Showing posts with label gk. Show all posts
Showing posts with label gk. Show all posts

MCQs on Finance

Best of luck !

1) Which is the Currency of Malaysia?
a) Malaysian Dollor b) Bhat c) Ringgit d) lira e) Rupiah

2) Which of the following is true about Convertibility of Rupee?
i) Rupee is fully convertible on the current account.
ii) Rupee is partially convertible on the capital account.
iii) Rupee is partially convertible on the current account.
iv) Rupee is non-convertible on the capital account.

a) i & ii only
b) i & iv only
c) ii & iii only
d) none of these

3) Full form of AUM?
a) All under management
b) All asset under-manageable
c) Assets under management
d) Always under management

4) What does full current account convertability of Rupee means?
i) Residents can make & recieve trade related payments in foreign currency & vice-versa.
ii) Can convert local financial assets into foreign assets.
iii) residents can purchase real estate abroad.
iv) for education & tourism purpose Rupee can be converted in restricted manner only.
v) Indian companies can buy foreign companies without restrictions out of Indian resources.

a) i & iii only
b) i, ii & v only
c) ii & iv only
d) i & iv only

5) In stock market parlance what does the term 'bearish' associated to?
a) index in upward trend
b) index in downward trend
c) index volatile & moving both ways
d) index showing not much activity.

6) Expand CAD?
a) Capital account deficit
b) Concurrent audit
c) Current Account deficit.
d) Convertible account deficit.

7) BSE's stock market index - Sensex is based on __ no. of large companies/scrips?
a) 25
b) 30
c) 50
d) 100

8) In stock market parlance what does the term 'short' associated to?
a) a trader sell a scrip/co. first & buys it later.
b) a trader short on money.
c) time period of 5 mins before the market closes.
d) a trader buys a scrip first & sells it later.

9) Which of the following is true about Derivatives?
i) They derive their value from an underlying asset.
ii) Its basically a financial contract refering future price.
iii) They are used to hedge risk in a transaction or for speculation purpose.
iv) They are available in OTC (Over-the-counter) market as well as Exchanges like NSE.

a) i only
b) i & ii only
c) i, ii & iii only
d) All the above.

10) Which of the following is true about Options?
i) they are basically derivative products only.
ii) there is no obligation to honor the contract.
iii) Premium is paid for not honoring the contract.
iv) 'Call option' gives holder right to sell underlying asset at prefixed rate.
v) 'Put option' gives holder right to buy underlying asset at prefixed rate.

a) i, ii only
b) i, ii & iii only.
c) i, iv & v only
d) all the above.

11) Which of the following is true about Futures?
i) these are derivatives products only.
ii) there is no obligation to honor the contract.
iii) they are listed on an exchange.
iv) they are used for hedging & speculation.

a) i & ii only
b) i, iii  & iv only
c) i & iii only
d) all the above.

12) Which of the following is true about Forward Contracts?
i) they are Over-the-counter derivative products
ii) traded on one-to-one basis among parties & mutually agreed terms.
iii) its used for hedging risk
iv) they are listed on an exchange.

a) i only
b) i & ii only
c) ii, iii & iv only
d) i, ii & iii only

13) Which of the following is true about recent Interest Rate Futures contract launched in India?
i) underlying security is either 10 year GoI bond (G-sec) or 91 day T-bill.
ii) contract to buy or sell a debt instrument.
iii) these are non-standard OTC contracts
iv) these are standaridized contracts available on MCX-FX, NSE & BSE.
v) they are basically derivative products only

a) i & v only
b) i, ii, iv & v only
c) i, ii, iii & v only
d) all the above.

14) Which of the following is true about Hedge funds?
i) they are meant for ultra rich individuals.
ii) they invest very aggressively in any class, from G-sec to any exotic derivatives.
iii) they can charge upto 20% of net profit, and do not share losses.
iv) they are virtually unregulated
v) they can market publicly.

a) i, ii only
b) i, ii & iv only
c) i, ii, iii & iv only
d) all the above

15) Which of the following is true about Swaps?
i) Swap is an exchange of cash-flows.
ii) in an Interest-rate swap, basis for calculation of Interest is changed e.g. from floating to fixed or vice-versa.
iii) in Currency Swap, cash flow of one currency is changed to another currency.
iv) Swaps are used to hedge currency & interest rate risks.

a) i only
b) i & ii only
c) i & iv only
d) all of above.

