IT

Analogue: The use of a system in which the data is of a continuously variable physical quantity such as voltage
or angular position. It is a signal that is continuously variable over its full range of values e.g. the signal of the
sound wave or the electric output of a telephone microphone is an analogue voltage signal.
Analogue Computer: A device that operate on date in the form of continuously variable physical quantities.
ANSI: American National Standards Institute.
Address Bus - An electronic pathway that carries data between the computers CPU and its memory.
Authentication - Means of ensuring that a message or instruction in an EFT context is from an authorised
source. Usually carried out with PIN.
Access Control Systems - Equipment or software designed to restrict access to equipment, data, software, or
system functions to authorized persons.
Batch Processing: A technique in which a number of similar items or transactions are processed in groups or
batches during a machine run.
Binary: A number system using base 2 and the numbers 0 and 1.
Bit — Binary digit - An individual piece of data either a 0 or 1.
Byte: A group of 8 bits to represent a character; the amount of memory required to store a single character, a
unit of data capable of storing 256 unique values.
Bar Code reader - An input device used to read bar codes, translate them into numbers, and input the
numbers often used In retail stores and assembly line productions.
Baud rate - A measure of modulation rate used In serial communications, the number of discrete signaling
events per second e.g. 2400 bits per second.
CBT: Computer Based Training - An interactive educational tool in which the computer usually explains the
subject with the help of text, pictures, animations and audio-visual features.
Centra! Processing Unit CPU - The processing component generally referred to as a chip located on the
motherboard that interprets and executes program instructions and communicates with input, output and
storage devices.
Control unit - One of the two basic parts (together with the ALU) of the CPU; contains instructions for carrying
out different activities of the computer.
CASE - An acronym for Computer Aided software Engineering, a collection of software tools that automate or
support the process or designing and programming software systems.
C++ _ An object oriented programming language-developed by AT & T Bell labs in 1980s.
Channel - It consists of controller card, interface cable and power supply.
Computer Network - A network of interconnected computer systems that allows data to be transformed
between them.
Compartmentaiisation - Rigid and well defined boundaries between different organs/offices of banks
providing hindrance to information flow amongst themselves.
Data: Facts, numbers, letters or symbols that become usable information when processed. Facts coded and
structured for subsequent processing, generally using a computer system.
Database - A non-redundant collection of inter-related data items processable by one or more applications.
Non-redundant means that individual data elements appear only once or less frequently than in normal files.
Data Communication - Data transfer between a source and a data destination via one or more data links.
Data processing: It is a method concerning with the systematic recording, arranging, filing, processing and
dissemination of facts of business, generally done by computers in today's organizations.
Data Transmission - The movement of data from one location of storage to another. If the locations are
geographically far away, generally done via satellites.
Digital — An electronic signal that is defined in terms of a signal set of discrete and discontinuous value, and
whose various states are at discrete internal part.
Digital Signal - A signal that a computer sends; made up of Os and Is and transmitted by telephone line.
Digital Computer: A device that manipulates discrete data and performs arithmetic and logic operations on
these data.
Demodulation - The process of converting an electric computer signal that has traversed a telephone line
back into sound or other data.
Desk Top Model - A PC designed to sit on a desk.
Digital Audio Tape Drive (DAT) - A tape drive that typically has two write heads and that has a very high
storage capacity.
DBMS - An acronym for the database management system. A program that maintains and controls the access
to collection of related information in electronic files.
Disk mirroring - The data is written on two or more hard disks simultaneous over the same channel.
Disk duplexing - The data Is written on two or more hard disks simultaneously over the different channel.
Dumb terminals - Hardware configuration consisting of a key board and monitor that is capable of sending
and receiving Information, but has no memory or processing capabilities.
ENIAC: Electronic Numeric Integrator and Calculator, the first electronic computing device designed by the US
army with Moore School of Electrical Engineering.
Electronic Fund Transfer (EFT) - The electronic systems that transfer money and record data relating to
these transfers. Funds transfers effected through the banking systems by electronic techniques with input and
output methods largely or completely being in electronic form.

