reading-comprehension

Reading Comprehension

Reading Comprehension: English Reading Comprehension Exercises with Answers, Sample Passages for Reading Comprehension Test for GRE, CAT, IELTS preparation

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English Reading Comprehension Test Questions and Answers. Improve your ability to read and comprehend English Passages

Q291. > The structure and operations of banks have undergone a rapid > transformation in recent years. Consequent upon the revolution in > information technology and the associated increase in competition > financial intermediaries have become increasingly global in > geographical coverage and universal in the financial operations, > encompassing a wide range of activities including banking, securities > markets activities and insurance. In the face of widespread concerns > about declining profitability of banks, the Basel capital adequacy > norms were enacted. > > Although the Basel norms helped to arrest the erosion of banks, > capital ratios, concerns were raised regarding the mere applicability > of baseline capital ratios in the changed environment of operation. > The blurring of both functional as well as national divisions among > the financial intermediaries, and the speed and complexity of > adjustment, made it difficult for regulators to keep up with the > growing pace change. In particular, the rule of ‘one-size-fits-all’ > aspect of the capital adequacy ratio was the subject of intense > debate. Recent banking crisis only emphasized the point that baseline > capital adequacy norms were not adequate to hedge against failures. In > response to the same, the Basel Committee on Banks’ Supervision came > out with the new Consultative Paper on Capital Adequacy. It invited > suggestions from the policymakers, academia and other institutes all > over the world. After taking into consideration manifold suggestions > of the various organizations, the second Consultative Paper on Capital > Adequacy was released. The Accord rests on three pillars; the first > pillar of minimum capital requirement, the second pillar of > supervisory review process and the third pillar of market discipline. > The first pillar sets out the minimum capital requirements. The new > framework maintains both the current definition of capital and the > minimum requirement of 8% of capital to risk-weighted assets. The > revised Accord will be extended on a consolidation basis to holding > companies of banking groups. The Accord stresses upon the improvement > in measurement of risks. The credit risk measurement methods have been > made more elaborate than those in the existing Accord. The new > framework also emphasizes the measurement of operational risk. For > measuring credit risk, two options have been proposed. The first is > the standardized approach and the second is the internal rating based > approach. Under the standardized approach, the existing approach for > credit risk remains conceptually the same, but the risk-weights have > been enlarged to encompass exposures to a broad category of borrowers > with reference to the rating provided by rating agencies. Which of the following factors are responsible for rapid transformation in banks in recent years?

  1.  The forces of privatization and international players have compelled the banks to do so.
  2.  Control from regulators has become meaningless for the banks to survive.
  3.  Sudden upsurge in economy.
  4.  The competition has increased and information technology has undergone a sea change.
  5.  None of these

Solution : Control from regulators has become meaningless for the banks to survive.
Q292. > The structure and operations of banks have undergone a rapid > transformation in recent years. Consequent upon the revolution in > information technology and the associated increase in competition > financial intermediaries have become increasingly global in > geographical coverage and universal in the financial operations, > encompassing a wide range of activities including banking, securities > markets activities and insurance. In the face of widespread concerns > about declining profitability of banks, the Basel capital adequacy > norms were enacted. > > Although the Basel norms helped to arrest the erosion of banks, > capital ratios, concerns were raised regarding the mere applicability > of baseline capital ratios in the changed environment of operation. > The blurring of both functional as well as national divisions among > the financial intermediaries, and the speed and complexity of > adjustment, made it difficult for regulators to keep up with the > growing pace change. In particular, the rule of ‘one-size-fits-all’ > aspect of the capital adequacy ratio was the subject of intense > debate. Recent banking crisis only emphasized the point that baseline > capital adequacy norms were not adequate to hedge against failures. In > response to the same, the Basel Committee on Banks’ Supervision came > out with the new Consultative Paper on Capital Adequacy. It invited > suggestions from the policymakers, academia and other institutes all > over the world. After taking into consideration manifold suggestions > of the various organizations, the second Consultative Paper on Capital > Adequacy was released. The Accord rests on three pillars; the first > pillar of minimum capital requirement, the second pillar of > supervisory review process and the third pillar of market discipline. > The first pillar sets out the minimum capital requirements. The new > framework maintains both the current definition of capital and the > minimum requirement of 8% of capital to risk-weighted assets. The > revised Accord will be extended on a consolidation basis to holding > companies of banking groups. The Accord stresses upon the improvement > in measurement of risks. The credit risk measurement methods have been > made more elaborate than those in the existing Accord. The new > framework also emphasizes the measurement of operational risk. For > measuring credit risk, two options have been proposed. The first is > the standardized approach and the second is the internal rating based > approach. Under the standardized approach, the existing approach for > credit risk remains conceptually the same, but the risk-weights have > been enlarged to encompass exposures to a broad category of borrowers > with reference to the rating provided by rating agencies. According to the passage activities encompassed by banks are:

