RBI Mains 2014-Paper 3: Finance and Management

RBI Mains 2014-Paper 3: Finance and Management
Instructions
SECTION I: Finance
SECTION II: Management
Attempt any three questions from Section I and any two from Section II.
In case the candidate answered more than five questions, only the first five answers will be evaluated and the rest of the answers will be ignored.
All questions carry equal marks.
Each question should be answered on new page and the question number must be written on the top.
The answers of parts of the same question, if any, should be written together. In other words, the answer of another questions should not be written in-between the Parts of a question.
Marks will be deducted for illegible hand-writing.
Answers must be brief and to the point.
Answers must be written either in English or in Hindi. However, all the questions should be answered in one language only. Answer-books written partly in English and partly in Hindi will not be evaluated.
Candidate should use only Blue or Black ink pen/Ball point pen to write the answers.


SECTION I: Finance
1. State the different types of exchange risks inherent in foreign exchange business.
2. Briefly explain the Union Budget, 2014-2015 provisions relating to financial, banking and insurance sectors.
3. Trace the developments in financial sector reforms in India since 1991.
Q4.
a)      Explain in brief the provisions of R. B. I. Act,1934.
b)      Write a note on R. B. I.‘s attempt in giving differential licenses for small banks.
Q5: Write short notes on any two of following:
a)      SEBI
b)      Stock Exchanges
c)       Service Tax
d)      Syndicated Loans.

SECTION II: Management
6. “Corporate Governance and Corporate Social Responsibility are the twins to shine a corporate entity “— Discuss.
7. Distinguish between :—
a)      Verbal and Non-verbal Communication
b)      Directing and Controlling.
8. “A successful leader is always an effective leader ” — do you vouch this statement.
write notes on following:
9. Explain in brief the Concept and Goals of Human Resources Development ( HRD ).
Outline the role of incentives in building up employee morale.


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RBI Mains 2014-Paper 1: English comprehension, Precis, Report Writing Questions


Instructions
All questions are compulsory.
Each question should be answered on a new page and the question number must be written on the top.
Précis and its title should be written in précis sheet only.
The answers of parts of the same question, if any, should be written together. In other words, the answer of another questions should not be written in between the Parts of a question.
Marks will be deducted if an answer far exceeds or far falls short of the set limit, or if the handwriting is illegible.
Candidate should use only Blue or Black ink pen/ball point pen to write the answers.

Essay
Q1. Write an argumentative essay of about 500 words, on any one of the following: (40 marks)

Euthanasia, a debatable phenomenon in India.
Media is one of the strongest pillars of democracy.
Role of R.B.I. in controlling the inflation.
Stand of the NDA Government in dealing with corruption.
Uses and misuses of Anti-Dowry Act.
Commonwealth Games-2014 and India.



Q2. Précis writing (24 marks)

A: Make a précis of the following passage in your own words, reducing it to about 230 words and give it a suitable title. Use the précis sheet specially provided for this purpose :- (24 marks)

Against the background of a stable recovery of world economy, the 6th BRICS leaders meeting from July, 15th to 16th at Fortaleza, Brazil, with the theme of Sustainable Solutions for Inclusive Growth, is definitely among the most important international events in the second half of this year. It is also an important event for China-India relations since the President of China has had his first ever meeting with the new Indian Prime Minister on the sidelines of the summit. The BRICS has become an important force to cope with the international financial crisis, in driving global economic growth and in promoting democratization of international relations.

The BRICS countries (Brazil, Russia, India, China and South Africa) are not only building upon their own strength, but also make efforts to help others. Despite the financial need for their own economy, BRICS contributed a total sum of $180 billion to the International Monetary Fund in two rounds and the efforts were well commended by the international community.

BRICS is highlighted by pragmatic co-operation in major projects. The BRICS New Development Bank (NDB) and the Financial Contingency Reserve Arrangement (CRA), which were first initiated during the 2012 BRICS summit in India, has become reality in the Fortaleza summit. The NDB and CRA will not only benefit the BRICS countries, but also provide finance to infrastructure projects in emerging markets and other developing countries. It is also aimed to assist them to better withstand risks from international financial turbulence. Other key economic co-operative projects such as joint financing by respective development banks, co-operation among industrial and business enterprises and the economic and trade liaison group will also inject new momentum for development of the BRICS countries.

