SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Subject: Financial Institutions and Markets

Sample Questions:
Section I: Subjective Questions

1. Explain why Reliance Industries has become an icon in the Indian capital market.

2. What are the guidelines of SEBI for merchant bankers?

3. Explain the code of conduct of a portfolio manager.

4. What factors the banker should keep in mind while managing his investment portfolio?

5. Differentiate between Held to Maturity (HTM) and Held for Trading (HFT).

6. What are the safeguards incorporated in takeover process?

7. What are the bank's rewards and the risks in private equity investments?

8. What is securtisation? State the process involved in securitisation.

Section II: Objective Questions

Multiple Choice Single Response

1. Agricultural Refinance Corporation was established to

1] support investment credit needs for agricultural development
2] regulate and supervise agricultural credit needs
3] control flow of credit to agriculture
4] finance non-agricultural credit to rural areas
2. Primary Weavers' Cooperative Societies are financed by scheduled commercial
banks through
1] Apex / Regional Weavers' Cooperative Societies
2] State Cooperative Banks
3] Land Development Banks
4] State Cooperative Department
3. NHB offers financial assistance under its project lending scheme for various projects
such as
1] township development and slum redevelopment projects
2] township development and rural housing projects
3] township development and infrastructural projects
4] township development and slum eradication projects
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Subject: Financial Institutions and Markets

4. If current needs of an investor are fulfilled through other means then the investors
will look for
1] capital appreciation
2] capital depreciation
3] risk appreciation
4] return depreciation
5. The investor should be aware of interest rate risk while making the investments in
the
1] fixed-income securities
2] diverse income securities
3] current income securities
4] variable income securities
6. The 'Net Saving' to the originator as result of the NHB's guarantee shall be equally
shared between
1] the NHB and the holders of subordinate RMBS/ originator
2] the NHB and the holders of subordinate RMBS
3] the NHB and the originator
4] the NHB and the holders of senior class RMBS/ originator
7. In the case of ICICI bank's second public issue, LIC was the lender of the shares for
the
1] public offer
2] GSO
3] bonus offer
4] rights offer
8. In case of an Initial Public Offer, by unlisted company, the promoters have to
necessarily offer at least 20% of the
1] subscribed capital
2] post issue capital
3] pre issue capital
4] capital
9. For transactions, which entail reporting requirements, details of the proposed
acquisition need to be filed with Stock Exchanges where shares of the target company
are listed, at least four working days before
1] the date of acquisition/allotment
2] the date of listing
3] the date of delisting
4] the date of firm allotment
10. The Post Office has traditionally been a distributor of financial services from
1] money orders to banking services
2] postal stamps to banking services
3] postal stamps to distribution of mutual fund products
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Subject: Financial Institutions and Markets

4] money orders to savings bank services

Multiple Choice Multiple Response

11. The current debate on development of a regulatory system for MFIs focuses on
1] identifying a suitable organisation to handle regulatory arrangement
2] mandatory registration and certain common performance standards
3] identifying a suitable organisation to handle supervisory arrangement
4] mandatory registration and certain common disclosure standards
12. General quota reviews allow the IMF to assess the adequacy of quotas both in terms
of
1] members' needs for conditional liquidity and
2] its own ability to finance those needs
3] members' needs for additional quota and
4] its own ability to increase the same
13. Venture capital is an actual or potential equity investment in companies through
purchase of
1] preference shares
2] stocks
3] warrants
4] options
14. The code of conduct requires a portfolio manager to
1] not get involved in unfair competition
2] observe high standards of integrity
3] create false market in securities
4] pass of price sensitive information to any participants in the market
15. Each member country of IMF was initially required to contribute
1] 25% of assigned quota in gold and
2] the rest in its own currency
3] 50% of assigned quota in gold and
4] the rest in any foreign currency
16. The different types of Portfolio Management are
1] The discretionary portfolio management service
2] The non-discretionary portfolio management service
3] The direct portfolio management service
4] The indirect portfolio management service
17. The advantages of a lease are
1] Flexibility
2] Tax Benefits
3] Indirect Financing
4] 100% Financing
18. On acquiring a pool of mortgage debt under securitisation
1] NHB makes an express declaration of trust in respect of mortgage debt
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Subject: Financial Institutions and Markets