Analogue: The use of a system in which the data is of a continuously variable physical quantity such as voltage
or angular position. It is a signal that is continuously variable over its full range of values e.g. the signal of the
sound wave or the electric output of a telephone microphone is an analogue voltage signal.
Analogue Computer: A device that operate on date in the form of continuously variable physical quantities.
ANSI: American National Standards Institute.
Address Bus - An electronic pathway that carries data between the computers CPU and its memory.
Authentication - Means of ensuring that a message or instruction in an EFT context is from an authorised
source. Usually carried out with PIN.
Access Control Systems - Equipment or software designed to restrict access to equipment, data, software, or
system functions to authorized persons.
Batch Processing: A technique in which a number of similar items or transactions are processed in groups or
batches during a machine run.
Binary: A number system using base 2 and the numbers 0 and 1.
Bit — Binary digit - An individual piece of data either a 0 or 1.
Byte: A group of 8 bits to represent a character; the amount of memory required to store a single character, a
unit of data capable of storing 256 unique values.
Bar Code reader - An input device used to read bar codes, translate them into numbers, and input the
numbers often used In retail stores and assembly line productions.
Baud rate - A measure of modulation rate used In serial communications, the number of discrete signaling
events per second e.g. 2400 bits per second.
CBT: Computer Based Training - An interactive educational tool in which the computer usually explains the
subject with the help of text, pictures, animations and audio-visual features.
Centra! Processing Unit CPU - The processing component generally referred to as a chip located on the
motherboard that interprets and executes program instructions and communicates with input, output and
storage devices.
Control unit - One of the two basic parts (together with the ALU) of the CPU; contains instructions for carrying
out different activities of the computer.
CASE - An acronym for Computer Aided software Engineering, a collection of software tools that automate or
support the process or designing and programming software systems.
C++ _ An object oriented programming language-developed by AT & T Bell labs in 1980s.
Channel - It consists of controller card, interface cable and power supply.
Computer Network - A network of interconnected computer systems that allows data to be transformed
between them.
Compartmentaiisation - Rigid and well defined boundaries between different organs/offices of banks
providing hindrance to information flow amongst themselves.
Data: Facts, numbers, letters or symbols that become usable information when processed. Facts coded and
structured for subsequent processing, generally using a computer system.
Database - A non-redundant collection of inter-related data items processable by one or more applications.
Non-redundant means that individual data elements appear only once or less frequently than in normal files.
Data Communication - Data transfer between a source and a data destination via one or more data links.
Data processing: It is a method concerning with the systematic recording, arranging, filing, processing and
dissemination of facts of business, generally done by computers in today's organizations.
Data Transmission - The movement of data from one location of storage to another. If the locations are
geographically far away, generally done via satellites.
Digital — An electronic signal that is defined in terms of a signal set of discrete and discontinuous value, and
whose various states are at discrete internal part.
Digital Signal - A signal that a computer sends; made up of Os and Is and transmitted by telephone line.
Digital Computer: A device that manipulates discrete data and performs arithmetic and logic operations on
these data.
Demodulation - The process of converting an electric computer signal that has traversed a telephone line
back into sound or other data.
Desk Top Model - A PC designed to sit on a desk.
Digital Audio Tape Drive (DAT) - A tape drive that typically has two write heads and that has a very high
storage capacity.
DBMS - An acronym for the database management system. A program that maintains and controls the access
to collection of related information in electronic files.
Disk mirroring - The data is written on two or more hard disks simultaneous over the same channel.
Disk duplexing - The data Is written on two or more hard disks simultaneously over the different channel.
Dumb terminals - Hardware configuration consisting of a key board and monitor that is capable of sending
and receiving Information, but has no memory or processing capabilities.
ENIAC: Electronic Numeric Integrator and Calculator, the first electronic computing device designed by the US
army with Moore School of Electrical Engineering.
Electronic Fund Transfer (EFT) - The electronic systems that transfer money and record data relating to
these transfers. Funds transfers effected through the banking systems by electronic techniques with input and
output methods largely or completely being in electronic form.

