Banking Awareness Quiz – Set 98

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. Who among the following appoints the “Authorized Dealers” for foreign exchange transactions?
   A. GOI
   B. RBI
   C. PSBs
   D. FEDAI
   E. FIMMDA
   
   Answer & Explanation

   D. FEDAI
   Explanation:
   Foreign Exchange Dealer’s Association of India (FEDAI) was set up in 1958 as an Association of banks dealing in foreign exchange in India (typically called Authorised Dealers – ADs) as a self regulatory body and is incorporated under Section 25 of The Companies Act, 1956. It’s major activities include framing of rules governing the conduct of inter-bank foreign exchange business among banks vis-à-vis public and liaison with RBI for reforms and development of forex market.
   
   
2. Which of the following is an Association of Commercial Banks, Financial Institutions and Primary Dealers?
   A. GOI
   B. RBI
   C. PSBs
   D. FEDAI
   E. FIMMDA
   
   Answer & Explanation

   E. FIMMDA
   Explanation:
   FIMMDA stands for The Fixed Income Money Market and Derivatives Association of India (FIMMDA). It is an Association of Commercial Banks, Financial Institutions and Primary Dealers. FIMMDA is a voluntary market body for the bond, Money And Derivatives Markets.
   
   
3. Banking services provided to Special Economic Zones(SEZ) units have been exempted from _________
   A. Sales Tax
   B. Securities Transaction Tax – STT.
   C. Central Excise Duty
   D. Service Tax
   E. None of the Above
   
   Answer & Explanation

   D. Service Tax
   Explanation:
   Banking services offered to units set up in special economic zones have been exempted from paying service tax.
   
   
4. The relationship between maturity and interest rates is known as ________
   A. Yield Curve
   B. Zero Coupon Yield Curve
   C. Negative Yield Curve
   D. Neutral Yield Curve
   E. None of the Above
   
   Answer & Explanation

   B. Zero Coupon Yield Curve
   Explanation:
   The Zero Coupon Yield Curve aka the Spot Curve is a relationship between maturity and interest rates which differs from a normal yield curve
   
   
5. The relationship between time and yield on a homogenous risk class of securities is called ________
   A. Yield Curve
   B. Zero Coupon Yield Curve
   C. Spot Curve
   D. Both (A) and (B)
   E. None of the Above
   
   Answer & Explanation

   A. Yield Curve
   Explanation:
   The relationship between time and yield on a homogeneous risk class of securities is called the Yield Curve.
   
   
6. Long-term debt securities issued by the GOI or any of the State Government’s or undertakings owned by them or by development financial institutions are called as ________
   A. Shares
   B. Debentures
   C. Bonds
   D. Both (A) and (C)
   E. None of the Above
   
   Answer & Explanation

   C. Bonds
   Explanation:
   Long-term debt securities issued by the Government of India or any of the State Government’s or undertakings owned by them or by development financial institutions are called as bonds.
   
   
7. A long-term security yielding a fixed rate of interest, issued by a company is called ________
   A. Shares
   B. Debentures
   C. Bonds
   D. Both (A) and (C)
   E. None of the Above
   
   Answer & Explanation

   B. Debentures
   Explanation:
   A debenture is a type of debt instrument that is not secured by physical assets or collateral. Instruments issued by companies are called debentures. The difference between the two is actually a function of where they are registered and pay stamp duty and how they trade.
   
   
8. Issuance of stamp duty on bonds is under ________
   A. The Companies Act, 1956
   B. The Public Debt Act 1944.
   C. Indian Stamp Act 1899 (Central Act)
   D. Reserve Bank of India Act, 1934
   E. Both (A) and (C)
   
   Answer & Explanation

   C. Indian Stamp Act 1899 (Central Act)
   Explanation:
   Issuance of stamp duty on bonds is under Indian Stamp Act 1899 (Central Act). A bond is transferable by endorsement and delivery without payment of any transfer stamp duty.
   
   
9. Which of the following is subject to payment of Stamp Duty under Indian Stamp Act, 1899 (Central Act)?
   A. Commercial Paper
   B. Treasury Bills
   C. Certificate of Deposit
   D. Both (A) and (C)
   E. None of the Above
   
   Answer & Explanation

   C. Certificate of Deposit
   Explanation:
   CD is subject to payment of Stamp Duty under Indian Stamp Act, 1899 (Central Act).
   
   
10. Which of the following is/are not eligible to issue Certificates of deposit(CD)?
    A. RRBs
    B. Co-operative banks
    C. Scheduled banks
    D. Both (A) and (B)
    E. None of the Above
    
    Answer & Explanation

    D. Both (A) and (B)
    Explanation:
    All scheduled banks (except RRBs and Co-operative banks) are eligible to issue CDs