16) Which of the following is true about Volatility Index (Vix)?
i) It captures mood of the market, high volatility is associated with fall in market.
ii) If Vix more than 30%, stock market investors are in fear zone.
iii) A low Vix associated with price rise.
iv) India Vix is based only Nifty 50 Option prices.

a) i & iii only
b) iv only
c) ii & iii only
d) all the above.

17) Whats REIT?
a) REal IT
b) Realistic Infra Technology fund
c) Reference for IT index
d) Real Estate Investment Trust

18) Full form of EURIBOR?
a) EUropean reference for labor market
b) EU's bechmark index
c) Euro Inter-Bank offered rate.
d) EU libor rate

19) 50 basis points means?
a) 5.00 %
b) 0.50 %
c) 0.05%
d) 50.00 %

20) What is meant by Arbitrage?
a) its nothing but name of a movie.
b) practice of taking advantage of a price difference between two or more markets.
c) hedging practice
d) an pre-budget activity.


Tip: boost memory and clear govt exams


Ans:
1) C. Thailand- Bhat. Turkey- Lira. Indonesia- Rupiah.
2) A.
3) C.
4) D.
5) B. And the term "Bullish" refers when Index is in upward trend.
6) C.
7) 30. NSE's Nifty is based on 50 large companies.
8) A. The term 'Long' refers to "buy first, sell later".
9) D. Derivative products includes OTC (forward contracts), Futures (forward contracts on exchanges), Options, Swaps
10) B. Options as the name suggests has no obligation. Call option is right to buy (think you are calling for price), Put option is right to sell (think you are putting 'it' on OLX to sell).
11) B. Furutes have obligation to honor the contract, think of it as buying/selling shares on NSE - you can't go back on trade you've done.
12) D.
13. B. IRF was recently re-launched for 3rd time in India.
14) C. Hedge funds can't market publicly.
15) D.
16) D.
17) D.
18) C.
19) B.
20) B.

Crimea crises

Invasion of Crimea by Russia - a small peninsula on top of Black sea is in news. Here's what I've collected from around the internet that could be beneficial for students.

Red Peninsula marked 2 is Crimea.



Crimea in southern Ukraine is at the center of what is being seen as the biggest crisis between Russia and the West since the Cold War. Crimea has been fought over - and changed hands - many times in its history. It has both cultural and strategic importance for Russia.




The Crimean War (1853 – 1856): Russia lost to an alliance of France, Britain, the Ottoman Empire over Crimea. The war was documented extensively in news (even in India).

This Crimean war saw active participation from Florence Nightingale; the founder of modern nursing. She was known as "The Lady with the Lamp",  The Nightingale Pledge taken by new nurses was named in her honor only.


Crimea today
Crimea changed many hands, saw many govts and finally transferred by Moscow (erstwhile USSR) to Ukraine in 1954. After disintegration of USSR, it remained with Ukraine only, even though majority of population are Russians. It has a unique political place in Ukraine, it is an autonomous republic within Ukraine, electing its own parliament, governed by the Constitution of Crimea (since 1998). The capital and administrative seat of the republic's government is the city of Simferopol, located in the center of the peninsula.


Crises
The current crises has it's roots in bad finances of Ukraine, and a tussle between EU and Russia. Ukraine had plans of integrating with EU and wanted a loan of $20 billion USD from EU - almost the level of its central bank's currency reserves, for it's Gas bills and debt repayments in 2014 alone. But EU was willing to give $0.85 billion only, that too after Ukraine signs a stand-by-agreement with IMF (which stopped loaning Kiev after it failed to implement necessary reforms in 2011).

But Russia was willing to offer $ 15 billion USD in loans (by buying Ukrainian bonds), and also offered heavy discounts on its gas prices, no strings attached.