Online: A term describing persons, equipment or devices that are in direct communication with the central
processing unit of a computer. Facility providing immediate access to computer files for data entry or enquiry
purposes.
Optical Storage - The main alternative to magnetic storage, uses a laser beam to read, write or transfer data
to the appropriate medium.
Output - Information generated through the processing of input data.
OfMlne ATMs - The ATMs which are not connected to the bank's host computer.
Organizational Decay - Downtrend in the growth.
Program: A set of instructions which a computer can understand and which has been ordered in a logical
sequence of steps to complete a particular task.
Programming Language: A precise notation with precisely defined grammar (syntax) and semantic rules to
express algorithm.
Packet Switched Network - A network designed to carry data in the form of packets. The packet and its
format is internal to the network.
Packet assembler/dissembler (PAD) - A protocol conversion device that permits end user devices, e.g.
terminals to access a packet switched network. It is a unit to which one can connect many places. This PAD is
connected to the Switching Device.
Payment Order - An unconditional instruction issued by an originator in writing or transmitted electronically to
a sending bank to effect a funds transfer of a certain sum of money to the designated account of a designated
beneficiary.
Password ~ A confidential code which a user must enter into the computer before the access control system
allows any operations to be performed.
Random Access — A method used to access a record of a file directly by it's address rather than sequentially.
Random Access Memory - A computers volatile or temporary memory built into its CPU, stores information
while the information is being worked upon but holds the information only until the computer is turned off or
reset.
Reduced Instruction Set Computing (RISC) Processor - A microprocessor used by some personal and mid
size computers including workstations contains only a handful of instructions and therefore works more quickly
than the CISC processor.
Redundant Array of Inexpensive Disks (RAID) - A set of hard disks all of which work together, with a file
spread across them also called a disk array.
Real time - Facility providing immediate updating of main files or data items with the data entered into the
system in on-line mode.
Semi-Conductor: It is used to form small compact circuitry which can also be used to form memory.
Simulation: The representation of various situations in a computer by means of a model so that different
condition can be tested.
Software: A set of instructions written to bring the hardware of a computer system into operation and to best
advantage.
Systems Analyst - A computer specialist responsible for analyzing current procedures for designing the most
efficient and economical system that will improve the given task within a company.
Serial Mouse - A general purpose port through which a mouse or modem can be connected to the computer,
the data transmission occurs one bit after another in series.
Server - It is a computer which coordinates all computer activities into a network.
Static Data - The data that usually does not get changed with passage of time, e.g. customer name, date of
borrowing etc.
Transistor: A small, light very fast switching device in the second generation computers.
Timesharing: A processing system in which CPU's time is shared by several users simultaneously such that
user has the illusion that no one else is using the same processor.
Terminal - an I/O device connected to a multi-user computer consisting of a monitor and a keyboard.
Technological Prowess - The extent of technology implemented successfully.
Turnover — Switch-over of jobs by the employees, particularly professionals.
Virtual Memory - A CPUs simulation of memory by accessing a disk drive and using it as internal memory.
Volatile Memory — Memory that retains data only until the computer is turned off.

Current Affairs on June 14th 2018

Today's Headlines
*Economic Times*

📝 Airtel plans Rs 24,000 cr capex in FY19 to beat rivals

📝 Kaspersky targets 10% revenue growth from South Asia

📝 ICICI Bank to sell 2% stake in life insurance arm

📝 India seeks help from World Bank on GeM software pricing

📝 Home loan growth may rise to 17-19% in FY19: Report

📝 Greenko plans to buy 6k-cr power project

📝 Four suitors for Usha Martin’s steel unit

📝 Securitisation volumes down 7.2% in FY18 on GST ambiguity: Report

*Business Standard*

📝 FIFA set to make $6.1 billion from World Cup 2018

📝 India's CAD triples to 1.9% in Q4 year-on-year, pegged at 1.6% in FY18

📝 India's silver use triples in a decade, world share up from 14.7% to 39.2%

📝 Govt's move to push FDI via stock exchanges fails to yield results

📝 Taiwan co, Adani may join hands to set up Rs 400 bn petrochemical project

📝 With rising awareness, carmakers see a surge in demand for airbags

📝 CBDT proposes amendments to three IT forms, invites public suggestions

*Financial Express*

📝 Comcast offers $65 billion to lure Fox from Disney bid

📝 Isro unit offers to transfer EV battery tech for Rs 1 crore

📝 Government may cut short-term bond sales as yields surge

📝 Public Wi-Fi networks without licence violate law, says COAI

📝 600 MW K’taka solar projects stuck over new wheeling, transmission charges

📝 Ikea partners with Adidas, Lego, others to design products for India

*Mint*

📝 Fed raises interest rates amid stronger inflation, drops crisis-era guidance

📝 HDFC Bank gets nod from cabinet for ₹24,000 crore FDI

📝 Carlsberg is said to plan IPO for India operations

📝 Truecaller buys Chillr, looks to expand digital payments services

📝 Fitch downgrades viability rating of SBI, BoB on poor asset quality

📝 PFRDA seeks to double pension limit under Atal Pension Yojana.

CAIIB IT DATA WARE HOUSE

DATA WAREHOUSE ARCHITECTURE
Different data warehousing systems have different structures. Some may have an ODS (operational data store), while some may have multiple data marts. In general a Data Warehouse is used on an enterprise level, while Data Mart is used on a business division/department level. Some may have a small number of data sources, while some may have dozens of data sources. In view of this, it is far more reasonable to present the different layers of a data warehouse architecture rather than discussing the specifics of any one system.
Layers in a Data Warehouse
In general, all data warehouse systems have the following layers:
 Data Source Layer
 Data Extraction Layer
 Staging Area
 ETL Layer
 Data Storage Layer
 Data Logic Layer
 Data Presentation Layer
 Metadata Layer
 System Operations Layer

The picture below shows the relationships among the different components of the data warehouse architecture:Pl z find snap

Each component is discussed individually below:
Data Source Layer
This represents the different data sources that feed data into the data warehouse. The data source can be of any format -- plain text file, relational database, other types of database, Excel file, etc., can all act as a data source

