introduction to indian economy section 2 MCQ Questions & Answers Detailed Explanation

Answer: (a)

The best way for a bank to avoid loss is to accept only sound collateral.

In lending agreements, collateral is a borrower’s pledge of specific property to a lender, to secure repayment of a loan. The collateral serves as protection for a lender against a borrower’s default - that is, any borrower failing to pay the principal and interest under the terms of a loan obligation.

If a borrower does default on a loan (due to insolvency or another event), that borrower forfeits (gives up) the property pledged as collateral - and the lender then becomes the owner of the collateral.

In a typical mortgage loan transaction, for instance, the real estate being acquired with the help of the loan serves as collateral. Should the buyer fail to pay the loan under the mortgage loan agreement, the ownership of the real estate is transferred to the bank.

The bank uses a legal process called foreclosure to obtain real estate from a borrower who defaults on a mortgage loan. Collateral, especially within banking, traditionally refers to secured lending (also known as asset-based lending).

Answer: (d)

Worldwide, the first known instance of an SEZ seems to have been an industrial park set up in Puerto Rico in 1947 to attract investment from the US mainland.

In the 1960s, Ireland and Taiwan followed suit, but in the 1980s China made the SEZs gain global currency with its largest SEZ being the metropolis of Shenzhen.

Answer: (d)

India is a developing economy. Its per capita income level is much low than compared of other developed countries. According to World Development Report (2011), India’s per capita income was the US $ 1499 in 2014.

The per capita income in the United States is US $ 47240 and hence India’s per capita income is about 1/40 of the US level of per capita.

The per capita income of 2015 has increased by 10.1%, (as compared to 2014) as stated by Minister of State for Statistics and Programme Implementation Gen. V K Singh.

The national income in 2014-15 stood at Rs. 11,217,079 crore. With the mentioned per capita income, India falls in the category of Lower Middle-Income Countries(LMC)

Answer: (b)

Tata AIG General Insurance Company offers motor insurance, car insurance, auto insurance, travel insurance & health insurance services in India.

ICICI Prudential offers insurance for wealth plans, health, life insurance in India, term insurance plans, ULIPs, retirement solutions, pension plans, etc.

Bajaj Allianz presents Life Insurance, Car Insurance, Travel Insurance, Health Insurance, Term Insurance and Home Insurance.

HDFC Life Insurance is one of India’s leading private life insurance companies, which offers a range of individual & group insurance plans & policies. It is a joint venture between Housing Development Finance Corporation Limited (HDFC), India’s leading housing finance institution and Standard Life plc, the leading provider of financial services in the United Kingdom.

Answer: (d)

The one rupee note is issued by the Ministry of Finance and it bears the signature of the Finance Secretary, while other notes bear the signature of Governor RBI.

However, only RBI is the only source of legal tender money because the distribution of one rupee notes and coins and small coins all over the country is undertaken by the Reserve Bank as an agent of the Government.

Answer: (d)

The Securities and Exchange Board of India (frequently abbreviated SEBI) is the regulator for the securities market in India. It was established on 12 April 1992 through the SEBI Act, 1992. Initially, SEBI was a non-statutory body without any statutory power.

However, in 1995, the SEBI was given additional statutory power by the Government of India through an amendment to the Securities and Exchange Board of India Act 1992.

In April 1998 the SEBI was constituted as the regulator of capital markets in India under a resolution of the Government of India.