CSP-2015: Indian Economy Test 2 dated: 15.12.2014

CSP-2015: Indian Economy Test 2 dated: 15.12.2014

Instructions

1.    Attempt all 100 questions.

2.    All questions carry equal marks

3.    Maximum marks:200

4.    Time allowed: As per UPSC rules

5.    Negative marking as per UPSC rules 

*****

1. Which one of the following statements correctly describes “Willful defaulter”…

        a. A company which has defaulted loan payments to bank as its factory got burned down

            and no money was able to be generated to pay the dues

        b. A unit of business failed to pay the dues in spite of having funds at its disposal on

            its own or among others concerns under same management

        c. A person filed IP petition as he lost assets in the business

        d. None of the above

2. Which of the following describes the Insider Trading Correctly?

      a. Trading in a publically traded firm by a person with specific inside information on

          its affairs.

      b. It is a trading with a view to improve the general market conditions

      c. It is a trading done with a varied knowledge on the movements of the stock markets by

          way of wide reading and experience on capital markets

      d. It is a trading done by the promoters for promoting the welfare of the investors.

3. The SEBI has finalized guidelines on the insider trading recently, on the basis of recommendations of High Level Committee to Review the SEBI (Prohibition of Insider Trading) Regulations, 1992 under the chairmanship of SN Sodhi. According to them, which one of the following persons are not in the purview of the definition of “Connected person”? 

      a. Employees or any other person who is associated with the company in the past 6

            Months, prior to the concerned trade activity 

b.    A public servant or a person who occupies a statutory position that allows such person access to “unpublished price sensitive information” relating to the company

c.    Immediate relatives of “connected persons” shall be deemed to be connected persons with a right to rebut the presumption

d.    The employees who left the company an year before.

4. The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’,  sometimes appearing in news, are used in relation to [CSP 2014]

            a. Banking operations

            b. Communication networking

            c. Military strategies

            d. Supply and demand of agricultural products

5. Consider the following statements?

1. The NBFCs are required to maintain CRR deposits with RBI.

2. RBI pays interest rates on CRR deposits.

3. Rationing of the credit would increase the liquidity in the market

Which of the above statements is or are true?

a. Only 4                 b. 1 & 2                        c. None                          d. 1 & 4

6. Consider the following statements

1.    Nominal interest rate doesn’t take inflation into account.

2.    Real interest rate takes inflation into account.

Which of the above statements are true?

a. Only 1            b. Only 2             c. Both 1 and 2                   d. Neither 1 nor 2

7. What is “base rate”?

            a. It is the minimum rate of interest that a bank has to charge from their customers.

            b. It is the maximum rate of interest that a bank is allowed to charge from their                                  customers.

            c. It is the interest rate at which loans are lent to most important/prime customers

            d. It is the rate set by RBI, not to lead loans to customers.

8. In a futuristic society, if real interest rate became a positive number, which of the following is most likely to be correct options?

      a. Fiscal deficit increased at the expense of current account deficit.

      b. People have started putting their entire savings into gold.

      c. RBI and Government failed in combating inflation.

      d. RBI and government successfully managed to bring down inflation below the

          Nominal interest offered in banks.

9. Which of the following measures would result in an increase in the money supply in economy? [CSP 2012]

1.   Purchase of government securities from public by central  bank

2.   Deposit of currency in commercial banks by the public

3.   Borrowing by government from the central bank.

4.   Sale of government securities to the public by central bank.

Codes:

a.    Only 1             b. 2 and 4               c. 1 and 3                  d. 2, 3 and 4

10. The RBI has prescribed ‘Fit and Proper’ criteria in its new guidelines for issue of banking licenses to private sector during February, 2013. What does it mean?

A.    The private firm/entities shall have financially sound with a successful track record of 10 years with sound credentials and integrity.

B.    They should have been in banking business for the past 10 years and has been doing business with integrity

C.   The firm shall have Rs.500 crores capitalization and good track record among its clients

D.   The entity must be an NFBC and has been in the finance business for the past 10 years

11. If the interest rate is decreased in an economy, it will  [CSP 2014]

(a)  Decrease the consumption expenditure in the economy

(b)  Increase the tax collection of the Government

(c)  Increase the investment expenditure in the economy

(d)  Increase the total savings in the economy

12. Consider the following pairs

	Nature of advance from RBI	Meaning
1	Ways and Means advance	Excess utilization of funds by the states than the balances kept by them with RBI
2	Normal WMA	Un-secured advances to states from RBI
3	Special WMA	Secured loan to states from RBI
4	Over draft	Amounts drawn in excess of WMA

Which of the above pairs are correctly matched?

       a. 1, 2 and 4 only                 b. 1 and 3 only               c. 1, 2, 3 and 4           d. 1 and 4 only

13. Consider the following pairs

	Nature of the bank branch	Population as per the latest census
1	Rural branch	More than 10,000 population
2	Semi-urban branch	More than 10,000 and less than 1 lakh
3	Urban branch	More than 10 lakh population
4	Metropolitan branch	10, 00,000 and above population

Which of the above pairs are correctly matched?

       a. 1, 2 and 4 only                 b. 1 and 3 only               c. 1, 2, 3 and 4           d. 2 and 4 only

14. The RBI is regarded as banker to the Government. Which of the following statement is not correct from that perspective?

       a. It performs all the banking functions of the State and Central Governments.

       b. It manages the public debt of the Government.

       c. It gives free loans to government without any interest and time frame

       d. It advices the Government on the matters of economic and monetary policy.