Many different types of data can be a data source:
 Operations -- such as sales data, HR data, product data, inventory data, marketing data, systems data.
 Web server logs with user browsing data.
 Internal market research data.
 Third-party data, such as census data, demographics data, or survey data.
All these data sources together form the Data Source Layer.
Clearly, the goal of data warehousing is to free the information that is locked up in the operational databases and to mix it with information from other, often external, sources of data. Increasingly, large organizations are acquiring additional data from outside databases. This information includes demographic, econometric, competitive and purchasing trends.
Data Extraction Layer
Data gets pulled from the data source into the data warehouse system. There is likely some minimal data cleansing, but there is unlikely any major data transformation.
Staging Area: This is where data sits prior to being scrubbed and transformed into a data warehouse / data mart. Having one common area makes it easier for subsequent data processing / integration.
ETL Layer
ETL stands for “Extract, Transform and Load”. This is where data gains its "intelligence", as logic is applied to transform the data from a transactional nature to an analytical nature. This layer is also where data cleansing happens. The ETL design phase is often the most time-consuming phase in a data warehousing project, and an ETL tool is often used in this layer.
Data Storage Layer
This is where the transformed and cleansed data sit. Based on scope and functionality, 3 types of entities can be found here: data warehouse, data mart, and operational data store (ODS). In any given system, you may have just one of the three, two of the three, or all three types.
Data Logic Layer
This is where business rules are stored. Business rules stored here do not affect the underlying data transformation rules, but do affect what the report looks like.
Data Presentation Layer
This refers to the information that reaches the users. This can be in a form of a tabular / graphical report in a browser, an emailed report that gets automatically generated and sent every day, or an alert that warns users of exceptions, among others. Usually an OLAP tool and/or a reporting tool is used in this layer.

Metadata Layer
This is where information about the data stored in the data warehouse system is stored. Metadata is data about data. A logical data model would be an example of something that's in the metadata layer. A metadata tool is often used to manage metadata. Data warehouse contains huge amount of data. The metadata component contains the information like: (1) description of data warehouse; (2) rules to map, translate and transform data sources to warehouse elements; (3) the navigation paths and rules for browsing in the data warehouse; (4) the data dictionary; (5) the list of pre-designed and built-in queries available to the users etc. Record descriptions in a COBOL program DIMENSION statements in a FORTRAN program, or SQL Create statement fields are examples of metadata.
In order to have a fully functional warehouse, it is necessary to have a variety of meta-data available, data about the end-user views of data and data about the operational databases. Ideally, end-users should be able to access data from the data warehouse (or from the operational databases) without having to know where that data resides or the form in which it is stored.
System Operations Layer
This layer includes information on how the data warehouse system operates, such as ETL job status, system performance, and user access history

NOTICE by IIBF

This is to bring to the notice of candidates that due to technical issue (Display problem ofquestions) examination of ‘Advanced Bank Management’ subject of CAIIB held on 3rd June,2018 could not be completed properly by candidates in some centres for the 8.30 am batch.Institute has, therefore, decided to conduct re-examination for those effected candidates on 24thJune 2018. The venue, time and other details will be given in the admit letter which will besent to the candidate’s email id registered with the Institute in due course. Admit letter will also be made available in the Institute’s website 3-4 day before the examination date. Candidate who do not receive the admit letter by email can download it from our website.Kindly note that in case if candidates choose to appear at the re-examination, their previous score if any, will be cancelled. In case if they choose not to appear for the re-examination,their previous score would be maintained For details plz check iibf site

CAIIB IT

caiib IT

CRYPTOGRAPHY
There are two basic types of Encryption algorithms:
(i) Symmetric encryption
(ii) Asymmetric Encryption
Symmetric Encryption: In this encryption technique the sender and receiver encrypts and decrypts the message with the same key. Examples are Twofish, Serpent, AES (Rijndael), Blowfish, CAST5, Kuznyechik, RC4, 3DES, Skipjack etc.

Asymmetric encryption: In this encryption technique the sender encrypts the message with the receiver’s public key and the receiver decrypts the information with recipient’s private key. Hence this technique is called public key encryption. Examples are: Diffie-Hellman, RSA, ECC, ElGamal, DSA etc.

