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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

Q296. > 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. Emphasis on operational risk measurement was the main feature of:

  1.  theory of three pillars risk management.
  2.  first consultative paper on capital adequacy.
  3.  second consultative paper on capital adequacy.
  4.  Basel capital adequacy norms.
  5.  None of these

Solution : theory of three pillars risk management.
Q297. > 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 difficulties was faced by regulators on prescription of Basel norms?

  1.  The regulators could not keep up with growing pace of change.
  2.  There was no provision for risk measurement.
  3.  The minimum requirement of 8% of capital could not be met.
  4.  The supervisory review process could not be carried out.
  5.  None of these

Solution : The regulators could not keep up with growing pace of change.

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Q298. > 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 is NOT a recommendation of second consultative paper on capital adequacy?

  1.  The minimum capital requirement for a bank has been prescribed.
  2.  Universal financial operations are permitted within limited geographical coverage.
  3.  The supervisory review should be more comprehensive.
  4.  The market discipline has to be observed by each bank.
  5.  None of these

Solution : Universal financial operations are permitted within limited geographical coverage.
Q299. > 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 passage factor(s) responsible for declining profitability in banks was/were: (A) cut-throat competition and technology revolution. (B) globalization of financial intermediaries. (C) privatization of insurance.

  1.  Only (A)
  2.  Only (B)
  3.  Both (A) and (B)
  4.  Both (B) and (C)
  5.  Neither (A) nor (B)

Solution : Both (A) and (B)

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Q300. > Ecoefficiency (measures to minimize environmental impact through the > reduction or elimination of waste from production processes) has > become a goal for companies worldwide, with many realizing significant > cost savings from such innovations. Peter Senge and Goran Carstedt see > this development as laudable but suggest that simply adopting > ecoefficiency innovations could actually worsen environmental stresses > in the future. Such innovations reduce production waste but do not > alter the number of products manufactured nor the waste generated from > their use and growth. Moreover, there is no guarantee that increased > economic growth from ecoefficiency will come in similarly ecoefficient > ways, since in today’s global markets, greater profits may be turned > into investment capital that could easily be reinvested in old-style > eco-inefficient industries. Even a vastly more ecoefficient industrial > system could, were it to grow much larger, generate more total waste > and destroy more habitat and species than would a smaller, less > ecoefficient economy. Senge and Carstedt argue that to preserve the > global environment and sustain economic growth, businesses must > develop a new systemic approach that reduces total material use and > total accumulated waste. Focusing exclusively on ecoefficiency, which > offers a compelling business case according to established thinking, > may distract companies from pursuing radically different products and > business models. The primary purpose of the passage is to

  1.  explain why a particular business strategy has been less successful than was once anticipated
  2.  propose an alternative to a particular business strategy that has inadvertently caused ecological damage
  3.  present a concern about the possible consequences of pursuing a particular business strategy
  4.  make a case for applying a particular business strategy on a large scale than is currently practiced
  5.  suggest several possible outcomes of companies’ failure to understand the economic impact of a particular business strategy

Solution : present a concern about the possible consequences of pursuing a particular business strategy
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Solution :

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