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Understanding ETFs Uses, Returns and Comparison with Mutual Funds and Stocks

 Exchange-Traded Funds (ETFs) have gained popularity among investors for their unique features and benefits. In this blog, we'll explore the uses of ETFs, their potential returns, how they differ from mutual funds and stock investments, and their safety profile. What is an ETF? An ETF is a type of investment fund that trades on stock exchanges, much like individual stocks. It holds a collection of assets, such as stocks, bonds, or commodities, and aims to track the performance of a specific index, sector, or asset class. Uses of ETFs Diversification : ETFs allow investors to gain exposure to a wide range of assets without having to purchase each individually. For instance, an ETF tracking the S&P 500 gives you exposure to 500 different stocks, reducing the risk associated with individual stock investments. Cost Efficiency : ETFs often have lower expense ratios compared to mutual funds. They typically pass on lower management costs to investors since they are often passively man
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Sample Questions for CAIIB - Bank Financial Management - Sample Questions Set 2



1. Right of a Creditor to retain possession of goods till debts due to him are paid by his debtor is called
a) Pledge
b) Lien
c) Set Off
d) Assignment

Answer - Lien

2. Interest rate risk is a type of
a) Credit Risk
b) Market Risk
c) Operational Risk
d) All the Above

Answer - Market Risk

3. Which amongst the following is not a Credit risk mitigant
a) Collateral security
b) ECGC policy
c) Surety
d) None of these

Answer - None of these

4. Capital Adequacy Ratio under Basel II is computed on the basis of
a) Risk weighted assets for credit risk
b) Capital for market risk
c) Capital for operational risk
d) All the Above

Answer - All the Above

5. ALM system is built on three pillars, which are
a) Capital adequacy, supervisory review, and market discipline
b) Information system, organization and process
c) ALCO, maturity ladder and duration
d) All of the above

Answer - Information system, organization and process

6. A Put Option is in the money if
a) The strike price is less than the market
b) The strike price is more than the market price
c) The Market price is equal to the strike price
d) A put option can never be in the money

Answer - The strike price is more than the market price

7. Zero risk investment implies
a) Zero variation in cash flow from investment
b) Investment in Zero coupon bond
c) Investment in government securities
d) Investment in Bank Fixed deposits

Answer - Zero variation in cash flow from investment

8. If Daily volatility of a stock is 0.5%. What is its 30 days volatility?

a) 5%
b) 1.58%
c) 8.22%
d) 2.74%

Answer - 2.74%

9. Back to back LC is
a) LC opened on the backing of an Export order
b) LC opened on the backing of an Import Order
c) LC opened on the backing of an Export LC
d) LC opened on the backing of an Import LC

Answer - LC opened on the backing of an Export LC

10. Which one is true in case of Pillars of Basel II
a) Minimum Capital Requirement
b) Supervisory Review of the capital adequacy
c) Market Discipline
d) All of the above

Answer - All of the above

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