Among the various models of symmetric cipher analyzed the Rijndael is the best. Actually it is the role model of DES and AES. This model is adopted by different information security agencies like NSA, NIST and FIPS.
Among the various asymmetric ciphers, RSA is a moderate and most useful cipher for small data encryption like digital signature, ATM Pin etc.
But as discussed above, RSA (asymmetric technique) is much slower than Rijndael (symmetric technique) and other symmetric cipher techniques. But the scalability of asymmetric cryptosystem is far higher than the symmetric cryptosystem. Thus where the number of users is huge and required keys are very high, asymmetric cryptosystem proves to be superior.
It is scientifically predicted that the symmetric cipher like Rijndael is supposed to be secure against mathematical attacks until 2090. Thus they are very suitable for hardware level security in communicating devices.
Advanced Encryption Standard (AES): is the successor of DES (Data Encryption Standard) as standard symmetric encryption algorithm for US federal organizations. AES uses keys of 128, 192 or 256 bits, although, 128 bit keys provide sufficient strength today. It uses 128 bit blocks, and is efficient in both software and hardware implementations. It was selected through an open competition involving hundreds of cryptographers during several years.
Safe Key Length
128-bit encryption is a data/file encryption technique that uses a 128-bit key to encrypt and decrypt data or files. In today’s parlance, it is considered one of the most secure encryption methods and used in most modern encryption algorithms and technologies. 128-bit encryption is considered to be logically unbreakable as of date. However, it is to be remembered that breakability is only relative considering the technology available at that time. Keeping this in view, it is also recommended by many that the cipher AES-256 be used among other places in SSL/TLS across the Internet. It's considered among the top ciphers. In theory it's not crackable since the combinations of keys is massive.

CAIIB IT

CAIIB IT

Logical Security

Generally, passwords must be at least 8 characters long and include upper and lower case characters and at least one numeric character and one special character. It is amazing to note that a ‘brute force’ tool which may crack a 4 character password in just 4 seconds, takes about 10 years to crack an 8 character password.

Privileged identity management (PIM) is a recent concept involving a domain within identity management focused on the special requirements of powerful accounts within the IT infrastructure of an enterprise. It is frequently used as an information security and governance tool to help companies in meeting compliance regulations and to prevent internal data breaches through the use of privileged accounts, like system or database administrator. PIM, privileged identity management; PUM, privileged user management; and PAM, privileged account management OR privileged access management; all three of these acronyms revolve around the same simple concept: who can get to a server, how they can get to a server and what they can do when they get there.

Denial-of-service (DoS) attacks: Where the intruder attempts to crash a service (or the machine), overload network links, overloaded the CPU, or fill up the disk. The intruder is not trying to gain information, but to simply act as a vandal to prevent from making use of machine.

Distributed Denial of Service (DDoS) attacks: In most respects it is similar to a DoS attack but the results are much, much different. Instead of one computer and one internet connection the DDoS attack utilises many computers and many connections. The computers behind such an attack may be often distributed around the whole world and will be part of what is known as a botnet. The main difference between a DDoS attack vs a DoS attack, therefore, is that the target server will be overload by hundreds or even thousands of requests in the case of the former as opposed to just one attacker in the case of the latter. Therefore it is much, much harder for a server to withstand a DDoS attack as opposed to the simpler DoS incursion.

An Intrusion Detection System (IDS) is a system for detecting such intrusions. IDS can be broken down into the following categories:

An Intrusion Prevention System (IPS) sits between the firewall and the rest of the network. That way, if an attack is detected, the IPS can stop the malicious traffic before it makes it to the rest of the network. In contrast, an IDS simply sits on top of the network rather than in front of it. Unlike IDS, IPS actively takes steps to prevent or block intrusions that are detected. These preventing steps include activities like dropping malicious packets and resetting or blocking traffic coming from malicious IP addresses. IPS can be seen as an extension of IDS, which has the additional capabilities to prevent intrusions while detecting them.

IPS is a system that actively takes steps to prevent an intrusion or an attack when it identifies one. IPS are divided in to four categories. First one is the Network-based Intrusion Prevention (NIPS), which monitors the entire network for suspicious activity. The second type is the Network Behavior Analysis (NBA) systems that examine the traffic flow to detect unusual traffic flows which could be results of attack such as distributed denial of service (DDoS). The third kind is the Wireless Intrusion Prevention Systems (WIPS), which analyzes wireless networks for suspicious traffic. The fourth type is the Host-based Intrusion Prevention Systems (HIPS), where a software package is installed to monitor activities of a single host.

Bharat Bill Payment System (BBPS)

Bharat Bill Payment System (BBPS) Bharat Bill Payment System (BBPS) is an integrated bill payment system in India offering interoperable and accessible bill payment service to customers online as well as through a network of agents, enabling multiple payment modes, and providing instant confirmation of payment.

National Payments Corporation of India (NPCI) will function as the authorised Bharat Bill Payment Central Unit (BBPCU), which will be responsible for setting business standards, rules and procedures for technical and business requirements for all the participants. NPCI, as the BBPCU, will also undertake clearing and settlement activities related to transactions routed through BBPS. Existing bill aggregators and banks are envisaged to work as Operating Units to provide an interoperable bill payment system irrespective of which unit has on-boarded a particular biller. Payments may be made through the BBPS using cash, transfer cheques, and electronic modes. To start with, the scope of BBPS will cover repetitive payments for everyday utility services such as electricity, water, gas, telephone and Direct-to-Home (DTH). Gradually, the scope would be expanded to include other types of repetitive payments, like school / university fees, municipal taxes etc.