As the world’s two most populous and largest developing countries as well as the founding members of the BRICS, China and India are firm supporters and active participants of the co-operation among the BRICS countries, and always take co-operation with other BRICS countries as one of the priorities in their foreign policy. China and India are also good neighbours, good friends and good partners that have established a strategic and co-operative partnership for peace and prosperity. Both countries are now facing a historical mission of growing the economy and improving people’s livelihood. The China-India bilateral co-operation and their co-operation under the BRICS framework are complementary to each other.

Our major projects include the BCIM Economic Corridor, the Chinese-style industrial parks in India, railway co-operation, and initiatives of the Silk Road Economic Belt and co-operation along the 21st Century Maritime Silk Road. We are also working for a ” Trans-Himalayas Economic Growth Region” driven by double-engine of China and India. All the co-operation can be benefited from the BRICS co-operation mechanism. China and India should establish a closer partnership of development to promote more integration of market, greater financial linkage, better connectivity of infrastructure as well as closer people-to-people contacts, and thus to bring our people tangible benefits.

India recently announced its Railway and Union budgets, indicating that India is set to accelerate economic development. As India’s only neighbor in BRICS, China hopes and believes that, under the strong leadership of Indian Prime Minister, India’s economy will gear up to a healthy track and develop better. China will enhance its co-operation with India by proactive and practical action.

Chinese railway department has recently sent officials and technical experts to India for substantive consultation on co-operation of the speedup of existed railway lines and the up gradation of railway stations.

It is firmly believed that, with our joint efforts, a wide-ranging, multilevel and high-quality economic co-operation between China and India will be achieved with more convergence of our two emerging markets. The common development of China and India will ensure the Asian century’s arrival.

There are still challenges for the BRICS countries to move forward. As an old saying goes, ‘If you want to go fast, go alone ; if you want to go far, go together.’ It is positively believed that as long as China, India and other BRICS members insist on building their strong partnership, deepening economic co-operation, a better future is achievable for BRICS.

Comprehension (précis based) 16 marks
Q2B: Answer any two of the following questions based on the above passage (10 marks)

What are the major objectives of the BRICS Bank?
How can pragmatic co-operation in major projects be ensured through the BRICS ?
Illustrate how can the China- India bilateral co-operation be achieved under the framework of the BRICS?

Q2C: Use any three of the following phrases in sentences of your own, to bring out its meaning (6 marks)
to cope with
pragmatic co-operation
trade liaison
tangible benefits
gear up.


Report Writing 20 marks
Q3. Attempt any one of the following in about 250 words: 20 marks.

It has been reported to R.B.I. that few banks are violating the prescribed norms while granting loans to the Private Companies. As the General Manager of R.B.I., direct a committee to be instantly constituted to look into the matter and recommend the remedial measures to be initiated against such banks. Draft a committee report.
On behalf of RBI, issue a circular to all the subsidiary banks to open special cell to deal with educational loan applications for higher education in India and abroad and expedite the essential procedures to sanction the loans within a specific period of 10 days.

The Chairman of Customers’ Association has reported to R.B.I. that banks located in rural areas are not able to function well due to frequent cuts in power supply. It causes tremendous inconvenience to customers who come from far off places and go back without their work being done. On behalf of R.B.I., draft a letter to the Chairman of the Association, assuring him that the matter will be seriously taken into account and rural banks will be instructed to make provision for the installation of generators to address this problem permanently in case of power failure.

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preference shares in india


Share capital of a company is categorized into preference and equity shares. It forms part of net-worth. 


Important terms:
Convertible - owner has a right to convert preference shares into equity shares at a later date. Those which don't carry this option is non-convertible preference shares.

Retractable (also Term Preferred Share) – the owner of the preferred shares have a right, at some period of time, to force the company to buy back their preferred shares.

Cumulative preference shares are preference shares on which the unpaid dividend accumulates as arrears.

Non-cumulative preference shares - if a company does not pay annual dividends then the investor does not have the right to claim any forgone dividends in the future.

Redeemable / Callable – company have the right to force the preferred shares to be sold back to the company at a set price or for an equivalent amount of common shares.


   ->  all rights & limitation are applicable to Public company or a private company which is a subsidiary of a public company. A private company can issue any terms to preference share holders through its Articles of Association. But if the private company goes public then those Preference shares issued with higher rights have to be redeemed or restructured.