  1.  insurance, housing finance and low cost funds.
  2.  market discipline, profit maximization and priority sector banking.
  3.  securities markets, insurance and banking.
  4.  geographical coverage, universalization and transformation.
  5.  None of these

Solution : securities markets, insurance and banking.

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Q293. > The structure and operations of banks have undergone a rapid > transformation in recent years. Consequent upon the revolution in > information technology and the associated increase in competition > financial intermediaries have become increasingly global in > geographical coverage and universal in the financial operations, > encompassing a wide range of activities including banking, securities > markets activities and insurance. In the face of widespread concerns > about declining profitability of banks, the Basel capital adequacy > norms were enacted. > > Although the Basel norms helped to arrest the erosion of banks, > capital ratios, concerns were raised regarding the mere applicability > of baseline capital ratios in the changed environment of operation. > The blurring of both functional as well as national divisions among > the financial intermediaries, and the speed and complexity of > adjustment, made it difficult for regulators to keep up with the > growing pace change. In particular, the rule of ‘one-size-fits-all’ > aspect of the capital adequacy ratio was the subject of intense > debate. Recent banking crisis only emphasized the point that baseline > capital adequacy norms were not adequate to hedge against failures. In > response to the same, the Basel Committee on Banks’ Supervision came > out with the new Consultative Paper on Capital Adequacy. It invited > suggestions from the policymakers, academia and other institutes all > over the world. After taking into consideration manifold suggestions > of the various organizations, the second Consultative Paper on Capital > Adequacy was released. The Accord rests on three pillars; the first > pillar of minimum capital requirement, the second pillar of > supervisory review process and the third pillar of market discipline. > The first pillar sets out the minimum capital requirements. The new > framework maintains both the current definition of capital and the > minimum requirement of 8% of capital to risk-weighted assets. The > revised Accord will be extended on a consolidation basis to holding > companies of banking groups. The Accord stresses upon the improvement > in measurement of risks. The credit risk measurement methods have been > made more elaborate than those in the existing Accord. The new > framework also emphasizes the measurement of operational risk. For > measuring credit risk, two options have been proposed. The first is > the standardized approach and the second is the internal rating based > approach. Under the standardized approach, the existing approach for > credit risk remains conceptually the same, but the risk-weights have > been enlarged to encompass exposures to a broad category of borrowers > with reference to the rating provided by rating agencies. The main features of the standardized approach are:

  1.  the credit risk management should encompass large corporate borrowers.
  2.  the borrowers should not have more than 8% risk weighted assets.
  3.  banks capital reserve ratios should be strictly maintained.
  4.  the risk weights should take into consideration the rating of rating agencies.
  5.  None of these

