BANKING AND FINANCIAL SERVICES [2023]

This article presents the multiple choice question for the course Banking and Financial Services. The Banking and Financial Services course is about understanding of banking system and banking services.

_____________ is not a type of bank account.

  • Savings account
  • Current account
  • Capital account
  • Demat account

Which of the following is the main function of a commercial bank?

  • Accepting deposits and granting loans
  • Regulating foreign exchange
  • Regulating monetary policy
  • Issuing currency notes

What does ‘KYC’ stand for in banking?

  • Know Your Customer
  • Keep Your Card
  • Keep Your Cash
  • Know Your Credit

What is a “unicorn” in the context of venture capital?

  • A venture capital fund that has achieved high returns for its investors
  • A startup company that is valued at $1 billion or more
  • A company that is headquartered in Silicon Valley
  • A company that has achieved high growth rates over a short period of time

_______________ is a scheduled bank in India.

  • Cooperative Bank
  • Moneylender
  • Chit Fund
  • Microfinance Institution

What is the role of a credit policy in credit management?

  • To determine the credit limit for customers
  • To define the terms and conditions for providing credit to customers
  • To evaluate the creditworthiness of customers
  • To determine the interest rate on credit provided to customers

Which of the following is NOT a function of a commercial bank?

  • Issuing currency notes
  • Providing investment banking services
  • Accepting deposits from the government
  • Granting loans and advances

What is the function of a credit policy?

  • To define the company’s marketing strategy
  • To define the company’s pricing strategy
  • To define the company’s investment strategy
  • To define the company’s credit management strategy

Which of the following is an example of a non-deposit liability for a commercial bank?

  • Savings account
  • Fixed deposit account
  • Borrowings from other banks
  • Certificate of deposit

______________ is the full form of an ATM in banking.

  • Automatic Teller Machine
  • Automatic Transaction Machine
  • Automated Teller Machine
  • Automated Transaction Machine

What is the full form of NPA in banking?

  • Non-Performing Asset
  • Non-Performing Account
  • Non-Performing Advance
  • Non-Performing Amortization

What is the purpose of a commercial bank’s reserve requirement?

  • To maintain solvency of the bank
  • To generate profits for the bank
  • To ensure liquidity of the bank
  • To manage the bank’s capital adequacy

______________ is not a type of banking regulation.

  • Prudential regulation
  • Monetary regulation
  • Market regulation
  • Supervisory regulation

What is the primary role of the central bank in a country’s economy?

  • Lending money to commercial banks
  • Regulating commercial banks
  • Issuing currency
  • Implementing fiscal policy

Which of the following is not a type of monetary policy tool?

  • Open market operations
  • Reserve requirements
  • Capital adequacy ratios
  • Discount rates

What is the main objective of prudential regulation?

  • To ensure financial stability
  • To control inflation
  • To promote economic growth
  • To manage foreign exchange rates

Demand deposit account is _____________________________.

  • A savings account with a fixed interest rate
  • An account that can be withdrawn from at any time without prior notice
  • An account that requires a minimum balance
  • A type of investment account

DIFFERENT BANKING AND FINANCIAL SERVICES

What is the role of the general partner in a venture capital fund?

  • To provide financing for the fund
  • To provide legal and regulatory support
  • To manage the fund’s investments
  • To raise capital from investors

What is the main source of funds for a development bank?

  • Deposits from the general public
  • Equity investments from shareholders
  • Loans and grants from international organizations
  • Fees from financial advisory services

___________________________ is the primary objective of a development bank.

  • Maximizing profits for shareholders
  • Providing financial services to the general public
  • Promoting economic development of a country
  • Facilitating international trade and commerce

What is the difference between a venture capital fund and a private equity fund?

  • A venture capital fund invests in early-stage companies, while a private equity fund invests in established companies.
  • A venture capital fund provides financing for small businesses, while a private equity fund provides financing for large businesses.
  • A venture capital fund is typically a closed-end fund, while a private equity fund is typically an open-end fund.
  • There is no difference between a venture capital fund and a private equity fund.

What is the typical focus of a development bank’s lending activities?