Bharat Interface for Money (BHIM)

Bharat Interface for Money (BHIM) Bharat Interface for Money (BHIM) is an app that lets you make simple, easy and quick payment transactions using Unified Payments Interface (UPI). You can make instant bank-to-bank payments and Pay and collect money using just Mobile number or Virtual Payment Address (VPA).

The following are the features of BHIM:

1. Send Money: User can send money using a Virtual Payment Address (VPA), Account Number & IFSC, Aadhaar Number or QR code. 2. Request Money: User can collect money by entering Virtual Payment Address (VPA). Additionally through BHIM App, one can also transfer money using Mobile No. (Mobile No should be registered with BHIM or *99# and account should be linked) 3. Scan & Pay: User can pay by scanning the QR code through Scan & Pay & generate your QR option is also present. 4. Transactions: User can check transaction history and also pending UPI collect requests (if any) and approve or reject. User can also raise complaint for the declined transactions by clicking on Report issue in transactions.5. Profile: User can view the static QR code and Payment addresses created or also share the QR code through various messenger applications like WhatsApp, Email etc. available on phone and download the QR code. 6. Bank Account: User can see the bank account linked with his/her BHIM App and set/change the UPI PIN. User can also change the bank account linked with BHIM App by clicking Change account provided in Menu and can also check Balance of his/her linked Bank Account by clicking “REQUEST BALANCE” 7. Language: Up to 8 regional languages (Tamil, Telugu, Bengali, Malayalam, Oriya, Gujarati, Kannada ,Hindi) available on BHIM to improve user experience. 8. Block User: Block/Spam users who are sending you collect requests from illicit sources. 9. Privacy: Allow a user to disable and enable mobilenumber@upi in the profile if a secondary VPA is created (QR for the disabled VPA is also disabled).

CAIIB Financial Advising

PORTFOLIO PERFORMANCE EVALUATION

 Portfolio Performance Measures

Portfolio performance evaluation involves determining periodically how the portfolio  performed  in  terms  of  not  only  the  return  earned,  but  also  the  risk experienced by the investor. For portfolio evaluation appropriate measures of return and risk as well as relevant standards (or “benchmarks”) are needed. In general, the market value of a portfolio at a point of time is determined by adding the markets value of all the securities held at that particular time. 

The essential idea behind performance evaluation is to compare the returns which were obtained on portfolio with the results that could be obtained if more appropriate   alternative   portfolios   had   been   chosen   for   the   investment.   Such comparison portfolios are often referred to as benchmark portfolios. In selecting them investor should be certain that they are relevant, feasible and known in advance. The benchmark should reflect the objectives of the investor.

 Beta

Beta (β) measures the systematic risk of a portfolio. It is the sensitivity of a portfolio to an index, typically an equity index. If beta is one, then the portfolio carries the same systematic risk as the index. If beta is less than one, then the systematic risk is less than that of the index. If beta is more than one, then the systematic risk is more than the index. It should be noted that apart from systematic risk, portfolios also carry specific risk, which is the risk of individual securities making losses even when the index is going up. Thus beta is not a full measure of risk.

Beta can be calculated as:

β=(Covariance between an asset and market )/(Variance of the asset)=(Cov(Asset,Market))/(Var(Asset))

 Capital Asset Pricing Model (CAPM)

CAPM was developed by W. F. Sharpe. CAPM simplified Markowitz‘s Modern Portfolio theory, made it more practical. Markowitz showed that for a given level of expected return and for a given feasible set of securities, finding the optimal portfolio with the lowest total risk, measured as variance or standard deviation of portfolio returns, requires knowledge of the covariance or correlation between all possible security combinations (see formula 3.3). When forming the diversified portfolios consisting large number of securities investors found the calculation of the portfolio risk using standard deviation technically complicated.

Measuring Risk in CAPM   is based on the identification of   two key components of total risk (as measured by variance or standard deviation of return):

 Systematic risk

 Unsystematic risk

Systematic risk is that associated with the market (purchasing power risk, interest rate risk, liquidity risk, etc.)

Unsystematic risk is unique to an individual asset (business risk, financial risk, other risks, related to investment into the particular asset) while unsystematic risk can be mitigated through diversification by holding many different assets in the portfolio, systematic risk cannot be avoided through diversification.

