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JAIIB PAPER 1 IE &IFS Marathon Mock 2 Crash Course Ambitious Baba
JAIIB PAPER 1 IE &IFS Marathon Mock 2 Crash Course Ambitious Baba
JAIIB PAPER 1 IE &IFS Marathon Mock 2 Crash Course Ambitious Baba
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51. The XYZ firm which is basically an IT based firm decided to enter into
different product segments and launch electronics, Bluetooth, and
communication device.
1) initially the product covers huge market segment due to large amount of
expenses incurred in sales and marketing expenses by the company.
Exclusive offers and discounts were given by the company. Extremely
popularize the product into the market making altogether extraordinary
sales experience for the firm.
2) As the time passes on, with the same amount of discount and offer sales
of the firm could not go beyond a certain limit. Sales become staged at that
point of time.
3) When after certain time there is no scope of further innovation in the
product and also different new players enter into the market. The sales of
XYZ firm drastically goes down. At that time company could not recover
even a basic manufacturing cost of the product.
4)After regular failure in the market terms, company started rising a fund
from different investors to sustain in the market and trying to be better and
superior with respect to the product as compare to their competitors. Here,
the game changes, now sales of the product increase day by day. It's now
recovering and making their position again in the market environment.
In the above case study, the product goes into different business cycle from
the entering into the market. Among the given options, which one is the
correct sequence of the cycle?
(a) Boom ----- Recession ----- Depreciation ---- Recover
(b) Boom ----- Recover ----- Depreciation ---- Recession
(c) Boom ----- Depreciation ----- Recession ---- Recover
(d) Boom ----- Recession ----- Recover ---- Depreciation
52. The ___________ was one in which majority of small-sized banks failed to
function properly and were unable to gain people's confidence.
(a) Pre-independence (prior to 1947)
(b) Post-independence (1947 to 1991)
(c) Post-liberalisation (1991 to 2010)
(d) Post-Global Financial Crisis (2010 to present)
53. Among the below mentioned which of the following is incorrect about
the recommendation of Narasimham Committee?
(a) A phased reduction in Statutory Liquidity Ratio.
(b) Phased achievement of 5% Capital Adequacy Ratio.
(c) Abolition of branch licensing policy.
(d) Deregulation of interest rates.
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54. Among the given, which of the following is not an example of financial
institution?
(a) Commercial and Cooperative Banks
(b) Non-Banking Financial Companies (NBFCs)
(c) Development Financial Institutions (DFIs)
(d) Finance ministry
55. The first 'Presidency Bank'- the Bank of Calcutta —was established in
Calcutta on June 2, 1806 with a capital of Rs __________ lakhs, to cater to the
requirement for modern banking services, uniform currency to finance
foreign trade and remittances by British army personnel and civil servants.
(a) 50
(b) 100
(c) 200
(d) 500
56. Among the below mentioned, The objective of which of the following
act was to establish cooperative credit societies "to encourage thrift, self-
help and cooperation among agriculturists, artisans and persons of limited
means"?
(a) Cooperative Societies Act in 1904
(b) BR Act
(c) RBI Act
(d) Cooperative Act
57. Section ____________ of banking regulation Act states that the subscribed
capital of a banking company cannot be less than 50% of the authorised
capital, and the paid-up capital cannot be less than 50% of the subscribed
capital.
(a) 10
(b) 12
(c) 1
(d) 2
58. Section 20 of banking regulation act deals with restrictions on banks for
making certain types of loans According to the Section, no banking
company shall enter into any commitment for granting any loan or advance
to or on behalf of:
(a) any of its directors,
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59. In terms of Section _______ of banking regulation act where the RBI is
satisfied that it is necessary or expedient in the public interest or in the
interests of depositors, it may determine the policy with regard to advances
to be followed by banks and when the policy has been so determined, all
banking companies or the banking company concerned, as the case may be,
shall be bound to follow the policy so determined by RBI.
(a) 10
(b) 12
(c) 17
(d) 21
60. Among the below mentioned statements, which of the following is/are
the objective of NHB?