15. Which of the following statements describe the mutual fund correctly?

      a. The money invested by the public in the big corporate houses

      b. An investment vehicle/house which pools up money from the public and invest the

          same in various equity and debt instruments.

     c. A group of people coming together and pooling up the money and using the same for their

         common and individual needs

     d. It as a co-operative society operating for the mutual benefit.

16. Which of the statements describes the concept of “hedging” in the financial market correctly?

         a. Reducing or controlling risk of losing the value of the stock by making an investment in

             different kinds of stocks

         b. Making an investment to reduce the risk of adverse price movements in an asset

         c. Reducing the risk of losing money, by buying different kinds of assets

         d. Trading in futures market

17. Which of the following statements are not true with regard to hot money?

       a. They are the funds which are frequently transferred between financial institutions or

           Countries to make quick profits.

       b. The money moves very quickly out of the countries potentially leading to market

            Instability and market crashes as happened in South East Asia during 1997 and Russian

           Crisis in 1998.

       c. Some forms of hot money are Short-term foreign portfolio investments, including

           Investments in equities, bonds, and financial derivatives, Short-term foreign bank loans & 

           Foreign bank loans with short term investment horizon

       d. Hot money has a major role in Foreign Direct Investment also.

18. What is Red Herring Prospectus in the operation of Financial Markets?

a.    It is a prospectus supplied to the public by the companies going for IPO. 

b.    It contain the complete details and price rate at which stocks are offered for sale under Initial Public Offer

c.    It is called red herring because of the bold disclaimer in red on the cover page of the preliminary prospectus

d.    It a preliminary prospectus filed by a company with the SEBI usually in connection with the company’s initial public offering.

19. Consider the following pairs   

	Types shares/loan	Meaning and/or effect
1	Common stock or ordinary shares	Securities that represents ownership in a corporation with voting rights
2	Preference  shares	Shares without voting rights, but entitled for specified dividends and have precedence at the time of liquidation.
3	Debentures	An un-secured medium- to long-term debt instrument used by large companies to borrow money
4	Private placement	Select individuals to whom shares are offered for sale.

Which of the above pairs are correctly matched?

       a. 1, 2 and 4 only                 b. 1 and 3 only               c. 1, 2, 3 and 4           d. 1 and 4 only

20. Consider the following pairs   

	Country	Name of the stock exchange
1	Brazil	BM and F Bovespa
2	Honk Kong	Strait Times
3	South Africa	JSE Ltd
4	Singapore	Hang Seng

  Which of the above pairs are correctly matched?

       a. 1, 2 and 4 only                 b. 1 and 3 only               c. 1, 2, 3 and 4           d. 1 and 4 only

21. Consider the following statements:

The price of any currency in international market is decided by the   (CSP2012]

1.  World Bank

2.   Demand for goods/services provided by the country concerned

3.              Stability of the government of the concerned country

4.  Economic potential of the country in question

Which of the statements given above are correct?
          a. 1, 2, 3 and 4          b.  2 and 3 only       c. 3 and 4 only          d. 1 and 4 only

22. The basic aim of Lead Bank Scheme is that    [CSP 2012)

        a. Big banks should try to open offices in each district

        b. There should be stiff competition among the various nationalized banks

        c. Individual banks should adopt particular districts for intensive development

        d. All the banks should make intensive efforts to mobilize deposits

23. Which of the following statements express the meaning of "teaser loans" by commercial banks?

a. The teaser loans carry low rate of interest in initial years and high rates are  

    higher in later years.

b.              The teaser loans carry high rate of interest in initial years and low interest rates are higher in later years.

c.               They offer very concessional rates of interest

d.              None of the above.

24. The lowering of Bank Rate by the Reserve Bank of India leads to            (CSP 2011)

a)     More liquidity in the market

b)    Less liquidity in the market

c)     No change in the liquidity in the market

d)    Mobilization of more deposits by commercial banks

25. What is the meaning of “Marginal Standing” under the “Marginal Standing Facility” [MSG] offered by RBI to the Scheduled commercial banks [SCBs]?

a)        Bankruptcy

b)       High ratio of bad debts

c)        High Liquidity position

d)       Overnight Liquidity problem or urgent need for funds by SCBs

26.  With reference to India, consider the following: (CSP 2010)

1.  Nationalization of Banks

2.           Formation of Regional Rural Banks

3.           Adoption of villages by Bank Branches

Which of the above can be considered as steps taken to achieve the "financial inclusion" in India?
         a.   1 and 2 only     b. 1 and 3 only              c.   3 only                d. 1, 2 and 3

27.  Consider the following statements

      1. NABARD was established during 1982 on the recommendation of Shivaraman   

          Committee and its headquarters is at Mumbai.

      2. It is an apex development bank in India and deals with the "matters concerning policy,  

         planning and operations in the field of credit for agriculture and other economic activities

         in rural areas in India".

