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Banking Awareness Quiz – Set 199

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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. ______ is the rate at which the central bank of a country lends money to commercial banks in the event of any shortfall of funds.
    A. Repo Rate
    B. Reverse Repo Rate
    C. Base Rate
    D. MCLR
    E. None of these
    A. Repo Rate 
    Explanation:
    Repo rate is the rate at which the central bank of a country lends money to commercial banks in the event of any shortfall of funds.

  2. ________ is used by monetary authorities to control inflation.
    A. Repo Rate
    B. Reverse Repo Rate
    C. Base Rate
    D. MCLR
    E. None of these
    A. Repo Rate
    Explanation:
    Repo Rate is used by monetary authorities to control inflation

  3. ________ is a type of asset-backed security collateralised by a pool of mortgages. 
    A. CRR
    B. SLR
    C. MBS
    D. MCLR
    E. None of these
    C. MBS
    Explanation:
    Mortgage-backed security (MBS) is a type of asset-backed security collateralised by a pool of mortgages.

  4. _______ represents transfer of credit risk from a primary lender, typically the originating bank, to an investment bank.
    A. CRR
    B. SLR
    C. MBS
    D. MCLR
    E. None of these
    C. MBS
    Explanation:
    MBS represents transfer of credit risk from a primary lender, typically the originating bank, to an investment bank.

  5. Which of the following is an investment to reduce the risk of adverse price movements in an asset?
    A. Hedge
    B. SPV
    C. MBS
    D. MCLR
    E. None of these
    A. Hedge
    Explanation:
    A Hedge is an investment to reduce the risk of adverse price movements in an asset.

  6. Which of the following represents cash flows from a mortgage loan?
    A. Hedge
    B. SPV
    C. MBS
    D. MCLR
    E. None of these
    C. MBS
    Explanation:
    MBS represents cash flows from a mortgage loan

  7. Under _____ mortgage payments are transferred to the MBS investors on a pro rata basis.
    A. Pass-through participation certificates
    B. Collateralised mortgage obligations
    C. Stripped mortgage-based security
    D. Covered bonds
    E. None of these
    A. Pass-through participation certificates
    Explanation:
    Under Pass-through participation certificates mortgage payments are transferred to the MBS investors on a pro rata basis.

  8. In ________, MBS is categorised into pools of securities called tranches.
    A. Pass-through participation certificates
    B. Collateralised mortgage obligations
    C. Stripped mortgage-based security
    D. Covered bonds
    E. None of these
    B. Collateralised mortgage obligations
    Explanation:
    In Collateralised mortgage obligations, MBS is categorised into pools of securities called tranches.

  9. In ________, the MBS is segregated into interest-only and principal-only.
    A. Pass-through participation certificates
    B. Collateralised mortgage obligations
    C. Stripped mortgage-based security
    D. Covered bonds
    E. None of these
    C. Stripped mortgage-based security
    Explanation:
    In Stripped mortgage-based security the MBS is segregated into interest-only and principal-only..

  10. In ARM, “A” stands for _____
    A. Advance
    B. Adjustable
    C. Attempt
    D. Advanced
    E. None of these
    B. Adjustable
    Explanation:
    Adjustable Rate Mortgages (ARM)