Through out this Russia wanted Kiev to join its own customs union (often seen as modern embodiment of soviet union, which now includes Belarus and Kazakhstan) instead of signing the EU pact. Russia had already put in economic pressures on Ukraine, with customs delays and a ban on Ukrainian chocolates, somewhere in August 2013.

The Ukraine's economy is heavily dependent on Russia - these measures put a heavy pressure on their exports and finances. Russians justified the trade embargoes by saying that they are merely protecting its businesses from influx of cheap European goods through Ukraine.


Ukraine's Leaders Cancelled EU Agreement for Russia's Offer
Ukraine's leaders were forced to fall back on Russia's assistance after they failed to meet stringent conditions laid down by EU, IMF (like 40% raise in gas prices, big budget cuts). Ukraine's leaders didn't sign association agreement with EU at it's Nov 2013 Vilnius summit, which resulted in mass protest in what is now called as Euromaidan (literally Eurosquare), protesters were demanding closer European integration and resignation of President Viktor Yanukovych.


Russia’s sovereign wealth fund invested the first $3 billion of the bailout in Ukrainian two-year notes in December 2013. Ukraine scrapped a planned $2 billion bond sale in Feb 2014, according to a statement in Irish Stock Exchange, where the notes used in the bailout program are listed. Ukraine's currency Hryvnia is weakening like anything, a big record CAD and it's ratings being reduced to junk levels are putting tons of pressure on the country. Longer the crises goes on, the higher the risk of a full-blown balance of payments and sovereign debt crisis.


As on date Russian forces have entered Crimea and it needs to be seen what's going to happen there in future.



RBI as Banker to Government



One of the important role of RBI is being Banker to Governments - GOI & State Govts. It doesn't get much public attention because it does not directly impact prices/ policy rates/ GDP figures of the country. However it's an important role of RBI. RBI also gives financial advice to govt, whenever called to do so.

RBI - banker to Government.

Legal Framework:


RBI Act 1934:

RBI has the 'obligation' to undertake the receipts and payments of the Central Government and to carry out the exchange, remittance and other banking operations, including the management of the public debt of the Union.


RBI has the 'right' to transact Government business of the Union in India.

Accordingly RBI is also banker to all State Govts, as per the agreements they enter into, except J&K and Sikkim.

RBI does NOT get any remuneration for the conduct of ordinary banking business other than the advantages which may accrue to it from the holding of their cash balances free of obligation to pay interest thereon.


Banker to Central Govt:

Work relating to Govt. business is handled by Public Accounts Dept of RBI. Govt's Principal accounts are maintained at Central Accounts Section in Nagpur. Duties involve receipt & payment of moneys on behalf of various govt dept.


Each ministry/Dept has been allotted a Public Sector Bank for handling it's transactions based on principle of 'One Bank - One Ministry/Dept'. The responsibility of maintenance of accounts lies with individual Ministry/Department only. This includes arranging payments, accounting receipt, disbursal, auditing of transaction. RBI does NOT handle day-to-day transactions as before, except where nominated.


Banker to State Govts:


The financial transactions of State Govts are done at various agency bank branches in respective states. All the transaction are consolidated at 'Link cell' in State Capital & settled with RBI office in the state. All consolidated position are then ultimately booked in Principal Accounts of the resp. State maintained @ CAS (Central Accounts Section) Nagpur.

Meanwhile transactions at various agency offices (RBI, SBI, Nationalized banks' branches, treasuries etc) are done without any reference to cash position of the State Govt @ CAS.



Central Accounts (CAS@ Nagpur):

Each agency bank has set up a 'Link office' in Nagpur, for fund settlement with CAS. All the financial transactions thus merge into CAS Nagpur, which work out daily cash balance of each Govt.

RBI sends daily, monthly advice of balance in its books, ways & means granted, investments made to respective Govts. This is useful for govts in preparing 'Ways & Means budgets'.



Other Services:

Besides receipt & payment of money on behalf of Govts. RBI performs other services to govts for which it may receive nominal fees, often this don't even cover costs!

