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Finance Set 1

Total questions: 40

Worksheet time: 22mins

Name
Class
Date
1.

Which of the following are the functions of the Money market? (1 M)

1. It forms the basis for the management of liquidity and money in the economy by the monetary authorities.

2. To provide reasonable access to the users of short-term money for meeting their requirements at realistic prices.

3. Improve the efficiency of capital allocation through a competitive pricing mechanism.

a)

1 and 2

b)

2 and 3

c)

1 only

d)

2 only

e)

All of the above

2.

Which of the following entities are recognized as participants of Call Money Market by RBI?(1 M)

a)

Regional Rural Banks

b)

Cooperative Banks

c)

Payment Banks

d)

B and C

e)

A and B

3.

Which of the following statements regarding treasury bills is incorrect?(1 M)

a)

1. They are issued by Central Government and State Governments

b)

2. They are issued at discount to face value

c)

3. It acts as the requirement for CRR and SLR for banks.

d)

1 & 3

e)

All of the above

4.

Primary Issuances by companies are governed by the SEBI in terms of SEBI(ICDR) Regulations,2009. What does ICDR stand for _____?(1 M)

a)

Integrated Capital and Disclosure Requirements

b)

Issue of Capital and Disclosure Requirements

c)

Issue of Cost and Disclosure Requirements

d)

Integrated Cost and Disclosure Requirements

e)

None of the above

5.

Which of the following options is used by companies to provide stability to price of the share in secondary market immediately on listing?(1 M)

a)

Depository Receipts

b)

Qualified Institutional Placement

c)

Preferential Issue

d)

Green Shoe Option

e)

None of the above

6.

What is stock split?(1 M)

a)

It is a decision of Company’s Board to increase the number of shares by issuing more shares to current shareholders in 2:1 ratio

b)

An invitation to existing shareholders to purchase additional new shares in the company.

c)

It is a purchase by a company of its outstanding shares that reduces the number of its shares in the open market.

d)

They are issued out of profits to its shareholders.

e)

None of the above

7.

Companies may pay and call back their bonds by callability feature. This would be usually done when the rates in the market are usually low. Which of the following does the above fall into?(1 M)

a)

Credit Risk

b)

Default Risk

c)

Prepayment Risk

d)

Interest Rate Risk

e)

A and B

8.

Which of the following statements are correct about the relationship about the bond variables?(1 M)

a)

Interest Rate and Bond Price are inversely proportional to each other.

b)

Interest Rate and Bond Price are proportional to each other

c)

Interest Rate and Yield are directly proportional to each other

d)

A and C

e)

All of the above

9.

What does LYON stand for ?(1 M)

a)

Liquidity Yielding Option Notes

b)

Liquidity Yielding Option Net

c)

Liquid Yield Option Notes

d)

Liquid Yield Option Net

e)

None of the Above

10.

The objective of which of the following bonds is to hedge or safeguard the investor against macroeconomic risks in the country?(1 M)

a)

Convertible Bond

b)

Callable Bond

c)

Puttable Bond

d)

Inflation Indexed Bond

e)

Gilt edged securities

11.

STRIPS stand for?(1 M)

a)

Separate Trading of Registered Interest and Principal Securities

b)

Securities Trading of Registered Interest and Principal System

c)

System Trading of Registered Interest and Principal Securities

d)

Special Trading of Registered Interest and Principal Securities

e)

None of the above

12.

Which of the following will lead to zero cash flow when an option is exercised immediately ?(1 M)

a)

At-the-money option

b)

In-the-money option

c)

Out-of-the-money option

d)

A and B

e)

B and C

13.

Which of the following statements regarding FSDC(Financial Stability and Development Council) is correct? (2 M)

1. It is chaired by RBI Governor.

2. It is a statutory body formed in the year 2010.

3. It was set up to strengthen and institutionalize the mechanism for maintaining financial stability, enhancing inter-regulatory coordination and promoting financial sector development.

a)

1 and 2

b)

3 only

c)

1 and 3

d)

2 and 3

e)

2 only

14.

