FREE MOCK TEST ON SECURITIZATION | CAIIB RETAIL BANKING EXAM 2023

SECURITIZATION FREE MOCK TEST FOR CAIIB 2023

In this article, we talk about the Securitization Free Mock Test, and CAIIB exam 2023. Also, we discussed a bit about securitization and some sample MCQs for it. In the end, we have also given the details of our CAIIB study material.

CAIIB is one of the prevalent flagship courses offered by IIBF. CAIIB syllabus includes two main subjects- ABM and BFM and an elective subject which can be chosen from six options: rural banking, retail banking, central banking, risk management, human resources management, and information technology. 

CAIIB exam 2023 is one of the toughest exams to crack but worry not; we are here for you. We have devised a plan for you, and if you follow that plan, we assure you that you will pass the CAIIB exam 2023 in November with flying colors. This plan involves our CAIIB study material and free CAIIB mock tests for you to practice. You can solve our CAIIB retail banking mock tests up to five times and compare them with your previous performances to keep a check on your improvement. These mock tests give you an idea about the level of difficulty of questions that have come in the earlier years so that you know what kind of questions you are going to face in the CAIIB exam in November 2023. 

In this article, we will focus mainly on questions on retail banking and one of its important topics, which is securitization. But before we begin with our questions, you should get a basic idea about securitization.

Read Also: SECURITIZATION | MORTGAGE-BACKED SECURITIES

SECURITIZATION

By pooling or combining diverse financial assets into a single entity or securitizing them, an issuer creates a marketable financial instrument. The issuer then sells investors this collection of repackaged assets. The market is made more liquid through securitization, which gives investors possibilities and frees up cash for originators.

Theoretically, it is possible to securitize any financial asset, converting it into a tradable, fungible thing with monetary worth. This is essentially what securities are.

Most of the time, however, securitization involves loans and other assets that produce receivables, such as various forms of consumer or commercial debt. Contractual debts like vehicle loans and credit card debt obligations may be gathered together in this process.

What Securitization Entails

In the securitization process, the entity holding the assets—the originator—collects the information on the purchases it wants to remove from the linked balance sheets. If it were a bank, it might be doing this with various mortgages and personal loans that it no longer wants to service, for instance. This collection of assets is currently regarded as a benchmark portfolio. The originator subsequently sells the portfolio to an issuer who will turn it into tradable securities. Created securities serve as a stake in the portfolio’s assets. Investors will purchase the produced securities at a predetermined rate of return.

The advantages of securitization

As a result of the securitization process, shares in products that would otherwise be out of reach for regular investors can now be purchased. An investor, for instance, can buy mortgage-backed securities (MBS) and receive regular returns in principle and interest payments. Small investors might be unable to afford to invest in a sizable pool of mortgages without the securitization of mortgages.

Many loan-based securities, in contrast to some other investment vehicles, are backed by tangible assets. If a borrower stops making loan payments on, say, a car or a house, the support may be seized and sold to pay off individuals who have an interest in the debt.

Additionally, the originator’s liability on their balance sheet decreases as debt is transferred into the securitized portfolio. They are therefore able to underwrite more loans because their liability has been declined.

Pros

• transforms intangible assets into tradable ones
• allows the creator to have more money
• generates profit for investors
• Let the small investors have the opportunity to perform well

SECURITIZATION FREE MOCK TEST FOR PRACTICE

The process of securitization involves one of the following?

1. 1. The lender selects the assets they want to securitize.
   2. For the loans securitized, the issuer (Special Purpose Vehicle) will make payment to the lender 
   3. The issuer turns the assets into a pool of securities to issue Pass-Through Certificates (PTCs), which are then offered to other willing investors.
   4. All the above. 

Ans – 4

Mortgage-backed securities (MBS) are supported by ______

1. 1. All retail loans
   2. Retail loans other than housing loans
   3. Mainly housing loans
   4. None of the above

Ans – 3

Asset-backed securitisation (ABS) is supported by _______

1. 1. All retail loans
   2. Retail loans other than housing loans
   3. Only housing loans
   4. None of the above

Ans – 2

Read Also: CAIIB NOVEMBER EXAM 2023 | SCHEDULE OF LIVE CLASSES

What kind of security can the borrower offer the bank in exchange for a loan?

1. 1. Hypothecation of the vehicle (car) should be purchased out of loan
   2. Hypothecation of all vehicles should be done, whether old or new
   3. Pledge of car should be purchased out of a loan
   4. Mortgage of a new car should be purchased out of a loan 

Ans – 1

After how much time the collection process or/and security repossession, the borrower will be contacted by Bank representatives authorised to represent the Bank?

1. 1. 0600 hrs
   2. 0700 hrs
   3. 0800 hrs
   4. 0900 hrs

Ans – 2

In 2011, RBI released comprehensive rules on information security in accordance with the committee’s recommendations which is headed by: 

1. 1. Mr. R S Talwar
   2. Mr. Gopalakrishna
   3. Mr. Ramesh Pandith
   4. Mr. Naresh Goyal

Ans – 2

The fundamental prerequisite for a company’s marketable securities _____

1. 1. Safety 
   2. Yield 
   3. Marketability
   4. None of the above

Ans- 1

Mortgage property’s ownership will be transferred to financial institutions only if:

1. 1. Borrower wants profit
   2. Borrower wants less rates
   3. Borrower defaults 
   4. Borrower doesn’t default

Ans – 3

The loan available for businesses or individuals to buy land, home, or other property comes under:

1. 1. Primary loan 
   2. Secondary loan
   3. Swapped mortgages 
   4. Mortgages

Ans – 4

Security is backed by mortgage cash flows and is packed with financial instruments. This type of security is classified as:

1. 1. Financial mortgage
   2. Instrumental mortgage
   3. Cash mortgage 
   4. Securitized mortgage

Ans – 4

Read Also: RETAIL BANKING IMPORTANT CASE STUDIES

CAIIB STUDY MATERIAL 2023

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