NIBAF Certification in Treasury Management (CTM)

Which of the following functions is primarily performed by the middle office of a commercial bank's treasury?

• AMeasuring, monitoring, and managing treasury market and liquidity risks
• BVerifying deal confirmations, matching trade details, and settling payments
• CExecuting foreign exchange spot transactions with interbank counterparties
• DFormulating the central bank's monetary policy and policy rate corridor

Under the State Bank of Pakistan (SBP) rules, what is the default day-count convention used for the calculation of interest/accrual on Government of Pakistan Treasury Bills (T-Bills)?

• AActual/365
• BActual/360
• C30/360
• DActual/Actual

Which monetary policy tool is utilized by the State Bank of Pakistan (SBP) to set a ceiling for overnight interbank money market rates?

• ASBP Standing Deposit Facility (SDF) Floor Rate
• BCRR (Cash Reserve Ratio) requirement
• CSLR (Statutory Liquidity Ratio) requirement
• DOpen Market Operation (OMO) Clean Outright Sale

Which of the following describes the Standing Reverse Repo Facility (Ceiling Rate) of the State Bank of Pakistan (SBP)?

• AThe rate at which the SBP provides overnight liquidity to commercial banks against eligib…
• BThe target rate around which the SBP aims to keep the weighted average overnight interban…
• CThe rate at which commercial banks can deposit excess funds with the SBP overnight.
• DThe rate at which the SBP purchases government securities through outright OMO operations.

What is the frequency at which Pakistani commercial banks are required to maintain their daily Cash Reserve Ratio (CRR) on average with the State Bank of Pakistan (SBP)?

• AOn a fortnightly average basis (over a 14-day period)
• BDaily basis with no averaging allowed
• COn a monthly average basis
• DOn a weekly average basis

What is the primary objective of the State Bank of Pakistan's Open Market Operations (OMOs)?

• ATo maximize the profitability of the central bank's own treasury operations
• BTo manage interbank market liquidity to keep the overnight rate close to the SBP Target R…
• CTo directly regulate the exchange rate of the Pakistan Rupee (PKR)
• DTo finance the federal government's budget deficit directly through credit creation

In Pakistan, which entity is eligible to be designated as a Primary Dealer (PD) for Government of Pakistan Securities (T-Bills and PIBs)?

• AAny corporate entity registered with the Securities and Exchange Commission of Pakistan (…
• BCommercial banks and development financial institutions (DFIs) that meet SBP criteria
• COnly foreign commercial banks operating branch networks in Pakistan
• DOnly asset management companies and insurance companies registered in Pakistan

Under SBP regulations, what is the maximum Net Open Position (NOP) limit in foreign exchange typically based on?

• AA fixed nominal amount of PKR 10 billion for all banks
• BA percentage of the bank's Total Regulatory Capital (Tier 1 + Tier 2 Capital)
• CA percentage of the bank's Paid-up Capital
• DThe total value of the bank's foreign currency deposits

What is the name of the real-time gross settlement (RTGS) system used in Pakistan for large-value interbank funds transfer?

• ANIFT (National Institutional Facilitation Technologies)
• BPRISM (Pakistan Real-time Interbank Settlement Mechanism)
• C1LINK interbank switch
• DRaast Instant Payment System

Which SBP regulation defines the exposure limits, liquidity requirements, and operational risk boundaries for treasury operations?

• AForeign Exchange Manual
• BPrudential Regulations for Corporate/Commercial Banking
• CSECP Code of Corporate Governance
• DGuidelines on Internal Risk Management Framework

In a treasury dealing room, what is the role of the Back Office regarding deal confirmation?

• AFront office dealers confirm deals directly with counterparties via phone without back of…
• BThe back office acts as the dealing agent, negotiating rates and executing deals on behal…
• CThe back office independently receives, matches, and verifies deal confirmations directly…
• DThe back office is only involved in audit preparation and does not perform daily deal ver…

Which of the following instruments is eligible for inclusion in the calculation of a conventional bank's Statutory Liquidity Ratio (SLR) under SBP rules?