Preference shares of a public company carry a preferential right to: 

 i) dividend at a fixed rate or amount,

 ii) repayment of capital in case of winding-up of co. 


 Limitation/obligation 
iii) limited voting rights, only in such matters which affects them, (equity shareholder controls the co.). It may acquire voting rights in situations where dividend is not paid.

iv) they have to be redeemed within 20 yrs from their issue.



 Risks:

Insolvency Risk: It may be questionable whether any assets remain after all other creditors have been paid to go to the preferred shareholders.

Credit risk involves any change in the financial strength of the company as to its ability to pay dividends and repay principal on maturity.


Rate of dividend payable to a foreign company on preference shares issued by an Indian company cannot exceed 300 basis points over the prime lending rate of the State Bank of India prevailing as on the date of the board meeting on which issue of preference shares was recommended. (FEMA)


The Banking Regulation (Amendment) Bill, 2005, proposes to permit banks to issue preference shares subject to the condition that preference shareholders will not acquire voting rights if the bank defaults in the payment of dividend.

Banking awareness test 01

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Ok now take out your pen & paper & start this test. It has 53 ques.. you’ve 30 minutes. I am calling it Banking / 01/ 05.07.2014.. once finished find answers on http://bank-exam-notes.blogspot.in/2014/07/answer-keys-to-banking-01-05072014.html


You may comment your scores... 3. 2. 1.


1) RBI established on ____ ?
a) 1st June 1935
b) 1st April 1935
c) 1st June 1934
d) 1st April 1934

2) RBI was established on the recommendations of ____ commission?
a) Central bank of British India Commission
b) John Hilton Young Commission
c) Bank of England Commission
d) Norman Commission
e) Sir Osborne Smith commission

3) RBI was nationalised wef ___ ?
a) 01 Jan 1949
b) 01 June 1949
c) 01 Mar 1949
d) 15 Aug 1947
e) none of these

4) RBI's central office is situated in ___ ?
a) Delhi
b) Mumbai
c) Kolkata
d) Chennai

5) Which of the following(s) is/are function/powers of RBI?
i) Managment of public debt
ii) lender of last resort to banks
iii) grants license to carry on banking business
iv) RBI fixes interest rates on SB

a) ii only
b) i & ii only
c) iii only
d) i, ii & iii only
e) all of the above

6) Which of the following(s) is/are Negotiable Instrument?
i) Promissory note
ii) Bill of exchange
iii) Cheque payable to order or bearer
iv) Currency note

a) i only
b) i & ii only
c) ii & iii only
d) i, ii & iii only
e) all of the above.

7) Which of a following is not a Commercial Bank ?
(A) Reserve Bank of India
(B) State Bank of India
(C) Canara Bank
(D) Oriental Bank of Commerce

8) Which of the following(s) is/are true of Bearer cheque?
i) it is payable to the person who presents it to the bank for encashment or a/c transfer
ii) these cheques are risky, as it could be misused if lost
iii) it is payable to any person who presents it for payment at the bank counter
iv) such cheques are not permitted by RBI

a) iv only
b) i & ii only
c) i, ii & iii only
d) all of the above

9) Which of the following(s) is/are true of Order cheque?
i) it is payable to a particular person only
ii) these cheques can be encashed over the counter by any person - hence the name 'order'
iii) In India order cheques are rarely used
iv) Banks don't encourage such cheques as it restricts payments system of the country

a) iv only
b) iii & iv only
c) ii only
d) i only

10) Full form of CTS?
a) clearing Truncation system
b) cheque transaction system
c) cheque truncation system
d) checking truncation system

11)  What is Cheque Truncation?
a) instead of physical cheque, image is transmitted to the drawee bank branch
b) movement of physical cheques to nearest clearing houses in efficient way
c) discourage use of cheques & move to epayment system
d) sorting of cheques as per their banks according to the MICR codes by machines


12) Which of the following(s) is/are true of CTS 2010?
i) it will speed up the process of cheque clearance.
ii) eliminates the time, money and manpower wasted during physical movement of cheques.
iii) it enhances the scope for clearing-related frauds as earlier each bank had its own security features on the cheque.
iv) in 2010, RBI came up with the guidelines for CTS.