(a) To regulate the activities of housing finance companies, based on
regulatory and supervisory authority, derived under the Act
(b) To encourage augmentation of supply of buildable land and also
building materials for housing and to upgrade the housing stock in the
country
(c) To encourage public agencies to emerge as facilitators and suppliers of
serviced land, for housing.
(d) All of the above
61. All housing finance companies registered with NHB under section
_____________ of the National Housing Bank Act, 1987 and scheduled
commercial/co-operative banks are eligible for refinance support, subject
to terms and conditions, as laid down under the respective refinance
schemes.
(a) 29A
(b) 25A
(c) 24A
(d) 20A
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(b) RCTC Ltd. (Risk Capital and Technology Finance Corporation) and
TDICI Ltd. (Technology Development and Investment Corporation of India)
- 1988
(c) NHB - 1988
(d) TFCI Ltd. (Tourism Finance Corporation of India) (set up by IFCI) -
1990
64. The Committee submitted its findings in January 2011, Among the
below mentioned, which of the following is/are the key recommendations
of the Malegam Committee?
(a) Creation of a separate category of NBFC operating in the microfinance
sector to be designated as NBFC-MFI
(b) Criteria for defining 'microfinance loans' classified as 'qualifying assets'
(c) Prudential norms on capital adequacy and provisioning requirements
(d) All of the above
65. In terms of section ___________of the RBI Act, 1934, all NBFCs have to
mandatorily register with RBI.
(a) 45IA
(b) 452A
(c) 45IB
(d) 452B
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67. According to the amendment of 1997 to the Reserve Bank of India Act,
1934, a Non-Banking Finance Company means:
(a) A Financial Institution which is a company;
(b) A non-banking institution which is a company and which has as its
principal business the receiving of deposits under any scheme or
arrangement or in any other manner or lending in any manner;
(c) Such other non-banking institution or class of such institutions as the
RBI may, with the previous approval of the Central Government, specify.
(d) All of the above
69. In 1956, the management of the life insurance business of all the
insurers and provident societies, then operating in India, was taken over by
the Central Government and these businesses were nationalised. LIC was
formed in September, 1956 with a capital contribution of Rs. ___________-
crores from the Government of India.
(a) 5
(b) 10
(c) 12
(d) 20
70. Section ______________ of The LIC Act the Act also provides Central
Government guarantees for sums assured and bonuses declared under LIC
policies.
(a) 35
(b) 37
(c) 38
(d) 40
71. For more effective supervision, RBI has adopted a regime of ____________-
under which, a robust off-site surveillance system has been introduced, to
assess the extent of various types of risks a bank is exposed to, from
analysis of host of supervisory data pertaining to a bank's activities.
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(a) CBS
(b) RBS
(c) FBS
(d) SSM
74. Among the below mentioned, which of the following is not a sector
included in infrastructure?
(a) Textile Mills
(b) Waterworks
(c) Waterways
(d) Canal networks
76. There are a number of factors which determine the levels of price
discovery. These include:
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77. The government has imposed a price ceiling on the rental rates of
apartments in a city. What is the likely impact of this price ceiling on the
supply of apartments in the city?
(a) Supply will increase as landlords will be incentivized to rent out more
apartments.
(b) Supply will remain constant as landlords will not be affected by the
price ceiling.
(c) Supply will decrease as landlords will have less incentive to rent out
apartments.
(d) None of the above.
78. Riya is a farmer who grows wheat in her fields. Due to favorable
weather conditions, she is able to produce a surplus of wheat this year.
However, the market is already flooded with wheat and the demand is low.
Riya is worried about the price she will get for her surplus wheat. What
concept of economics is illustrated in this scenario?
(a) Elasticity of demand
(b) Equilibrium price
(c) Price ceiling
(d) Price floor
79. The LTRO was introduced by RBI in February 2020, among the below
mentioned, which of the following is/are the objective of the above?
(a) To encourage banks to undertake maturity transformation smoothly
and seamlessly, so as to augment credit flows to productive sectors, and,
(b) To assure banks about the availability of durable liquidity, at
reasonable cost, relative to prevailing market conditions.