      3. It is owned by the by the Government of India & RBI at 99:1 ratio.

      4. NABARD has no role in financial inclusion

Which of the above statements are true?

a.    1, 2 & 3            b. 2, 3 & 4             c. 1, 2 & 4              d. All of the above

28. "World   Economic   Outlook" report is published by—

a.     IMF                   b. World Bank              c. RBI                            d. UNCTAD

29. Which of the following pairs is not correctly matched?

a.     EXIM Bank—Financing for export-import

b.     RBI—Banker's bank

c.     IDBI—Industrial finance

d.     IFCI—Financial assistance to commercial institutions

30.  The regulator of Micro Finance business in India is—

a.     Securities and Exchange Board of India [SEBI]

b.     Reserve Bank of India [RBI]

c.     Forward Market Commission [FMC]

d.     None of these

31. Consider the following pairs   

	Printing press	Products made
1	Currency Note Press, Nasik Road	Lower denominations except Rs.20 & Rs.50 & Rs.100
2	Bank Note Press, Dewas	Rs.20 and above denominations
3	Security    Printing    Press, Hyd.	Postal stamps for southern states
4	Security Paper, Hoshangabad	Bank & currency notes paper

  Which of the above pairs are correctly matched?

          a. 1, 2 and 4 only            b. 1 and 3 only          c. 1, 2, 3 and 4           d. 1 and 4 only

32. What is the most important effect of “buyback of shares” or shares repurchase by the companies?

      a. It would decrease the investment value of the individual share holders

      b. It enhances the investment value of the existing shareholders

      c. It dilutes the shareholding of the company involved in buyback of shares

      d. It would increase the numbers of shares of a listed company. 

33. The value of the stock market indices is measured in terms of values of a group of stocks, but not all the listed companies. In this connection, which of the following pairs are in-correctly matched?      

1	BSE Index- Sensex	30 stocks
2	NSE Index- Nifty	60 stocks
3	MCX Index- SX40	40 stocks

  Which of the above pairs are correctly matched?

a. 1 & 2                b. 2 & 3              c. Only 2            d. 1, 2 & 3

34. Consider the following pairs   

	Term in capital market	Meaning
1	Retail or Individual investor	An investor who applies or bids for securities of or for a value of not more than Rs. 2,00,000 for their personal account.
2	Qualified Institutional Buyers [QIBs]	Institutional investors who are perceived to possess expertise and the financial strength to evaluate and invest in the capital markets, as defined by SEBI.
3	High Net Worth Investors [HNIs]	Individuals having investable assets of $1 million and above
4	Institutional investors	Organizations which invest in large quantities of shares of insurance companies, pension and mutual funds etc.

    Which of the above pairs are correctly matched?

           a. 1, 2 and 4 only              b. 1 and 3 only           c. 1, 2, 3 and 4           d. 1 and 4 only

35. BFSI means

       a. Banking of the Small scale Industries

       b. Broad Framework on the sick industries

       c. Beneficial Financial Sector of India

       d. Banking, Financial Services and Insurance.

36. Which of the following gives the correct meaning of “Security Receipts” [SRs]?

     a. They are securities issued by the trusts, owned by the Asset Reconstruction  

         Companies [ARCs] as against the NPAs purchased from the banks

     b. SRs are assets under the management [AUM] of ARCs given to the retail investors

     c. SRs are money market instruments for raising the capital by the corporate firms

     d. SRs are money capital instruments for raising the capital by the corporate firms

37. Banks, Financial Institutions, Non-Banking Financial Companies, Housing Finance Companies and Credit Card Companies use its services. It collects the data of loan seekers from the loan grantors and provides Credit Information Reports [CIR] and Individual Credit scores. This Institution, has recently has stated that it will come with a “Risk Index” to help the banks and other financial institutions in granting loans to corporate entities. Identify it?

        a. SEBI                  b. RBI           c. CIBIL            d. Competition Commission of India [CCI]

38. Which of the following statements are true with regard to charging of withdraw of cash from ATMs by the RBI?

       a. The number of free transactions has been reduced to 3 from 5 in the non-home ATMs in

           6 metros, Mumbai, Kolkata, New Delhi, Chennai, Hyderabad and Bangalore.

       b. The number of free transactions in home ATMs is 5 

       c. The transactions in excess of 3 or 5 as the case may be would be charged by the banks

           as per their wish in a transparent manner, but not exceeding Rs.20/- plus taxes

           applicable, per transaction.

       d. All of them

 

39. What is “sbiINTOUCH”?

    A. It is a digital banking initiative brought out by SBI, to deliver best-in-class services

         to the growing tech-savvy customer base through its digital stores.

