Indian Financial System MCQS: Answer:-D. Corporation Bonds

INDIAN FINANCIAL SYSTEM MCQS
Question:- 1- The bonds issued by corporations and exposed to default risk are
classified as
A. Default bonds
B. Risk bonds
C. Zero Risk bonds
D. Corporation Bonds
E. All of these
Answer:- D. Corporation Bonds
Explanation:-
Bonds issued by corporations and exposed to default risk are
classified as corporation bonds. A corporate bond is a debt security issued by a
corporation and sold to investors. The backing for the bond is usually the payment
ability of the company, which is typically money to be earned from future
operations. In some cases, the company's physical assets may be used as collateral
for bonds.
Question:2- A company can raise capital through the primary market in the form of
______
A. Equity shares
B. Preference shares
C. Debentures
D. None of these
E. All of these
Answer:- C. Debentures
Explanation:-
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A spot trade, also referred to as a spot transaction, is when a trader

makes a purchase on a financial instrument, commodity, or foreign currency on
some specified date. Typically, a spot contract includes the physical delivery of the
currency or instrument. A spot transaction takes into account the time value of
share price payment. This time value changes based on the maturity and interest
rates. In a spot trade with respect to foreign exchange, the rate at which the change
is carried out is called the spot exchange rate. One can contrast futures trading with
spot trading.
Question:- 3- Operational Risk is the risk of-
A. When borrowers or counterparties fail to meet contractual obligations.
B. The unpredictability of equity markets, commodity prices, interest rates, and
credit spreads.
C. Loss due to errors, interruptions, or damages caused by people, systems, or
processes.
D. The ability of a bank to access cash to meet funding obligations
E. All of these
Answer: C- Loss due to errors, interruptions, or damages caused by people,
systems, or processes.
Explanation:-
Operational risk is "the risk of a change in value caused by the fact
that actual losses, incurred for inadequate or failed internal processes, people and
systems, or from external events, differ from the expected losses".
Question:- 4- The Markets in Which the derivatives are traded, are classified as:
A. Assets backed Market
B. Cash Flow backed markets
C. mortgage backed markets

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D. Derivatives Securities markets

E. None of these
Answer:- D. Derivatives Securities markets
Explanation:-
The derivatives market refers to the financial market for financial
instruments such as futures contracts or options that are based on the values of
their underlying assets.
Question:- 5- Hedging by buying an option
A. Limits gain
B. Limits losses
C. Limits losses
D. Has no limit on losses
E. None of these
Answer:- B. Limits losses
Explanation:-
A hedge is an investment that is made with the intention of reducing
the risk of adverse price movements in an asset. Normally, a hedge consists of
taking an offsetting or opposite position in a related security.
Question:-6- What are the Benefits of Financial Inclusion?

A. Bringing more and more customers tothe bank and it potentially increasing the
business of the banks.
B. Helps to improve the standard of living of the majority of people.
C. Bridges the gap between rural people and urban people.

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D. Strong consumer protection.

E. All of these
Answer:- E- All of these
Explanation:-
1. The rural masses will get access to banking like cash receipts,
cash payments, balance enquiry and statement of account can be completed using
fingerprint authentication.
2. The confidence of fulfilment is provided by issuing an online receipt to the
customer.
3. Reduction in cash economy as more money is brought into the banking
ecosystem
4. It inculcates the habit to save, thus increasing capital formation in the country
and giving it an economic boost.
5. Direct cash transfers to beneficiary bank accounts, instead of physical cash
payments against subsidies will become possible. This also ensures that the funds
actually reach the intended recipients instead of being siphoned off along the way.
6. Availability of adequate and transparent credit from formal banking channels
will foster the entrepreneurial spirit of the masses to increase output and prosperity
in the countryside.
Question:-7- The World Bank’s baseline projection assumes Ukraine’s poverty,
based on the $5.50 per day threshold rate, will increase from _____ in 2021 to
_____ in 2022.
A. 1.8 % , 19.8%
B. 1.7 % , 18.9%
C. 1.9 %, 20.2%
D. 2.1 %, 19.6%
E. 2.9 %, 19.9%

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Answer:- A. 1.8 % , 19.8%

Explanation:-
The World Bank’s baseline projection assumes Ukraine’s poverty,
based on the $5.50 per day threshold rate, will increase from 1.8% in 2021 to
19.8% in 2022. It added that models developed by from the United Nations
suggested that a more severe and protracted war could lead to poverty affecting
nearly 30% of the population. Quoting estimates from authors of a Centre for
Global Development blog, the World Bank said the latest surge in food prices
could push an additional 40 million people under the $1.90-per-day poverty line.
Question:-8- Which of the following currency has largest weightage in the
determination of the value of the SDR?
A. US Dollars
B. Chinese Renmibi
C. Japanese Yen
D. Pound Sterling
E. Indian Rupee
Answer:- A. US Dollars
Explanation:-
Currency Weights in the SDR (and SDR Interest Rate) Basket
With effect from August 1, 2022, the IMF has determined that the five currencies
that meet the selection criteria for inclusion in the SDR valuation basket will be
assigned the following weights based on their roles in international trade and
finance:
U.S. dollar 43.38 percent
Euro 29.31 percent

5
Chinese renminbi 12.28 percent
Japanese yen 7.59 percent
Pound sterling 7.44 percent
The amounts of each of the five currencies will be calculated on July 29, 2022 (the
transition date) in accordance with the new weights and will go into effect on
August 1, 2022.
Question:-9- How much of India’s forex reserves held in present time ?
A. US$532.838 Billion
B. US$538.628 Billion
C. US$550.675 Billion
D. US$580.690 Billion
E. US $593.280 Billion
Answer:- A. US$532.838 Billion
Explanation:-
India's total foreign exchange (Forex) reserves stand at around
US$532.838 Billion on 07 Oct 2022, with the Foreign Exchange Assets (FCA)
component at around US$471.496 Billion, Gold Reserves at around US$38.995
Billion, SDRs (Special Drawing Rights with the IMF) of around US$17.582
Billion and around US$4.836 Billion Reserve Position in the IMF, as per Reserve
Bank of India's (RBI) weekly statistical supplement published on 14 Oct 2022.
Question:- 10- What is the frequency of publishing of the report on management
od FOREX Exchange Reserves (FER) by RBI?
A. Monthly

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B. Quarterly
C. Half yearly
D. Annually
E. None of these
Answer:- C. Half yearly
Explanation:-
The Reserve Bank of India publishes half-yearly reports on
management of foreign exchange reserves as part of its efforts towards enhanced
transparency and levels of disclosure. These reports are prepared half yearly with
reference to the position as at end-March and end-September each year. The
present report (38th in the series) is with reference to the position as at end-March
2022.
The report is divided into two parts: Part I contains the developments regarding
movement of foreign exchange reserves, information on the external liabilities vis-
à-vis the reserves, adequacy of reserves, etc., during the half-year under review.
Objectives of reserve management, statutory provisions, risk management
practices, information on transparency and disclosure practices followed by the
RBI with regard to reserve management are covered in Part II.

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INDIAN FINANCIAL SYSTEM MCQS

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A spot trade, also referred to as a spot transaction, is when a trader

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D. Derivatives Securities markets

Question:-6- What are the Benefits of Financial Inclusion?

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D. Strong consumer protection.

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Answer:- A. 1.8 % , 19.8%

U.S. dollar 43.38 percent

Euro 29.31 percent

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Chinese renminbi 12.28 percent

Japanese yen 7.59 percent

Pound sterling 7.44 percent

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For Free Study Material Visit Our Website:

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