  • Consumer loans
  • Commercial and corporate loans
  • Infrastructure and developmental projects
  • Personal loans for education and healthcare

_______________ is not a type of deposit account.

  • Savings account
  • Current account
  • Fixed deposit account
  • Loan account

The purpose of the Know Your Customer (KYC) policy in banking is _____________________ .

  • To prevent money laundering and terrorist financing
  • To encourage customers to save money
  • To provide customers with loans at low interest rates
  • To promote financial inclusion

Which of the following is not a type of non-performing asset (NPA)?

  • Sub-standard assets
  • Doubtful assets
  • Bad assets
  • Standard assets

The purpose of a credit rating agency is _________________________.

  • To rate the creditworthiness of borrowers
  • To provide loans to customers
  • To regulate the financial system
  • To issue currency

What is a credit rating?

  • The process of evaluating a company’s marketing strategies
  • The process of evaluating a company’s financial performance
  • The process of evaluating a company’s human resources
  • The process of evaluating a company’s production processes

The main objective of the Basel III framework is ____________________ .

  • To regulate commercial banks
  • To ensure financial stability
  • To promote economic growth
  • To manage foreign exchange rates

What is the purpose of a development bank’s technical assistance programs?

  • To generate profits for the bank
  • To provide loans to developing countries
  • To provide financial literacy training to borrowers
  • To support capacity building and skill development in project implementation

Who assigns credit ratings to companies?

  • Stock brokers
  • Credit bureaus
  • Banks
  • Credit rating agencies

Which of the following is NOT a typical function of a development bank?

  • Providing deposit and savings accounts to the public
  • Financing infrastructure projects
  • Providing long-term loans for agriculture and rural development
  • Promoting export-oriented industries

___________ is not a type of credit risk.

  • Default risk
  • Interest rate risk
  • Liquidity risk
  • Country risk

What is the primary focus of a development bank’s poverty alleviation programs?

  • Providing free grants to low-income individuals
  • Offering low-interest rate loans to low-income individuals
  • Providing vocational training to low-income individuals
  • Providing affordable housing to low-income individuals

What is the function of a development bank’s risk management department?

  • To generate profits for the bank
  • To manage the bank’s investment portfolio
  • To ensure compliance with regulations
  • To assess and manage credit risk in lending activities

The purpose of a Letter of Credit (LC) is ______________________.

  • To provide loans to customers
  • To regulate the financial system
  • To facilitate international trade
  • To promote financial inclusion

What is the role of development banks in providing long-term financing?

  • Providing short-term loans to businesses
  • Providing equity investments to businesses
  • Providing long-term loans to businesses
  • Providing insurance services to businesses

What is the main function of commercial banks?

  • Providing loans to individuals and businesses
  • Issuing currency
  • Regulating the stock market
  • Managing government budgets

The main objective of venture capital funds is _____________________________.

  • To provide short-term financing to companies
  • To provide long-term financing to companies
  • To provide seed capital to startup companies
  • To provide funding for charitable organizations

What is the role of international development banks?

  • To provide financial services to the general public
  • To promote economic development in developing countries
  • To manage the investments of private individuals
  • To provide insurance services to businesses

The source of capital for venture capital funds is _________________ .

  • Government grants
  • Bank loans
  • Private investors
  • Charitable donations

What is the function of a central bank in relation to commercial banks?

  • Regulating the monetary policy
  • Providing loans to individuals
  • Managing stock market investments
  • Facilitating international trade

What is the function of a credit monitoring system?

  • To approve loans and advances to customers
  • To manage the company’s investment portfolio
  • To evaluate and manage credit risk
  • To provide financial advice to customers

The primary source of income for commercial banks are _______________ .

  • Interest on loans
  • Fees and commissions
  • Trading securities
  • Government grants

What is a debit card?

  • A type of credit card
  • A type of prepaid card
  • A type of savings account
  • A type of checking account

The risk profile of venture capital funds is _________________ .

  • Low risk
  • Moderate risk
  • High risk
  • No risk

What is the difference between credit risk and market risk?

  • Credit risk is the risk of loss due to changes in market conditions, while market risk is the risk of loss due to defaults by customers.
  • Credit risk is the risk of loss due to defaults by customers, while market risk is the risk of loss due to changes in market conditions.
  • Credit risk and market risk have the same definition.
  • Credit risk and market risk are unrelated.