(c) Both a and b
(d) None of the above
80. Among the below mentioned, what is the minimum net worth required
for a corporate to issue certificate of deposit?
(a) Rs 1 crore
(b) Rs 4 crores
(c) Rs 5 crores
(d) There is no minimum net worth requirement
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81. Pay-out day is the day when the exchange makes payment or delivery of
securities to the broker. Settlement cycle is on a _________rolling settlement
basis, with effect from April 1, 2003.
(a) T+2
(b) T+1
(c) T+3
(d) T+4
85. ABC Bank has decided to monetize some of its assets to generate
additional revenue. The bank has a portfolio of government securities that
it is considering monetizing. What is monetization, and how can it help ABC
Bank in its current situation?
(a) Monetization is the process of converting debt into equity. It can help
ABC Bank reduce its financial burden.
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(b) Monetization is the process of converting assets into cash. It can help
ABC Bank generate additional revenue.
(c) Monetization is the process of printing new currency notes. It can help
ABC Bank increase its deposits.
(d) Monetization is the process of converting equity into debt. It can help
ABC Bank increase its financial leverage.
86. Among the below mentioned, as per RBI act, Authorised person has
been defined in section ___________ of the Act, which means an authorised
dealer, money changer, offshore banking unit or any other person for the
time being authorised to deal in foreign exchange or foreign securities.
(a) 2(a)
(b) 2(b)
(c) 2(c)
(d) 2(d)
88. The __________ functions as a means to increase the global equity trade,
which in turn, can help increase not only volumes on local and foreign
markets but also the exchange of information, technology, regulatory
procedures as well as market transparency.
(a) DR
(b) IDR
(c) ADR
(d) GDR
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90. Among the below mentioned, which of the following is/are the
important reasons for the formation of a clearing union?
(a) Exports and imports among members can expand relatively faster
because of conservation of foreign exchange in intra-group transactions, at
least until the settlement date.
(b) Trade liberalisation can be promoted initially among the members.
(c) Exploitation of scale economies would be made possible by enlarged
trade.
(d) All of the above
92. In terms of SEBI guidelines, the Company issuing the shares to public
shall make arrangements for the use of proceeds of the issue to be
monitored by one of the financial institutions, in case of issues, which
exceed Rs. ___________ crores.
(a) 100
(b) 200
(c) 500
(d) 1000
93. Among the below mentioned, Identify the statement which is not true?
(a) Merchant Banks are regulated by RBI
(b) Merchant Banks are regulated by SEBI
(c) Merchant Bankers mainly undertake fee-based business
(d) Merchant Banks primarily assist in raising equity
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(a) The total number of options contracts outstanding in the market at any
given point in time
(b) The total number of buyers of call options in the market at any given
point in time
(c) The total number of buyers of put options in the market at any given
point in time
(d) The total number of option sellers in the market at any given point in
time
98. 'Forfeit' is derived from the French word 'forfeit', which means
surrendering of rights. All forfaiting transactions have a minimum
transaction size, normally in the range of USS______________.
(a) 100,000
(b) 150,000
(c) 200,000
(d) 250,000
99. The entity operating TReDS should have sound technological basis, to
support its operations and as such it should, at the minimum, fulfil which of
the following technological requirements?
(a) Information about bills/ invoices, discounting and quotes shall be
disseminated by it in real time basis, supported by a robust MIS system.
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51.
Ans. a
Sol. In the above case study, the product goes into different business cycle
from the entering into the market. Among the given options, Boom -----
Recession ----- Depreciation ---- Recover is the correct sequence of the
cycle.
52.
Ans. a
Sol. The pre-independence phase was one in which majority of small-sized
banks failed to function properly and were unable to gain people's
confidence. People were more associated with money lenders and
unregulated players, for meeting their savings and borrowing needs.
53.
Ans. b
Sol. The recommendations of the Narasimham Committee - I were as
follows:
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54.