Being Banker to govt RBI provides: exchange, handle forex transaction of GOI, remittance transactions, management of public debt & issue of new loans, invest surplus funds, issue & management of special funds, bonds, pension schemes, safe custody facility and act as Adviser to Govt on various Monetary & economic perspectives.


Reforms:


a) Computerization: RBI's endeavor is to help common person to pay Govt's dues at bank branch of his choice, while ensuring instantaneous credit to Govt's a/c @ RBI.

RBI & Govts are working towards computerization of dealing branches, CAS, all PAOs (Pay & Accounts Offices)/ Circle Offices of Govt/ Drawing offices/ Treasury offices.

It is envisaged that real-time settlement of funds would handle shortcomings observed in manual system of handling transactions. Reconciliation at every level will be quicker with increased accuracy.


Instead of paper scrolls, Govt depts are geared up for accepting the same in e-format. Earlier all deposits in Govt's a/cs were to be accompanied by appropriate challans. Challans were in multiple copies, different shapes, sizes. Paying taxes & accounting for same was cumbersome, time-consuming process.

With the progress in banking it is possible for assesses to pay govt's dues using single pay-in-slip. Later electronically just by quoting PAN!


OLTAS (On-Line Tax Accounting System) introduced in 2004, for collection of Direct Taxes is a step in that direction. OLTAS can be accessed through Net-banking of Agency Banks & taxes can be paid by common taxpayer in minutes.



b) Expansion in Agency Banks: At present all public sector banks & 3 private sector banks (Axis, HDFC, ICICI bank) act as RBI's agent to do Govt business.

Agreement between State Govt & RBI provide that the RBI is not entitled for any remuneration for ordinary banking operations apart from the advantages which may accrue from holding cash balances free of obligation to pay interest thereon. However minimum balances doesn't adequately compensate RBI for the cost of conducting Govt's business.


Presently 'Agency commission' is given to commercial banks by RBI. This merely covers the cost of doing the transaction. In most of the countries this cost is borne by Govts themselves.

RBI is trying to create a climate of competition for Govt Business. It's suggested that system of 'bidding' would rationalize agency charges better rather than present 'cost system'


For more information read FAQs by RBI & speech by Sh. YV Reddy (former RBI Governor).



25 richest countries of the world

Top 25 countries of world in GDP per capita (nominal) terms.



Rank GDP per capita Country
1 $1,06,406  Luxembourg
2 $1,04,756  Qatar
3 $99,170  Norway
4 $78,881   Switzerland
5 $67,304  Australia
6 $56,426  Denmark
7 $54,815  Sweden
8 $52,300  Canada
9 $52,052  Singapore
10 $51,704  United States
11 $48,761  Kuwait
12 $46,707  Japan
13 $46,643  Austria
14 $46,011  Netherlands
15 $45,984  Ireland
16 $45,635  Finland
17 $43,774  United Arab Emirates
18 $43,615  Belgium
19 $42,725  Iceland
20 $42,402  Brunei
21 $41,866  Germany
22 $41,223  France
23 $39,161  United Kingdom
24 $38,255  New Zealand
25 $36,676  Hong Kong




India has a GDP per capita of $3,842. India finds place in lower portion of the list.

25 Important Currencies of World

Important International Currencies:



Here are some extremely important currencies from MCQs point of view. They've been asked in many competitive exams:

  
  1.    Malaysian - Ringgit
  2.    Thailand - Bhat
  3.    China  - Yuan Renminbi
  4.    South Korean - Won
  5.    Japanese  - Yen
  6.    New Zealand - Dollar $
  7.    Swedish  - Krona
  8.    U.S. - Dollar 
  9.    Australian - Dollar 
  10.    Canadian -  Dollar 
  11.    Hong Kong -  Dollar
  12.    Singapore - Dollar
  13.    Swiss - Franc
  14.    Russia - Rubal
  15.    UAE - Dirham
  16.    Turkish - Lira
  17.    British - Pound
  18.    Argentina  - Peso
  19.    Chile -  Peso
  20.    Columbia -  Peso
  21.    Maxico - Peso
  22.    Brazil - Real
  23.    South Africa - Rand
  24.    Philippines - Peso
  25.    Indonesian - Rupiah
   

Banking News Notes Dec 2013

Important Banking News: 

This piece of information is must read for bank exams:


-> Paperless banking facility: Axis Bank Ltd has launched the e-KYC initiative to facilitate paperless banking to Aadhaar card holders at Mumbai. With this step, Axis Bank became the first bank to allow customers to open an account with just their Aadhaar number.