The time value of money is central to the concept of finance. Which of the following are the Factors Affecting the Value of Money? (2M)

1. Risk and Uncertainty

2. Inflation

3. Consumption

4. Investment Opportunities

a)

1 ,2 and 3

b)

2 ,3 and 4

c)

1 and 4

d)

1 ,3 and 4

e)

All of the above

15.

In order to give the next push to the lending platforms, the aggregate exposure of a lender to all borrowers at any point of time, across all P2P platforms, shall be subject to a cap of _________ ?(1 M)

a)

₹10 lakh

b)

₹40 lakh

c)

₹25 lakh

d)

₹50 lakh

e)

₹100 lakh

16.

Consider the following statements with respect to a form of raising capital? (2M)

1. Faster way of raising capital for companies as they have to comply with lesser requirements.

2. Avoids time and expense of registering with SEBI.

3. It is available only for a select group of investors.

a)

Initial Public Offering

b)

Rights Issue

c)

Private Placement

d)

Factoring

e)

None of the above

17.

A method in which a bank advances cash to an exporter against invoices or promissory notes guaranteed by importers bank?(2 M)

a)

Factoring

b)

Leasing

c)

Franchising

d)

Forfeiting

e)

Crowd Funding

18.

Which of the following bills allows the government to withdraw funds from the Consolidated Fund of India?(1 M)

a)

Finance Bill

b)

Money Bill

c)

Appropriation Bill

d)

Vote an Account

e)

None of the above

19.

Which of the following are not part of Revenue Receipts?(1 M)

a)

Tax Revenue

b)

Recovery of Loans and Advances

c)

Profits and Dividends

d)

Government receives financial help from foreign governments and international organization

e)

All of the above

20.

Which of the following are part of Capital Expenditure?(1 M)

a)

1. Salary Paid to Army Officer

b)

2. Interest paid on national debt

c)

3. Government expenditure on investment of land, building ,equipment and machinery.

d)

4. Central assistance for state and UT’s.

e)

3 & 4

21.

Finance Commission was established by President of India in 1951 under which of the following articles of the constitution ?(1M)

a)

Article 270

b)

Article 275

c)

Article 280

d)

Article 285

e)

None of the above

22.

Which of the following statements regarding the MTSS(Money Transfer Service Scheme) is correct?(2 M)

a)

It is a channel used by the non-residents of India is a way of transferring personal remittances from abroad to beneficiaries in India.

b)

Remittance like donations, trade remittances and charity funds are allowed via MTSS

c)

There is a provision for cash remittance

d)

A and C

e)

All of the above

23.

Which of the following regarding GST Council is correct? (2 M)

1. It is a constitutional body under Article 279A and makes recommendations to Union and State.

2. It is chaired by the Secretary of Finance.

3. Every decision of the GST Council shall be taken at the meeting by a majority of not less than 1/2 of the weighted votes of the members present and voting.

a)

1 and 2

b)

1 and 3

c)

2 and 3

d)

1 only

e)

All of the above

24.

What does CBLO stand for ?(1 M)

a)

Collective Bank Lending Obligation

b)

Collective Borrowing Lending Obligation

c)

Collateralized Bank Lending Obligation

d)

Collective Borrowing Lending Obligation

e)

Collateralized Borrowing and Lending Obligation

25.

Which of the following institutions are classified as Qualified Institutional Buyers(QIB)? (2 M)

1. Scheduled Commercial Banks

2. Pension Funds with min corpus of Rs.25 Crores

3. FIIs registered with SEBI

4. Provident Funds with min corpus of Rs.30 Crores

5. State Industrial Development Corporations

a)

1, 2, 3 & 5

b)

2, 3, 4 & 5

c)

1, 3 & 4

d)

2, 3 & 5

e)

1, 4 & 5

26.

Which of the following is correct with respect to Earnings multiple? (1 M)

a)

1. It is company’s net profit divided by the number of common shares it has outstanding

b)

2. It is an important factor to be analysed when making a decision to invest in a stock

c)

3. It is the actual earnings of the company.

d)

1 & 2

e)

2 & 3

27.

