CAIIB · December 2026
CAIIB free mock test
Twenty original questions across ABM, BFM, ABFM and BRBL, to show you where you stand. Pick an answer and you’ll see the working straight away.
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A short free test, not a full paper: IIBF’s papers have 100 questions in 2 hours. Rules as on 30 June 2026. IIBF’s own notice decides the exam.
ABM: Advanced Bank Management
Question 1 · ABM
On a ₹1,00,000 written-off account, a bank expects full recovery with probability 0.7, recovery of ₹40,000 with probability 0.2, and nothing with probability 0.1. What is the expected recovery?
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Answer: ₹78,000
Expected value = (0.7 × 1,00,000) + (0.2 × 40,000) + (0.1 × 0) = 70,000 + 8,000 = ₹78,000.
Source: Expected value; IIBF, Advanced Bank Management, Module A
Question 2 · ABM
A branch’s deposits grew from ₹100 crore to ₹144 crore in 2 years. What is the compound annual growth rate?
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Answer: 20%
CAGR = (144 ÷ 100)^(1/2) − 1 = 1.20 − 1 = 20%. 22% is the simple average of the 44% total growth.
Source: Compound annual growth rate; IIBF, ABM, Module A
Question 3 · ABM
A unit’s annual credit sales are ₹730 lakh and its average receivables are ₹100 lakh. What is its average collection period, on a 365-day year?
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Answer: 50 days
Average collection period = average receivables ÷ annual credit sales × 365 = 100 ÷ 730 × 365 = 50 days.
Source: Average collection period; IIBF, ABM, Module C
Question 4 · ABM
Under Section 149(4) of the Companies Act, 2013, every listed public company must have independent directors making up at least:
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Answer: one-third of its directors
Section 149(4) requires at least one-third of the total number of directors of a listed public company to be independent directors.
Source: Companies Act, 2013, Section 149(4)
BFM: Bank Financial Management
Question 5 · BFM
USD/INR is 88.00 and EUR/USD is 1.1000. What is the EUR/INR cross rate?
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Answer: 96.80
EUR/INR = EUR/USD × USD/INR = 1.1000 × 88.00 = 96.80.
Source: Cross rates; IIBF, Bank Financial Management, Module A
Question 6 · BFM
USD/INR spot is 84.00 and the 3-month forward is 85.05. What is the annualised forward premium on the dollar?
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Answer: 5.00%
Premium = (85.05 − 84.00) ÷ 84.00 × (12 ÷ 3) × 100 = 1.25% × 4 = 5.00% a year.
Source: Forward premium; IIBF, BFM, Module A
Question 7 · BFM
A loan has an exposure at default of ₹50 crore, a probability of default of 2% and a loss given default of 40%. What is the expected loss?
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Answer: ₹0.40 crore
Expected loss = EAD × PD × LGD = 50 × 0.02 × 0.40 = ₹0.40 crore.
Source: Expected loss; IIBF, BFM, Module B
Question 8 · BFM
A bond priced at ₹1,000 has a modified duration of 5 years. If its yield rises by 50 basis points, its price will be about:
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Answer: ₹975
Price change ≈ −modified duration × change in yield = −5 × 0.50% = −2.5%, or about ₹25. New price ≈ ₹975. Prices fall when yields rise.
Source: Modified duration; IIBF, BFM, Module C
Question 9 · BFM
A bank has rate-sensitive assets of ₹800 crore and rate-sensitive liabilities of ₹1,000 crore. If rates rise by 1 percentage point on both, its net interest income will:
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Answer: fall by ₹2 crore
Gap = 800 − 1,000 = −₹200 crore. Change in NII = −200 × 1% = −₹2 crore. A negative gap loses when rates rise.
Source: Repricing gap analysis; IIBF, BFM, Module D
ABFM: Advanced Business & Financial Management
Question 10 · ABFM
On Blake and Mouton’s Managerial Grid, the 9,9 style, with high concern for both people and production, is called:
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Answer: Team management
9,9 is team management. 1,1 is impoverished, 1,9 is country club and 9,1 is authority-compliance.