a) i only
b) i & ii only
c) iv only
d) i, ii & iv only

13) A Banker's cheque issued by SBI is valid only for ___ months?
a) 2 months
b) 4 months
c) 3 months
d) 6 months

14) A Mutilated Cheque is ___ ?
a) e-cheques
b) new form of cheques encouraged by banks
c) a cheque torn in two or more pieces
d) a stale cheque


15)India’s First Financial Archive has been set up at—
(1) Mumbai
(2) New Delhi
(3) Ahmadabad
(4) Kolkata
(5) None of these

16) Which of the following(s) is/are true?
i) an 'Uncrossed/open' cheque can be paid across counter or by account transfer
ii) two parallel lines on the left corner of the cheque makes it a crossed cheque
iii) a crossed cheque is payable by account transfer only
iv) a crossed cheque can be paid in cash

a) i & ii only
b) i, ii & iv only
c) i, ii & iii only
d) all of the above

17) Which of the following(s) is/are true of Electronic cheques?
i) its exact mirror image of paper cheque
ii) its generated in a secured system only
iii) its scanned form of a physical cheque
iv) digital signature is used to sign it

a) iii only
b) i & ii only
c) i & iv only
d) i, ii & iv only


18) Currency notes are not Promissory notes?
a) True
b) False
c) Currency notes of Rs 1 denomination are not P-notes as they are issued by Govt
d) depends on the denomination of the note

19) Cash can't be accepted by banks for issuing Demand Drafts above Rs 50,000/-. Why?
a) DD can be issued against cash payments of upto Rs 1 lac.
b) to avoid banks being used by unscruplous elements for money laundering
c) to encourage electronic transfer of money
d) to inculcate financial discipline among general public & use of SB a/cs.

20) For the purpose of KYC, a customer may be defined as ...?
a) only Savings account holders of a bank
b) Savings & loan account holders only
c) beneficial owners only
d) any person or entity connected with any financial transaction

21) Banks are required to maintain secrecy of customer's account?
a) no such restriction, banks can share info freely with others
b) banks can disclose affairs of customers if deemed reasonable
c) to maintain secrecy of a/cs is a legal duty
d) Info can be shared on case-by-case basis

22) Match following correctly:
i) Garnishee order - issued by court
ii) Attachment oder - issued by Income Tax authorities
iii) Garnishee order - issued by Income Tax authorities
iv) Attachment oder - issued by court

a) i & ii only
b) i & iv only
c) i only
d) iii & iv only


23) When a contract is 'void ab initio' what does it mean?
a) No contract exists from beginning
b) contract ceases if any stipulation voilated
c) contract ends from the day any of its terms are unacceptable to any party
d) none of these

24) Max no. of partners in a Partnership firm involved in banking business?
a) 5
b) 7
c) 10
d) 20

25) What does 'Ultra Vires' means?
a) Beyond the powers
b) latest ultra violet machine to detect fake notes
c) define ultra rich people
d) Wire transfer method

26) A deposit account can be closed by ___ ?
a) customer only
b) customer &/or bank
c) customer &/or bank after giving due notice
d) can't be closed, its perpetual

27) First Governer of RBI?
a) Sir James Braid Taylor
b) Sir C D Deshmukh
c) H V R Iengar
d) Sir Osborne Smith

28) First Indian Governer of RBI?
a) Sir Osborne Smith
b) H V R Iengar
c) C D Deshmukh
d) Sir Benegal Rama Rau

29) Talwar Committee in banking was related to ?
a) Expansion of banking in rural areas
b) FDI in banking
c) Customer service
d) NPA in banking

30) Banking Ombudsman scheme is related to ?
a) resolution of complaints related to banking services through conciliation & mediation
b) NPA resolution by compromise
c) providing cheap banking services to low-income group
d) none of these

31) Banking Ombudsman scheme covers which of the following?
a) all commercial banks
b) comercial & RRB banks
c) all comercial & scheduled primary co-operative banks
d) all of the above i.e. commercial, RRB & scheduled primary co-operative banks

32) Complaints older than ___ months after receipt of bank's reply are not taken up by Banking Ombudsman?
a) 6months
b) 10 months
c) 12 months
d) 24 months

33) Who can be an Ombudsman?
a) ex-banker from any scheduled bank
b) appointed by Lead bank
c) well-known economist or banker
d) CGM/GM from RBI