Ans. d
Sol. Examples of financial institutions are:
- Financial Regulators
- Commercial and Cooperative Banks
- Non-Banking Financial Companies (NBFCs)
- Development Financial Institutions (DFIs)
- Insurance companies
- Insurance brokers
- Mutual Funds
- Pension Funds
55.
Ans. a
Sol. The first 'Presidency Bank'- the Bank of Calcutta —was established in
Calcutta on June 2, 1806 with a capital of Rs 50 lakhs, to cater to the
requirement for modern banking services, uniform currency to finance
foreign trade and remittances by British army personnel and civil servants.
The Government subscribed to 20% of its share capital. This was renamed
as Bank of Bengal in 1809. The Bank of Madras was the second Presidency
bank set up in 1843, followed by the Bank of Bombay in July 1843.
56.
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Ans. a
Sol. The rural cooperative movement in India was started primarily for
dealing with the problem of village credit. The Indian cooperative banking
movement received a fillip, with the passing of the Cooperative Societies
Act in 1904. The objective of this Act was to establish cooperative credit
societies "to encourage thrift, self-help and cooperation among
agriculturists, artisans and persons of limited means". Many cooperative
credit societies were set up governing the provisions of this Act which had
undergone certain amendments in the year 1912.
57.
Ans. b
Sol. Section 12 states that the subscribed capital of a banking company
cannot be less than 50% of the authorised capital, and the paid-up capital
cannot be less than 50% of the subscribed capital. Further, the capital of
the company shall consist of ordinary shares or equity shares only. A
shareholder cannot exercise his/her voting rights on a poll, in excess of
10% of the total voting rights of all the shareholders of the banking
company, as laid down in the Companies Act.
58.
Ans. d
Sol. Section 20 deals with restrictions on banks for making certain types of
loans According to the Section, no banking company shall:
(a) grant any loans or advances on the security of its own shares, or-
(b) enter into any commitment for granting any loan or advance to or on
behalf of-
(i) any of its directors,
(ii) to any firm in which any of its directors is interested as a partner,
manager, employee or guarantor, or
(iii) any company in which a director of the bank is interested as a Director,
Managing Agent, Manager, employee or guarantor.
(iv) any individual in respect of whom any of its directors is a partner or
guarantor
59.
Ans. d
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Sol. In terms of Section 21, where the RBI is satisfied that it is necessary or
expedient in the public interest or in the interests of depositors, it may
determine the policy with regard to advances to be followed by banks and
when the policy has been so determined, all banking companies or the
banking company concerned, as the case may be, shall be bound to follow
the policy so determined by RBI. As such, RBI may direct banks with
respect to the purpose of advance, the margins to be maintained, the
maximum quantum that can be lent to a single entity and the rate of
interest to be charged and banks would be required to adhere to such
directions provided by RBI.
60.
Ans. d
Sol. The National Housing Bank has been pursuing the following objectives
● To promote a sound, healthy, viable and cost-effective housing
finance system to cater to all segments of the population and to integrate
the housing finance system, with the overall financial system
● To promote a network of dedicated housing finance institutions to
adequately serve various regions and different income groups
● To augment resources for the sector and channelise them for housing
● To make housing credit more affordable
● To regulate the activities of housing finance companies, based on
regulatory and supervisory authority, derived under the Act
● To encourage augmentation of supply of buildable land and also
building materials for housing and to upgrade the housing stock in the
country
● To encourage public agencies to emerge as facilitators and suppliers
of serviced land, for housing.
61.
Ans. a
Sol. The Bank has played a facilitator role in this regard, instead of itself
opening such dedicated housing finance institutions. For this purpose, NHB
has issued the Model Memorandum and Articles of Association. NHB has
also issued guidelines for participating in the equity of housing finance
companies. All housing finance companies registered with NHB under
section 29A of the National Housing Bank Act, 1987 and scheduled
commercial/co-operative banks are eligible for refinance support, subject
to terms and conditions, as laid down under the respective refinance
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62.
