Banking Awareness Quiz Set – 42

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. Which of the following is a type of short term loan provided to companies to fulfill their working capital requirements?
   A. Cash Credit
   B. Overdraft
   C. Collateral
   D. None of these
   

   Answer & Explanation

   A. Cash Credit
   Explanation:The cash credit account is functions like a current account with cheque book facility. The facility is provided against pledge or hypothecation of stock i.e. raw materials, work in progress, finished goods, etc. or on the guarantee of book debts (debtors) or other collateral security as per banking company norms.
   
   
2. A card which is used to make payments by the card holder, but needs to be paid in full, on the due date when the statement is received is known as ______.
   A. Credit Card
   B. Charge Card
   C. Post-paid Card
   D. Pre-paid Card
   

   Answer & Explanation

   B. Charge Card
   Explanation:The card will not allow you to further carry the balance to the next month and so you can borrow money for a particular period only. Non repayment of money within stipulated time may cause you a penalty or it may also amount to suspension of your account. Card issuer puts up a boundary for the spendings the card holder makes with the card, i.e. When the card holder makes payment, each and every purchase is approved or denied at the register.
   
   
3. Which of the following is a bank account opened by NRI to deposit income mainly generated from an Indian source?
   A. NRI
   B. NRP
   C. NRO
   D. FCNR
   

   Answer & Explanation

   C. NRO
   Explanation:Non-Resident Ordinary Account held to manage the income earned in India like rent, pension, dividend, interest, etc. It is opened either by the citizen of India, while temporarily shifting to abroad or by an NRI by transferring money from his home country or from his other NRO account. A normal bank account can also be redesignated to NRO account when the residential status of the account holder is changed to NRI. The account is mainly used to park money earned from Indian sources in India.
   
   
4. In it a worldwide recognized identification code used at the time of international credit transfer between banks and also when there is an exchange of messages between banks.
   A. IFSC Code
   B. SWIFT Code
   C. NEFT Code
   D. None of these
   

   Answer & Explanation

   B. SWIFT Code
   Explanation:SWIFT, Society for Worldwide Interbank Financial Telecommunication Code. The code is also used when there is an interchange of messages between banks. The code is a combination of 8 or 11 alphanumeric characters. First 4 characters bank code, Next 2 characters country code, Next 2 characters location code, Last 3 characters are optional that represents branch code.
   
   
5. In which of the following a credit facility is provided by the bank to an entity for a specific purpose, to be repayable after a short duration?
   A. Advances
   B. Loans
   C. Security
   D. None of these
   

   Answer & Explanation

   A. Advances
   Explanation:Advances are the source of finance, which are provided by the banks to the companies to meet short term financial requirement. They are granted against securities which are as under:
   •Primary Security: Hypothecation of Debtors, Stock Pro-notes etc.
   •Collateral Security: Mortgage of land and buildings, machinery, etc.
   •Guarantees: Guarantees given by partners, directors or promoters, etc.
   
   
   
6. This card usually has Maestro or Cirrus or Plus logo.
   A. Debit Card
   B. Credit Card
   C. ATM Card
   D. Pre-paid Card
   

   Answer & Explanation

   C. ATM Card
   Explanation:ATM card is a card made up of a plastic, issued by the bank, contains the basic details about the bank account of the customer. The bank allows its customer to withdraw money at any time with the use of the card through an Automated Teller Machine. For the convenience of the public the bank has made this facility available to its users 24 hours a day.
   
   
7. All Scheduled Commercial Banks (SCBs) having their current account and Subsidiary General Ledger (SGL) with an RBI are eligible for this rate.
   A. Bank Rate
   B. Repo Rate
   C. MSF
   D. Reverse Repo Rate
   

   Answer & Explanation

   C. MSF
   Explanation:Marginal Standing Facility Rate is referred to as a facility, in which the scheduled commercial banks can borrow funds from the central bank overnight, against the government approved securities of Statutory Liquidity Ratio (SLR) quota (which is in excess of the current SLR) up to a certain percentage of their Net Demand and Time Liabilities. It is at the discretion of RBI whether to grant the loan or not.
   
   
8. ________ of Rs. 20000 or more should be issued with “A/c payee” crossing.
   A. Banker’s Cheque
   B. Cheque
   C. FD
   D. Demand Draft
   

   Answer & Explanation

   D. Demand Draft
   Explanation:Demand Draft is a negotiable instrument issued by the bank on the behalf of a customer, containing an order to pay a certain sum to the payee from one branch to another branch of the same bank. The validity period of a demand draft is 3 months, but it can be re-validated against an application. It can never be dishonored because its payment is done in advance.
   
   
9. Which of the following are the funds in which investor’s type is Pension fund, endowment fund, high net worth individuals?
   A. Mutual Fund
   B. Hedge Fund
   C. Debt Fund
   D. Hybrid Funds
   

   Answer & Explanation

   B. Hedge Fund
   Explanation:A hedge fund is an investment partnership, where only few high net worth investors can make an investment in the fund. The minimum amount of initial investment in the fund is relatively high. The fund is set free from strict regulations. The risk factor is very high in hedge funds.
   
   
10. _________ is a negotiable instrument issued by the international depository bank, representing foreign company’s stock trading globally.
    A. ADR
    B. GDR
    C. ARM
    D. None of these
    

    Answer & Explanation

    B. GDR
    Explanation:Global Depository Receipt is a negotiable instrument used to tap the financial markets of various countries with a single instrument. The receipts are issued by the depository bank, in more than one country representing a fixed number of shares in a foreign company. The holders of GDR can convert them into shares by surrendering the receipts to the bank.