  B. It is online services provided by the SBI group banks

  C. It is the widow created for facilitating government payments

  D. It is window made for creating new accounts in PMs Jan Dhan Yojana

  E. None of the above

40. Consider the following pairs   

	Name of the Country	Name of the domestic payment gateway
1	China	China Unionpay (CUP)
2	Australia	Eftpos (epal)
3	India	Rupay
4	Singapore	Network for Electronic Transfers (NETS)

          Which of the above pairs are correctly matched?

                a. 1, 2 and 4 only        b. 1 and 3 only           c. 1, 2, 3 and 4           d. 1 and 4 only

41.Which of the following is CORE function/objective of the National Payments Commission of India [NPCI]?

   a. To co-ordinate with the bankers for easy encashment of payments made by

       the customers.

   b. To develop a nation-wide uniform and standard business process for all retail

       payment systems by consolidating and integrating  the existing multiple

       systems with varying service levels

   c. to facilitate an affordable payment mechanism to benefit the common man

       across the country and help financial inclusion.

   d. To compete with the visa and mastercard operating companies in the World.

42. The President of India had dedicated, “Rupay”, the Indian domestic card payment network to the Nation during May, 2014. This was introduced by the National Payments Commission of India on the lines of Chinese Unionpay, Which work on three channels — ATMs, Point of Sales (PoS) and online sales. Which one of the following is a NOT an effect of introduction of this gateway?

     a. Reduce the transaction cost

     b. Availability of services at a cost much less than those of international cards such as

         Visa, Mastercard etc.

     c. Financial inclusion/Reach the unbanked sections

     d. Enhances the number of cash transactions

43. What is the meaning of 80:20 scheme of RBI on the gold imports and exports?

    a. The Indian traders are allowed to import only 80% of their entitled gold

    b. Specific star trade houses are allowed to import gold on the condition that

        20% of the imported gold is exported as finished products.

    c. It is the allowable import share of gold by star trading houses and five banks

        respectively.

d. None of the above.

44. Which of the following statements are true with regard to Bharatiya Mahila Bank (BMB)?

            1. It is India’s first all-women bank which serves only for female gender.

            2. Recently, it has been included in the second schedule to the RBI Act 1934.

            3. It offers loan to girl child at a concessional rate which is 1% lower than the

                normal rates.

            4. It came to existence during Nov., 2013 with a seed capital of Rs 1,000 crore,

                to take care of the banking needs of women and promote their economic                                      Empowerment.

a.    1, 2 & 3        b. 2 & 4             c. 2, 3 & 4            d. 1, 3 & 4

45. What is the meaning of “Dual Currency Bonds”?

        a. Bonds issued in the international market for raising funds and interest is paid

            in one of the 2 foreign currencies whichever is beneficial to the investor.

        b. The DCB pay interest coupons in one currency and principal redemption for a

            fixed sum in a second currency, often the dollar

        c. They are the bonds issued in India as well as in a foreign country.

        d. None of the above.

46. One of the Indian states has reintroduced Bhamashah Financial Empowerment Scheme, (BFES) whereby the Government will deposit Rs.1500/- into the savings accounts of 50 lakh rural families belonging to Below Poverty Line (BPL), Small & Marginal Farmers and identified SC/ST families.  This scheme is on financial inclusion, i.e., to provide banking service & health insurance services to the targeted population. Identify the state?

   a. Madhya Pradesh           b. Chhattisgarh               c. Rajasthan           d. Kerala

47. The Budget 2014-15 has increased the investment limit under section 80C of the Income Tax Act from Rs.1 lakh to Rs.1.5 lakh. Similarly the investment limit in Public Provident Fund [PPF] has been enhanced from Rs.1.0 lakh to Rs.1.5 lakh. Which of the following would NOT be result of these proposals?

      a. It promotes Savings 

      b. It reduces the quantum of tax payable

      c. It result into more liquidity in the market

      d. It sucks the liquidity from the system.

 48. Consider the following budget proposals with regard to urban development in India

       1.  Development of 100 smart cities with all civic facilities with an outlay of Rs.7060 crores

       2.  The minimum built up area & capital to allow FDI in urban development is reduced from

            50,000 Sq. mtrs to 20,000 sq. mtrs and from USD 10 million to USD 5 million

            respectively with a three year post completion lock in.  

       3. The conditions of space and capital for allowing FDI are not applicable for those urban

           Housing projects which are committing at least 30% of the total project cost for low cost

           affordable housing

  Which of the above statements are NOT true?

a.    1 & 3                    b. 2 & 3                    c. Only 3           d. All of them   

49. Consider the following statements

   1. P-Notes are derivative instruments issued by registered FIIs to overseas Investors such as

       HNIs and hedge funds who wish to invest in the Indian Markets. 

   2. The registered FIIs issuing P-notes are mandated to collect details of the real        

        beneficiary owners of funds to be invested through this route.

   3. As per the latest norms of SEBI, the P-notes are required have to registered  

       themselves with SEBI now.

Which of the above statements are true?

a.    Only 1            b. Only 1 & 2              c. 1 & 3                  d. All of them.

50. Consider the following statements with regard to “shadow banking entities”

1.    The shadow banking entities are non-bank financial intermediaries that provide services similar to traditional commercial banks

2.    They borrow money in the short term and take that money to invest in long-term assets  

3.    They don’t accept deposits and stay away from the regulatory framework of the resident country.

4.    As per the report of the Switzerland-based Financial Stability Board (FSB) growth rates of above business in India is around 20 per cent since 2007.