Source: Blake and Mouton, The Managerial Grid (1964) and later editions; IIBF, ABFM, Module A
Question 11 · ABFM
Fayol’s principle of unity of command means that:
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Answer: each employee should take orders from one superior only
Unity of command means one employee, one boss. One plan for a group is unity of direction, which is a separate principle.
Source: Henri Fayol, General and Industrial Management; IIBF, Advanced Business & Financial Management, Module A
Question 12 · ABFM
A firm is financed 40% by debt at an after-tax cost of 7% and 60% by equity at 15%. What is its weighted average cost of capital?
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Answer: 11.8%
WACC = (0.40 × 7%) + (0.60 × 15%) = 2.8% + 9.0% = 11.8%. 11.0% is the simple average, which ignores the weights.
Source: Weighted average cost of capital; IIBF, ABFM, Module C
Question 13 · ABFM
A firm’s sales are ₹100 lakh, variable costs ₹60 lakh and fixed costs ₹20 lakh. What is its degree of operating leverage?
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Answer: 2.00
Contribution = 100 − 60 = ₹40 lakh. EBIT = 40 − 20 = ₹20 lakh. Degree of operating leverage = contribution ÷ EBIT = 40 ÷ 20 = 2.00. 2.50 is sales ÷ contribution, and 5.00 is sales ÷ EBIT.
Source: Degree of operating leverage; IIBF, ABFM, Module B
Question 14 · ABFM
A share is expected to pay a dividend of ₹5 next year, growing at 7% a year for ever. Investors require 12%. What is its value under the Gordon growth model?
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Answer: ₹100
Value = next dividend ÷ (required return − growth) = 5 ÷ (0.12 − 0.07) = ₹100.
Source: Gordon growth model; IIBF, ABFM, Module C
Question 15 · ABFM
An acquirer’s EPS is ₹30 and the target’s EPS is ₹15. On an EPS basis, how many acquirer shares should be given for one target share?
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Answer: 0.50
Exchange ratio = target EPS ÷ acquirer EPS = 15 ÷ 30 = 0.50.
Source: Share exchange ratio; IIBF, ABFM, Module C
BRBL: Banking Regulations & Business Laws
Question 16 · BRBL
Under Section 149(1) of the Companies Act, 2013, the minimum number of directors for a public company is:
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Answer: 3
A public company needs at least 3 directors, a private company 2 and a one person company 1. 7 is the minimum number of members of a public company, not of directors.
Source: Companies Act, 2013, Section 149(1)
Question 17 · BRBL
A bank maintains its Statutory Liquidity Ratio under:
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Answer: Section 24 of the Banking Regulation Act, 1949
SLR comes from Section 24 of the Banking Regulation Act. Section 42 of the RBI Act is the source of the Cash Reserve Ratio for scheduled banks.
Source: Banking Regulation Act, 1949, Section 24
Question 18 · BRBL
Under the Limitation Act, 1963, the period to file a suit to enforce payment of money secured by a mortgage of immovable property is:
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Answer: 12 years
Article 62 of the Schedule gives 12 years from the date the money sued for becomes due. A simple money suit generally has 3 years.
Source: Limitation Act, 1963, Schedule, Article 62
Question 19 · BRBL
In Mohori Bibee v Dharmodas Ghose (1903), the Privy Council held that a mortgage made by a minor is:
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Answer: void from the beginning
A minor is not competent to contract under Section 11 of the Indian Contract Act, so the Privy Council held the mortgage void from the beginning, not voidable. In that case the lender’s agent knew of the minority, but the ruling rests on the minor’s incapacity, so a lender’s ignorance would not make such a mortgage valid.
Source: Mohori Bibee v Dharmodas Ghose (1903) 30 IA 114; Indian Contract Act, 1872, Section 11
Question 20 · BRBL
Under Section 69 of the Indian Partnership Act, 1932, an unregistered firm:
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Answer: cannot sue a third party to enforce a right arising from a contract
Under the central Act, registration of a firm is optional, but Section 69 bars an unregistered firm from suing a third party to enforce a right arising from a contract. The firm can still be sued.
Source: Indian Partnership Act, 1932, Section 69
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