34) Complaints can be filed in Ombudsman by whom?
i) through any advocate on behalf of the aggrieved person only
ii) by the aggrieved person himself only
iii) authorised representative of the aggrieved person only
iv) by the aggrieved person or his advocate

a) i & ii only
b) ii only
c) iv  only
d) ii & iii only

35) Banking Ombudsman gives award or reject a complaint within __?
a) 15 days
b) 7 days
c) 30 days
d) 90 days

36) Max amount of compensation that can be awarded by Ombudsman?
a) 1lac
b) No such limit
c) 10 lacs
d) 20 lacs

37) 'Banking code for Customer Service' released by BCSBI (Banking codes & Standard Board of India) are ___ ?
a) Mandatory rules for all banks
b) Voluntary code for banks
c) some parts are mandatory for all banks
d) mandatory for scheduled banks only

38) Consumer Protection Act 2002 is applicable for ?
i) Banking sector
ii) Insurance sector
iii) all goods & service providers
iv) Private service providers

a) i only
b) i & ii only
c) iv only
d) all of these

39) Which of the following transactions are reported to FIU- IND (Finance Intelligence Unit - India)?
i) CTR
ii) DTR
iii) LTR
iv) STR

a) i only
b) i & ii only
c) i & iv only
d) all of these

40) Which is true about CTR?
i) Large cash transaction of above Rs 10 lac is reported
ii) Large cash transaction of above Rs 1 lac is reported
iii) CTR should be submitted by 15th of succeeding month
iv) individual transaction below Rs 50,000/- may not be included

a) i only
b) i & iii only
c) ii & iii only
d) i, iii & iv only


41) Which is true about STR?
i) suspicious transaction report is based on cash only
ii) report furnished to FIU within 7 days of confirmation of sucpicious transaction
iii) Banks should put restrictions on accounts where suspicious transaction is reported
iv) suspicious transaction report is based on cash or non-cash activity

a) i & ii only
b) i, ii & iii only
c) ii, ii & iv only
d) ii & iv only

42) In which of the following accounts do nomination facility exists?
i) Deposit a/cs
ii) Safe deposit of articles
iii) Lockers
iv) Loans

a) i only
b) i & ii only
c) i, ii & iii only
d) all of these

43) TDS is payable on which account(S)?
i) Savings account
ii) Fixed deposits
iii) Recurring deposits

a) ii only
b) i & ii only
c) ii & iii only
d) all of these

44) TDS is deducted if aggregated amount of Interest per financial year exceeds __?
a) 1000/-
b) 5000/-
c) 10000/-
d) 20000/-

45) Which is/are true about Service tax?
i) its an Indirect tax
ii) rate of ST is 12.36% (12% + 2% Edu cess + 1% secondary & higher edu cess)
iii) its a direct tax
iv) small service provider with turnover up to Rs 10lacs exempted

a) i & ii only
b) ii & iii only
c) ii only
d) i, ii & iv only

46) STT - Security Transaction Tax - is levied for purchasing shares on delivery basis. Rate is ..?
a) 0.1%
b) 0.0125%
c) 0.125%
d) 0.01%

47) A savings/current account is tagged "Inoperative or Dormant" if its not operational by customer for a period of
 ...?
a) 12 months
b) 6months
c) 24 months
d) 18 months

48) Amount of Total unclaimed deposits lying with all scheduled commercial banks at the end of December 2012?
a) 1156 crore
b) around 2000 crore
c) 3652 crore
d) 2562 crore

49) Which of the following is true of 'Depositor Education and Awareness Fund (DEAF)'
i) banks should remit unclaimed deposits only - to the fund
ii) banks should remit unclaimed deposits alongwith interest accrued to the fund
iii) DEAF was first announced in the annual monetary policy by RBI in May, 2013
iv) banks should transfer amounts becoming due in each calendar month on the last working day of the subsequent month

a) i only
b) i & iii only
c) ii & iv only
d) ii, iii & iv only

50) What are 'Unclaimed deposits'?
a) an account which is not operated for 10 years
b) an account not operated for 2 years
c) an account not operated for 12 years
d) an account not operated for 10 months

51) What are 'Notice Deposits'?
a) Term Deposit for a specific period but withdrawable on giving at least one complete banking day's notice
b) another name for Savings account
c) another name for current account
d) Normal Fixed Deposits in banks for short duration

