MINT CLUB_R2

Arjun is negotiating a contract with a supplier for raw materials critical to his manufacturing operations. He is concerned that the supplier might default on their obligations, either due to financial instability or operational inefficiency, leading to disruptions in his supply chain. What is the financial term for the risk associated with such a scenario?

• Liquidity Risk

• Credit Risk

• Systemic Risk

• Operational Risk

Priya identifies a stock trading at an inflated price due to market speculation. Using a brokerage account, she borrows shares to sell at the current high price, intending to repurchase them later at a lower price as the speculation subsides. If the price unexpectedly rises instead, she risks significant losses. What is the term for this speculative investment strategy?

• Put Option

• Short Selling

• Hedging

• Arbitrage

Rohan works in the treasury department of a bank and is tasked with meeting short-term liquidity needs. His bank needs to borrow funds overnight from another bank to meet its reserve requirements. The interest rate for such interbank lending is influenced by monetary policy and market liquidity conditions. What is the term for this interest rate?

• Federal Funds Rate

• Repo Rate

• LIBOR

• Base Rate

A company has incurred significant expenses in December for producing goods that will generate revenue in January. The accounting team debates whether these expenses should be recognized immediately or deferred to match the timing of revenue realization. Which accounting principle dictates that expenses must be recorded in the same period as the related revenues?

• Matching Principle

• Conservatism Principle

• Realization Principle

• Revenue Recognition

Meera is reviewing her investment portfolio, which includes high-risk equities and government bonds. To minimize risk, she decides to allocate funds into different asset classes and industries to offset potential losses in one sector with gains in another. This strategy is particularly useful during volatile market conditions. What is this risk management practice called?

• Hedging

• Diversification

• Dollar-Cost Averaging

• Arbitrage

Rahul is considering purchasing a bond that adjusts its principal based on inflation rates. By doing so, he aims to safeguard his returns against the eroding value of money caused by rising prices. The bond's interest payments and final payout are aligned with the inflation index. What type of bond is Rahul planning to buy?

• Municipal Bond

• Treasury Note

• Inflation-Linked Bond

• Convertible Bond

An investor is interested in an instrument whose value is derived from the performance of gold prices. The instrument doesn’t involve owning the physical asset but allows the investor to speculate on its price movements. This type of instrument is commonly used for hedging or speculative purposes. What is this financial instrument called?

• Derivative

• Stock

• Bond

• Mutual Fund

An analyst is calculating a profitability metric that reflects the amount of earnings attributable to each outstanding share of a company’s stock. This metric is often used by investors to assess a company's financial performance and compare it with competitors. What is the full form of EPS, the key metric being analyzed?

• Earnings Per Share

• Equity Per Share

• Earnings Price Spread

• Equity Price Spread

To ensure financial stability, a central bank enforces a regulation requiring commercial banks to maintain a minimum level of capital relative to their risk-weighted assets. This requirement helps absorb potential losses and protect depositors' funds during financial crises. What is this regulatory framework called?

• Statutory Liquidity Ratio

• Capital Adequacy Ratio

• Reserve Requirement

• Basel Norms

A finance student is tasked with valuing an investment that will generate cash flows in the future. To determine its present value, the student applies a discount rate that reflects the opportunity cost and the time value of money. This process is critical for making investment decisions and comparing projects with different time horizons. What is this valuation process called?

• Discounting

• Compounding

• Capitalizing

• Amortizing