->SARFAESI Act: The most effective tool to recover bad loans; Amidst rising NPAs, the SARFAESI Act was the most potent tool in the hands of banks for recovering bad loans as the Act empowers banks to recover NPAs without the intervention of courts by providing three alternative methods — securitisation, asset reconstruction and enforcement of security — without the intervention of courts. 


According to the RBI’s Report on Trend and Progress of Banking in India, 2012-13, banks have recovered Rs 18,500 crore through the Sarfaesi route. Also, in terms of efficiency, the Act has proved to be more effective than the DRTs or mediation by Lok Adalats. 

“Under the Sarfaesi Act, notice is served and two-months’ time is given to the borrower to discharge his liabilities, but DRTs (despite clear instructions from the Supreme Court that they cannot give stay orders on Sarfaesi) are still giving stay orders and eventually, the stay order is lifted but in the process one to one-and-a-half years is lost, without any benefit to any party. 


Also, the rising levels of stress across the banking system was reflected in the fact that the number of cases under all the three mechanisms saw a massive increase of 66 per cent to 10.45 lakh cases.



-> Bharatiya Mahila Bank (BMB) will offer 4.5% on Savings Bank balances up to Rs 1 lakh and 5% on balances above Rs 1 lakh. 

Set up with a capital base of Rs 1,000 crore, is the first bank started in the public sector space by an Act of Parliament (other public sector banks were nationalised in two tranches in 1969 and 1980). It will predominantly serve women customers, it will serve men too.



-> Technology-related banking frauds in India have fallen in the last four years due to stepping up checks on on-line transactions by the banks. According to the RBI Data, during current financial year, 8765 tech-related frauds were reported, a 13% drop over the previous fiscal.


-> Liquidity support to MSME sector: The liquidity support comes in the wake of slowdown in the economy which has resulted in liquidity tightness in a large number of MSEs in the manufacturing and services sector, particularly due to delayed settlement of receivables from large corporate, public sector undertakings and government departments.

 In view of the need to ease the liquidity stress to micro and small enterprises (MSE) sector which is employment intensive and contributes significantly to exports, RBI has been to provide refinance of an amount of Rs. 5,000 crore to the Small Industries Development Bank of India (SIDBI) under the provisions RBI Act, 1934. The facility will be available up to March 31, 2014.




-> FI limit in AXIS Bank increased: The Cabinet committee on economic affairs (CCEA) has approved the proposal of Axis Bank for increase in foreign investment from 49% to 62% entailing an inflow of about Rs 7,250 crore. Following the inflow and hike in stake by foreign investors, the bank will become foreign-owned, whereby every future investment in seven subsidiaries will be governed by the foreign direct investment policy.



-> Next commonwealth summit in 2015: Malta, a Southern European country was unanimously chosen as the host of the next Commonwealth summit



-> New CMD for corporation bank: S. R. Bansal


-> New MCX-SX chairman: Former Union Home Secretary G.K. Pillai has been appointed as Chairman of MCXSX.

RBI Inflation linked bonds: important points to remember

 Inflation Indexed National Saving Securities- some important FAQs from exam point of view:

a) Inflation rate for these bonds will be:  Final combined CPI (consumer price index) base: 2010, with lag of 3 months.


b) Eligibility: only retail investor. Individuals, HUFs, charitable institutions, Universities. Maturity period is 10yrs.


c) Interest Rate: 2 parts: i) fixed part: @ 1.5% p.a. (ii) variable: inflation rate.

This fixed rate of interest also acts as floor rate, in case there is deflation in economy.


d) Interest gets accrued & compounded on half yearly basis.


e) Minimum limit: Rs 5000/-, Max- 5lacs per annum per applicant.