Preview Questions Financial Analyst | Role Specific Skill

Question 1: How should an analyst treat off-balance-sheet items such as loan guarantees when evaluating a bank's financial position?

Which action should you take?

Choose only one option

They should be included in the calculation of capital reserves

They should be disclosed in the notes to the financial statements, as they represent contingent liabilities

They should be excluded from financial analysis due to their immaterial effect

They should be treated as part of the liabilities section of the balance sheet

Question 2: In financial reporting, what does the Current Ratio indicate for a financial institution?

Which action should you take?

Choose only one option

The institution's operational efficiency

The institution's leverage level

The institution's profitability

The institution's ability to meet short-term obligations

Question 3: In the context of a financial model for a BFSI company, what is the best way to incorporate the effects of IFRS 9 on expected credit losses?

Which action should you take?

Choose only one option

Apply a fixed percentage to the loan book based on asset class

Model the impact as a reduction in cash flows from operations

Use forward-looking information to adjust credit provisions

Adjust provisions based on historical loss ratios

Question 4: In evaluating a portfolio, which method would you use to determine the weighted average return of all assets?

Which action should you take?

Choose only one option

Use the Sharpe ratio to calculate portfolio returns

Calculate the weighted average return using individual asset weights

Use the capital market line (CML)

Apply the efficient frontier theory

Question 5: What is the role of "responsibility accounting" in the budgeting framework of BFSI organizations?

Which action should you take?

Choose only one option

To allocate revenues to different departments

To assign accountability for budget performance to specific managers or departments

To focus solely on cost reduction strategies

To merge all departmental budgets into a master budget

Question 6: What is the primary economic risk that banks face when operating in emerging markets?

Which action should you take?

Choose only one option

Liquidity risk from low foreign reserves

Inflation risk due to unstable monetary policy

Interest rate risk stemming from unpredictable government bonds

Currency fluctuation risk and political instability