (CDs)?

The minimum maturity period of a Certificate of Deposit is seven days.

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