MCQ Bank

Subjects

All Subjects 129 ACC311

F:210

210 ACC31Q

BNK601 — PDF

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129 result(s)

BNK601 Final Term AI Solved

Q20

Promissory note is issued by _____________________________

A) Principal
B) Agent
C) Debtor
D) Creditor

AI Explanation

A promissory note is an unconditional promise in writing made by a debtor to a creditor, making the debtor the issuer or maker of the instrument.

BNK601 Final Term AI Solved

Q21

A negotiable instrument that can be made payable to the maker himself is called____________________.

A) Promissory note
B) Promissory note
C) None of the given options
D) Bill of exchange

AI Explanation

Unlike a bill of exchange or cheque which cannot be drawn payable to the maker alone, a promissory note can legally be made payable to the maker themselves.

BNK601 Final Term AI Solved

Q22

Which one of the following is a continuous and integral part of the credit life cycle?

A) Follow up and monitoring of the loan
B) To analyze the paying capacity of the borrower
C) Technical and economical appraisal
D) To conduct the financial analysis of the borrowers financial statements

AI Explanation

Follow up and continuous monitoring of the loan is an ongoing, integral phase of the credit life cycle that runs throughout the duration of the credit facility.

BNK601 Final Term AI Solved

Q23

Banks can _____________________ to avoid liquidity risk.

A) Increase lending
B) Sell liquid assets
C) None of the given options
D) Decrease borrowing

AI Explanation

To manage liquidity risk effectively, banks typically increase liquid assets or borrow funds rather than selling liquid assets or decreasing borrowing indiscriminately.

BNK601 Final Term AI Solved

Q24

Which of the following is not a negotiable instrument?

A) Currency note
B) Bill of exchange
C) Banker’s cheque
D) A cheque

AI Explanation

A currency note is legal tender issued by the central bank and is governed by currency laws rather than the Negotiable Instruments Act, meaning it is not classified as a negotiable instrument.

BNK601 Final Term AI Solved

Q25

An ATM machine outside a bank’s branch is not dispensing cash, which type of risk the bank is facing?

A) Credit risk
B) Liquidity Risk
C) Market risk
D) Operational risk

AI Explanation

An ATM malfunctioning and failing to dispense cash represents a failure of internal systems, processes, or technology, which falls directly under operational risk.

BNK601 Final Term AI Solved

Q26

If the endorser restricts or excludes the right to further negotiate the instrument then it is called ________________.

A) Partial endorsement
B) Restrictive endorsement
C) Blank endorsement
D) Full endorsement

AI Explanation

An endorsement that explicitly restricts or excludes the right of the endorsee to further negotiate the instrument is defined as a restrictive endorsement.

BNK601 Final Term AI Solved

Q27

Which one of the following does not qualify as promissory note?

A) Thirty days after date, I owe to pay Mr.Ahamd or order the sum of rupees one hundred thousand only and the amounts which may be due to Ahmad by date.
B) I owe Rs 10,000 to Mr. Ahmad
C) All of the given options
D) I promise to may Mr.Ahmad Rs: 100,000 thirty days after getting admission in University.

AI Explanation

None of the provided statements qualify as a valid promissory note because they either lack an unconditional promise to pay, depend on an uncertain event, or have an uncertain amount.

BNK601 Final Term AI Solved

Q28

Banks involve in off-balance sheet activities to earn profit. Which one of the following is not an off-balance sheet item?

A) Derivative contracts
B) Advances
C) Guaranty offers
D) Loan commitments

AI Explanation

Advances represent direct loans extended by a bank and are recorded directly on the asset side of the balance sheet, unlike off-balance sheet items such as guarantees, commitments, and derivatives.

BNK601 Final Term AI Solved

Q29

If the endorser adds a direction to pay the amount mentioned in the instrument to, or to the order of, a specified person it is called ____________________________.

A) Partial endorsement
B) Restrictive endorsement
C) Full endorsement
D) Blank endorsement

AI Explanation

A full endorsement specifies a particular person to whom or to whose order the amount of the instrument is to be paid.

BNK601 Final Term AI Solved

Q30

In a promissory note the maker is the ____________________.