Ans. d
Sol. In 1986, IREDA Ltd. (Indian Renewable Energy Development Agency
Ltd) in 1987, RCTC Ltd. (Risk Capital and Technology Finance Corporation)
and TDICI Ltd. (Technology Development and Investment Corporation of
India) (later known as IFCI Venture Capital Funds Ltd. and ICICI Venture
Funds Management Ltd.) in 1988, NHB in 1988, TFCI Ltd. (Tourism Finance
Corporation of India) (set up by IFCI) in 1989, SIDBI (also carved out of
IDBI) in 1989, and IDFC Ltd. in 1997.
63.
Ans. c
Sol. Till the beginning of the 21st century, the activities of the MFIs were
largely unregulated. The rapid growth and demand for their services,
unfortunately, led to a crisis in the sector in 2010, largely in Andhra
Pradesh, where the activity was concentrated. During the said period, the
lending by MFIs had escalated exponentially and this led to a very high
level of borrowing, per family. The high level of borrowings led to increase
in defaults which motivated some of the MFIs to resort to coercive recovery
methods. This culminated into a spate of suicides in the State and during
2010, there were 30 suicides by women borrowers, in the short space of 45
days.
64.
Ans. d
Sol. In order to ascertain the reasons for the crisis and in an order to bring
in discipline and control in the microfinance sector, the RBI appointed a
Committee to Study Issues and Concerns in the MFI Sector (Chairman: Y H
Malegam). The Committee submitted its findings in January 2011 and some
of the key recommendations of the Malegam Committee are listed here:
- Creation of a separate category of NBFC operating in the microfinance
sector to be designated as NBFC-MFI
- Criteria for defining 'microfinance loans' classified as 'qualifying assets'
- Prudential norms on capital adequacy and provisioning requirements
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65.
Ans. a
Sol. In terms of section 45-IA of the RBI Act, 1934, all NBFCs have to
mandatorily register with RBI. While RBI has deregulated credit related
matters and bestowed greater operational freedom to banks in the matter
of credit dispensation to NBFCs, yet in view of the sensitivities attached to
financing of certain types of activities undertaken by NBFCs, restrictions on
financing such activities continue to be in force.
66.
Ans. d
Sol. Activities of NBFCs Not Eligible for Bank Credit
The following activities undertaken by NBFCs are not eligible for bank
credit:
- Bills discounted/rediscounted by NBFCs, except for rediscounting of bills
discounted by NBFCs arising out of sale of Commercial vehicles (including
light commercial vehicles) and two-wheeler and three-wheeler vehicles
subject to the undernoted conditions:
-the bills should have been drawn by the manufacturer on dealers only.
-the bills must represent genuine sales transaction, as may be confirmed by
chassis/engine number.
-the banks should satisfy themselves about the bona fides and track record
of the NBFCs, which have discounted the bills.
- Investments of NBFCs both of current and long-term nature, in any
company/ entity by way of shares, debentures. Stock broking companies
may however be extended need-based finance, against shares and
debentures held by them, as stock in trade.
- Unsecured loans/inter corporate deposits by NBFCs to/in any company.
- All types of loans and advances by NBFCs to their subsidiaries, group
companies/entities.
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67.
Ans. d
Sol. According to the amendment of 1997 to the Reserve Bank of India Act,
1934, a Non-Banking Finance Company means:
(i) A Financial Institution which is a company;
(ii) A non-banking institution which is a company and which has as its
principal business the receiving of deposits under any scheme or
arrangement or in any other manner or lending in any manner;
(iii) Such other non-banking institution or class of such institutions as the
RBI may, with the previous approval of the Central Government, specify.
68.
Ans. a
Sol. e-IA stands for e-Insurance Account or "electronic insurance account",
which maintains the insurance policy documents of policyholders in
electronic format. This e-insurance account facilitates the policyholders by
providing access to the insurance portfolio at a click of a button through
Internet.
69.
Ans. a
Sol. The LIC Act, 1956
In 1956, the management of the life insurance business of all the insurers
and provident societies, then operating in India, was taken over by the
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70.