Which of the following measures the correlation of the price movement of an option with its underlying stock/asset?(1 M)

a)

Gamma

b)

Delta

c)

Beta

d)

Theta

e)

Rho

28.

Government spending using up financial and other resources that would otherwise be used by private enterprise is called as ______ ? (1 M)

a)

Crowding out Effect

b)

Deficit Financing

c)

Keynesian Effect

d)

Loanable Funds

e)

None of the above

29.

Under which of the following PPP contract ,private partner has the responsibility of entire service and obligations about ensuring service and quality standards ?(1 M)

a)

Concessions

b)

Service Contract

c)

Management Contract

d)

Lease Contract

e)

Build Operate Transfer

30.

TINXSYS is a project to facilitate the effective tracking of inter-State transactions. The project is designed to facilitate Commercial Tax Departments of various States and Union Territories to exchange the data regarding the interstate trade and help them in checking evasion of tax. TINXSYS stands for which of the following? (1 M)

a)

Transaction Information Exchange System

b)

Transaction Information Number Exchange System

c)

Tax Information Exchange System

d)

Tax Information Number Exchange System

e)

None of the above

31.

The government has made it mandatory to mention ____digit HSN or tariff code for 49 chemical based products while issuing Goods and Services Tax (GST) invoice, a move aimed at curbing tax evasion?(1M)

a)

5 digit

b)

6 digit

c)

7 digit

d)

8 digit

e)

9 digit

32.

Which of the following are not the causes of demand pull Inflation ?(1 M)

a)

A cut in the interest rates by the monetary authorities.

b)

Economic growth and increased consumption.

c)

Government following an easy monetary policy

d)

Devaluation of currency

e)

All of the above

33.

Which of the following are fiscal measures to control inflation? (1M)

1. Reducing government expenditure.

2. Higher Repo rates in the economy.

3. Deficit Financing

a)

1 and 2

b)

3 only

c)

2 and 3

d)

1 and 3

e)

1 only

34.

Which of the following is also called as the real balance effect in economics?(1M)

a)

Philips Effect

b)

Keynes Effect

c)

Pigou Effect

d)

Pigmalion Effect

e)

None of the above

35.

The government had set up a working group under ________to revise the series of Wholesale Price Index (WPI) with base 2011-12 and devise a new Producer Price Index (PPI). (1 M)

a)

Anuj Gupta

b)

Ajay Bhushan Pandey

c)

Rajiv Kumar

d)

Ramesh Chand

e)

None of the above

36.

Which of the following inflation index is used for calculating Dearness Allowance? (1 M)

a)

WPI

b)

CPI-AL

c)

CPI-IW

d)

CPI-combined

e)

PPI

37.

Which of the following Section of SEBI Act 1992 gives power to investigate regulatory data leaks and unauthorized access of data?(1 M)

a)

Section 14

b)

Section 15HAA

c)

Section 15C

d)

Section 12

e)

None of the above

38.

Which of the following statements are correct regarding the Co-Lending Model(CLM)? (1M)

a)

1. It was launched by RBI in the year 2017.

b)

2. Under this model, some of the NBFCs partner with banks to lend to the priority sector.

c)

3. NBFCs shall be required to retain a minimum of 20% share of the individual loans on their books.

d)

1 & 2

e)

2 & 3

39.

Which of the following can be called the Contingent Risk Buffer for meeting all risks/losses from retained earnings of the Reserve Bank of India? (1 M)

a)

1. Economic Capital

b)

2. Realized Equity

c)

3. Revaluation Reserves

d)

2 & 3

e)

All of the above

40.

Which of the following is/are incorrect with respect to Ways and Means Advances(WMA)? (2 M)

1. The WMA scheme was introduced in 1997.

2. If the WMA exceeds 90 days, it would be treated as an overdraft.

3. The interest rate on overdrafts is 3% points more than the repo rate.

4. There are two types of Ways and Means Advances — normal and special.

5. The interest rate for Special WMA or Special Drawing Facility (SDF) is 1% point less than the repo rate.

a)

1, 3 & 5

b)

3 only

c)

5 only

d)

3 & 5

e)

1 only