What is the use of aptitude test in competitive exams?
1. Maintaining Adequate Reserves: Banks are supposed to maintain an absolute amount of cash reserves under the respective regulation-such as Cash Reserve Ratio or CRR. The reserves offer capacity for any cash claims that may occur in an unusual way from their depositors. Despite the fact that maintaRead more
1. Maintaining Adequate Reserves: Banks are supposed to maintain an absolute amount of cash reserves under the respective regulation-such as Cash Reserve Ratio or CRR. The reserves offer capacity for any cash claims that may occur in an unusual way from their depositors. Despite the fact that maintaining such reserves generates no interest, they provide liquidity for money at the bank’s end.
2. Asset/Liability Mismatch Management: They control their asset (loans and investments) and liability maturity profile to storage the inflow from the maturity of asset liability outflow thus minimizing the factor of liquidity risk.
3.Lending and Interbank Market: Also, banks can borrow from other banks in the interbank market or rely on short term funding instruments like repos if funds are immediately required. It would thus enable the servicing of their short term liabilities without compelling the sale of long term assets that would fetch high prices in the market.
4. Liquidity Pool: They possess a pool of HQLAs that can be sold easily at any time, amongst which are government bonds ,inter alia to allow the generation of cash in case of a thick of liquidity.
5. Diversification of funding source: The use of funding by banks reduces on distinct sources of funding for instance retail deposits, wholesale funding, bonds and yet reduces the risk of a short supply of liquidity.
6. Profitability through Lending and Investments: The liquidity that banks establish with regard to income earning activities for loans and securities would guarantee that liquid assets are properly utilized to generate profits without compromising on the capacity to meet its obligations.
This strategic management ensures availability of liquidity and profitability with reduction of the probability of high liquidity.
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Aptitude tests are commonly used in competitive exams for several reasons: Assessing Basic Skills : They measure fundamental skills such as numerical ability, logical reasoning, and verbal proficiency, which are essential for academic and professional fields. Standardization : These tests provide aRead more
Aptitude tests are commonly used in competitive exams for several reasons:
- Assessing Basic Skills : They measure fundamental skills such as numerical ability, logical reasoning, and verbal proficiency, which are essential for academic and professional fields.
- Standardization : These tests provide a standardized method to evaluate the abilities of all candidates, ensuring a fair comparison based on a common set of criteria.
- Predicting Success : Aptitude tests are designed to predict a candidate’s ability to succeed in future tasks, courses, or job roles. High scores often correlate with better performance in the relevant field.
- Identifying Potential : They help in identifying candidates with the potential to excel in specific areas, even if they lack prior knowledge or experience in those areas.
- Efficiency : Aptitude tests can quickly and efficiently screen large numbers of candidates, making the selection process more manageable.
- Eliminating Bias : By focusing on objective skills rather than subjective factors, aptitude tests help reduce biases that might arise from interviews or other subjective evaluation methods.
- Diagnostic Tool : These tests can diagnose strengths and weaknesses, helping candidates understand areas where they need improvement and aiding educators in tailoring their instruction accordingly.
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