2] NHB appoints itself as a trustee for the benefit of investors

3] NHB makes an express declaration of trust in respect of its proposed borrowing
programme
4] NHB appoints a commercial bank as a trustee for the benefit of investors
Fill in the Blanks

19. The functions and management of Shipping Development Fund Committee were
taken over by ________ Limited.
1] SCICI
2] ICICI
3] IDBI
4] NABARD
20. Majority of NGOs have undertaken the task of financial intermediation and are
registered as a ________ or Society.
1] Trust
2] Company
3] Firm
4] Charitable Institutions
21. The quantum of deposits that could be raised by MFI is linked to their net
________funds.
1] owned
2] borrowed
3] mobilised
4] saved
22. Generally, debentures are ________ liquid as compared to PSU bonds.
1] less
2] more
3] equally
4] not
23. State Government securities will be valued applying the ________.
1] YTM method
2] IRA method
3] IFR method
4] AFS method
24. Primary Dealers act as________in the primary market
1] Market makers
2] Underwriters
3] regulators
4] Observers
25. NHB's Guarantee shall be the ________resort in the hierarchy of the structured credit
enhancements provided in the structure of RMBS.
1] last
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Subject: Financial Institutions and Markets

2] first
3] primary
4] secondary
26. Securities Trading Corporation of India Ltd. was set up by Reserve Bank of India in
________.
1] May, 1994
2] June, 1995
3] July, 1996
4] April, 1994
27. The Public Announcement is made to ensure that the shareholders of the target
company are aware of an ________ opportunity available to them.
1] new
2] existing
3] exit
4] early
28. Non-bank financial institutions such as LIC, GIC and UTI operate in the money
market through ________.
1] banks
2] RBI
3] SBI
4] FIs
State True or False

29. Agricultural Finance Corporation Limited was registered as a company under the
Companies' Act.
30. On 22nd January 2001, India Post in partnership with SBI Mutual Fund launched a
scheme for the distribution of mutual funds through post offices
31. The general powers vested in banks to operate Portfolio Management Scheme and
similar schemes on behalf of its clients have been withdrawn
32. The treasury bills are a class of Government Securities.

33. The SEBI issued guidelines for the merchant bankers in April, 1990.

34. Agricultural Finance Corporation Limited has consultancy operations in other

countries as well.
35. Bank-sponsored NBFCs are allowed to offer discretionary PMS to their clients, on a
case-to-case basis.
36. The preference share may be valued above its redemption value.

37. NHB's guarantee enables the originators to derive the pricing and other benefits of
AAA(So) RMBS at AA(So) terms.
38. There is no tax deducted at source from the interest component of money market
instruments.
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Subject: Financial Institutions and Markets

Match the Following

39. 1] ICICI 1] Industrial Credit and Investment
Corporation of India
2] SSIDC 2] Small Scale Industries Development
Corporation
3] GIC 3] General Insurance Corporation
4] IRBI 4] Industrial Reconstruction Bank of India
5] Infrastructural Credit and Investment
Corporation of India
6] Investment Reconstruction Bank of India
40. 1] ACHFS 1] State level Apex Co-operative Housing
Finance Societies
2] ARDB 2] State Co-operative Agriculture and Rural
Development Bank
3] HUDCO 3] Housing and Urban Development
Corporation
4] USAID 4] United States Agency for International
Development
5] Agricultural Rehabilitation and
Development Bank
6] Association of Co-operative Housing
Finance Societies
41. 1] Venture Capital 1] start up capital
2] Acquisition Finance 2] funds to finance acquisition of another
company
3] Kanwal Rekhi 3] founder of Excelan
4] Vinod Dham 4] father of the Pentium chip
5] father of the Intel chip
6] The International US Entrepreneurs
42. 1] SDR 1] Special Drawing Rights
2] BOP 2] Balance of Payment
3] ESAF 3] Enhanced Structural Adjustment Facility
4] PRSP 4] Poverty Reduction Strategy Paper
5] Enhanced Structural Authorisation
Facility
6] Poverty Reduction Structure Paper