Money and Banking online Test

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Money and Banking online Test - 22

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Weekly Quiz Competition

Question 1
1 / -0

According to traditional approach the average cost of capital ________________________________.

A
Remains constant up to a degree of leverage and rise sharply thereafter with even increase in leverage

B
Rises constantly with increase in leverage

C
Decreases up to a certain point, remains unchanged for moderate increase in leverage and rises beyond a certain point

D
Decreases at an increasing rate with increase in leverage

E
Increase up to certain point remains constant for moderate decrease in leverage and decreases beyond a certain point.

Solution

According to the traditional approach the average cost of capital K$$_0$$ as a consequence of a behaviour of K$$_e$$ and K$$_d$$, decreases up to a certain point remains more or less unchanged for moderate increases in leverage thereafter and rises beyond a certain point.
Question 2
1 / -0

The statistical technique used by Altman to distinguish between a bankrupt and a non bankrupt firm is ______________.

A
Multiple Discriminant Analysis

B
Correlation

C
Joint Probability

D
Multiple Regression Analysis

E
Both (B) and (D) above

Solution

Multiple discriminant Analysis (MDA) is the statistical technique that is used to distinguish between bankrupt and non bankrupt firms.
Question 3
1 / -0

What is the term used for the ratio of the Cash Reserves that the banks are required to keep with the RBI?

A
Liquidity ratio

B
SLR

C
CRR

D
Net demand and Time liability

Solution

CRR refers to the cash reserve ratio. It refers to the amount that is to be kept by the commercial banks as minimum reserve in the form of cash with the central bank, i.e., RBI.
Question 4
1 / -0

Many a time we read in newspaper about the benefits of National Electronic Funds Transfer (NEFT), a delivery service launched by the bank. Why do banks advocate for such delivery channels?
A. It is a system in which no physical transfer takes place, hence risk is very low.
B. In this system banks are not required to transfer any money actually to the account of the customer. Only book adjustment is done. Hence actual fund is not needed.
C. This facility is available to anybody at any place. Even having a bank account is not at all necessary.

A
Only (A) is correct

B
Only (B) is correct

C
Only (C) is correct

D
Both (A) and (B) are correct

Solution

National Electronic Funds Transfer (NEFT) is a nation-wide payment system facilitating one-to-one funds transfer.

Under this Scheme, individuals can electronically transfer funds from any bank branch to any individual having an account with any other bank branch in the country participating in the Scheme.
Question 5
1 / -0

Various banks in the country have installed machines which disburse money to general public. These machines are called _______.

A
coin dispensing machines

B
ATMs

C
debit card machines

D
ledger machines

Solution

An ATM, which stands for automated teller machine, is a specialized computer that makes it convenient to manage a bank account holder's funds.
It allows a person to check account balances, withdraw or deposit money, print a statement of account activities or transactions, and even purchase stamps
Question 6
1 / -0

What is a 'Debit Card'?

A
It is a card issued by a Rating Agency.

B
It is a card which can be used for withdrawing cash or making payment even in the absence of any balance in the account

C
It is a card which can be used for withdrawing cash or making payment if there is balance in the account.

D
It is a card which carries prepaid balance.

Solution

Debit card is electronic generated card that acts as plastic money at the time of buying goods and services. Debit card is used to withdraw money from your bank account either directly through ATMs in cash or at the time of doing payment for something.
Question 7
1 / -0

A money deposited in a bank that cannot be withdrawn for a preset fixed period of time is known as a ____________________.

A
term deposit

B
checking account

C
savings bank deposit

D
no frills account
Question 8
1 / -0

As we all know, Banks in India are required to maintain a portion of their demand and time liabilities with the Reserve Bank of India. What is this portion is called?

A
Statutory Liquidity Ratio

B
Cash Reserve Ratio

C
Bank Deposit

D
Reverse Repo

Solution

Cash Reserves Ratio (CRR) refers to the proportion of total deposits of the commercial banks which they must have keep as cash reserves with the central bank. The ratio is fixed by the central bank and is varied from time to time to control the supply of money in the economy depending upon the prevailing situation of inflation or deflation.
Question 9
1 / -0

By increasing repo rate, the economy may observe the following effect(s) ____________________.

A
Rate of interest on loans and advances will be costlier.

B
Industrial output would be affected to an extent.

C
Banks will increase rate of interest on deposits.

D
All of these
Question 10
1 / -0

Which of the following is a payment and settlement system used by the banks in India?

A
Liquidity Adjustment Facility

B
Real Time Gross Settlement

C
Forward Rate Agreements

D
Central Depository Service

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Money and Banking online Test - 22

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Money and Banking online Test - 22

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Question 1

Remains constant up to a degree of leverage and rise sharply thereafter with even increase in leverage

Rises constantly with increase in leverage

Decreases up to a certain point, remains unchanged for moderate increase in leverage and rises beyond a certain point

Decreases at an increasing rate with increase in leverage

Increase up to certain point remains constant for moderate decrease in leverage and decreases beyond a certain point.

Solution

Question 2

Multiple Discriminant Analysis

Correlation

Joint Probability

Multiple Regression Analysis

Both (B) and (D) above

Solution

Question 3

Liquidity ratio

SLR

CRR

Net demand and Time liability

Solution

Question 4

Only (A) is correct

Only (B) is correct

Only (C) is correct

Both (A) and (B) are correct

Solution

Question 5

coin dispensing machines

ATMs

debit card machines

ledger machines

Solution

Question 6

It is a card issued by a Rating Agency.

It is a card which can be used for withdrawing cash or making payment even in the absence of any balance in the account

It is a card which can be used for withdrawing cash or making payment if there is balance in the account.

It is a card which carries prepaid balance.

Solution

Question 7

term deposit

checking account

savings bank deposit

no frills account

Question 8

Statutory Liquidity Ratio

Cash Reserve Ratio

Bank Deposit

Reverse Repo

Solution

Question 9

Rate of interest on loans and advances will be costlier.

Industrial output would be affected to an extent.

Banks will increase rate of interest on deposits.

All of these

Question 10

Liquidity Adjustment Facility

Real Time Gross Settlement

Forward Rate Agreements

Central Depository Service

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