Solution : the credit risk management should encompass large corporate borrowers.
Q294. > The structure and operations of banks have undergone a rapid > transformation in recent years. Consequent upon the revolution in > information technology and the associated increase in competition > financial intermediaries have become increasingly global in > geographical coverage and universal in the financial operations, > encompassing a wide range of activities including banking, securities > markets activities and insurance. In the face of widespread concerns > about declining profitability of banks, the Basel capital adequacy > norms were enacted. > > Although the Basel norms helped to arrest the erosion of banks, > capital ratios, concerns were raised regarding the mere applicability > of baseline capital ratios in the changed environment of operation. > The blurring of both functional as well as national divisions among > the financial intermediaries, and the speed and complexity of > adjustment, made it difficult for regulators to keep up with the > growing pace change. In particular, the rule of ‘one-size-fits-all’ > aspect of the capital adequacy ratio was the subject of intense > debate. Recent banking crisis only emphasized the point that baseline > capital adequacy norms were not adequate to hedge against failures. In > response to the same, the Basel Committee on Banks’ Supervision came > out with the new Consultative Paper on Capital Adequacy. It invited > suggestions from the policymakers, academia and other institutes all > over the world. After taking into consideration manifold suggestions > of the various organizations, the second Consultative Paper on Capital > Adequacy was released. The Accord rests on three pillars; the first > pillar of minimum capital requirement, the second pillar of > supervisory review process and the third pillar of market discipline. > The first pillar sets out the minimum capital requirements. The new > framework maintains both the current definition of capital and the > minimum requirement of 8% of capital to risk-weighted assets. The > revised Accord will be extended on a consolidation basis to holding > companies of banking groups. The Accord stresses upon the improvement > in measurement of risks. The credit risk measurement methods have been > made more elaborate than those in the existing Accord. The new > framework also emphasizes the measurement of operational risk. For > measuring credit risk, two options have been proposed. The first is > the standardized approach and the second is the internal rating based > approach. Under the standardized approach, the existing approach for > credit risk remains conceptually the same, but the risk-weights have > been enlarged to encompass exposures to a broad category of borrowers > with reference to the rating provided by rating agencies. The consultative paper of Basel Committee was a result of:

  1.  three pillar accord of academic institutes.
  2.  contribution from international policy makers, academicians and institutions.
  3.  failure of structures and operations of banks in the world.
  4.  erosion of banks’ fixed assets owing to global competition.
  5.  None of these

Solution : failure of structures and operations of banks in the world.

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Q295. > The structure and operations of banks have undergone a rapid > transformation in recent years. Consequent upon the revolution in > information technology and the associated increase in competition > financial intermediaries have become increasingly global in > geographical coverage and universal in the financial operations, > encompassing a wide range of activities including banking, securities > markets activities and insurance. In the face of widespread concerns > about declining profitability of banks, the Basel capital adequacy > norms were enacted. > > Although the Basel norms helped to arrest the erosion of banks, > capital ratios, concerns were raised regarding the mere applicability > of baseline capital ratios in the changed environment of operation. > The blurring of both functional as well as national divisions among > the financial intermediaries, and the speed and complexity of > adjustment, made it difficult for regulators to keep up with the > growing pace change. In particular, the rule of ‘one-size-fits-all’ > aspect of the capital adequacy ratio was the subject of intense > debate. Recent banking crisis only emphasized the point that baseline > capital adequacy norms were not adequate to hedge against failures. In > response to the same, the Basel Committee on Banks’ Supervision came > out with the new Consultative Paper on Capital Adequacy. It invited > suggestions from the policymakers, academia and other institutes all > over the world. After taking into consideration manifold suggestions > of the various organizations, the second Consultative Paper on Capital > Adequacy was released. The Accord rests on three pillars; the first > pillar of minimum capital requirement, the second pillar of > supervisory review process and the third pillar of market discipline. > The first pillar sets out the minimum capital requirements. The new > framework maintains both the current definition of capital and the > minimum requirement of 8% of capital to risk-weighted assets. The > revised Accord will be extended on a consolidation basis to holding > companies of banking groups. The Accord stresses upon the improvement > in measurement of risks. The credit risk measurement methods have been > made more elaborate than those in the existing Accord. The new > framework also emphasizes the measurement of operational risk. For > measuring credit risk, two options have been proposed. The first is > the standardized approach and the second is the internal rating based > approach. Under the standardized approach, the existing approach for > credit risk remains conceptually the same, but the risk-weights have > been enlarged to encompass exposures to a broad category of borrowers > with reference to the rating provided by rating agencies. How did Basel norms help the Bank?

  1.  It changed the environment of operations.
  2.  The decline in capital ratios was arrested.
  3.  The banks could successfully keep market discipline.
  4.  It did not erode the quality of risk measurement.
  5.  None of these

Solution : The banks could successfully keep market discipline.
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Solution :

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