Which of the above statements are correct?

a.    1 and 2         b. 2 & 3           c. 1 & 3            d. All of them   

51. Consider the following statements on financial inclusion.

       1. Covering rural poor in banking net.

       2. Covering urban poor in banking net.

       3. Providing jobs to poor people.

       4. Providing vocational training to poor people.

       5. Spreading banking awareness among poor people.

Which of the above statements is part of the Financial Inclusion?

     a. 1, 3 and 5          b. 1, 2 and 5            c. Only 3             d. All of them

52. Consider the following organizations or concerns.

1.    Post office

2.    Panchayats

3.    NGO and Insurance Agents

4.    Self Help Groups (SHG)

Which of the above is/are eligible to become Business correspondents for banks?

a.    Only 1 and 2        b. Only 2 and 4         c. Only 2 and 3            d. All of them.

53. The Reserve Bank of India has proposed to designate certain banks as domestic systemically important banks (D-SIBs) where their size as a percentage of GDP equal to or more than 2 per cent and they will be subject to higher capital requirements. In deciding the RBI has considered some the following indicators.

1.    Size

2.    Interconnectedness

3.    Substitutability

4.    Complexity

5.    Cross Jurisdictional activity 

Which of the following indicators followed by RBI in deciding the D-SIBs?

             a.   1, 2, 3 & 4           b. 1, 2, 3 & 5              c. 1,3,4 & 5              d. All of the above.

54. Consider the guidelines issued by RBI on D-SIBs on the lines of guidelines issued by Basel Committee on Banking Supervision [BCBS] for globally systemically important banks (G-SIBs).

         1. Higher capital requirements over and above the Basel III norms are prescribed for these

             Banks as they are too-big-to-fail.

         2. These banks are classified under five categories/buckets and have to achieve additional      

             Common Equity Tier 1 capital, ranging from 0.2% to 1%.

         3.  The higher capital requirements applicable to D-SIBs will be applicable from April 1,

              2016 in a phased manner and would become fully effective from April 1, 2019.

Which of the above guidelines are correct?

a.    1, 2 & 3                b. Only 2                   c. Only 3                      d. 1 & 2 only

55. Which of the following is not a part of the Tier 1 capital of a bank?

        a. Common equity or general shares of a bank

        b. Disclosed reverses or retained profits in the balance sheet

        c. Redeemable and cumulative preferred stock or shares

        d. Non-redeemable non-cumulative preference shares.

56. Consider the following statements. 

     1. They are nothing but Indian Depository Receipts [IDRs] before the Union Budget, 2014-15

     2. They are introduced based on the recommendations of Sahoo Panel headed by MS

         Sahoo, Secretary, Institute of Company Secretaries of India.

     3. BhDRs is an investment opportunities for Indians to invest in the foreign companies,

         operating outside India.

     4. They are almost opposite to GDR/ADR issues where in the Indian companies raise money

     from abroad.

Which of the above statements are true with regard to Bharat Depository Receipts [BhDRs]?

             a. 1, 2 and 4 only        b. 1 and 3 only           c. 1, 2, 3 and 4           d. 1 and 4 only

57. There is a paradigm shift in the policy of RBI in granting bank licenses to the aspirants during 2014. Which one of the following is the most appropriate answer from the options given below?

       a. Adoption of Basel III norms of BCBS.

       b. Allowing the non-deposit taking NBFCs to function as “Business Correspondents”

       c. Granting licences for differentiated banking such as payment bank and small banks.

       d. Granting of bank licenses to the aspirants on a regular basis.

58. What are the following are the features of “PMs Jan Dhan Yojana?

         a. A Saving Bank [SB] account and debit card with Rs.5000/- over draft facility in due

              course

         b. It is no frill account, i.e., no minimum balance is prescribed for the account and Rupay

             card

         c. Rs.1,00,000/- accident cover and Rs.30,000/- additional life cover to the   

             Account holder if the account is opened on or before republic day in Jan., 2015.

         d. All of them

59. Consider the following functions of a facility.

         1. To ensure that funds are blocked in the bank account to the extent of shares applied

         2. To ensure that funds are returned in the case of non-allotment of shares 

         3. To ensure smooth handling of purchase of shares under IPO/FPO etc.

         4. To put rest to grievances of the investors on refund of un-allotted amounts 

Which of the above are functions of Application Supported by Blocked Amount [ASBA] in IPO or FPO or Rights Issue?

             a. 1, 2 and 4 only        b. 1 and 3 only           c. 1, 2, 3 and 4           d. 1 and 4 only

60. What are REITs?

        a. Real Estate Infrastructure Trusts

        b. Real Estate Investment Trusts

        c. Rating of Entrepreneurs in Indian Trade

        d. Retail Entrepreneurs Investment Training 

61. Consider the followings statements

       1. They will provide suitable buyers for the properties of real estate people or builders

       2. These trusts have to buy the completed commercial properties only

       3. The main income of the trusts would be by rent or interest

       4. They have been given “pass through status” in the budget and therefore they need not

          pay tax on the interest or rent earned by them. 

