1. The major liabilities of the commercial banks are
Correct : B. deposits
2. The money market where securities are issued by governments to obtain funds for short term is classified as
Correct : A. money market instruments
3. The federal funds, bankers acceptance, commercial paper and repurchase agreements are classified as
Correct : C. money market instruments
4. In financial transactions, the risk that there will be no profit in selling of this asset
is classified as
Correct : A. price risk
5. The type of risk in which the value of liabilities and assets is affected by the exchange rate is classified a
Correct : B. foreign exchange risk
6. In commercial banks, the subordinate debentures and subordinate notes are considered as
Correct : C. banks liabilities
7. The type of financial security having payoffs which are connected to some securities Issued some time back is classified as
Correct : D. derivative security
8. A bond whose coupon rate is below the current market rate of interest will have a price:
Correct : C. equal to its maturity value
9. A widening of the difference between the return on corporate bonds and on government bonds might suggest which of the following?
Correct : A. The economy is on the brink of recession.
10. In a situation where share prices are generally depressed because long-term interest rates are expected to rise in future, a large firm looking for long-term finance would normally consider:
Correct : A. issuing long-dated bonds.
11. Using a supply and demand framework, what is likely to happen to share prices in general if the central bank unexpectedly raises interest rates?
Correct : A. The demand curve shifts to the left.
12. Using a supply and demand framework, what is likely to happen to share prices in
general if the central bank raises interest rates in response to a fall in the exchange rate?
Correct : B. No changes.
13. Which of the following actions might you expect lenders to take during periods of
variable and unpredictable inflation?
Correct : D. Reduce the average length of loans they are willing to make.
14. In the 'walking stick' hypothesis, the yield curve slopes:
Correct : D. up and then down
15. Secondary markets
Correct : C. include centralized exchanges, over-the-counter markets, and electronic communication networks.
16. Financial institutions:
Correct : B. are also known as financial intermediaries.
17. Debt markets:
Correct : B. are markets for bonds, loans, and mortgages.
18. Centralized exchanges:
Correct : D. are secondary markets where buyers and sellers meet in the same location.
19. Debt and equity markets:
Correct : A. are markets where financial claims are bought and sold for immediate cash payments.
20. The internal rate of return is:
Correct : D. the interest rate that equates the present value of an investment with its cost.
21. Coupon bonds:
Correct : A. require borrowers to pay the lender coupon payments until maturity, when the borrower pays the principle.
22. The present value of a coupon bond is:
Correct : D. the present value of the coupon payments and the present value of the principle payment.
23. The real interest rate:
Correct : D. is the inflation adjusted interest rate.
24. The nominal interest rate indicates that:
Correct : B. people care about what dollars can buy.
25. The commercial paper issued with low interest rate thus the commercial paper is categorized as
Correct : D. better credit rating
26. The maximum maturity days of holding commercial paper are
Correct : B. 270 days
27. In borrowing and lending of federal funds, the federal funds rate is result of function between
Correct : C. supply and demand
28. The demand for heavy loans can cause
Correct : B. deficiencies for banks
29. The agreement which incurs the transaction between two parties and promise held that second
party will sell security at specific maturity is classified as
Correct : D. reverse repurchase agreement
30. Which among the following was set up by RBI in 1988 jointly with public sector banks and all India Financial Institutions to develop the money market & provide liquidity to money market instruments as sequel to Vaghul Working Group recommendations?
Correct : A. Discount and Finance House of India Ltd (DFHI)
31. Which among the following is correct regarding BPLR or bench mark prime lending rate?
Correct : A. It is lowest interest rate below PLR charged by a bank from the best customer of the financial year
32. Which among the following coined the term “Second generation Reforms”?
Correct : B. International Monetary Fund
33. The commercial paper issued with low interest rate thus the commercial paper are categorized as
Correct : D. better credit rating
34. In primary markets, first time issued shares to be publicly traded in stock markets is
considered as
Correct : D. initial public offering
35. Transaction cost of trading of financial instruments in centralized market is classified as
Correct : B. low transaction costs
36. Stocks or shares that are sold to investors without transacting through financial institutions are
classified as
Correct : A. direct transfer
37. Type of financial security which have linked payoff to another issued security is classified as
Correct : B. derivative security
38. In primary markets, property of shares which made it easy to sell newly issued security is
considered as
Correct : A. increased liquidity
39. Liquidity status of certificate of deposit which is more negotiable is considered as
Correct : C. more liquid
40. Commercial paper issued with low interest rate thus commercial paper are categorized as
Correct : D. better credit rating
41. Maximum maturity days of holding commercial paper are
Correct : B. 270 days
42. In borrowing and lending of federal funds, federal funds rate is result of function between
Correct : C. supply and demand
43. A "hybrid" fund is one that:
Correct : C. has different "loads" for different classes of investors in the fund
44. The first mutual fund was established in the:
Correct : D. 1960s
45. A mutual fund that invests solely in stocks would be categorized as a/an:
Correct : B. fixed income fund
46. A large number (about 25%) of long-term mutual funds are _____________ funds, buying securities in proportions similar to those of a major stock index.
