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.

MCQs on banking

MCQs from various sources important for exams. Answer key is available at the end.

1) What is GAGAN Project developed with the help of ISRO?
a) It's ambitious plan of Indian airforce to develop next generation fighter planes by 2020.
b) It's satellite based system by AAI, to navigate & guide aircrafts over India, Bay of Bengal, South-East Asia & Middle East expanding upto Africa.
c) It's domestic version of GPS.
d) Advance weather forecasting system to be developed with the help of NASA.

2) Match the following correctly.
i. TS Vijayan, ii. UK Sinha, iii. Ila Patnaik, iv. Raghuram Rajan, v. Ramesh Abhishek
A) RBI, B) FMC, C) IRDA, D) SEBI, E) Principal Economic Advisor

(a) i-C, ii-D, iii-E, iv-A, v-B.
(b) i-C, ii-D, iii-B, iv-A, v-E
(c) i-C, ii-E, iii-D, iv-A, v-B
(d) i-D, ii-E, iii-B, iv-A, v-C.

3. Who is not Dy. Governor of RBI from below?
a) Urjit Patel, b) R. Gandhi, c) H R Khan, d) Anand Sinha

4) A Dy. Governor of RBI is appointed for a period of ____?
a) 3 years, b) 4 years, c) 5 years, d) 6 yrs, e) no such limit.

5) Name the youngest governor of RBI.
a) Raghuram Rajan. b) Bimal Jalan. c) YV Reddy. d) SS Tarapore. e) CD Deshmukh

6) Which of the following book is written by Sh Raghuram Rajan?
a) Saving Capitalism, b) Irrational Exuberance, c) The Alchemy of Finance, d) Saving the world, e) none of these

7) Autobiography of actor Dilip Kumar?
a) My Journey through Bollywood. b) Black & White to Colored Cinema. c) 100 years 0f Indian Cinema. d) The Substance and the Shadow. e) The man of substance.


8) When is World environment day?
a) 2 june, b) 3 june, c) 5 july, d) 1 Aug, e) 5 june.

9) Official Mascot of FIFA 2014 is ___?
a) Blu Macaw. b) Zakumi. c) Goleo. d) Fuleco. e) Striker.

10) Who heads 14th Finance Commission?
a) Vijay Kelkar. b) YV Reddy. c) Raghuram Rajan. d) Bimal Jalan.

11) What is 'Cash Recyclers' machine?
a) ATMs that can accept & dispense cash too. b) Recycling machine for soiled notes. c) Note sorting machine. d) Note counting machine.

12) Which of the following is true?
a) Minors above 10 can open & operate Savings account independetely with cheque book & ATM facility.
b) For the purpose of KYC, a bank account can be opened with just one address proof, which can be either permanent or local.
c) All scheduled commercial banks to deploy only “talking ATMs” starting 1 July.
d) all of these.




Ans:
1. B. GPS-Aided Geo Augmented Navigation (GAGAN)
2. A.
3. D.
4. C.
5. E.
6. A. Other being ‘Fault Lines: How Hidden Fractures Still Threaten the World Economy’.
7. D.
8. E.
9. D.
10. B.
11. A.
12. D.

MCQ on Indian economy on eve of Independence

MCQs made on 'Indian economy on the eve of Independence' Chapter 2 of Datt & Sundharam Eco book
Take a paper & write ans first. Check your progress with answers given at the end. Good luck.

1) Throughout the colonial period there was a generation of a large export ________?
a) Deficit b) surplus c) no conclusive data available

2) Life expectancy during colonial period in India?
a) 30yrs b)50 yrs c) 60 yrs d) 63yrs

3) Muslin which had its origin in Bengal had enjoyed world wide market in Pre-Colonial period. Indian 'Daccai Muslin' had gained fame for its exquisite quality. What is muslin?
a) very fine quality jute ropes b) silk textile (c) a type of cotton textile (d) an exquisite gem stone e) none of these

4) Jute is 2nd most important vegetable fiber after cotton, in terms of usage & global production. Jute is also known as ______?
a) Brown Fiber b) Affordable fiber  c) Yellow fiber d) Golden Fiber e) none of these

5) What is meant by 'progressive ruralization' or 'deindustrialization of India' which characterized colonial rule?
a) There was no industries till colonial period to deindustrialize. b) rural areas were made more progressive to export more raw materials back to UK. c) the trend of growing proportion of the working force in agriculture. d) none of these.

6) The largest source of revenue for Britishers in India was from ______?
a) Textile & Jute industry b) Gems & stone industry. c) Temple tax d) Land revenue e) none of these.

7) In order to bring stability in Agriculture the Britishers introduced land settlement in 1773. Where was it first introduced?
a) fertile lands of Punjab province b) Bombay province c) all directly British ruled areas d) Bengal e) none of these.

8) To enhance land returns a type of 'permanent settlement' which raised the status of revenue collectors to that of Private landlords introduced in Bengal by Britishers is called _____ ?
a) Ryotwari settlement b) Zamindari system c) Bengal Land settlement system d) none of these.

9) Permanent settlement system was brain-child of ______?
a) Philip Francis, English MP in House of Commons. b) William Bentick. c) Warren Hastings. d) Lord Cornwallis. e) none of these

10) How is Ryotwari system introduced by Britishers in large parts of Bombay, Madras, north-eastern & north-western parts of India is different from Zamindari system?
a) Land revenues were excessive in former.
b) Just the name was different for easy understanding by locals otherwise both systems were same.
c) Under Ryotwari system revenues can be collected in both cash & kind.
d) Each peasant holding a plot of land was recognised as landlord & was directly responsible to state for annual land revenue payment.