 Which of the following statements are true with regard to REITs?

a.    All of them        b. 2, 3 and 4                       c. 1, 3 and 4                      d. 1, 2 and 3

62. Which of the following is not a derivative transaction?

     A. Futures      B. Call Option     C. Put option    D. Rights Issue   

63. What is “crowding out effect”?

      a. Excess borrowings and spending by the Govt. result in low investment by private

          firms due to lack of credit availability in the market 

       b. Excess spending by private firms deprives Govt. for the resources towards public

           spending

       c. It is nothing but competition between Govt. and private firms for funds

       d. None of them

64. The RBI has defined “Willful defaulter” and in that connection, consider the following statements

1.    Default in repayment of loans deliberately, in spite of having capacity to oblige payments

2.    The defaulter, has diverted the loan to some other purpose, other than for which it was sanctioned  by the bank

3.    The defaulter, has siphoned off the funds and neither used the funds for the specific purpose, nor the funds available with the unit in the form of others assets

4.    The defaulter has disposed-off the movable or immovable assets for which a term loan was secured without the knowledge of the lender/bank.  

Which of the above statements are included in the definition of willful defaulter as per the RBI?

a.    1, 2 and 3         b. 1, 2, 3 and 4              c. 2, 3, and 4           d. None of the above

65. What is the meaning of angel investors…?

       a. Affluent individual who provides capital for a business start-up, usually in

           exchange for convertible debt or ownership equity

       b. Affluent investors who provide capital and guidance to start-up to make high profits

       c. A wealthy investors provide capital in high risky areas of business to make quick gains

       d. None of the above

66. What is meant by an “arbitrage”…?

      a. The opportunity to buy an asset at a low price then selling it leisurely on a different           

          time and market for a higher price.

      b. Leveraging the price differential in the cash and derivatives market to generate returns.

      c. It is buying one type of asset and converting it into different form and sells it for profit

      d. None of the above

67. Consider the following activities of Govt.

       1. Providing tax incentives

       2. Making GST legislation

       3. Dilution of green laws to promote investment

       4. Reduction of interest rates

Which of the above is/are part of the Monetary Policy of the Government of India?

a.    Only 4              b. 2 and 4                   c. 1 and 4            d. 1, 2 and 3

68. The “Open Market Operations” of RBI includes….

        1. Buying of Govt. securities from the public

        2. Sale of Govt. securities to mop up money from the market 

        3. Sale of the shares of Public sector undertakings

Codes:

a.    1 and 3 only                b. 2 and 3 only           c. 1 and 2 only       d. 1, 2 and 3

69. The term “underwriting” is associated with, which of the following activity?

        a. Issue of shares in the Primary market

        b. Issue of shares in the secondary market

        c. Issue of shares in both Primary and secondary markets

        d. Issue of shares in the recognized stock exchanges of India

70. Merchant banking means….

       a. Providing banking facilities to the big business houses in India

       b. Banking plus consultancy services such as financial, marketing, managerial &

           legal etc. 

       c. Providing purely consultancy services from starting of the business to its running…

       d. Providing banking loans at a concessional rates to MSME sector    

71. Consider the following pairs

	Type of Govt. Security	Purpose/Description
1	Cash Management Bills	Temporary mismatches of Government of India’s cash flow
2	Treasury Bills	Long term money markets instruments with maturity period more than a year
3	Dates Securities	Short term borrowing by the Central/State Govt.’s with maturity period less than a year.

Which of the above pairs are correctly matched?

a.    Only 1                    b. 1 and 2                                c. 1 and 3           d. 1, 2 and 3

72. Consider the following statements

         1. “Commercial Paper” is an unsecured promissory note or bond issued by India Inc. with

               a fixed maturity of not more than 270 days.

          2. The CPs with higher rating by the Credit Rating Agencies will give/offer more rate of

               Interest/return than those of with lower rating.

Which of the above statements are true?

      a. Only 1            b. Only 2             c. Both 1 and 2                   d. Neither 1 nor 2

73. What is the meaning of “Certificate of Deposit”..?

        a. They are unsecured promissory bonds for raising money from the public

        b. Unsecured money market instrument used by RBI to raise money for the Govt.

        c. They are secured promissory bonds issued by Scheduled Commercial Banks for 

            rising Money with maturity period not less than a week and not more than a year

        d. Secured money market instrument used by RBI to raise money for the Govt.

74. Consider the following statements

       1. The allowable FDI limit in Scheduled Commercial private banks is 74%

       2. The allowable FDI limit in PSU banks is 20%

       3. 100 per cent foreign investment is allowed in asset reconstruction companies [ARCs]

Which of the above statements are true?

a.    Only 1                    b. 1 and 2                                c. 1 and 3           d. 1, 2 and 3

75. Consider the following statements

       1. A business loan, both principal and interest unpaid beyond 90 days

       2. A loan given to Small scale Industry unpaid beyond one year

       3. Unpaid agriculture loan [both interest and principal] beyond 3 months

Which of the above loans are to be categorized as Non Performing Asset by the Scheduled Commercial banks?

a.    1 and 3                  b. 1 and 2             c. 2 and 3                      d. 1, 2 and 3

76. Consider the following Non-performing asset pairs of a bank

	Type of NPA	Purpose/Description
1	Sub-standard asset	Loan which is remained as NPA for more than one year
2	Doubtful asset	Un-recoverable loans, though not written off in the books
3	Loss asset	Loan which is classified as NPA for a period not exceeding 1 year

Which of the above pairs are correctly matched?