In CAPM, investors are compensated for taking only systematic risk. Though, CAPM only links investments via the market as a whole. The CAPM predicts what an expected rate of return for the investor should be, given other statistics about the expected rate of return in the market and market risk (systematic risk):

E(r j) =  Rf  + β(j) * ( E(rM) - Rf) 

E(r j)  -  expected return on stock j; 

Rf       -  risk free rate of return;

E(rM) -  expected rate of return on the market

β(j)    -    coefficient Beta, measuring undiversified risk of security j.

 Portfolio Beta 

It can be used as an indication of the amount of market risk that the portfolio had during the time interval. It can be compared directly with the betas of other portfolios. One cannot compare the ex post or the expected and the expected return of two portfolios without adjusting for risk. To adjust the return for risk before comparison of performance risk adjusted measures of performance can be used:

 Sharpe’s ratio;

 Treynor’s ratio;

 Jensen’s Alpha.

Sharpe’s ratio shows an excess a return over risk free rate, or risk premium, by unit of total risk, measured by standard deviation:

Sharpe’s ratio =  (rp– rf)

σp

Here:    

rp  -  the average return for portfolio p during some period of time;

rf  -  the average risk-free rate of return during the period; 

σp  - standard deviation of returns for portfolio p during the period.

Treynor’s ratio shows an excess actual return over risk free rate, or risk premium, by unit of systematic risk, measured by Beta:

Treynor’s ratio =  (rp –rf)

βp

Here:   βp – Beta, measure of systematic risk for the portfolio p.

Jensen‘s Alpha shows excess actual return over required return and excess of actual risk premium over required risk premium. This measure of the portfolio manager’s performance is based on the CAPM.

Jensen’s Alpha =  rp – {rf  + βp (rm – rf)}

Here:  rm   - the average return on the market in period t; 

(rm – rf)  - The market risk premium during period t.

It is important to note, that if a portfolio is completely diversified, all of these measures (Sharpe, Treynor’s ratios and Jensen’s Alfa) will agree on the ranking of the portfolios. The reason for this is that with the complete diversification, total variance is equal to systematic variance. When portfolios are not completely diversified, the Treynor’s and Jensen’s measures can rank relatively undiversified portfolios much higher than the Sharpe measure does. Since the Sharpe ratio uses total risk, both systematic and unsystematic components are included.

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CAIIB Financial Advising

Ratios	Formula
Total Assets Turnover Ratio	Net Sales / Avergae Total Assets
	Total Assets = Fixed Assets + Long Term Investments + Current Assets
	Net Sales = Gross Sales - Sales Return - Excise Duty
Fixed Assets Turnover Ratio	Net Sales / Average Net Fixed Assets
Interest Coverage Ratio	Profit before Interest and Tax (EBIT) / Interest Expenses
Debt Service Coverage Ratio	(NPAT (Net Profit after Tax) + Depreciation + Interest) / (Interest + Loan Principal Repayment)
Earnings per Share (EPS)	Amount Available to Equity Shareholders : (NPAT - Preference Dividend if any) / Outstanding No.of Equity Shares
Dividend per Share (DPS)	Amount Available as Equity Dividend: (Equity Dividend) / Outstanding No.of Equity Shares
	OR
	EPS * Payout Ratio
Dividend Payout Ratio	Equity Dividend * 100 / Profit available to Equity Shareholders
	OR
	DPS * 100/ EPS
Return on Capital Employed	Profit before Interest and Tax  *100 / Capital Employed  or  Average Total Assets
Dividend Yield	DPS * 100 / MPS
	(where MPS = Market Price per Share)
Price Earnings Ratio (P/E Ratio)	Market price per Share / Earnings Per Share
Financial Leverage	PBIT/PBT
Operating Leverage	Contribution / PBIT
Combined leverage	Contribution / PBT

CAIIB IT

ACID properties (Atomicity, Consistency, Isolation & Durability)

Atomicity: Atomicity requires that each transaction be "all or nothing": if one part of the transaction fails, then the entire transaction fails, and the database state is left unchanged. An atomic system must guarantee atomicity in each and every situation, including power failures, errors and crashes. To the outside world, a committed transaction appears (by its effects on the database) to be indivisible ("atomic"), and an aborted transaction does not happen.
Consistency: The consistency property ensures that any transaction will bring the database from one valid state to another. Any data written to the database must be valid according to all defined rules including constraints, cascades, triggers, and any combination thereof. This does not guarantee correctness of the transaction in all ways the application programmer might have wanted

(that is the responsibility of application-level code), but merely that any programming errors cannot result in the violation of any defined rules.
Isolation: The isolation property ensures that the concurrent execution of transactions results in a system state that would be obtained if transactions were executed sequentially, i.e., one after the other. Providing isolation is the main goal of concurrency control. Depending on the concurrency control method (i.e., if it uses strict - as opposed to relaxed - serializability), the effects of an incomplete transaction might not even be visible to another transaction.
Durability: The durability property ensures that once a transaction has been committed, it will remain so, even in the event of power loss, crashes, or errors. In a relational database, for instance, once a group of SQL statements execute, the results need to be stored permanently (even if the database crashes immediately thereafter). To defend against power loss, transactions (or their effects) must be recorded in a non-volatile memory