What is the role of limited partners in venture capital funds?

  • They provide the capital for the fund
  • They manage the day-to-day operations of the fund
  • They make investment decisions on behalf of the fund
  • They provide mentorship and guidance to the portfolio companies

Which of the following is a liability for a commercial bank?

  • Loans to customers
  • Deposits from customers
  • Interest income
  • Investment in stocks

What is a cashier’s check?

  • A check drawn on the bank’s own funds
  • A check drawn on the customer’s funds
  • A check drawn on the government’s funds
  • A check drawn on a third party’s funds

What is the role of a credit manager?

  • Approving loans and advances to customers
  • Managing the company’s investment portfolio
  • Assessing the creditworthiness of customers
  • Providing financial advice to customers

Which of the following is a type of savings account offered by banks?

  • Credit card
  • Checking account
  • Money market account
  • Personal loan

What is the role of commercial banks in the payment system?

  • Issuing currency
  • Regulating interest rates
  • Facilitating transactions
  • Managing government bonds

The function of a commercial bank in managing liquidity risk is ________________________________.

  • Managing stock market investments
  • Issuing currency
  • Regulating interest rates
  • Maintaining adequate cash reserves

Credit management is about __________________ .

  • Managing a company’s social media accounts
  • Managing a company’s financial statements
  • Managing a company’s credit risk
  • Managing a company’s inventory

What is the role of venture capital funds in the startup ecosystem?

  • Providing mentorship and guidance to startup companies
  • Providing operational support to startup companies
  • Connecting startups with potential customers and partners
  • All of the above

Which organization is responsible for issuing currency notes in India?

  • Ministry of Finance
  • Reserve Bank of India (RBI)
  • Indian Banks’ Association (IBA)
  • Securities and Exchange Board of India (SEBI)

What type of bank product allows businesses to borrow money for short-term financing needs?

  • Home loans
  • Business loans
  • Car loans
  • Personal loans

What is the typical investment horizon for venture capital funds?

  • 1-2 years
  • 3-5 years
  • 5-10 years
  • 10+ years

Venture capital funds are the ___________________________ .

  • Funds used for personal expenses
  • Funds used for purchasing real estate
  • Funds used for investing in startup companies
  • Funds used for government projects

What is a time deposit in a commercial bank?

  • A loan provided by the bank
  • A type of savings account
  • An account for managing investments
  • A deposit with a fixed term and higher interest rate

Home equity loan is ____________________ .

  • A loan taken against the equity in a home
  • A loan taken against the value of a car
  • A loan taken against the value of a business
  • A loan taken against the value of a stock portfolio

The role of commercial banks in the creation of money is ______________________ .

  • Issuing currency
  • Providing loans to customers
  • Regulating interest rates
  • Managing government bonds

What is a credit rating scale?

  • A scale used to measure a company’s profitability
  • A scale used to measure a company’s market share
  • A scale used to measure a company’s production capacity
  • A scale used to measure a company’s creditworthiness

What type of bank product allows individuals to earn interest on their savings over a fixed period of time?

  • Checking accounts
  • Savings accounts
  • Money market accounts
  • Certificate of deposit

A credit rating of “AAA” signifies __________________.

  • High creditworthiness with very low risk of default
  • Low creditworthiness with very high risk of default
  • Medium creditworthiness with moderate risk of default
  • High creditworthiness with high risk of default

What is a payday loan?

  • A short-term loan with a high interest rate and fees
  • A long-term loan with a low interest rate and fees
  • A type of checking account with a high interest rate
  • A type of savings account with a low interest rate

What type of bank product allows individuals to make purchases and pay bills without using cash or writing checks?

  • Personal loans
  • Credit cards
  • Home loans
  • Business loans

A credit rating of “D” signifies ________________ .

  • High creditworthiness with very low risk of default
  • Low creditworthiness with very high risk of default
  • Medium creditworthiness with moderate risk of default
  • Default or near default

What is the function of a commercial bank in managing market risk?