a.    Only 1                    b. 1 and 2                                c. 1 and 3           d. None

77. Which of the following acts as banker to the Central Banks?

           a. Banking Committee on Basel Supervision [BCBS]

           b. The Bank for International Settlements [BIS]

           c. IMF

           d. World Bank

78. Which one of the following is not an objective of BCBS, headquartered at Basel, in Switzerland?

          a. Prudential regulation of banks and providing a forum for co-operation on banking

              Supervisory matters

          b. Improve the banking sector's ability to absorb shocks arising from financial and

              Economic stress and thereby achieve financial stability

          c. To improve risk management and governance, strengthen banks' transparency and  

              Disclosures

          d. To enhance the profits of the banking sector, so that Financial Inclusion is possible

              

79. Risk Weighted Assets [RWA] means…

        a. Total NPAs of the bank

        b. Bank assets with special risks, weighted according to exposure to different sectors and  

             different levels of possible default.

        c. Bank loans which are given to high risk areas such a real estate, credit cards etc. 

        d. None of the above   

80. According to RBI, which of the following assets of the bank are risk free and there is no need to treat them as Risk weighted assets [RWA] and apportion a portion of capital for possible default and loss from them?

a.    Housing Loans

b.    Government Approved Securities

c.    Venture Capital Investments

d.    Loans against Jewellery

81. Basel norms are …

         a. A set of international banking prudential norms and regulations

         b. A set of norms for international derivative transactions and markets

         c. A set of capital market regulations

         d. None of the above

 82. Under the Basel III rules of BCBS, the banks are required to hold 4.5% of common equity, as against 2% in Basel II and 6% of Tier I capital (including common equity) as against 4% in Basel II of "risk-weighted assets" (RWAs). In addition to this, Basel III norms include certain new regulations which were not part of Basel II norms of BCBS. Identify those new regulations from the options and codes given below?

          1. A "mandatory capital conservation buffer" of 2.5% of RWAs in the form of common 

              Equity Tier 1 capital. 

          2. A "discretionary counter-cyclical buffer" to allow national regulators to require up to an

              additional 2.5% of capital during periods of high credit growth.

          3. A leverage ratio of 3% to take care of risks involved in the exposure to Derivative

              Market

Codes:

a.    Only 1             b. 1 and 2                 c. 1, 2 and 3              d. None of the above

83. Consider the following monetary policy instruments of RBI

            1. Cash Reserve Ratio [CRR] and Statutory Liquidity Ration [SLR]

            2. Direct action and Moral suasion           

            3. Marginal requirements and credit rationing

            4. Bank Rate and Open Market Operations [OMOs]

Which of the above are Quantitative credit controls available to the RBI?

      a. 1 and 4                 b. 1 and 3         c. 1 and 2          d. 1, 3 and 4

84. Consider the following statements

            1. There would be convergence of capital providers [or owners] and loan seekers in the

                Co-operative banks in India

            2. In SCBs, there is no such convergence of capital provides and loans seekers 

Which of the above statements are true?

a.    Only 1                 b. Only 2                c. Both 1 and 2          d. Neither 1 nor 2

85. Capital Adequacy Ratio [CAR] or "Capital to Risk Weighted Assets Ratio (CRAR) is very important concept the financial world, which is used to protect depositors and promote the stability and efficiency of financial systems. It is a measure of a bank's capital. It is expressed as a percentage of a bank's risk weighted credit exposures to its capital, both Tier 1 and Tier 2.

In this connection, consider the following statements

      1. Tier 1 capital can absorb losses [suffered by bank] without a bank being required to cease  

           Trading. It provides highest degree of safety to the investors/depositors in the bank.

      2. Tier 2 capital can absorb losses in the event of a winding-up and so provides a lesser

          degree of protection to depositors.

a.    Only 1                 b. Only 2                c. Both 1 and 2          d. Neither 1 nor 2

86. Consider the following items/components of capital of a bank

        1. Undisclosed reserves, Revaluation reserves and General Provisions and loss reserves

        2. Redeemable Cumulative preference shares and perpetual cumulative preference

            Shares

        3. Hybrid debt capital instruments such as bonds.

        4. Sub-ordinated debt and/or Long term unsecured loans

        5. Debt Capital Instruments.

Which of the above qualify as Tier-2 capital of a bank?

a.    1, 2 and 3             b, 1, 2, 3 and 4             c. 1, 3, 4 and 5             d. 1, 2 ,3, 4 and 5

87. Consider the following businesses/Non-Banking Finance Companies [Imp 4 CSP 2015]

         1. Merchant Banking Companies

         2. Venture Capital Companies

         3. Stock Broking companies and Mutual Funds

         4. Nidhi companies and Chit Fund Companies

Which of the above businesses are regulated and controlled by SEBI?

a.    1, 2 and 3             b, 1, 2, 3 and 4             c. 1, 3, and 4           d. 1 and 3 only 

88. Non-Banking Finance Companies [NBFCs] means

               a. Financial Institutions that provide banking services without holding  a banking license

       b. A company registered with RBI with differentiated bank license

       c. A company which is not involved banking operations 

       d. None of the above

89. The RBI has tightened the norms for the NBFCs to ensure stability and protection of investors recently in a phased manner.

