Management of Financial Institutions Set 1

QN1. Bridge Finance is meant for

a) Short term financing

b) Financing until public issue is subscribed

c) Those companies which expect subscription of their public issue

d) All of the above

Answer

Answer: (a) Short term financing

QN2. SLR stands for

a) Sub-Local Railway

b) Statutory Liquidity Ratio

c) State Liquidity Resources

d) Statutory Liquidity Reserve

Answer

Answer: (b) Statutory liquidity ratio

QN3. CRR stands for

a) Cash Reserve Ratio

b) Company’s Reserve Ratio

c) Cash Resource Ratio

d) Committed Reserve Ratio

Answer

Answer: (a) Cash reserve ratio

QN4. Open Market Operations have an objective of

a) ensuring availability of products of every one

b) management of monetary policy

c) ensuring separation of different markets

d) stressing fair play for all concerned

Answer

Answer: (b) management of monetary policy

QN5. The difference between commercial banks can be stated as

a) Commercial banks deal in the retail sale of Government securities whereas investment bankers sell the government securities in whole sale.

b) Basic objective of commercial banks is to generate profit whereas investment bankers have only social objectives.

c) Commercial banks accept short term deposits and give only short term loans whereas investment bankers arrange for long term loans.

d) There is no difference between commercial banks and investment banks.

Answer

Answer: (c) Commercial banks accept short term deposits and give only short term loans whereas investment bankers arrange for long term loans.

QN6. Options and Futures trading in India was started in the Year

a) 1999

b) 2000

c) 2001

d) 2002

Answer

Answer: (b) 2000

QN7. Foreign exchange market in India has

a) Fixed rate system

b) Floating rate system

c) Flexible rate system

d) None of the above

Answer

Answer: (b) Floating rate system

QN8. Basic determinant of Foreign Capital inflow are

a) Imbalances in savings and investments leading to current account gaps

b) Legal and Institutional Structure

c) Expected rate of return

d) All of the above

Answer

Answer: (d) All of the above

QN9. Interest rates in India during the year 2001 have

a) gone up

b) gone down

c) have not changed

d) been higher than that of U.S.A.

Answer

Answer: (b) gone down

QN10. “Basis Point” in the context of interest rates is equal to

a) one thousandth of one percent

b) one tenth of one percent

c) one hundredth of one percent

d) one hundredth of one

Answer

Answer: (c) one hundredth of one percent

QN11. “Call option” means

a) a right to buy

b) a right to buy without obligation

c) a right to sell

d) a right to sell without obligation

Answer

Answer: (b) right to buy without obligation

QN12. Diversifiable risk is

a) systematic risk

b) unsystematic risk

c) neither systematic risk nor unsystematic risk

d) both systematic as well as unsystematic risk

Answer

Answer: (b) unsystematic risk

QN13. Term Insurance is

a) A combination of savings and life insurance

b) A pure life insurance risk plan

c) Meant for a person who wants to get good returns from his insurance

d) Not a suitable insurance plan for persons above 35 years of age

Answer

Answer: (b) A pure life insurance risk plan

QN14. Fiscal Policy of the Government is

a) with respect to revenues and expenditure

b) relating to interest rates

c) associated with lending by commercial banks

d) a part of Monetary Policy

Answer

Answer: (a) with respect to revenue and expenditure

QN15. P/E Ratio means

a) market price is to EPS Ratio

b) Price Equity Ratio

c) Product Equity Ratio

d) Price Equation Ratio

Answer

Answer: (a) market price is to EPS ratio (price earning ratio)

