money supply, banking & financial institutions section 3 Practice Questions Answers Test with Solutions & More Shortcuts
Money Supply, Banking and Financial Institutions PRACTICE TEST [12 - EXERCISES]
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Question : 41
Consider the following statements regarding "Exchange Traded Funds (ETF)":
- ETFs are traded like stocks and can be bought and sold throughout the day
- ETFs can be used as a vehicle for disinvestment
- ETFs offers the benefit of diversification of risks
a) (i) & (ii) only
b) (ii) & (iii) only
c) (i) only
d) All of the above
Answer »Answer: (d)
The concept of a mutual fund is that various investors/individuals put their money in a fund and this fund is used to purchase shares or bonds of various companies thus diversifying the risk of the investors. The fund is managed by experts and individuals/investors don’t trade the share/bonds directly.
The fund managers decide which companies to invest in and from which companies to exit. If the share price or bond price of the companies increase then the value of the fund also increases and investors gain.
If some individual wants to put money into the mutual fund then it can be done only once after the market has closed for that given day.
Exchange-Traded Funds (ETFs) are almost similar to mutual funds but they differ in the sense that ETFs are traded on the stock exchange throughout the day.
So, if an investor wants to purchase an ETF, they can always purchase it from the stock exchange/market throughout the day, just like the shares of any company.
The Central government announced in the budget 2018-19 that they will be creating an ETF of various central public sector companies so that to attract investors to purchase ETFs, and through which the disinvestment can be done.
So, when an investor is purchasing the shares of the ETF, he is indirectly purchasing the shares of various companies from which the ETF has been created.
Question : 42
Consider the following statement:
- IRDA is a multimember nodal agency
- It is vested with regulatory powers in respect of the insurance sector similar to those vested in SEBI in respect of the capital markets and of RBI for the banking sector.
- The IRDA Act, 1999 cleared the way for private sector entry into the insurance business.
a) 2 only
b) 1 only
c) 3 only
d) All of the Above
Answer »Answer: (d)
IRDA is a multimember nodal agency. It is vested with regulatory powers in respect of the insurance sector similar to those vested in SEBI in respect of the capital markets and of RBI for the banking sector.
The IRDA Act, 1999 cleared the way for private sector entry into the insurance business.
Question : 43
Consider the following statements regarding the Office of Economic Advisor (OEA):
- It is attached to the Ministry of Finance.
- The weekly compilation and Publication of Wholesale Price Indices (WPI) is done by the Office of Economic Advisor.
a) Only 2
b) Only 1
c) Both 1 and 2
d) Neither 1 nor 2
Answer »Answer: (a)
The Office of the Economic Advisor (OEA) is an attached office of the Ministry of Commerce & Industry.
Question : 44
The term "Phantom Capital" was recently in the news, is related to which of the following:
a) Recapitalization of public sector banks
b) Circular Flow of Income in an economy
c) Fake currency notes
d) Foreign Direct Investment
Answer »Answer: (d)
In practice, FDI is defined as cross-border financial investments between firms belonging to the same multinational group, and much of it is phantom in nature which means investments that pass through empty corporate shells.
These shells, also called special purpose entities, have no real business activities.
Question : 45
Consider the following statements regarding the Reserve Bank of India (RBI):
- It was set up on the basis of recommendations of the Hilton Young Commission
- It was set up as a shareholder’s bank but was nationalized in 1949
a) (ii) only
b) Both (i) & (ii)
c) (i) only
d) Neither (i) nor (ii)
Answer »Answer: (b)
The Reserve Bank of India (RBI) was set up on the basis of the recommendations of the Hilton Young Commission.
The Reserve Bank of India Act, 1934 provides the statutory basis of the functioning of the RBI, which commenced operations on April 1, 1935.
RBI began its operations by taking over from the Government the functions so far being performed by the Controller of Currency and from the Imperial Bank of India, the management of Government accounts and public debt. Burma (Myanmar) seceded from the Indian Union in 1937 but the Reserve Bank continued to act as the Central Bank for Burma till the Japanese Occupation of Burma and later up to April 1947.
After the partition of India, the Reserve Bank served as the central bank of Pakistan up to June 1948 when the State Bank of Pakistan commenced operations. The Reserve Bank, which was originally set up as a shareholder’s (private) bank, was nationalised in 1949.
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Money Supply, Banking and Financial Institutions Shortcuts »
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indian economy MCQ CATEGORIES
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» Introduction to Indian Economy
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» Planning, Economic Development & Five year Plans
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» National Income & Human Development Index
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» Agriculture Sector, Subsidy and Food Processing
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» Industries, Manufacturing & Service Sectors
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» Inclusive growth, Sustainable development and employment
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» Poverty & Unemployment
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» Introduction to Micro Economics
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» Introduction to Macro Economics
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» Macro fundamentals, GDP, Investment, Growth
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» Demand & Supply, Profit Loss, Inflation & Price Index
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» Fiscal Policy, Public Finance and Monetary Policy
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» Money Supply, Banking and Financial Institutions
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» Taxes Types, Methods & Budgeting Process
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» Banking, Security Market & Insurance
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