Ans. b
Sol. The LIC Act laid the basis for creating LIC of India, out of the several
insurance companies which existed prior to nationalisation. LIC of India
was vested with exclusive privilege to transact life insurance business in
India. This has been done away with, as a result of amendments made in
1999.
Section 37 of the Act also provides Central Government guarantees for
sums assured and bonuses declared under LIC policies. This does not apply
to ULIP policies.
71.
Ans. b
Sol. For more effective supervision, RBI has adopted a regime of Risk Based
Supervision (RBS), under which, a robust off-site surveillance system has
been introduced, to assess the extent of various types of risks a bank is
exposed to, from analysis of host of supervisory data pertaining to a bank's
activities. The on-site visit by the RBI's Senior Supervisory Manager (SSM)
in charge of the bank, is used for examining high risk areas detected, and
for broadly validating the data provided by the bank,
72.
Ans. d
Sol. Marginal Standing Facility (MSF)/ Standing Deposit Facility (SDF): MSF
was instituted, under which, scheduled commercial banks can borrow (if
necessary, even by dipping into their SLR portfolios) on overnight basis, at
their discretion up to 2% of their respective NDTLs, at 100 basis points (i.e.,
1%) above the policy repo rate, under the Liquidity Adjustment Facility,
against approved government securities, in order to provide a safety valve,
against unanticipated liquidity shocks.
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73.
Ans. d
Sol. Under EASE 5.0, PSBs would continue to invest in new-age capabilities
and deepen the ongoing reforms to respond to evolving customer needs,
changing competition and the technology environment. EASE 5.0 would
focus on digital customer experience and integrated & inclusive banking,
with emphasis on supporting small businesses and agriculture.
Simultaneously, all PSBs will also create a bank-specific 3-year strategic
roadmap across diverse themes - business growth, profitability, risk,
customer service, operations, and capability building.
74.
Ans. a
Sol. Textile Mills is not a sector included in infrastructure. Infrastructure
typically refers to the basic physical and organizational structures and
facilities needed for the operation of a society or enterprise, including
things like roads, bridges, airports, seaports, water and sanitation systems,
energy infrastructure, communication networks, and transportation
systems, among others. Textile Mills, on the other hand, are part of the
manufacturing sector.
75.
Ans. d
Sol. NaBFID will be governed by a Board of Directors. The members of the
Board include: (i) the Chairperson appointed by the central government, in
consultation with RBI, (ii) a Managing Director, (iii) up to three Deputy
Managing Directors, (iv) two directors nominated by the central
government, (v) up to three directors elected by shareholders, and (vi) a
few independent directors (as specified). A body constituted by the central
government will recommend candidates for the post of the Managing
Director and Deputy Managing Directors. The Board will appoint
independent directors, based on the recommendation of an internal
committee. In October 2021, banking veteran Shri K V Kamath has been
designated as the first Chairperson of NaBFID.
76.
Ans. d
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Sol. There are a number of factors which determine the levels of price
discovery. These include:
- Supply and demand
- Attitudes to risk
- Volatility
- Available information
- Market mechanisms
77.
Ans. c
Sol. The correct Answer is (c). When the government imposes a price
ceiling on rental rates, landlords may have less incentive to rent out
apartments as they will not be able to earn as much income as they would
without the price ceiling. This means that the supply of apartments will
decrease, which can lead to a shortage of rental housing in the city.
78.
Ans. b
Sol. The correct Answer is B) Equilibrium price. Equilibrium price is the
price at which the quantity demanded of a good or service equals the
quantity supplied. When the market is flooded with wheat, the supply of
wheat increases and the demand for wheat remains the same, resulting in a
surplus. This leads to a decrease in the price of wheat until it reaches a level
where the quantity supplied equals the quantity demanded, which is the
equilibrium price. Riya is worried about the price she will get for her
surplus wheat because the current price is likely to be lower than the
equilibrium price.
79.
Ans. c
Sol. The LTRO was introduced by RBI in February 2020, with the following
dual objectives:
- To encourage banks to undertake maturity transformation smoothly and
seamlessly, so as to augment credit flows to productive sectors, and,
- To assure banks about the availability of durable liquidity, at reasonable
cost, relative to prevailing market conditions.