• AShares of blue-chip corporate companies listed on the Pakistan Stock Exchange (PSX)
• BUnrated corporate Term Finance Certificates (TFCs)
• CGovernment of Pakistan Treasury Bills (T-Bills) and Market Treasury Bills (MTBs)
• DInterbank clean loans extended to other commercial banks

Under SBP rules, what is the 'Monetary Policy Corridor' and how is it structured around the Policy Target Rate?

• AA corridor of 100 bps where the Target Rate is the ceiling and the Floor Rate is 100 bps…
• BA corridor of 200 bps where the ceiling is the Policy Target Rate and the floor is 200 bp…
• CA corridor with the Standing Reverse Repo Rate as the ceiling and the Standing Deposit Fa…
• DA flat rate system with no corridor, where the SBP lends and borrows at the exact same ra…

What is the statutory minimum Capital Adequacy Ratio (CAR) currently required for commercial banks in Pakistan as per Basel III guidelines implemented by the SBP (excluding capital conservation buffers)?

• A8.0%
• B12.5%
• C10.0%
• D15.0%

Under the SBP framework, which department in a commercial bank treasury handles 'Outsource' activities like settlement, reconciliation, and SWIFT messaging?

• AMiddle Office
• BFront Office Dealing Room
• CBack Office (Operations)
• DCompliance Department

What is the primary function of the Domestic Markets & Monetary Management Department (DMMD) of the State Bank of Pakistan?

• ATo supervise the credit risk of commercial bank corporate borrowers
• BTo regulate the stock exchanges and brokerage houses in Pakistan
• CTo issue currency notes and manage the minting of coins in Pakistan
• DTo conduct open market operations, primary auctions of government debt, and manage FX res…

In the context of SBP's guidelines on treasury risk management, what is 'operational risk' in a dealing room?

• AThe risk of exchange rate fluctuations changing the value of foreign currency holdings
• BThe risk that a counterparty will default on its payment obligations at settlement
• CThe risk of interest rate changes reducing the net interest income of the bank
• DThe risk of loss resulting from inadequate or failed internal processes, people, and syst…

What is the legal framework that empowers the State Bank of Pakistan to regulate monetary policy and treasury markets in Pakistan?

• ASecurities and Exchange Ordinance, 1969
• BFinancial Institutions (Recovery of Finances) Ordinance, 2001
• CCompanies Act, 2017
• DBanking Companies Ordinance (BCO), 1962 and State Bank of Pakistan Act, 1956

How does the SBP define a 'Market Maker' in the context of government securities primary dealer (PD) rules?

• AA dealer who only buys government securities in primary auctions and does not quote secon…
• BA regulator who monitors the trading activities in the secondary market to prevent manipu…
• CAn investor who holds government securities until maturity to support government long-ter…
• DAn institution that is obligated to provide two-way (bid and ask) quotes in the secondary…

Which SBP circular series is primary for issuing guidelines regarding domestic money markets, Open Market Operations, and primary auctions?

• ABPRD Circulars
• BPSD Circulars
• CEPD Circulars
• DDMMD Circulars / Circular Letters

A treasury manager buys a 3-month (91-day) Market Treasury Bill (MTB) with a face value of PKR 100 million at a discount rate of 18.0%. What is the purchase price of the T-Bill?

• APKR 95,512,329
• BPKR 82,000,000
• CPKR 95,500,000
• DPKR 98,200,000

What is the day-count convention used in Pakistan for calculating the accrued interest on Pakistan Investment Bonds (PIBs)?

• AActual/365
• B30/360
• CActual/360
• DActual/Actual

If a PIB has a coupon rate of 12.0% per annum, paid semi-annually, and the next coupon payment is due in 90 days, how much interest has accrued since the last coupon payment (assume a semi-annual period of 182.5 days, and 92.5 days have elapsed)?