52) Which of the following(s) is/are true about interests on Savings bank (SB) a/c?
i) RBI deregulated SB interest rate wef 25 Oct 2011
ii) Interest on SB can be paid on Quaterly basis or longer period
iii) Banks must offer uniform interest rates on deposits of upto Rs 1 lacs, thereafter differential rates can be given.
iv) Wef April 1, 2010 payment of interest on savings a/c would be calculated on a daily product basis

a) i only
b) i, ii only
c) i,ii & iii only
d) i, iii & iv only

53) Which is true about PPF a/c?
i) Tenure of PPF a/c is 15 year.
ii) current interest rate is 8.7% p.a
iii) you can invest min 500 & max 1lacs per FY
iv) Scheme is available to Residents, NRIs

a) i only
b) i & iii only
c) i, ii & iii only
d) all of these


Answer keys to Banking / 01/ 05.07.2014

Answer keys to Banking / 01/ 05.07.2014


1. B. 1st April 1935
2. B. John Hilton Young Commission also 'Royal commission on Indian currency & Finance'
3. A. 01 Jan 1949
4. B. Mumbai
5. d) i, ii & iii only. Banks are free to decide SB rates. Some offer 4%, few 6%.
6. d) i, ii & iii only. Negotiablity means valid transferability of the said instruments. Currency not Negotiable.
7. (A) Reserve Bank of India
8. c) i, ii & iii only
9. d) i only. When you write 'order' on the cheque or delete 'bearer' out of the 2 words mentioned then it becomes order cheque. safe method on issuing chq. Payee can give it to someone else by signing his/her name on backside (officially called endorsement).
10) c) cheque truncation system
11. a) instead of physical cheque, image is transmitted to the drawee bank branch
12. d) i, ii & iv only. RBI has brought unique security features like bar codes, encrypted codes, logos, watermarks, holograms on CTS cheques - they are secure & fraud proof.
13. c) 3 months. All cheques/DD/BC have validity of 3months. Expired cheque is also known as Stale cheque.
14. c) a cheque torn in two or more pieces. It can be paid - after getting confirmation from drawer.
15. (4) Kolkata
16. c) i, ii & iii only
17. d) i, ii & iv only
18. a) True
19. b) to avoid banks being used by unscruplous elements for money laundering
20. d) any person or entity connected with any financial transaction
21. c) to maintain secrecy of a/cs is a legal duty
22. a) i & ii only
23. a) No contract exists from beginning
24. c) 10
25. a) Beyond the powers (Bank can't go beyond the scope of their objects)
26. c) customer & bank after giving due notice
27) d) Sir Osborne Smith
28) c) C D Deshmukh
29) c) Customer service
30) a) resolution of complaints related to banking services through conciliation & mediation
31) d) all of the above i.e. commercial, RRB & scheduled primary co-operative banks
32) c) 12 months
33) d) CGM/GM from RBI
34) d) ii & iii only
35) c) 30 days
36) c) 10 lacs. Award may be actual loss suffered or 10 lacs whichever is lower.
37) b) Voluntary code
38) d) all of these. CPA is applicable to all goods & service providers, private or public.
39) c) i & iv only. CTR= Cash transaction report. STR = Suspicious transaction report.
40) d) i, iii & iv only.
41) d) ii & iv only. Banks should not put restriction on accounts where suspicious transactions are identified.
42) c) i, ii & iii only
43) a) ii only. TDS is not deducted on NRE (non resident external) a/cs also
44) c) 10000/-. Per financial year per branch.
45) d) i, ii & iv only
46) d) 0.01%
47) c) 24 months. No penalty if minimum balance not kept in dormant bank account.
48) c) 3652 crore
49) d) ii, iii & iv only
50) a) an account is not operated for 10 years. Banks are supposed to locate them & properly discharge the balance if party is found... otherwise remit it to the fund - along with interest.
51) a) Term Deposit for a specific period but withdrawable on giving at least one complete banking day's notice
52) d) i, iii & iv only. Banks are now free to give interest shorter duration also (both SB & FD). 'Daily product basis' means banks will have to pay interest on the daily minimum balance in SB a/c.
53) c) i, ii & iii only





MCQs on Finance

Best of luck !

