School of Distance Education UNIVERSITY OF CALICUT SCHOOL OF DISTANCE EDUCATION BA ECONOMICS. (2011 Admission Onwards) VI Semester

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1 UNIVERSITY OF CALICUT SCHOOL OF DISTANCE EDUCATION BA ECONOMICS (2011 Admission Onwards) VI Semester Additional Course (In lieu of Project) Banking And Finance QUESTION BANK 1. The definition of banking is given in (a) Negotiable Instruments Act 1981 (b) RBI Act Presently the public sector banks in India (a) 6 (b) 19 (c) Banking Regulation Act 1949 (d) Contract Act (c) 20 (d) Which of the following banks are not commercial banks (a) Foreign banks (b) State cooperative banks (c) Private banks (d) Regional Rural Banks 4. Under which of the following methods of note issue, RBI issues currency notes (a) Fixed fiduciary system (b) Minimum reserve system (c) Maximum fiduciary system (d) Proportional reserve system 5. Lead bank scheme was introduced in (a) 1965 (b) 1969 (c) 1981 (d) 1992 Banking and Finance Page 1

2 6. A rise in reserve ratio of banks will lead to (a) An increase in money supply (b) Proportionate increase in money supply (c) Decrease in money supply 7. SLR stands for (a) Single lens route (b) Statutory Liquidity Ratio (c) Statutory Liability Ratio 8. Which of the following categories the payment can be stopped (a) Gift cheques (b) Cheques (c) Bill of exchange (d) Promissory notes 9. Which of the following are legal tender (a) Currency notes (b) Draft 10. CRR is required to maintain in the form of (a) Cash with RBI (b) Cash with bank (e) (c) Cheques (d) Pro note (c) Approved govt. securities 11. The validity of a cheque is months from the date of cheque (a) 3 months (b) 6 months (c) 1 month (d) 12 months 12. Gilt edged securities are (a) Shares of private limited company (b) First class govt. securities (c) Shares of a company (d) None of the above 13. Currency notes deposited at currency chest are the property of (a) SBI (b) RBI (c) Respective Bank who made deposit (d) Government 14. When a bankers name is written on a cheques instead of two parallel lines, it is a (a) General crossing (b) No crossing (c) Special crossing (d) Payable to bearer 15. Which of the following is a borrowing facility (a) Term finance (b) Performance guarantee 16. Selective credit control covers (a) Margin (b) Interest (c) Bills received under letter of credit (c) Level of credit Banking and Finance Page 2

3 17. Pledge of advance is made against (a) Gold (b) Commodities School of Distance Education (c) Coins and Notes 18. Cash credit account is closed on the death of (a) Agent (b) Principal (c) Managing Director (d) None of the above 19. Which bank does not belongs to state bank group (a) State bank of Bikaner and Jaipur (b) State bank of Travancore (c) State bank of Patiala (d) State bank of Banaras 20. The power of banks to create credit depends on (a) Deposit available with them and safe ratio (b) Safe ratio only (c) Deposit available with them only (d) None of the above 21. Largest nationalized bank of India is (a) Central bank of India (b) State bank of India (c) Reserve Bank of India 22. Difference between market value of security and loan amount is known as (a) Collateral value (b) Security value (c) Margin 23. Bank rate policy as a weapon of credit control has emerged from the central bank s function as (a) Bank of note issue (c) Bankers bank (b) Lender of last resort 24. Discount rate on certificate of deposits is decided by (a) RBI (b) IBA (c) SBI 25. The central bank of India is (a) Central bank of India (b) Reserve bank of India (c) Federal Bank of India 26. Minimum age to open a SB account in own name is (a) 10 (b) 18 (c) 21 (d) DFHI started its business in (a) 1975 (b) 1988 (c) 1991 (d) 1999 Banking and Finance Page 3

