money supply, banking & financial institutions section 12 Practice Questions Answers Test with Solutions & More Shortcuts

Answer: (c)

Committee of Creditors (CoC) consists of only financial creditors (like banks, NBFCs etc.). But the proceeds/money from the resolution process is shared by the financial and operational creditors boht.

Only CoC will decide how the resolution proceeds will be shared among financial and operational creditors and NCLT will not have any say.

NCLT cannot interfere in the merits of the commercial decision taken by the CoC but a “limited judicial review” was possible to see that the CoC had taken into account, inter alia, the fact that the interest of all stakeholders, including operational creditors, had been taken care of.

Answer: (d)

Whenever something is surplus, its value decreases. So, when there is surplus liquidity (money) in the economy, the value of money decreases, which means money is available at a cheaper rate

i.e. lesser interest rate. And since the value of money (Rupee) has decreased, it also means that the same amount of rupee will be able to purchase fewer dollars i.e. rupee will depreciate. And it also means that purchasing power of rupees will decrease.

When the interest rate comes down in the economy then if you will purchase bonds then your return/yield will also be less.

This you can also determine as, when the interest rate comes down in the economy, the bond prices go up and return/yield comes down.

Answer: (d)

Commercial Paper (CP) is an unsecured money market debt instrument issued in the form of a promissory note for less than one year.

NBFCs and high rated companies also are allowed to issue commercial papers to raise short term money.

Answer: (d)

Refer the trends

Answer: (d)

Bank rate is the interest rate at which a nation’s central bank lends money to domestic banks. Often these loans are very short in duration.