QN16. Assest Securitization is

a) Conversion of illiquid assets through special purpose vehicle

b) Provide adequate collateral security to banks prior to raising loans

c) Not suitable in Indian financial environment

d) Essential in case of all the loans

Answer

Answer: (b) Provide adequate collateral security to bank prior to raising loans

QN17. Factoring is

a) not a financial service

b) helpful in business for working capital management

c) based on Negotiable Instruments Act

d) same as bills discounting

Answer

Answer: (b) helpful in business for working capital management

QN18. “Tax Haven” means

a) tax exemption given under the budget

b) sudden reduction of taxes

c) a country where taxes are low

d) not paying taxes although otherwise liable to pay

Answer

Answer: (c) a country where taxes are low

QN19. “REPO” transactions means

a) Ready Purchase

b) Ready forward Purchase

c) Purchase as well as sale simultaneously

d) None of these

Answer

Answer: (c) Purchase as well as sale simultaneously

QN20. RBI allowed general public to purchase government securities at

a) Maximum price

b) Minimum price

c) Average price

d) Market price

Answer

Answer: (b) Minimum price

QN21. Credit rating agencies

a) established by large business houses

b) evaluate credit worthiness of a company

c) are there only in India

d) all of the above

Answer

Answer: (b) evaluate credit worthiness of a company

QN22. “Commercial Papers” are

a) unsecured promissory notes

b) secured promissory notes

c) sold at a premium

d) issued for a period of one to two years

Answer

Answer: (a) unsecured promissory notes

QN23. Which of the following is not a money market security?

a) Treasury bills

b) National saving certificate

c) Certificate of deposit

d) Commercial paper

Answer

Answer: (b) National saving certificate

QN24. The present interest rate of PPF is

a) 10%

b) 9.5%

c) 9%

d) 11%

Answer

Answer: (b) 9.5% (currently it is 8%, but option not available in the choice given)

QN25. NBFC offer higher rate of interest because of

a) the best management of funds

b) the competition among the NBFCs

c) the risk involved

d) the credit rating

Answer

Answer: (c) the risk involved

QN26. Registrar to the issue

a) helps in the appointment of lead managers

b) drafts the prospectus

c) recommends the basis of allotment

d) directs the various agencies involved in the issues

Answer

Answer: (c) recommends the basis of allotment

QN27. The underwriter has to take up

a) the fixed portion of the issue capital

b) the agreed portion of the unsubscribed part

c) the agreed portion or can refuse it

d) none of the above

Answer

Answer: (b) the agreed portion of the unsubscribed part

QN28. SEBI would not vet offer documents seeking listing on

a) OTCEI

b) NSE

c) BSE

d) ISE

Answer

Answer: (a) OTCEI

QN29. Warehousing facility means

a) storing the stocks with the merchant bankers

b) storing the stocks with the brokers

c) issuing separate contract notes for different trade

d) issuing one contract not for a large quantity traded in parts

Answer

Answer: (a) storing the stocks with the merchant bankers

QN30. Identify the controllable risk

a) labour problem

b) increase in loan service charge

c) cut in subsidy

d) technological obsolescence

Answer

Answer: (a) Labour problem

QN31. Share prices

a) move either in declining or increasing trend

b) may remain flat for a period of time

c) the movement of the share prices form a straight line

d) the increasing of decreasing move be Zigzag

Answer

Answer: (d) the increasing or decreasing move be zigzag

QN32. Highly liquid security is

a) mutual fund units

b) treasury bills

c) shares

d) commercial papers

Answer

Answer: (b) Treasury bills

QN33. Investor invest more in stock during their

a) early career period

b) mid career level

c) retirement stage with huge money

d) all the above mentioned period

Answer

Answer: (b) mid career level

QN34. To frame the investment policy you should have

a) knowledge about the company and brokers

b) investible funds

c) knowledge about the investment alternatives

d) knowledge about the markets with funds

Answer

Answer: (c) Knowledge about the investment alternatives

QN35. Zero coupon bonds has its origin in

a) U.S. security market

b) Wall street

c) Japan’s security market

d) Dalal street

Answer

Answer: (c) U.S. security market

QN36. Apex regulatory body for insurance sector is

a) IRA

b) IRAA

c) IRDA

d) IRRA

Answer

Answer: (c) IRDA

QN37. NPA in the context of banking sector stand for

a) Net Present Amount

b) Non Performing Assets

c) Net Protected Amount

d) Non Protected Amount

Answer

Answer: (b) Non performing assets

QN38. Financial Institutions are not be regulated by

a) RBI

b) SEBI

c) IDBI

d) Government

Answer

Answer: (b) SEBI

QN39. Maximum duration of a treasury bill can be

a) 3 months

b) 6 months

c) 364 days

d) 365 days

Answer

Answer: (d) 365 days

QN40. Capital gains taxes are imposed on

a) short term profit

b) long term profit

c) due to changes in prices

d) charged by State Government

Answer

Answer: (c) due to change in prices