4 28. The main objective of EXIM Bank is to promote (a) Saving habit among public (b) Foreign trade (c) Small scale industries 29. DFHI was established for creating secondary market in (a) Govt. securities (b) Capital market instruments (c) money market instruments (d) all the above 30. The Main difference between capital market and money market is with regard to (a) Type of securities (b) Maturity period of securities (c) Value of securities 31. Replica of a bank account kept with customer is known as (a) Book of account (b) Pass book (c) Ledger account 32. Insurance of bank deposit is done by (a) Oriental insurance (b) Reserve bank of India (c) DICGC 33. A set of institutions, instruments and markets which encourage savings and channelise them for productive purposes (a) Stock Exchange (c) Financial System (b) Financial market (d) Derivative market. 34. The market where the securities are issued for the first time is called (a) Primary market (c) Tertiary market (b) Secondary Market (d) Bond market is a share in the share capital of a Company. (a) Share (c) Bond (b) Debenture (d) Capital. 36. Preferential shares have preferential right for. (a) Payment of dividend (c) Both of these (b) Repayment of Capital is an acknowledgement of the debt of the Company. (a) Share (d) Debentures (b) Preference shares 38. The maximum allowable underwriting commission for shares (a) 2.5% (c) 7.5% (b) 5% (d) 10% Banking and Finance Page 4

5 39. The supplementary public issue made by a company once it is listed and established on a stock exchange is called (a) IPO (c) Bonus issue (b) FPO (d) Right issue 40. The process of generating and recording investor demand for shares during their issuance process, in order to support efficient price discovery. (a) Merchant Banking (c) Private placement (b) Stock Broking (d) Book Building 41. Payment of dividend in the form of fully paid shares are called (a) Right issue (c) Preferential issue (b) Bonus issue 42. Issue of shares to the existing shareholders of a company in proportion to their holding is called (a) Bonus issue (c) Private placement (b) Right issue 43. A stock issue to the specified employees of a company as an option scheme is called (a) ESOS (c) Right issue (b) Deferred Issue (d) Option placement 44. The process of converting the physical form of shares into electronic form is called (a) Materialisation (c) Rematerialisation (b) Dematerialisation (d) ESOP 45. is an organisation which holds securities in electronic format at the request of the investor (a) Depository (c) Merchant Banker (b) Stock Broker (d) Clearing House 46. Anybody of individuals whether incorporated or not, constituted for the purpose of assisting, regulating or controlling the business of buying, selling of securities. (a) Sock Broker (c) Secondary market (b) Merchant Banker (d) Book runner 47. Bombay Stock Exchange was established in the year (a) 1785 (b) 1875 (c) 1895 (d) Which of the following is a stock index of the Bombay Stock exchange (a) Nifty (c) NASDAQ (b) DJIA (d) Sensex Banking and Finance Page 5

6 49. CNX Nifty is a stock market index of companies (a) 30 (c) 50 (b) 40 (d) The base year of SENSEX (a) (b) (c) 1995 (d) An investor or investment fund that is established or registered in a foreign country and investing in the financial markets of India (a) DII (c) Both of these (b) FII 52. Securities and Exchange Board of India (SEBI) had become a statutory body by passing SEBI act in the year (a) 1988 (c) 1992 (b) 1990 (d) Market for short term financial assets is known as a) Money market c) Financial market b) Capital market d) None of these 54. A money market instrument with maturity of more than one day but not exceeding 14 days is known as a) Call money c) Notice money b) Term money d) None of these 55. Interest rate in call money market is decided by a) RBI b) SBI 56. Treasury bills are issued in multiples of a) Rs.10,000 b) Rs.25,000 c) Govt. of India d) None of these c) Rs.50,000 d) Rs.100, Ad hoc treasury bills are issued by RBI on behalf of a) Govt. of India c) Commercial banks b) State Govt. d) RBI 58. On the basis of its maturity, treasury bills are classified into a) 2 b) 3 c) 4 d) Certificate of Deposit is issued by a) RBI b) Financial institutions c) Companies d) Govt. of India Banking and Finance Page 6

