Banking Awareness Quiz – Set 70

Hello Aspirants,
Welcome to Banking Awareness Quiz in AffairsCloud.com. Here we are creating quiz covering important questions which are common for all the bank exams and other competitive exams.

1. Time period that is considered from the inception of the credit, investment or negotiable instrument and ends upon the maturity or expiry of the instrument is referred as ________
   A. Amortisation Period
   B. Amortising Swap
   C. Asset Backed Security
   D. Attrition Analysis
   
   Answer & Explanation

   A. Amortisation Period
   Explanation:
   The amortisation period on a mortgage is the total length of time it will take you to pay off your mortgage.
   
   
2. A debt which is irrecoverable and is therefore written off as loss in the accounts of an institution or bank is known as __________
   A. external debt
   B. good debt
   C. bad debt
   D. internal debt
   
   Answer & Explanation

   C. bad debt
   Explanation:
   The term bad debts usually refers to accounts receivable (or trade accounts receivable) that will not be collected.
   
   
3. ___________ is basically charged when a person uses a credit card to obtain cash.
   A. Early Repayment Charge
   B. Redemption Fee
   C. Transaction Fee
   D. Cash Advance Fee
   
   Answer & Explanation

   D. Cash Advance Fee
   Explanation:
   A cash advance fee is a charge that a credit card issuer charges a customer for accessing the cash credit line on his or her account, either through an ATM, convenience check or at a bank’s teller window.
   
   
4. Which is an interest-free period that is to be given by a creditor to debtor?
   A. Fixed Period
   B. Preset Period
   C. Grace Period
   D. None of the Above
   
   Answer & Explanation

   C. Grace Period
   Explanation:
   The grace period is the provision in most loan and insurance contracts which allows payment to be received for a certain period of time after the actual due date. During this period no late fees will be charged, and the late payment will not result in default or cancellation of the loan.
   
   
5. An account which is maintained by depositing undistributed parts of profit for future needs is known as ________
   A. Savings Account
   B. Current Account
   C. Reserve Account
   D. None of the Above
   
   Answer & Explanation

   C. Reserve Account
   Explanation:
   Funds taken out of earnings to provide for anticipated future payments is called Reserve Account.
   
   
6. The difference between the total cost of a project and the sanctioned loan amount is termed as ___________
   A. Near Money
   B. Hot Money
   C. Gross Income
   D. Margin Amount
   
   Answer & Explanation

   D. Margin Amount
   Explanation:
   The Difference between the market value of a collateral and amount of the loan advanced against it. Margin Amount is also known as haircut.
   
   
7. A loan which is secured by collateral and for which borrower is not personally liable is called __________
   A. Secured loan
   B. Syndicated loan
   C. Non-Recourse loan
   D. No Documentation loan
   
   Answer & Explanation

   C. Non-Recourse loan
   Explanation:
   A non-recourse debt is a type of loan that is secured by collateral, which is usually property. If the borrower defaults, the issuer can seize the collateral, but cannot seek out the borrower for any further compensation, even if the collateral does not cover the full value of the defaulted amount.
   
   
8. Which term refers closure of the loan account prior to the tenure fixed for the account?
   A. Pre Approved
   B. Pre Closure
   C. Personal Disposable
   D. None of the Above
   
   Answer & Explanation

   B. Pre Closure
   Explanation:
   Prepayment or pre-closure of a loan implies to the early repayment of a loan, in part or in full. Prepayment is done to reduce the tenure of the loan as well as the interest.
   
   
9. Taking back of property by a seller or a lender from the buyer or borrower due to default of payment is termed as ________
   A. Reconveyance
   B. Repossession
   C. Recurring Billing
   D. Revalidation
   
   Answer & Explanation

   B. Repossession
   Explanation:
   Repossession is a term used to denote a financial institution taking back an object that was either used as collateral or rented or leased.
   
   
10. A very large loan extended by a group of small banks to a single borrower is known as ______
    A. Secured loan
    B. Syndicated loan
    C. Non-Recourse loan
    D. No Documentation loan
    
    Answer & Explanation

    B. Syndicated loan
    Explanation:
    A syndicated loan is a loan offered by a group of lenders (called a syndicate) who work together to provide funds for a single borrower. The borrower could be a corporation, a large project, or a sovereignty (such as a government). The loan may involve fixed amounts, a credit line, or a combination of the two.