80.
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Ans. b
Sol. The minimum net worth required for a corporate to issue a certificate
of deposit (CD) is (b) Rs 4 crores. CDs are short-term debt instruments
issued by banks, financial institutions, and corporations to raise funds from
the money market. As per the guidelines of the Reserve Bank of India (RBI),
corporate entities can issue CDs subject to certain conditions, including a
minimum net worth requirement. As per the current RBI guidelines,
corporates issuing CDs must have a minimum net worth of Rs 4 crores as
per the latest audited balance sheet. Additionally, they must also have been
sanctioned working capital limit by banks or financial institutions. The
minimum amount for a CD issue is Rs 1 lakh, and the tenure of CDs can
range from 7 days to 1 year.
81.
Ans. a
Sol. Pay-in Day and Pay-out Day: Pay-in day is the day when the brokers
make payments or delivery of securities to the exchange. Pay-out day is the
day when the exchange makes payment or delivery of securities to the
broker. Settlement cycle is on a T+2 rolling settlement basis, with effect
from April 1, 2003. The exchanges have to ensure that the pay-out of funds
and securities to the clients is done by the broker, within twenty-four hours
of the pay-out. The exchanges will have to issue a press release
immediately after the pay-out.
82.
Ans. c
Sol. A broker is a member of a recognised stock exchange, who is permitted
to do trading on the screen-based trading system of different stock
exchanges. The broker is enrolled as a member with the concerned
exchange and is registered with SEBI. A sub-broker is affiliated to a
member of a recognised stock exchange and is a person who is registered
with SEBI.
83.
Ans. b
Sol. The correct Answer is B) Setting the price of the shares. Setting the
price of the shares is the responsibility of the company's management and
underwriters. A merchant banker's role in an IPO process includes
preparing the prospectus, marketing the shares to potential investors,
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84.
Ans. c
Sol. Government Securities will be issued for a minimum amount of Rs,
10,000 (Face Value) and in multiples of Rs. 10,000 thereafter.
85.
Ans. b
Sol. Monetization is the process of converting any asset into cash. In the
case of ABC Bank, monetizing its portfolio of government securities can
help the bank generate additional revenue. By selling the securities, the
bank can realize cash that can be used to lend to customers, invest in new
products or services, or pay off debts. Therefore, option (b) is the correct
Answer
86.
Ans. c
Sol. Sections 10 and 12 - These provisions deal with duties and liabilities of
the authorised persons. Authorised person has been defined in Section2(c)
of the Act, which means an authorised dealer, money changer, offshore
banking unit or any other person for the time being authorised to deal in
foreign exchange or foreign securities.
87.
Ans. d
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Sol. The practice of issuing DRs later spread to the UK and other European
Countries. Such Depository Receipts have been called as Global Depository
Receipts (GDRs) distinguishing them from the ADRs. In more recent years,
several other countries have also introduced DRs like China, India, Hong
Kong, etc. The GDRs are commonly listed on European stock exchanges
such as the London Stock Exchange. GDRs may be denominated in US
dollars, Euros, or any European currency. GDRs issued in other countries
are typically denominated in the currency of that country.
88.
Ans. a
Sol. The DR functions as a means to increase the global equity trade, which
in turn, can help increase not only volumes on local and foreign markets
but also the exchange of information, technology, regulatory procedures as
well as market transparency. Thus, instead of being faced with
impediments to foreign investment, as is often the case in many emerging
markets, the DR investor and company can both benefit from investment
abroad.
89.
Ans. d
Sol. An issue of ADR/GDR by a company in an overseas market gives people
the opportunity to add the benefits of foreign investment, while bypassing
the unnecessary risks of investing outside their own borders, by adding
these securities to their portfolio. As with any security, however, investing
in ADRs requires an understanding of why they are used and how they are
issued and traded.
90.
Ans. d
Sol. The members of the ACU are Bangladesh, Bhutan. India, Iran, Maldives,
Myanmar, Nepal, Pakistan and Sri Lanka.