1) Which is the Currency of Malaysia?
a) Malaysian Dollor b) Bhat c) Ringgit d) lira e) Rupiah

2) Which of the following is true about Convertibility of Rupee?
i) Rupee is fully convertible on the current account.
ii) Rupee is partially convertible on the capital account.
iii) Rupee is partially convertible on the current account.
iv) Rupee is non-convertible on the capital account.

a) i & ii only
b) i & iv only
c) ii & iii only
d) none of these

3) Full form of AUM?
a) All under management
b) All asset under-manageable
c) Assets under management
d) Always under management

4) What does full current account convertability of Rupee means?
i) Residents can make & recieve trade related payments in foreign currency & vice-versa.
ii) Can convert local financial assets into foreign assets.
iii) residents can purchase real estate abroad.
iv) for education & tourism purpose Rupee can be converted in restricted manner only.
v) Indian companies can buy foreign companies without restrictions out of Indian resources.

a) i & iii only
b) i, ii & v only
c) ii & iv only
d) i & iv only

5) In stock market parlance what does the term 'bearish' associated to?
a) index in upward trend
b) index in downward trend
c) index volatile & moving both ways
d) index showing not much activity.

6) Expand CAD?
a) Capital account deficit
b) Concurrent audit
c) Current Account deficit.
d) Convertible account deficit.

7) BSE's stock market index - Sensex is based on __ no. of large companies/scrips?
a) 25
b) 30
c) 50
d) 100

8) In stock market parlance what does the term 'short' associated to?
a) a trader sell a scrip/co. first & buys it later.
b) a trader short on money.
c) time period of 5 mins before the market closes.
d) a trader buys a scrip first & sells it later.

9) Which of the following is true about Derivatives?
i) They derive their value from an underlying asset.
ii) Its basically a financial contract refering future price.
iii) They are used to hedge risk in a transaction or for speculation purpose.
iv) They are available in OTC (Over-the-counter) market as well as Exchanges like NSE.

a) i only
b) i & ii only
c) i, ii & iii only
d) All the above.

10) Which of the following is true about Options?
i) they are basically derivative products only.
ii) there is no obligation to honor the contract.
iii) Premium is paid for not honoring the contract.
iv) 'Call option' gives holder right to sell underlying asset at prefixed rate.
v) 'Put option' gives holder right to buy underlying asset at prefixed rate.

a) i, ii only
b) i, ii & iii only.
c) i, iv & v only
d) all the above.

11) Which of the following is true about Futures?
i) these are derivatives products only.
ii) there is no obligation to honor the contract.
iii) they are listed on an exchange.
iv) they are used for hedging & speculation.

a) i & ii only
b) i, iii  & iv only
c) i & iii only
d) all the above.

12) Which of the following is true about Forward Contracts?
i) they are Over-the-counter derivative products
ii) traded on one-to-one basis among parties & mutually agreed terms.
iii) its used for hedging risk
iv) they are listed on an exchange.

a) i only
b) i & ii only
c) ii, iii & iv only
d) i, ii & iii only

13) Which of the following is true about recent Interest Rate Futures contract launched in India?
i) underlying security is either 10 year GoI bond (G-sec) or 91 day T-bill.
ii) contract to buy or sell a debt instrument.
iii) these are non-standard OTC contracts
iv) these are standaridized contracts available on MCX-FX, NSE & BSE.
v) they are basically derivative products only

a) i & v only
b) i, ii, iv & v only
c) i, ii, iii & v only
d) all the above.

14) Which of the following is true about Hedge funds?
i) they are meant for ultra rich individuals.
ii) they invest very aggressively in any class, from G-sec to any exotic derivatives.
iii) they can charge upto 20% of net profit, and do not share losses.
iv) they are virtually unregulated
v) they can market publicly.

a) i, ii only
b) i, ii & iv only
c) i, ii, iii & iv only
d) all the above

15) Which of the following is true about Swaps?
i) Swap is an exchange of cash-flows.
ii) in an Interest-rate swap, basis for calculation of Interest is changed e.g. from floating to fixed or vice-versa.
iii) in Currency Swap, cash flow of one currency is changed to another currency.
iv) Swaps are used to hedge currency & interest rate risks.

a) i only
b) i & ii only
c) i & iv only
d) all of above.

16) Which of the following is true about Volatility Index (Vix)?
i) It captures mood of the market, high volatility is associated with fall in market.
ii) If Vix more than 30%, stock market investors are in fear zone.
iii) A low Vix associated with price rise.
iv) India Vix is based only Nifty 50 Option prices.

a) i & iii only
b) iv only
c) ii & iii only
d) all the above.