  • Managing stock market investments
  • Evaluating creditworthiness of borrowers
  • Issuing currency
  • Regulating interest rates

What type of bank product provides individuals with a specific amount of money that can be used for purchasing a car?

  • Personal loans
  • Credit cards
  • Auto loans
  • Home loans

A credit limit is _____________________________________.

  • The maximum amount of credit a company can provide to its customers
  • The minimum amount of credit a company can provide to its customers
  • The average amount of credit provided by a company
  • The interest rate charged on credit provided by a company

What is the main goal of credit management?

  • Maximizing profits for the company
  • Minimizing losses due to credit risk
  • Maximizing sales revenue for the company
  • Minimizing inventory costs

Which of the following is NOT a credit rating agency?

  • Moody’s
  • Standard & Poor’s
  • FICO
  • Fitch Ratings

What is a bank product that provides individuals with a loan to finance their education?

  • Personal loans
  • Credit cards
  • Home loans
  • Student loans

What is a bank product that provides individuals with a credit line that can be used for various purposes?

  • Personal loans
  • Credit cards
  • Home equity loans
  • Lines of credit

How do credit ratings impact borrowing costs for companies?

  • Higher credit ratings result in lower borrowing costs
  • Higher credit ratings result in higher borrowing costs
  • Credit ratings do not impact borrowing costs
  • Credit ratings impact only the tenure of borrowing, not the cost

What is a bank product that provides businesses with funds to purchase or lease equipment or machinery?

  • Personal loans
  • Credit cards
  • Business loans
  • Equipment financing

What is the function of a commercial bank in the foreign exchange market?

  • Regulating interest rates
  • Managing stock market investments
  • Facilitating international trade
  • Providing loans to individuals

Which of the following is NOT a type of development bank?

  • National development bank
  • Regional development bank
  • International development bank
  • Retail development bank

What is the role of a commercial bank in managing credit risk?

  • a) Evaluating creditworthiness of borrowers
  • b) Issuing credit cards to customers
  • c) Managing stock market investments
  • d) Regulating interest rates

What is the purpose of credit scoring in credit management?

  • a. To determine the creditworthiness of customers
  • b. To determine the interest rate on credit provided to customers
  • c. To determine the credit limit for customers
  • d. To determine the payment terms for customers

The purpose of the Priority Sector Lending (PSL) scheme in India is _____________________.

  • A) To provide loans to large businesses
  • B) To promote small-scale industries
  • C) To regulate the banking system
  • D) To promote financial inclusion

What is the main function of the Securities and Exchange Board of India (SEBI)?

  • A) Regulating the banking system
  • B) Regulating the stock market
  • C) Regulating the insurance industry
  • D) Regulating the mutual fund industry

What is a CD (certificate of deposit)?

  • a) A type of savings account with a high interest rate
  • b) A type of loan that must be repaid within a specific time period
  • c) An investment in stocks or bonds
  • d) An insurance policy

A credit score is _____________________.

  • a) A measure of an individual’s creditworthiness
  • b) The interest rate charged on a loan
  • c) The total amount of debt an individual owes
  • d) The amount of money an individual has in savings

What is a checking account?

  • a) An account that pays a fixed interest rate
  • b) An account used for long-term savings
  • c) An account used for everyday transactions
  • d) An account used for international transactions

What is the purpose of the Reserve Bank of India (RBI)?

  • A) Regulating the stock market
  • B) Regulating the insurance industry
  • C) Regulating the mutual fund industry
  • D) Regulating the banking system

Who regulates and supervises the functioning of credit rating agencies in India?

  • a. Securities and Exchange Board of India (SEBI)
  • b. Reserve Bank of India (RBI)
  • c. Ministry of Finance
  • d. Indian Banks’ Association (IBA)

What is the maximum amount insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC) in India?

  • A) Rs. 1 lakh
  • B) Rs. 5 lakhs
  • C) Rs. 10 lakhs
  • D) Rs. 25 lakhs

What is the interest rate charged by the Reserve Bank of India (RBI) when banks borrow money overnight through the repo rate?

  • a. Reverse repo rate
  • b. Prime lending rate
  • c. Base rate
  • d. Marginal cost of funds based lending rate (MCLR

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