7 60. Certificate of Deposits is issued in multiples of a) Rs.10,000 b) Rs.25,000 c) Rs.50,000 d) Rs.100, Commercial Papers are issued by a) Banks b) RBI 62. Commercial Papers are issued in multiples of a) Rs.25,000 b) Rs.50, Repo Rate is a) Lending rate of banks to RBI b) Lending rate of RBI to banks c) Govt. of India d) Joint Stock Companies c) Rs.100,000 d) Rs.500,000 c) Lending rate of RBI to public d) None of these 64. Maximum period for which domestic fixed deposits are accepted by Indian banks is a) 5 years c) 10 years b) 7 years d) 15 years 65. Which of the following is not a negotiable instrument a) Cheque c) Fixed deposit receipt b) Bill of exchange d) Promissory note 66. Power of attorney refers to a) An authority to operate a bank account b) Power of a person c) An instrument by which a person is empowered to act for another person d) All the above 67. The latest recovery channel made available to bank to recover NPA is a) SARFAESI Act c) RBI Act b) Banking Regulation Act d) Right to Information Act 68. Which of the following card product launched by the banks is working on the principle of Buy Now Pay Later? a) Credit Card c) Master Card b) Debit Card d) ATM Card 69. When bank returns cheque unpaid, it is called a) Blank cheque b) Dishonor of cheque c) Mutilated cheque d) Bearer cheque 70. Which of the following carries out Open Market Operation a) Bombay Stock Exchange c) Reserve Bank of India b) National Stock Exchange d) Securities Exchange Board of India Banking and Finance Page 7

8 71. Federal Reserve is central bank of a) India b) Pakistan 72. Rate of interest on term deposit is fixed by a) RBI b) SBI 73. Financial year in banks is period between a) January to December b) March to April 74. RBI was natinalised in the year a) 1947 b) 1948 c) UK d) US c) Govt. d) Banks themselves c) April to March d) July to June c) 1949 d) The Indian bank with highest number of branches operated in foreign country is a) State Bank of India c) Bank of India b) Bank of Baroda d) Central Bank of India 76. The latest public sector bank in India is a) Federal bank b) State Bank of Travancore c) ICICI Bank d) IDBI Bank 77. The first nationalization of banks in India was in the year a) 1948 c) 1969 b) 1950 d) The present governor of RBI is a) D Subbarao b) Raghuram Rajan 79. Which is the largest private sector bank in India a) HDFC bank b) IDBI bank 80. The head quarters of RBI is situated at a) Mumbai b) Chennai c) CD Deshmukh d) Bimal Jalan c) AXIS bank d) ICICI bank c) New Delhi d) Culcutta Banking and Finance Page 8

9 ANSWER KEY 1. Banking Regulation Act State cooperative banks 4. Minimum reserve system Decrease in money supply 7. Statutory Liquidity Ratio 8. Cheques 9. Currency notes 10. Cash with RBI months 12. First class govt. securities 13. RBI 14. Special crossing 15. Term finance 16. All the above 17. Commodities 18. Agent 19. State bank of Banaras 20. Deposit available with them and safe ratio 21. State bank of India 22. Margin 23. Lender of last resort 24. None the above 25. Reserve bank of India Foreign trade 29. money market instruments 30. Maturity period of securities 31. Pass book 32. DICGC 33. Financial System 34. Primary market 35. Share 36. Both of these 37. Debentures 38. 5% 39. FPO 40. Book Building Reserved 41. Bonus issue 42. Right issue 43. ESOS 44. Dematerialisation 45. Depository 46. Secondary market Sensex FII Money market 54. Notice money 55. None of these 56. Rs.25, RBI Financial institutions 60. Rs.100, Joint Stock Companies 62. Rs.500, Lending rate of RBI to banks years 65. Fixed deposit receipt 66. All the above 67. SARFAESI Act 68. Credit Card 69. Dishonor of cheque 70. Reserve Bank of India 71. US 72. Banks themselves 73. April to March Bank of Baroda 76. IDBI Bank Raghuram Rajan 79. ICICI bank 80. Mumbai Banking and Finance Page 9