LIC AAO Mains 2019- Financial and Insurance Market Questions | 20th June

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LIC AAO Mains 2019- Financial and Insurance Market Questions | 20th June

LIC AAO Mains 2019- Financial and Insurance Market Questions

As we know, LIC has released both the vacancies of AAO (Assistant Administrative Officer) & ADO (Apprentice Development Officer). Insurance Market & Financial Awareness is a newly introduced section which will be asked in both the exams. LIC AAO mains 2019 is scheduled to be held on 28th June. While LIC ADO Prelims 2019 is scheduled to be held on 6th & 13th July. Here is a quiz on Insurance Market & Financial Awareness being provided by Adda247 for free to let you practice the best of latest pattern Questions for LIC examination for sure shot selection.

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Q1. Agriculture Insurance Company of India Limited was incorporated under the Indian Companies Act _______________.
1956
1961
1949
1969
1980
Solution:
Agriculture Insurance Company of India Limited was incorporated under the Indian Companies Act 1956 on 20th December, 2002 with an authorised share capital of INR 15 billion and paid up capital of INR 2 billion. AIC commenced business from 1st April, 2003.
Q2. Recommendations of which committee, The Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry?
Sivaraman Committee
Malhotra Committee
Rangarajan Committee
Mehta Committee
Reddy Committee
Solution:
Following the recommendations of the Malhotra Committee report, in 1999, the Insurance Regulatory and Development Authority (IRDA) was constituted as an autonomous body to regulate and develop the insurance industry. The IRDA was incorporated as a statutory body in April, 2000.
Q3. What was the authorised capital of Agriculture Insurance Company of India Limited (AIC)?
Rs. 1000 Crores
Rs. 2000 Crores
Rs. 1500 Crores
Rs. 500 Crores
Rs. 100 Crores
Solution:
Agriculture Insurance Company of India Limited (AIC) has been formed at the behest of Government of India, consequent to the announcement by the then Hon'ble Union Finance Minister in his General Budget Speech FY 2002-03 that, "to subserve the needs of farmers better and to move towards a sustainable actuarial regime, it was proposed to set up a new Corporation for Agriculture Insurance". Authorised Share Capital of AIC was Rs. 1500 Crores.
Q4. Which of the following is/are functions and duties of IRDAI?
Registering and regulating insurance companies
Protecting policyholders’ interests
Licensing and establishing norms for insurance intermediaries
Promoting professional organisations in insurance
All of the above are functions and duties of IRDAI
Solution:
Section 14 of the IRDA Act, 1999 lays down the duties, powers and functions of IRDA.
Registering and regulating insurance companies.
• Protecting policyholders’ interests.
• Licensing and establishing norms for insurance intermediaries.
• Promoting professional organisations in insurance.
• Regulating and overseeing premium rates and terms of non-life insurance covers.
• Specifying financial reporting norms of insurance companies.
• Regulating investment of policyholders’ funds by insurance companies.
• Ensuring the maintenance of solvency margin by insurance companies.
• Ensuring insurance coverage in rural areas and of vulnerable sections of society.
Q5. Where is the Registered Office of Agriculture Insurance Company of India Limited?
Hyderabad
Chennai
Mumbai
New Delhi
Kolkata
Solution:
Registered Office and Head Quarters of Agriculture Insurance Company of India Limited is in New Delhi.
Q6. Insurance Regulatory and Development Authority (IRDA) was set up as autonomous body under which act?
IRDA Act, 1996
IRDA Act, 1999
IRDA Act, 2000
IRDA Act, 2002
IRDA Act, 1995
Solution:
Insurance Regulatory and Development Authority (IRDA) set up as autonomous body under the IRDA Act, 1999.
Q7. Who is current Chairman-cum-Managing Director of Agriculture Insurance Company of India Limited?
Tajinder Mukherjee
AV Girija Kumar
Girish Radhakrishnan
TL Alamelu
Alamelu T Lakshmanachari
Solution:
Mrs. Alamelu T. Lakshmanachari is current Chairman-cum-Managing Director of Agriculture Insurance Company of India Limited.
Q8. Parliament was passed Insurance Laws (Amendment) Bill, 2015. The amendment bill hikes Foreign Direct Investment (FDI) cap in the insurance sector to ______________ percent from present 26 percent.
49%
40%
64%
75%
100%
Solution:
Parliament has passed Insurance Laws (Amendment) Bill, 2015. It was first passed in Lok Sabha on 4 March 2015 and later in Rajya Sabha on 12 March 2015, which will become an Act when the President signs it. The amendment bill aims to bring improvements and revisions in the existing laws relating to insurance business in India. The bill also seeks to remove archaic provisions in previous laws and incorporate modern day practices of insurance business that are emerging in a changing dynamic environment, which also includes private participation. It is expected that the foreign investment would bring about 20,000-25,000 crore in short funds. The amendment bill hikes Foreign Direct Investment (FDI) cap in the insurance sector to 49 percent from present 26 percent.
Q9. Name the insurance that is a financial cover for a contingency linked with human life, like death, disability, accident, retirement etc.
Property Insurance
Health Insurance
Motor Insurance
Life Insurance
Travel Insurance
Solution:
Life Insurance is a financial cover for a contingency linked with human life, like death, disability, accident, retirement etc. Human life is subject to risks of death and disability due to natural and accidental causes. When human life is lost or a person is disabled permanently or temporarily, there is loss of income to the household.
Q10. A ____________________ may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions.