• APKR 3.04 per PKR 100 face value
• BPKR 6.00 per PKR 100 face value
• CPKR 2.96 per PKR 100 face value
• DPKR 6.08 per PKR 100 face value

What is the difference between the 'clean price' and the 'dirty price' of a Pakistan Investment Bond (PIB)?

• AClean price is the market price of the bond excluding accrued interest, while dirty price…
• BClean price is the price paid by the buyer including accrued interest, while dirty price…
• CClean price is the face value of the bond, while dirty price is the depreciated book valu…
• DClean price is the price of a conventional bond, while dirty price is the price of an Isl…

A bank enters into a 7-day repo transaction by selling a T-Bill at a clean price of PKR 98 million (Dirty Price of PKR 98.2 million) and agrees to buy it back at a repo rate of 17.5%. What is the repo interest payable at maturity? (Use Act/365)

• APKR 329,548
• BPKR 330,221
• CPKR 298,421
• DPKR 341,200

What is the yield-to-maturity (YTM) of a bond?

• AThe annual coupon rate divided by the clean market price of the bond
• BThe discount rate that equates the present value of all future cash flows of the bond to…
• CThe average interest rate paid by the issuer over the entire life of the bond based on fa…
• DThe interest rate paid to the bank by the central bank for overnight deposits

If a PIB's yield-to-maturity (YTM) increases, what happens to its market price?

• AThe market price of the PIB increases.
• BThe market price of the PIB decreases.
• CThe market price of the PIB remains unchanged.
• DThe market price initially drops but then doubles.

Which metric measures the sensitivity of a bond's price to a 1% (100 basis points) change in interest rates?

• AConvexity
• BModified Duration
• CMacaulay Duration
• DYield to Maturity

A 6-month (182-day) T-Bill with a face value of PKR 100 million is quoted at a yield (yield-to-maturity equivalent) of 19.5%. What is its clean price? (Use Act/365, priced as a discount bond)

• APKR 90,254,120
• BPKR 91,132,421
• CPKR 95,238,095
• DPKR 91,000,000

What does 'bond convexity' represent in bond portfolio management?

• AThe linear relationship between bond prices and interest rates
• BThe curvature of the bond price-yield relationship, which improves the price approximatio…
• CThe speed at which a bond's principal is amortized over its life
• DThe difference between the yield of a government bond and a corporate bond

A commercial bank's treasury holds a bond with a Modified Duration of 4.5 years. If interest rates across the yield curve increase by 50 basis points (0.50%), what is the estimated change in the bond's price?

• AIncrease of 2.25%
• BDecrease of 9.00%
• CDecrease of 2.25%
• DIncrease of 4.50%

Under SBP rules, if a primary dealer bids in a non-competitive auction for Treasury Bills, what yield do they receive?

• AThe maximum yield accepted in the competitive auction
• BThe minimum yield bid in the competitive auction
• CThe weighted average yield of the accepted competitive bids in the same auction
• DA fixed yield set by the SBP prior to the auction

Which day-count convention is standard for interbank PKR repo transactions in Pakistan?

• AActual/360
• B30/360
• CActual/365
• DActual/Actual

What is 'accrued interest' on a bond?

• AThe interest that is penalized due to early redemption of the bond.
• BThe total interest that will be paid to the bondholder at maturity.
• CThe interest that has accumulated on a bond since the last coupon payment date, which bel…
• DThe difference between the purchase price and the face value of a discount bond.

A 10-year Pakistan Investment Bond (PIB) is trading in the secondary market. If the SBP increases the policy rate, what is the immediate expected direction of the PIB's yield and price?

• AYield decreases, Price increases
• BYield increases, Price increases
• CYield increases, Price decreases
• DYield remains unchanged, Price decreases

A treasury manager wishes to immunize a bond portfolio against interest rate risk. What is the primary condition required for portfolio immunization?

