money supply, banking & financial institutions section 11 Practice Questions Answers Test with Solutions & More Shortcuts

Question : 36

With reference to the Indian Public Finance, consider the following statements:

1. External liabilities reported in the Union Budget are based on historical exchange rates
2. The continued high borrowing has kept the real interest rates high in the economy
3. The upward trend in the ratio of Fiscal Deficit of GDP a recent years has a adverse effect on private investment
4. Interest payments is the single largest component of the non-plan revenue expenditure of the Union Government

a) 1 and 4

b) 1, 2 and 3

c) 2, 3 and 4

d) 1, 2, 3 and 4

Question : 37

Consider the following statements:

1. Through masala bonds, capital is raised in foreign currency
2. Through masala bonds capital is raised in domestic currency
3. By issuance of masala bonds, the exchange risk is transferred to the investor

a) (ii) only

b) (i) & (iii) only

c) (i) only

d) (ii) & (iii) only

Question : 38

Which among the following gives a precise definition of “ Arbitrage” in Financial World?

a) To profit from an existing discrepancy among prices, exchange rates, and/or interest rates on Different Markets without risk of these changing

b) To profit from an existing discrepancy among prices, exchange rates, and/or interest rates on new techniques or products in same market.

c) to profit from an existing discrepancy among prices, exchange rates, and/or interest rates on Same market without risk of these changing

d) All of above

Question : 39

Consider the following statements regarding the Capital Adequacy Ratio (CAR) of banks:

1. Deposits of the public is a part of the capital for calculating CAR
2. Bondholders increase the CAR of the bank and hence safety of the depositors

a) (ii) only

b) Both (i) & (ii)

c) (i) only

d) Neither (i) nor (ii)

Question : 40

Consider the following statements regarding Money Multiplier:

1. It increases with an increase in reserve requirements of banks
2. It decreases with an increase in reserve requirements of banks
3. It increases with Monetary Base
4. It decreases with Monetary Base

a) (ii) only

b) (ii) & (iii) only

c) (i) only

d) (ii) & (iv) only