The important reasons for the formation of a clearing union are:
i) Exports and imports among members can expand relatively faster
because of conservation of foreign exchange in intra-group transactions, at
least until the settlement date.
ii) Trade liberalisation can be promoted initially among the members.
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91.
Ans. a
Sol. Integrated treasury is a holistic approach to funding the balance sheet
and deployment of funds across the domestic as well as global money and
forex markets. This approach enables the bank to optimise its asset-liability
management and also capitalise on arbitrage opportunities.
92.
Ans. c
Sol. In terms of SEBI guidelines, the Company issuing the shares to public
shall make arrangements for the use of proceeds of the issue to be
monitored by one of the financial institutions, in case of issues, which
exceed Rs. 500 crores. Though, in terms of SEBI guidelines, it is mandatory
for the issuers to appoint 'Monitoring Agency', if the issue size is more than
Rs. 500 crores, at the insistence of Merchant Bankers and Stock Exchanges,
the issuers of issues of less than Rs. 500 crores are also appointing
Monitoring Agency.
93.
Ans. d
Sol. Option d) is not a true statement. Merchant banks primarily assist in
raising both equity and debt capital for their clients. They offer a range of
services related to securities and finance, including underwriting, issue
management, loan syndication, advisory services, mergers and acquisitions,
and more.
Regarding the other options:
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a) Merchant Banks are regulated by RBI: This is partially true. While the
Reserve Bank of India (RBI) regulates certain aspects of merchant banking,
such as monitoring capital adequacy requirements and ensuring
compliance with anti-money laundering regulations, the Securities and
Exchange Board of India (SEBI) is the primary regulator of merchant
banking activities in India.
b) Merchant Banks are regulated by SEBI: This is true. The SEBI is the
primary regulator of merchant banking activities in India.
c) Merchant Bankers mainly undertake fee-based business: This is
generally true. Merchant bankers earn their income through fee-based
services and do not typically engage in trading or investment activities for
their own account.
94.
Ans. a
Sol. The strike price is the specified price at which the underlying asset can
be bought or sold if the option is exercised, and it is determined at the time
the option is purchased.
95.
Ans. a
Sol. Open interest is the total number of options contracts outstanding in
the market at any given point in time, which includes both buyers and
sellers of options.
96.
Ans. a
Sol. The value of the futures contract to LMN Corporation can be calculated
by comparing the current market price to the contracted price. Since the
current market price is more favorable for LMN, it means that the value of
the futures contract is positive. The difference between the contracted
price and the current market price is $10 per barrel, and the notional
amount is 1,000 barrels. Therefore, the value of the futures contract to LMN
Corporation is (a) $10,000 gain.
97.
Ans. a
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98.
Ans. d
Sol. 'Forfeit' is derived from the French word 'forfeit', which means
surrendering of rights. All forfaiting transactions have a minimum
transaction size, normally in the range of USD 250,000. In terms of RBI
guidelines, Exim Bank and AD Category - I Banks (on Non-recourse basis
only) are permitted to handle forfaiting transactions.
99.
Ans. d
Sol. The entity operating TReDS should have sound technological basis, to
support its operations and as such it should, at the minimum, fulfil the
following technological requirements.
- It shall be able to provide electronic platform for all the participants.
- Information about bills/ invoices, discounting and quotes shall be
disseminated by it in real time basis, supported by a robust MIS system.
- It shall have a suitable Business Continuity Plan (BCP), including a
disaster recovery site.
- It shall have an online surveillance capability which monitors positions,
prices and volumes in real time so as to check system manipulation.
100.
Ans. a
Sol. Option (a) is the correct Answer Deal origination is the process of
identifying potential targets for mergers and acquisitions. This involves
conducting market research, analysing industry trends, and identifying
companies that are a good fit for the acquirer's strategic objectives. Deal
origination can be done through a variety of methods, including
networking, cold calling, and using data analytics tools. Once potential
targets have been identified, the acquirer will typically conduct due
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