11) With completion of Industrial revolution in UK during 1850-1947, raw matarials like cotton, jute, sugarcane etc. were in high demand by UK's industry. So much was the policy conditions & high market price that the farmers started production of crops for industrial sale rather than for family consumption, this was called _______?

a) Modernisation of Indian Agriculture b) Commercialisation of Indian Agriculture c) its nothing but 'normal sales of Marketable surplus'. d) Marketed surplus. e) none of these.


12) Which of the following(s) is/are cause(s) of slow growth of private enterprises in India's industrialization (1850-1957)?
a) Unimaginative private enterprise, short-sighted Indian industrialists.
b) complete absense of financial institutions to help transfer of savings to industrial investment.
c) Banking was not highly developed & was more concerned with commerce rather than industry.
d) Lack of support from British government e) all of these

13) The company agents who would sign bonds with local artisans to deliver cotton & silk fabrics much below market price are called
a) Gomastas b) Izaredars c) Thakurs d) Seths e) none of these.

14) What among the following(s) did not characterize "Imperial Preference" clause in the Policy of Discriminating protection adopted by Britishers in response to Indian National Movement?
a) Imports from UK has no/zero duties, while exports to UK are preferred.
b) to help Indian business to undertake investments in India.
c) to help British capital find safe & secure avenues of Investment in India.
d) to help maintain British trade monopoly in India & stop any other country to enter the Indian market. e) all of these.

15) RBI's first census of India's foreign Assets & Liability as on 30 June 1948 revealed total foreign business investments of Rs 302 cr, out of it what was the % of British investments in India?
a) 51% b) 60% c) 72% d) 91% e) 100%.

16) What is meant by Home charges, one of the ways of economic drain of India?
a) Charges for establishment of industries in India. b) Incentives for exporting raw material to UK. c) Remuneration paid to British officials for working in India. d) Payments on account of interest on foreign debts incurred by India, remittances of Salaries, Savings, Pension by Britishers etc. e) none of these.

17) First train on India soil was run on 1853 between?
a) Bombay to Thane. b) Thane to Bombay. c) Bombay to Surat. d) none of these.

18) Who among the following are some of the notable economists who estimated India’s per capita income during the colonial period.
a) Dadabhai Naoroji. b) William Digby. c) Findlay Shirras d) V.K.R.V. Rao.  e) R.C. Desai


ANSWERS

1. ANS: B
2. Ans: A
3. Ans: C.  Egyptian mummies dating back 2000 BC were wrapped in Indian Muslin. Greeks called it Gangetika.
4. Ans: D
5. C. The unemployed craftsmen & artisans shifted to agriculture also described as back-to-the-land movement. In mid nineteenth century 55%, in 1901 68%, in 1931 72% of population was dependent on Agri.
6. D.
7. D. First 'Izaredari system' was introduced by Warren Hastings. In it the right to collect revenue was given to the highest bidder (who may change). Izaredars then squeezed everybody to pay to the Company. This 'bidding' process was later changed to a more permanent system which was hereditary.
8. B. Under Zamindari system land revenue were fixed for perpetuity. Zamindars were reponsible for payment of land revenue to the state.
9. D.
10. D. Ryots=peasant cultivators/hired labor. Later Mahalwari system (Mahal= house, district) was introduced in UP, Punjab in which along with village communities, landlords were jointly responsible for revenue.
11. B.
12. E.
13. A
14. B.
15. C.
16. D.
17. A.
18. All of the these ;).



Indian economy on eve of independence notes


Britishers changed structure of Indian economy — India end up being net supplier of raw materials and consumer of finished industrial products from UK. India was feeder of UK's Industrial base.

Agriculture: Mainly Agrarian economy. 85% of population lived in villages & derived livelihood directly or indirectly from agri. Stagnant growth, bad land/ revenue settlement system - zamindari system.

Industrial sector: declining handicraft industries in India resulted in high unemployment, and demand was meet by cheap UK goods. From 1850s cotton & jute textile mills come up in Maharashtra, Gujrat. Jute mills in Bengal. 1900s- Iron/steel, TISCO(Tata Iron & Steel Co 1907) were set up.

However no Capital goods industry. {Capital goods industry means industries which can produce machine tools which are, in turn, used for producing articles for current consumption.}

Another drawback of colonial rule was Public sector was confining its activities only to the railways, power generation, communications, ports and some other departmental undertakings.

Foreign Trade: more than 50% of foreign trade was with UK. India was basically exporting raw goods (raw silk, cotton, wool, sugar, indigo, jute etc.) and importing finished consumers goods (cotton, silk and woollen clothes and capital goods like light machinery).

Most Importantly throughout the colonial period there was a generation of a large export surplus. This means that several essential commodities - food grains, clothes, kerosene etc were scarcely available here. The surplus was used to pay off British Government's war efforts.

Demographic condition: 1st modern census of 1881. Before 1921, India was in the first stage of demographic transition. The second stage of transition began after 1921.

{Demographic Transition : It is a concept developed by demographer Frank Notestein in 1945 to describe the typical pattern of falling death and birth rates in response to better living conditions associated with economic development. Notestein identified three phases of demographic transition, pre-industrial, developing and modern industrialised societies. Later another phase, post-industrial was also included.}


Social Development indicators was not good. Overall literacy level - 16%, for women: 7%. Life expectancy just 32yrs.

Occupational Structure:


Infrastructure: Real motive behind development of infra was to sub-serve colonial interest. Social benefits of railways outweighed huge economic losses.

Read MCQs to complete your understanding of this part.