Bitcoin Crypto-currency & Block-chain Technology CAIIB IT Exam

CAIIB IT::

Bitcoin Crypto-currency & Block-chain Technology

Now, most people have heard about Bitcoin, the cryptocurrency. The technology behind Bitcoin and what makes it so potentially disruptive at so many levels is called block-chain, or also a distributed ledger. Block-chain, thus; is essentially a distributed database. Many of the Banks, nationally and internationally, have started taking steps towards adopting block-chain technology for their cross-border payment systems, to start with.
Today, there are several banks pursuing individual block-chain strategies. These individual initiatives will be meaningful when they are used by all the banks. For instance, a payment system such as NEFT cannot be successful if it is adopted by only one bank. Block-chain, the technology behind cyber currency Bitcoin, follows the concept of a centralized registry that can be accessed by all members, and every event is registered as an unalterable 'block'. Being the largest bank in India, SBI has taken the lead in initiating block-chain. Other banks in the country are following suit gradually.
All the subsequent events related to the loan can be put on the “block” so that members can take informed decisions. Another business where block-chain can be used as a tool is in trade finance where there's a risk of fraud with the merchant going to multiple banks with the same invoice to get the bill discounted. If documents are put on the block-chain, everyone will know which invoices have been discounted by Bank X and this could prevent multiple discounting frauds.

CAIIB IT IIBF Updates Very Important for exam

Down load link here:


https://drive.google.com/file/d/1iAQsHEUY4Fga3DN9EtWl_EJrpEKCbqMN/view?usp=sharing

Retail credit card case study

Retail Banking - Credit Card
Mr A drawing annual salary of Rs. 1500000 has been enjoying a credit card from your Bank.The bank has fixed a spending limit of Rs. 250000 lac on his card. During Dec,2014, he made purchase of Rs. 200000 and paid on due date (10 jan 2015) Rs. 140000 being a part of the outstanding amount of Rs. 250000.During Jan 2015,He wanted to make additional purchase of Rs. 100000 which bank allowed  and he made purchase on 11 jan 2015.Rate of interest charged by bank s 3 per month.
answer the following question

01. What would be the minimum payment requirement on credit card dues during any month?
a.3% of due
b.5% of due
c.8% of As due
d.10% of due

Ans: Minimum payment require 5%

02. As the bank charges interest at 3% per month, what would be the annual effective rate to the user?
a. 36%
b. 42.58%*
c. 39%
d. None of the above
Ans:b
Solution
Effective interest rate=(1+r)^n-1
=(1+0.03)^12-1
=1.42576-1
=0.42576
=42.58%

03. Daily interest charged on outstanding balance as on 11 jan,2015 will be
a. Rs.207.12*
b. Rs.210.72
c. Rs.202.10
d. Rs.207.00
Ans:a

Solution
Daily interest charged=Due outstanding*12/365*r
=(110000+100000)*12/365*0.03
=210000*12*.03/365
=75600/365
=207.12

04. Total interest Charged on 10 Feb,2015 will be
a. Rs.6420
b. Rs.6214*
c. Rs.6312
d. Rs.6210
Ans:b

Solution
Total interest charged= no of days outstanding * Daily interest
From 11 Jan 2015 to 10 Feb 2015 =30 days
=30*207.12
=6214

05. If Mr A wants to clear all his dues on the due date on 10 Feb 2015, what amount would be required to pay
Ans: . 216214

Solution
outstanding amount+additional purchase+interest
=110000+100000+6214
=216214

Case Study - Retail Banking - 1

Most important CAIIB Retail

Case Study - Retail Banking - 1

A bank "X" issued a platinum credit card to mr. A with a credit limit of rs. 1,00,000. The bill date is 2nd of every month and due date is 22nd of the same month.

The rate of interest charged is 2.38% per month.
interest is calculated on daily basis.
Note: there is no interest charged for the first 50 days.
Overdue charges is rs. 600

Mr. A makes a shopping worth rs. 1,00,000 in the month of july and paid rs. 85000 on 22nd july and rest pays on 10th august with final payment.

Q.1 For how much days interest will be paid?
i) 18 days ii) 21 day iii) ..... days iv) No interest will be paid as MAD is paid

Q.2 What will be the financial charges on final payment?

Q.3 How much payment he will make in the full settlement at 10 august?

Q.4 What will be the overdue charges for the month?

Q.5 What will be the late payment charges are levied on him?
Attachments area