A) Principal debtor
B) All of the given options
C) Surety
D) Creditor

AI Explanation

In a promissory note, the maker is the person who promises to pay, making them the principal debtor obligated to fulfill the payment.

BNK601 Final Term AI Solved

Q31

Following are the conditions of a person to be called as “Holder in due course” Except:

A) He must have obtained the instrument in good faith
B) He obtains the instrument for valuable consideration
C) He becomes the holder of the instrument after maturity
D) He must take the instrument complete on the face of it

AI Explanation

A holder in due course must acquire the instrument before its maturity; acquiring it after maturity disqualifies them from this status.

BNK601 Final Term AI Solved

Q32

The alteration of date, time or the sum payable in relation to promissory notes, bill of exchange or cheque is called ______________________.

A) Mere alteration
B) Material alteration
C) Complete alteration
D) None of the given options

AI Explanation

Altering critical elements such as the date, time, or sum payable on a negotiable instrument constitutes a material alteration that affects its legal validity.

BNK601 Final Term AI Solved

Q33

Banks feel difficulty to assess individual assets risk due to availability of _____________________about the borrower.

A) Limited published information
B) All of the given options
C) Asymmetric information
D) Non documentation of Economy

AI Explanation

Banks struggle to assess individual asset risk due to a combination of limited published information, asymmetric information, and lack of documentation in the broader economy.

BNK601 Final Term AI Solved

Q34

Which one of the following cannot be considered as signature for the purpose of endorsement?

A) Signature by pencil
B) All of the given options
C) Lithograph signature
D) Rubber stamp

AI Explanation

Signatures by pencil, lithography, or rubber stamps are generally all legally acceptable forms of signature for endorsement as long as the intent to authenticate is present, meaning none of them are disqualified.

BNK601 Final Term AI Solved

Q35

The potential risk of loss associated with variability in a bank’s net interest income is called _______________.

A) Equity and security price risk
B) None of the given options
C) Foreign Exchange rate risk
D) Interest rate risk

AI Explanation

Interest rate risk is the potential risk of loss arising from the adverse movements of interest rates affecting a bank's net interest income and overall financial condition. Variability in net interest income is a direct consequence of mismatched asset and liability maturities and rates.

BNK601 Final Term AI Solved

Q36

Which one of the following risks is specific to bank’s risks?

A) Liquidity Risk
B) Operational risk
C) Market risk
D) Credit risk

AI Explanation

While liquidity, operational, and market risks apply to many types of financial and non-financial institutions, credit risk—the risk of default or failure of borrowers to meet their obligations—is fundamentally central and specific to the core intermediation and lending activities of commercial banks.

BNK601 Final Term AI Solved

Q37

An agent can be personally liable if he does the following acts EXCEPT:

A) If he executes an instrument without his authority
B) If he indorse an instrument with authority but in excess of his authority
C) If he does not indicate that he is an agent
D) If he does not disclose the name of his principal

AI Explanation

Wait, let's look closely at agency law and negotiable instruments. An agent is personally liable when acting without authority, not indicating agency, or not disclosing the principal. Endorsing an instrument with actual authority (even if exceeding it? No, exceeding authority usually creates liability, but let's check standard banking/law quiz options). Let's re-verify agency liability: executing without authority, acting in excess of authority (Wait, option B says 'with authority but in excess' which is a contradiction, or maybe 'without' vs 'with'). Let's re-read standard multiple choice for BNK601: Agent liability excludes acting strictly within authority.

BNK601 Final Term AI Solved

Q38

Banks’s depositors are the creditors of the bank. They can demand their deposited money from the bank any time. If a bank fails to pay a customer his deposited money on demand the bank is facing ___________________ risk.

A) Liquidity Risk
B) Operational risk
C) Market risk
D) Credit risk

AI Explanation

Liquidity risk is the risk that a bank will be unable to meet its financial obligations, such as depositors demanding their money back on demand, due to an inability to liquidate assets or obtain funding.

BNK601 Final Term AI Solved

Q39

If the endorser signs his name only it is called ____________________________.

A) Blank endorsement
B) Restrictive endorsement
C) Special endorsement
D) Partial endorsement

AI Explanation

A blank endorsement specifies no particular endorsee and typically consists of just the endorser's signature, making the instrument payable to bearer.