• AThe portfolio's total value must exceed the present value of the liabilities.
• BThe portfolio must be rebalanced only once at the end of a 10-year cycle.
• CThe portfolio must consist entirely of short-term Treasury Bills.
• DThe portfolio's duration must be equal to the duration of the liabilities.

A commercial bank enters into a repo transaction with the SBP using a PIB as collateral. The SBP applies a 'haircut' of 2.0% on the collateral value. If the market value of the PIB is PKR 100 million, how much funding will the bank receive?

• APKR 102 million
• BPKR 100 million
• CPKR 50 million
• DPKR 98 million

Which day-count convention is used for corporate Term Finance Certificates (TFCs) in Pakistan?

• AActual/360
• B30/360
• CActual/Actual
• DActual/365

What is the coupon frequency of standard floating-rate Pakistan Investment Bonds (Floating Rate PIBs) issued in the primary market?

• AQuarterly
• BAt maturity
• CAnnually
• DSemi-annually

How is the coupon rate of a floating-rate PIB reset under SBP guidelines?

• AIt is fixed by the SBP Governor at each monetary policy meeting.
• BIt is linked to the weighted average yield of the 3-month Treasury Bill competitive aucti…
• CIt is indexed to the consumer price inflation (CPI) rate in Pakistan.
• DIt is linked to the cut-off yield of the latest 6-month Market Treasury Bill (MTB) auctio…

Which committee is primarily responsible for managing a bank's balance sheet structure, interest rate risk, and liquidity risk?

• AAsset Liability Committee (ALCO)
• BAudit Committee
• CCredit Risk Committee
• DBoard Risk Management Committee

What is the key objective of the Liquidity Coverage Ratio (LCR) under Basel III guidelines implemented by the SBP?

• ATo ensure a bank has sufficient High-Quality Liquid Assets (HQLA) to survive a 30-day sev…
• BTo limit the ratio of long-term loans to short-term deposits to 50%
• CTo measure the bank's profitability over a one-year horizon
• DTo calculate the maximum credit exposure to a single borrower group

What is 'interest rate gap analysis' used for in asset-liability management (ALM)?

• ATo measure the mismatch between rate-sensitive assets (RSA) and rate-sensitive liabilitie…
• BTo measure the difference between interest rates on conventional loans and Islamic loans
• CTo measure the credit default risk of the loan portfolio
• DTo calculate the bank's return on equity (ROE) under stress conditions

Under Basel III rules, what is the Net Stable Funding Ratio (NSFR) designed to measure?

• AThe amount of stable funding (liabilities and capital) relative to the required stable fu…
• BThe proportion of regulatory capital held against market risk exposures
• CThe short-term daily cash outflows of a commercial bank
• DThe ratio of non-performing loans to total advances

If a bank has a positive interest rate gap (RSA > RSL) in the 3-month time bucket, how will its Net Interest Income (NII) be affected if interest rates rise?

• ANet Interest Income (NII) will increase.
• BNet Interest Income (NII) will decrease.
• CNet Interest Income (NII) will remain unchanged.
• DNet Interest Income (NII) will immediately drop to zero.

What is 'Economic Value of Equity (EVE)' sensitivity in ALM?

• AThe sensitivity of the bank's stock price to changes in corporate earnings
• BThe sensitivity of the net present value of the bank's assets and liabilities (and thus i…
• CThe ratio of net profit to total equity capital of the bank
• DThe market value of the bank's treasury assets divided by total liabilities

What does a 'negative duration gap' imply for a commercial bank's balance sheet risk?

• AThe average duration of assets is greater than the weighted duration of liabilities; equi…
• BThe average duration of liabilities is greater than the weighted duration of assets; equi…
• CThe bank has no interest rate risk exposure.
• DThe bank's liabilities are entirely composed of short-term interbank borrowings.