 In this connection, consider the following statements

          1. The minimum net owned funds would be Rs.2 crores for all NBFCs by 2017

          2. Categorized them as Non-deposit taking NBFCs with assets less than Rs.500 crore

              and systemically important NBFCs with assets of over Rs.500 crore

          3. All Non-deposit taking NBFCs with asset size of Rs.500 crore and above and all

              deposit-taking NBFCs to maintain minimum Tier-I capital of 10% by the end of March

              2017

          4. The time frame for treating assets as NPA is made in tune with the banks (90 days)

              for all non–deposit taking systemically important NBFCs and deposit-taking NBFCs 

          5. Provision for standard assets for non–deposit taking systemically important NBFCs

              and Deposit-taking NBFCs increased to 0.40%

Which of the above statements are true?

a.    1, 2 and 3             b, 1, 2, 3 and 4         c. 1, 2 ,3, 4 and 5                  d.1, 3, 4 and 5            

90. What is the main duty of Asset Reconstruction Companies [ARCs] in India?

        a. Collection of dues from the NPAs brought from the banks

        b. Helping and advising the businesses which created NPAs to bank in paying their dues

        c. They are reconstructing the business of the NPAs

        d. None of the above

91. The RBI has brought new guidelines for ARCs recently. In this connection, consider the following statements

       1. The ARCs henceforth will have to pay upfront 15 per cent of the bid value of non-

            performing loans, against five per cent earlier.

        2. The ARCs which are planning to buy bad loans will get more time (at least two weeks) to

            carry out due diligence before bidding for stressed assets.

        3. The ARCs will get only up to six months, instead of one year to plan recoveries from the

            Non-performing assets acquired.

Which of the above statements are true?

a.    1 and 2                b. 1 and 3                     c. 1, 2 and 3             d. 2 and 3

92. Derivatives in capital market means

         a. The derivatives are contracts whose value is determined by fluctuations in the

             underlying asset

         b. Derivatives are contracts where the value of the assets is determined by the

             appreciation in the value of underlying asset

         c. Derivatives are contracts where the value of the assets is determined by the

             depreciation in the value of underlying asset

         d. None of the above

93. Which of the following is NOT a derivative transaction? 

          a. Futures contracts

          b. Forward contracts

          c. Options [Call and Put options] and Swaps

          d. Exchange traded funds

94. Which of the following correctly describes the trading in Futures?

           a. Trading in original securities/Indices of stock exchange or in Commodities

           b. A form of investment, speculating on the price of a security going up or down in

               future date

           c. A complicated transaction involving transfer of physical assets at the time of contract

           d. Trading in future based on the present value of stocks or commodities

95. Consider the following class of people

             1. Hedgers

             2. Speculators

             3. Long term investors in stock market

             4. Investors in Mutual Funds

Which kind of the above class of investors generally deal/trade in Futures and Options?

           a. 1 and 2                        b. 1 and 3               c. 1, 2 and 3                 d. 1, 2, 3 and 4

96. It is an option gives the buyer the right but not the obligation to buy a given quantity of the underlying asset at a given price on or before a given future date. If the said buyer can exercise the option and ask the seller to sell an underlying asset at a cost as per the option agreement, irrespective of the market value of the said asset on a particular date. Identify the name of the correct option involved in this case from the choices given below. 

   a. Call Option        b. Put option      c. Both Call and Put option   d. Neither Call nor Put option

97. It is an option gives the buyer the right but not the obligation to sell a given quantity of the underlying asset at a given price on or before a given future date. The said buyer of an option, can exercise the option and Sell the underlying asset to the contractee at a cost as per the option agreement, irrespective of the market value of the said asset on a particular date. Identify the name of the correct option involved in this case from the choices given below. 

   a. Call Option        b. Put option      c. Both Call and Put option   d. Neither Call nor Put option

98. Consider the following pairs

Sl. No.	Name of the ATM	Descriptions
1	White label ATMs	Management of the ATM & handling of cash dispensation by the Private concern/s for the Commercial banks
2	Brown label ATMs	ATMs under joint management of bank & private individual/ concern/s

Which of the above pairs are correctly matched?

            a. only 1                      b. only 2                     c. Both 1 & 2              d. Neither 1 nor 2

99. What is/are the facility/facilities the beneficiaries can get from the services of Business

Correspondent (Bank Saathi) in branchless areas? [CSP 2014]

           1. It enable the beneficiaries to draw their subsidies and social security benefits in their

                 Villages

            2. It enable the beneficiaries in the rural areas to make deposits and withdrawals

Select the correct answer using the code given below

                  a. 1 only      b. 2 only            c. Both 1 and 2              d. Neither 1 nor 2

100. In the context of Indian economy, which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements? [CSP 2014]

1.    To enable the Central Bank to control the amount of advances the banks can create

2.    To make the people’s deposits with banks safe and liquid

3.    To prevent the commercial banks from making excessive profits

4.    To force the banks to have sufficient vault cash to meet their day-to-day requirements

    Select the correct answer using the code given below.

              a. 1 only           b. 1 and 2 only          c. 2 and 3 only          d. 1, 2, 3 and 4

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