Policy Charges
Administration Charges
Surrender Charges
Fund Switching Charge
Mortality Charges
Solution:
Surrender Charges- A surrender charge may be deducted for premature partial or full encashment of units wherever applicable, as mentioned in the policy conditions.
Q11. Money Market Instruments are simply the instruments or tools which can help one operate in the money market. Which of the following is not the money market instrument?
Certificate of Deposits
Share
Repurchase Agreements
Treasury Bills
Banker’s Acceptance
Solution:
Money Market Instruments are simply the instruments or tools which can help one operate in the money market. These instruments serve a dual purpose of not only allowing borrowers meet their short-term requirements but also provide easy liquidity to lenders. Some of the common money market instruments include Banker’s Acceptance, Treasury Bills, Repurchase Agreements, Certificate of Deposits and Commercial Papers.
Q12. A Banker's Acceptance (BA) is a short-term debt instrument issued by a company that is guaranteed by a commercial bank. The date of maturity typically ranges between __________ and _____________ days from the date of issue.
30 days and 180 days
10 days and 150 days
50 days and 100 days
80 days and 200 days
40 days and 130 days
Solution:
A banker's acceptance (BA) is a short-term debt instrument issued by a company that is guaranteed by a commercial bank. Banker's acceptances are issued as part of a commercial transaction. These instruments are similar to T-bills, are frequently used in money market funds and are traded at a discount from face value on the secondary market, which can be an advantage because the banker's acceptance does not need to be held until it matures. Banker's acceptances vary in amount according to the size of the commercial transaction. The date of maturity typically ranges between 30 and 180 days from the date of issue, which generally classifies the banker's acceptance as a short-term negotiable instrument. To create a banker’s acceptance, the drawer must meet the eligibility requirements as set forth by the banking institution that serves as the backer in the transaction.
Q13. A ________________________ is a written order used primarily in international trade that binds one party to pay a fixed sum of money to another party on demand or at a predetermined date.
Certificate of Deposits
Commercial Papers
Banker's Acceptance
Repurchase Agreements
Bill of Exchange
Solution:
A bill of exchange is a written order used primarily in international trade that binds one party to pay a fixed sum of money to another party on demand or at a predetermined date. Bills of exchange are similar to checks and promissory notes—they can be drawn by individuals or banks and are generally transferable by endorsements. A bill of exchange transaction involves up to three parties. The drawee is the party that pays the sum specified by the bill of exchange. The payee is the one who receives that sum. The drawer is the party that obliges the drawee to pay the payee. The drawer and the payee are the same entity unless the drawer transfers the bill of exchange to a third-party payee.
Q14. First announced in ________________ by RBI, Certificate of Deposits have become a preferred investment choice for organizations in terms of short-term surplus investment as they carry low risk while providing interest rates which are higher than those provided by Treasury bills and term deposits.
1987
1983
1989
1991
1997
Solution:
A Certificate of Deposit or CD, functions as a deposit receipt for money which is deposited with a financial organization or bank. However, a Certificate of Deposit is different from a Fixed Deposit Receipt in two aspects. The first aspect of difference is that a CD is only issued for a larger sum of money. Secondly, a Certificate of Deposit is freely negotiable. First announced in 1989 by RBI, Certificate of Deposits have become a preferred investment choice for organizations in terms of short-term surplus investment as they carry low risk while providing interest rates which are higher than those provided by Treasury bills and term deposits. Certificate of Deposits are also relatively liquid, which is an added advantage, especially for issuing banks. Like treasury bills, CDs are also issued at a discounted price and their tenor ranges between a span of 7 days up to 1 year. However, banks issue Certificates of Deposits for durations ranging from 3 months, 6 months and 12 months. They can be issued to individuals (except minors), trusts, companies, corporations, associations, funds, non-resident Indians, etc.
Q15. Money market has become a component of the financial market for buying and selling of securities of short-term maturities, of _____________ year or less.
five
six
two
one
three
Solution:
Money market basically refers to a section of the financial market where financial instruments with high liquidity and short-term maturities are traded. Money market has become a component of the financial market for buying and selling of securities of short-term maturities, of one year or less, such as treasury bills and commercial papers. Over-the-counter trading is done in the money market and it is a wholesale process. It is used by the participants as a way of borrowing and lending for the short term.
               



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