Correct : D. index
47. The bulk of the nation's money supply is created within the private banking system and is sometimes called:
Correct : B. net money
48. A type of bank account designed to compete with money market mutual funds, and having limited check-writing services, is known as:
Correct : A. wholesale CDs
49. __________would encompass fees received by the bank, but not revenues coming
from interest charges on loans.
Correct : B. Spread
50. Another name used for a bank income statement is:
Correct : D. report of condition
51. Which of the following is an advantage to investors of an open-end mutual fund?
Correct : C. The fund agrees to redeem shares at any time.
52. In --------------- Securities share bond debentures are offered to the public for subscription
for raising capital or fund.
Correct : A. Prime Securities
53. ADR Stands for:
Correct : C. American Depository Receipt
54. SEBI operates to fulfill the needs of these three groups, choose the one which is not in those three:
Correct : B. the police
55. The largest industry group receiving venture capital funding is
Correct : D. none of the above.
56. The source of venture capital funding has
Correct : A. shifted from wealthy individuals to pension funds and corporations.
57. A typical venture capital firm has a ______ number of investors who each
contribute a ______ amount of money to the fund.
Correct : B. small; large
58. Most automobile financing is provided by
Correct : C. finance companies owned by automobile companies.
59. Business finance companies provide specialized forms of credit to businesses by making loans and purchasing accounts receivable at a discount; this provision of credit is called
Correct : B. factoring.
60. Which one of the following is a regarded as classic venture capital?
Correct : B. Early stage
61. Which agency regulates and supervises NBFCs?
Correct : C. RBI
62. Which of the following statements is/are correct? 1. NBFCs does not hold a banking license. 2. NBFC can issue Demand Drafts like banks.
Correct : A. Only 1
63. Consider the following statements 1. Chit Funds are type of NBFC 2. All NBFCs are ruled by RBI 3. RBI said any purchase of a stake of 26% or more in a company, or a change in more than 30% of its directors, would need the central bank's permission. Which of the above statements is/are correct?
Correct : C. 1,3
64. Which of the following NBFC converted itself into a commercial Bank?
Correct : D. Kotak Mahindra
65. Indian Banks Association (IBA) has a common networking system for sharing the ATM facilities in Mumbai, which is known as
Correct : B. Shared Payment Network System
66. Markets in which derivatives are traded are classified as
Correct : D. derivative securities markets
67. Consider buying of put option, probability that a buyer would have negative payoff increases with the
Correct : A. increase in stock price
68. Price of an option is subtracted form time value of option to calculate
Correct : C. intrinsic value
69. If intrinsic value of an option is $450 and price of an option is $560 then time value of an
option is
Correct : A. $110
70. Type of swaps in which fixed payments of interest are exchanged by two counterparties for
floating payments of interest are called
Correct : B. interest rate swaps
71. Type of bonds that pay coupon interest are classified as
Correct : C. coupon bond
72. For given change in interest rates, percentage change in present value of bond is classified as
Correct : A. price sensitivity
73. Type of bond whose present value is lesser than that of its face value is classified as
Correct : A. discount bond
74. For an investment, weighted average time to maturity is considered as
Correct : D. duration
75. Bonds that does not pay any interest rate are considered as
Correct : B. zero coupon bond
76. Which of the following is not a characteristic feature of venture capital firms?
Correct : A. Funding just one or a small number of firms.
77. Which of the following is a characteristic feature of venture capital firms?
Correct : A. Developing a portfolio of companies.
78. Which of the following is not a primary function of a Bank?
Correct : C. Facilitating import of goods
79. Which of the following is not an institutional credit rating agency in Indian financial
system?
Correct : B. CIBIL
80. ___________ is regarded as “Hybrid securities”.
Correct : B. . Preference shares
81. ————— represent claims for the payment of a sum of money sometimes in the future
and/or a periodic payment in the form of interest or dividend.
Correct : C. Financial asset
82. SEBI was established in —————.
Correct : A. 1988
83. RBI started functioning on —————.
Correct : A. 1-4-1935
84. National Housing bank is a fully owned subsidiary of —————.
Correct : C. RBI
85. ————— has the statutory powers to regulate and promote the Indian capital market.
Correct : C. SEBI
86. Any company making a public issue of value of more than Rs. ———— is required to file a
draft offer document with SEBI.
Correct : C. 50 lakh
87. ————— Committee was constituted by SEBI for deciding about derivatives trading.
Correct : A. L.C.Gupta
88. RBI is the lender of last resort for —————.
Correct : D. Commercial Banks
89. The market regulator of Indian Capital Market is ……………
Correct : C. SEBI
90. …………………… facilitate the transfer of funds from savers to the borrowers.
Correct : C. financial market
91. ……………………… market is a market for old issues.
Correct : C. Secondary market
92. Which of the following is a financial asset
Correct : C. share
93. Which of the following is a cash asset?
Correct : A. deposit created out of loans
94. Govt. bond is a
Correct : B. long term security
95. Money market deals with ..................... instruments.
Correct : B. short term
96. The market for extremely short period loan is called.....................
Correct : A. call money market
97. ..................... acts as an intermediary between Govt. and money market
Correct : A. RBI
98. ................... are drawn by contractors on the Govt. departments for the goods supplied to them
Correct : B. supply bill
99. ..................... are an important instrument of short term borrowing by the Govt.
Correct : C. Treasury bill
100. ..................... is a market for bankers’ acceptances