Banking and Financial Institutions MCQs

Question 1

Which among the following is NOT a correct statement?

Accepted Answer

The Reserve Bank of India worked as Central Bank of Bangladesh from January 1972 to December 1975

Answer

The Reserve Bank of India worked as Central Bank of Burma till April 1947

Answer

The Reserve Bank of India worked as Central Bank of Pakistan till June 1948

Answer

The Reserve Bank of India commenced its operations on 1st April 1935

Question 2

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

Accepted Answer

a-3, b-1, c-4, d-2

Answer

a-3, b-1, c-2, d-4

Answer

a-1, b-2, c-3, d-4

Answer

a-4, b-2, c-1, d-3

Question 3

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.

Accepted Answer

1 and 2 only

Answer

3 only

Answer

2 and 3 only

Answer

1, 2 and 3

Question 4

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

Accepted Answer

All of the above

Answer

Forward markets facilitate the exchange of forward and futures contracts, setting the price of a delivered asset or financial instrument

Answer

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

Answer

Forward contracts differ from futures because they are customizable on offer size and maturity date, while the other tends to be standardized

Question 5

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

Accepted Answer

official points of acceptance

Answer

head office or branch offices of the mutual fund

Answer

designated RTAs

Answer

designated banks

Question 6

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?

Accepted Answer

Swap

Answer

Futures

Answer

Forward

Answer

Options

Question 7

Which of the following discounts the treasury bills?

Accepted Answer

RBI

Answer

Commercial banks

Answer

SEBI

Answer

Finance Ministry

Question 8

Reserve Bank of India is

Accepted Answer

a body corporate, having perpetual succession and a common seal

Answer

an extension wing of Ministry of Finance, Government of India

Answer

an institution owned by Indian Banks Association

Answer

a private sector bank

Question 9

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

Accepted Answer

Rs. 10000

Answer

Rs. 500

Answer

Rs. 5000

Answer

Rs. 1000