17) Whats REIT?
a) REal IT
b) Realistic Infra Technology fund
c) Reference for IT index
d) Real Estate Investment Trust

18) Full form of EURIBOR?
a) EUropean reference for labor market
b) EU's bechmark index
c) Euro Inter-Bank offered rate.
d) EU libor rate

19) 50 basis points means?
a) 5.00 %
b) 0.50 %
c) 0.05%
d) 50.00 %

20) What is meant by Arbitrage?
a) its nothing but name of a movie.
b) practice of taking advantage of a price difference between two or more markets.
c) hedging practice
d) an pre-budget activity.


Ans:
1) C. Thailand- Bhat. Turkey- Lira. Indonesia- Rupiah.
2) A.
3) C.
4) D.
5) B. And the term "Bullish" refers when Index is in upward trend.
6) C.
7) 30. NSE's Nifty is based on 50 large companies.
8) A. The term 'Long' refers to "buy first, sell later".
9) D. Derivative products includes OTC (forward contracts), Futures (forward contracts on exchanges), Options, Swaps
10) B. Options as the name suggests has no obligation. Call option is right to buy (think you are calling for price), Put option is right to sell (think you are putting 'it' on OLX to sell).
11) B. Furutes have obligation to honor the contract, think of it as buying/selling shares on NSE - you can't go back on trade you've done.
12) D.
13. B. IRF was recently re-launched for 3rd time in India.
14) C. Hedge funds can't market publicly.
15) D.
16) D.
17) D.
18) C.
19) B.
20) B.

MCQs for rbi


1. Currency chest is the property of ____ ?
A. RBI. b) SBI. C) GoI d) Lead bank of the area. e) Bank itself.

2. Which dept of RBI oversees designing of banknotes in India?
a) Dept of banknotes b) Dept of rupee management c) Dept of banking affairs d) Dept of Currency management e) none of these.

3. Where is not a currency printing press located ?
a) Dewas (MP) b) Salboni (WB) c) Nasik d) Mysore e) Mumbai

4. Where is not a coin mint located from below ?
a) Noida b) Delhi c) Hyderabad d) Mumbai e) Calcutta

5. Banknotes & Rs.1 coins can be used to pay any sum upto _____?
a) no such limit b) Rs 1 lacs. c) 1 crore, d) 1.50 lacs

6) 50 Paisa coins can be used to pay/ settle any sum upto ____?
a) Rs Two. b) Rs Five. c) Rs Ten. d) Rs One hundred.

7) Which of the following is true of RBI's balance sheet?
a) RBI's balance sheet is a sum of 2 major Dept i.e. Issue Dept & Banking dept.
b) RBI's annual year closes on 30 june.
c) Currency circulation is backed by 3 major assets of Issue dept ie. Gold, foreign & Rupee security.
d) CRR balances, Open Market Operations, Loans to Govt etc comes under Banking dept's Balance sheet.
e) all of the above.

8) What is KYC?
a) to verify the identity of customers.
b) budget related activity of an organisation.
c) effort to convert black money into white money.
d) legal ways to harass poor customers.
d) none of these.

9) Payment system of the country include which of the following?
i) Cheques. ii) Credit cards. iii) Currency. iv) Electronic transfers

a) i only
b) i & iii only
c) i, ii & iii only
d) all of these

10) Which of the following is not true about WMA - Ways & Means Advance by RBI to State Govts.
a) Short-term finance to state govt to tide over temporary mismatches  in cash flow.
b) non interest-bearing limits
c) if WMA limits are exceeded, its called 'Overdraft' - allowed for few days only.
d) These limits are without any security.
e) B & D


ANS:
1) A. RBI. CC is extension of Issue Dept of RBI.
2) D. This dept essentially oversees work of issue & retrieval of currency. This is performed through 18 issue offices.
3) E. Dewas & Nasik presses' are Govt owned. Salboni & Mysore are owned by RBI, through its wholly owned subsidiary, the Bharatiya Reserve Bank Note Mudran Ltd. (BRBNML).
4) B.
5) A.
6) C.
7) E.
8) A. Know Your Customer.
9) D.
10. B. State govts have to pay interest on these limits.