Banking Awareness Quiz – Set 87

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/are correct about the “Operational Risk” as used in the field of banking?
   A. Risk of loss due to inadequate or failed internal process
   B. Risk of loss due to natural calamities
   C. Loss occurred due to non-compliance of legal procedures
   D. All of the Above
   E. None of the Above
   
   Answer & Explanation

   A. Risk of loss due to inadequate or failed internal process
   Explanation:
   The Basel Committee defines the operational risk as the “risk of loss resulting from inadequate or failed internal processes, people and systems or from external events”.
   
   
2. What is/are the characteristics of ‘Hot Money’?
   A. The term is used for fresh currency notes issued by RBI
   B. It is the fund which inflows in the market to take advantage of high interest rates
   C. It is the fund which is thrown in the market to create imbalance in the stock markets
   D. All of the Above
   E. None of the Above
   
   Answer & Explanation

   B. It is the fund which inflows in the market to take advantage of high interest rates
   Explanation:
   Hot money is currency that moves regularly, and quickly, between financial markets so investors ensure they are getting the highest short-term interest rates available.
   
   
3. When a corporate entity wishes to raise money from the market it can do that by issuing
   A. Treasury Bills
   B. Kisan Vikas Patra
   C. National Savings Certificate
   D. Commercial Papers
   E. None of the Above
   
   Answer & Explanation

   D. Commercial Papers
   Explanation:
   Commercial paper is an unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting short-term liabilities.
   
   
4. When an agent asks a customer to invest in a Mutual Fund product without telling him/her about the risks involved in the investment, the process is termed as ______
   A. Mis-selling
   B. Undertaking
   C. Misappropriation of Funds
   D. cross selling
   E. None of the Above
   
   Answer & Explanation

   A. Mis-selling
   Explanation:
   The act of selling something that is not suitable for the person who buys it.
   
   
5. In the Capital market, the term arbitrage is used with reference to ______
   A. Purchase of securities to cover the sale
   B. Sale of securities to reduce the loss on purchase
   C. Simultaneous purchase and sale of securities to make profits from price
   D. Variation in different markets
   E. None of the Above
   
   Answer & Explanation

   C. Simultaneous purchase and sale of securities to make profits from price
   Explanation:
   Arbitrage is the simultaneous purchase and sale of an asset to profit from a difference in the price. It is a trade that profits by exploiting the price differences of identical or similar financial instruments on different markets or in different forms. Arbitrage exists as a result of market inefficiencies.
   
   
6. Sub-prime lending refers to ________
   A. lending done by banks at rates below PLR
   B. Funds raised by the banks at sub-libor rates
   C. Group of banks which are not rated as prime banks as per Banker’s Almanac
   D. lending done by financing institutions including banks to customers not meeting with normally required credit appraisal standards
   E. All of the Above
   
   Answer & Explanation

   D. lending done by financing institutions including banks to customers not meeting with normally required credit appraisal standards
   Explanation:
   In finance, subprime lending (also referred to as near-prime, non-prime, and second-chance lending) means making loans to people who may have difficulty maintaining the repayment schedule, sometimes reflecting setbacks, such as unemployment, divorce, medical emergencies, etc.
   
   
7. Currency Swap is an instrument to manage _______
   A. currency risk
   B. interest rate risk
   C. currency and interest rate risk
   D. cash flows in different currency
   E. All of the above
   
   Answer & Explanation

   D. cash flows in different currency
   Explanation:
   A currency swap (or a cross currency swap) is a foreign exchange derivative between two institutions to exchange the principal and/or interest payments of a loan in one currency for equivalent amounts, in net present value terms, in another currency.
   
   
8. Head quarters of National Council of Applied Economic Research(NCAER) is located in ______
   A. Mumbai
   B. New Delhi
   C. Hyderabad
   D. Chennai
   E. None of the Above
   
   Answer & Explanation

   B. New Delhi
   Explanation:
   National Council of Applied Economic Research or NCAER is a New Delhi based non-profit think tank of economics.
   
   
9. Trade Gap means
   A. Gap between total GDP and total consumption
   B. Gap between total imports and total exports
   C. Gap between available liquidity and expected demand in next five months
   D. Gap between budgeted revenue collection and actual collection of the same
   E. None of the above
   
   Answer & Explanation

   B. Gap between total imports and total exports
   Explanation:
   The amount by which the value of a country’s visible imports exceeds that of visible exports; an unfavourable balance of trade.
   
   
10. Which of the following agencies in India is responsible for computation of national income?
    A. NCAER
    B. CSO
    C. NSS
    D. RBI
    E. None of the Above
    
    Answer & Explanation

    B. CSO
    Explanation:
    The Central Statistical Office which is one of the two wings of the National Statistical Organisation (NSO) is responsible for coordination of statistical activities in the country and for evolving and maintaining statistical standards. Its activities include compilation of National Accounts.