91. The purchase and sell of which of the following instrument is effected through subsidiary General Ledger (SGL) account?
Treasury Bills
Options
Equity Shares
All of the Above
Answer.1. Treasury Bills
Explanation:
The purchase and sell of Treasury Bills are effected through the subsidiary General Ledger (SGL) account.
Treasuries can be bought and sold through an investment professional, a commercial bank, or an online broker. They can provide you with the most recent issues that are trading in the secondary market.
92. Minimum Subscription amount of a Certificate of Deposit is ________.
Rs. 25,000
Rs. 50,000
Rs. 1,00,000
Rs. 5,00,000
Answer.3. Rs. 1,00,000
Explanation:
The minimum Subscription amount of a Certificate of Deposit is Rs. 1,00,000 i.e the minimum deposit that could be accepted from a single subscriber should not be less than Rs. 1 lakh, and in multiples of Rs. 1 lakh thereafter.
93. Which instrument was introduced in the year 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings?
Certificate of Deposit
Commercial Paper
Commercial Bill
None of the Above
Answer.2. Commercial Paper
Explanation:
As part of efforts to develop the money market, Commercial Paper (CP) was introduced in India in 1990 with a view to enabling highly rated corporate borrowers to diversify their sources of short-term borrowings and also provide an additional financial instrument to investors.
94. When money is lent for more than a day and up to 14 days it is called __________
Demand Money
Call Money
Put Money
Notice Money
Answer.4. Notice Money
Explanation:
When money is borrowed or lend for the period between 2 days and 14 days it is known as ‘Notice Money’. And ‘Term Money’ refers to borrowing/lending of funds for a period exceeding 14 days.
95. What type of relationship is there between call rates and short-term money market instruments such as CDs and CPs?
Inverse
Direct
Negative
None of the Above
Answer.1. Inverse
Explanation:
There is an inverse relationship between call rates and other short-term money market instruments. A rise in call money rates makes other sources of finance such as commercial paper and certificates of deposit cheaper in comparison to banks raising funds from these sources.
96. _______ is an important tool to finance credit sales?
Commercial Bill
Commercial Paper
Certificate of Deposit
None of the Above
Answer.1. Commercial Bill
Explanation:
A commercial bill is an important tool to finance credit sales. It may be a demand bill or a usance bill. A demand bill is payable on demand, that is immediately at sight or on a presentation by the drawee. A usance bill is payable after a specified time.
97. Which instrument involves high risk and high returns and helps corporates in solving temporary capital crises without many formalities?
Equity Shares
Term Loan
Inter-corporate Deposits
All of the Above
Answer.3. Inter-corporate Deposits
Explanation:
Inter-corporate Deposits involve high risk and high returns and help corporates in solving temporary capital crises without many formalities.
An Inter-Corporate Deposit (ICD) is an unsecured borrowing by corporates and FIs from other corporate entities registered under the Companies Act 1956. The corporate having surplus funds would lend to another corporate in need of funds.
98. Which of the following are money market instruments?
Treasury Bills
Commercial Bills
Call Money
All of the Above
Answer.4. All of the Above
Explanation:
Money Market Instruments in India – Treasury Bills, Commercial Bills, Repurchase Agreements, call money, Commercial Papers, Certificate of Deposit, Banker’s Acceptance & MMMFs. Money market instruments are liquid with varying degrees and can be traded in the money market at a low cost.
99. What is the full form of CRISIL?
Credit Rating and Investment Services of India Limited
Credit Rating Information Services of India Limited
Credit Rating Institution for Small Industries Limited
Credit Rating Information Sector of India Limited
Answer.2. Credit Rating Information Services of India Limited
Explanation:
CRISIL (Credit Rating Information Services of India Ltd): CRISIL was jointly set up in 1988, by India’s leading financial institutions, ICICI and UTI. Its other shareholders include LIC, SBI, HDFC, GIC, etc went public and to date is India’s leading only listed credit rating agency.
100. ICRA was incorporated in which year?
1990
1991
1992
1993
Answer.2. 1991
Explanation:
ICRA Limited (formerly Investment Information and Credit Rating Agency of India Limited) was set up in 1991 by leading financial/investment institutions, commercial banks and financial services companies as an independent and professional investment Information and Credit Rating Agency.
101. CARE has been set up by ________ in collaboration with some banks and financial institutions.
IDBI
IFCI
ICICI
UTI
Answer.1. IDBI
Explanation:
Credit Analysis and Research Ltd. (CARE): It commenced operations in November l993.§ It has been set up by the IDBI in collaboration with some banks and financial service companies..
102. The concept of Credit Rating originated in which country?
UK
USA
Russia
UAE
Answer.2. USA
Explanation:
The concept of Credit Rating originated in the USA. Credit rating agencies originated in the United States in the early 1900s, when ratings began to be applied to securities, specifically those related to the railroad bond market.
103. Which was the first-ever instrument that was rated?
US Rail Road Bonds
UK Rail Road Bonds
US Mines Bonds
None of the Above
Answer.1. US Rail Road Bonds
Explanation:
US Rail Road Bonds was the first-ever instrument that was rated. The first railroad in North America Baltimore & Ohio is chartered by Baltimore merchants.
104. Which sentence is true? Sentence A – Rating is once given remains unchanged sentences B – Rating may be upgraded, downgraded, or continue to be unchanged.
Sentence A is True
Sentence B is True
Both are true
Both are false
Answer.2. Sentence B is True
Explanation:
Rating may be upgraded, downgraded, or continue to be unchanged.
A ratings downgrade or upgrade gives an indication to investors about the company’s potential to make more profits without accumulating too much debt.
Hence only statement 2 is true.
105. Which of the following is NOT true with respect to Credit Rating?
Credit Rating helps the market regulators in promoting stability and efficiency in the securities market.
Credit Rating helps issuers to have wider access to capital with better pricing
Credit Rating saves the investor’s time and enables him to take quick decisions.
A Credit Rating is a recommendation for the issuers to buy, sell or hold the security.
Answer.4. A Credit Rating is a recommendation for the issuers to buy, sell or hold the security.
Explanation:
A credit rating is not interpreted as investment advice and should not view it as a recommendation to buy, sell, or hold securities. A credit rating is not a guarantee that a financial obligation will be repaid.