Banking and Financial Awareness for RBI/IBPS Exams

Q1. Nowadays we frequently read news items about “Derivatives” as used in the world of finance and money market. Which of the following statement(s) correctly describes what a derivative is and how it affects money/finance markets?
I. Derivatives enable individuals and companies to insure themselves against financial risk.
II. Derivatives are like fixed deposits in a bank and are the safest way to invest one’s idle money lying in a bank.
III. Derivatives are the financial instruments which were used in India even during the British Raj.
(a) Only III
(b) Only II
(c) Only I
(d) All of the above
(e) None of the above

Q2. Prior to the establishment of the Reserve Bank of India, the Government banking business was conduct by? 
(a) Bank of India
(b) Central Bank of India
(c) National Bank of India 
(d) Imperial Bank of India
(e) None of the above

Q3. Which of the following is not a general credit control measure?
(a) bank rate  
(b) variable reserve ratios
(c) open market operations 
(d) regulation of margin requirements on advances against agricultural commodities
(e) None of the above

Q4. Which one of the following is/are implication(s) of large inflow of foreign exchange into the country?
I. It makes monetary management difficult for RBI.
II.It creates money supply, asset bubbles and inflation.
III.It weakens the competitiveness of Indian exports.
(a) Only I
(b) Only II
(c) Only III
(d) All of the above
(e) None of the above

Q5. In India, which of the following agency is responsible for announcing the Foreign Trade Policy?
(a) RBI
(b) EXIM-Bank 
(c) Foreign Ministry 
(d) Ministry of Commerce and Industry
(e) None of the above

Q6. Euro Bond is an instrument?
(a) Issued in the European market  
(b) Issued in Euro currency 
(c) Is a bond denominated in a currency not native to the issuer's home country
(d) All of the above
(e) None of the above

Q7. Money laundering normally involves?
(a) Placement of funds 
(b) Layering of funds 
(c) Integrating of funds
(d) All of the above
(e) None of the above

Q8. The IMF and the World Bank were conceived as institutions to?
(a) Strengthening international economic co-operations and to help create a more stable and prosperous global economy 
(b) IMF promotes international monetary cooperation 
(c) The World Bank promotes long term economic development and poverty reduction 
(d) All of the above
(e) None of the above

Q9. Capital Market Regulator is?
(a) RBI
(b) IRDA
(c) NSE
(d) SEBI
(e) None of the above

Q10. FDI refers to?
(a) Fixed Deposit Interest 
(b) Fixed Deposit Investment 
(c) Foreign Direct Investment
(d) Future Derivative Investment
(e) None of the above 

Q11. Many a time we read a term MSS in relation to banking transactions. What is the full form of MSS?
(a) Money Stabilization Scheme 
(b) Market Stabilization Scheme
(c) Maturity and Standardization Service 
(d) Money Stabilization Service 
(e) None of the above 

Q12. RBI’s open market operation transactions are carried out with a view to regulate?
(a) Liquidity in the economy 
(b) Prices of essential commodities 
(c) Inflation 
(d) All of the above
(e) None of the above  

Q13. Open market operations, one of the measures taken by RBI in order to control credit expansion in the economy means?
(a) Sale or purchase of Govt. securities
(b) Issuance of different types of bonds 
(c) Auction of gold 
(d) All of the above 
(e) None of the above 

Q14. The bank rate means?
(a) Rate of interest charged by commercial banks from borrowers 
(b) Rate of interest at which commercial banks discounted bills of their borrowers 
(c) Rate of interest allowed by commercial banks on their deposits 
(d) Rate at which RBI purchases or rediscounts bills of exchange of commercial banks
(e) None of the above 

Q15. What is an Indian Depository Receipt?
(a) A deposit account with a Public Sector Bank 
(b) A deposit account with any of depositories in India 
(c) A denominated in Indian currency and are issued by a domestic depository and the underlying equity shares are secured  with a custodian 
(d) All of the above 
(e) None of the above 

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