Banking and Financial Awareness Quiz

1. Nowadays we frequently read news items about “Derivatives” as used in the world of finance and money market. Which of the following statement(s) correctly describes what a derivative is and how it affects money/finance markets? 

I. Derivatives enable individuals and companies to insure themselves against financial risk. II.Derivatives are like fixed deposits in a bank and are the safest way to invest one’s idle money  lying in a bank. 

III.Derivatives are the financial instruments which were used in India even during the British Raj.

 Only III

 Only II

 Only I

 All of the above

2. Prior to the establishment of the Reserve Bank of India, the Government banking business was conduct by?

 Bank of India

 Central Bank of India

 National Bank of India

 Imperial Bank of India

3. Which of the following is not a general credit control measure?

 bank rate

 variable reserve ratios

 open market operations

 regulation of margin requirements on advances against agricultural commodities

4. Which one of the following is/are implication(s) of large inflow of foreign exchange into the country? 

I. It makes monetary management difficult for RBI. 

II.It creates money supply, asset bubbles and inflation. 

III.It weakens the competitiveness of Indian exports.

 Only I

 Only II

 Only III

 All of the above

5. In India, which of the following agency is responsible for announcing the Foreign Trade Policy?

 RBI

 EXIM-Bank

 Foreign Ministry

 Ministry of Commerce and Industry

6. Many a time we read a term MSS in relation to banking transactions. What is the full form of MSS?

 Money Stabilization Scheme

 Market Stabilization Scheme

 Maturity and Standardization Service

 Money Stabilization Service

7. RBI’s open market operation transactions are carried out with a view to regulate?

 Liquidity in the economy

 Prices of essential commodities

 Inflation

 All of the above

8. Open market operations, one of the measures taken by RBI in order to control credit expansion in the economy means?

 Sale or purchase of Govt. securities

 Issuance of different types of bonds

 Auction of gold

 None of the above

9. The bank rate means?

 Rate of interest charged by commercial banks from borrowers

 Rate of interest at which commercial banks discounted bills of their borrowers

 Rate of interest allowed by commercial banks on their deposits

 Rate at which RBI purchases or re-discounts bills of exchange of commercial banks

10. What is an Indian Depository Receipt?

 A deposit account with a Public Sector Bank

 A deposit account with any of depositories in India

 A denominated in Indian currency and are issued by a domestic depository and the underlying equity shares are secured with a custodian

 None of the above