Banking and Financial Institutions MCQ Questions and Solutions with Explanations

Banking and Financial Institutions MCQ Questions and Solutions with Explanations | Commerce

Banking and Financial Institutions MCQ Questions and answers with easy and logical explanations. Commerce provides you all type of quantitative and competitive aptitude mcq questions with easy and logical explanations. Banking and Financial Institutions MCQ is important for exams like B.COM, M.COM, BBA, BBM, CA, CS, CMA, CPA, CFA, UPSC, NET, Banking and other commerce department exam. Page-9 section-3

Match the items of List-I with those in List-II and select the correct answer.

List-I	List-II
a. Bank Rate Policy	1. Involving the shortening of the currency of bills eligible for rediscount
b. Credit Rationing	2. Involving the Purchase and sale of securities in the open market
c. Variable Reserve System	3. Involving the alteration of discount rate
d. Open Market Operations	4. Involving the variation of the minimum reserves

A) a-3, b-1, c-2, d-4 B) a-1, b-2, c-3, d-4 C) a-4, b-2, c-1, d-3 D) a-3, b-1, c-4, d-2

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Answer & Solution

Answer: Option D

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Why a retail investor is recommended to invest through a mutual fund in a stock exchange?
1. Mutual funds invest funds in a diversified portfolio of securities, thus reducing the risk of the investor.
2. Mutual funds are managed by financial experts.
3. Mutual funds promise high returns to the investors of the fund.

A) 3 only B) 2 and 3 only C) 1 and 2 only D) 1, 2 and 3

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Answer: Option C

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Which of the statements are correct in context of forward markets?

A) Forward markets facilitate the exchange of forward and futures contracts, setting the price of a delivered asset or financial instrument B) Forward contract pricing is based on the difference in interest rates between two currencies being traded, particularly within FX. Otherwise, it would be based on the yield curve C) Forward contracts differ from futures because they are customizable on offer size and maturity date, while the other tends to be standardized D) All of the above

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Answer: Option D

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Application from investors are to be received by mutual funds only at the

A) head office or branch offices of the mutual fund B) designated RTAs C) official points of acceptance D) designated banks

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Answer: Option C

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Suppose Party A has a right to buy USD 6,000 from Party B, 1 month down the line, at Rs. 46 = 1 USD (US Dollar).However, after 1 month Party A does not exercise the right. This is possible in which contract?

A) Swap B) Futures C) Forward D) Options

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Answer: Option A

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Which of the following discounts the treasury bills?

A) RBI B) Commercial banks C) SEBI D) Finance Ministry

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Answer: Option A

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Reserve Bank of India is

A) an extension wing of Ministry of Finance, Government of India B) a body corporate, having perpetual succession and a common seal C) an institution owned by Indian Banks Association D) a private sector bank

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Answer: Option B

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In terms of Section 24 of the RBI Act, 1934, RBI may issue bank notes for the maximum denomination of:

A) Rs. 500 B) Rs. 5000 C) Rs. 10000 D) Rs. 1000

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Answer & Solution

Answer: Option C

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Defective electrical wiring that may lead to fire is an example of

A) pure risk B) non-diversifiable risk C) speculative risk D) physical hazard

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Answer: Option D

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Which of the following Insurance is best suited to risk?

A) High frequency and low loss everity B) Low frequency and high loss severity C) Minimum frequency and no loss severity D) High frequency and high loss severity

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Answer & Solution

Answer: Option B

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