Correct Answer: C) Bank assets that are not generating income
Explanation: Non-performing Assets are loans or advances where the interest and/or installment of principal remain overdue for a period of more than 90 days.
A) Stock options
B) Bonds
C) Derivatives
D) Mutual funds
Correct Answer: C) Derivatives
Explanation: Derivatives are financial instruments whose value is derived from a particular asset, index, or interest rate. They are primarily used to hedge against risks and can also be used for speculative purposes.
A) Assets that bring in the highest level of income to banks
B) Investments in non-financial instrument
C) Bank assets that are not generating incomeI
D) Government-owned assets
Correct Answer: C) Bank assets that are not generating income
Explanation: Non-performing Assets are loans or advances where the interest and/or installment of principal remain overdue for a period of more than 90 days.
A) Saving money
B) Trading in stocks
C) Keeping physical gold
D) Real estate transactions
Correct Answer: B) Trading in stocks
Explanation: A Demat account, or dematerialized account, provides the facility of holding shares and securities in electronic format. During online trading, shares are bought and held in a Demat account, thus facilitating easy trade for the users.
A) Company earnings
B) Stock market trends
C) CEO decisions
D) Unemployment rate
Correct Answer: D) Unemployment rate
Explanation: The national unemployment rate is a macroeconomic factor as it reflects the economic conditions of a country and impacts economic policy decisions.
A) Goods in international markets
B) Government securities by the central bank
C) Shares by large corporations
D) Currencies by foreign exchange dealers
Correct Answer: B) Government securities by the central bank
Explanation: Open Market Operations involve the buying and selling of government securities in the open market by a central bank to control the money supply and interest rates.
A) Reserve Bank of India
B) Finance Ministry of India
C) State Bank of India
D) Securities and Exchange Board of India
Correct Answer: A) Reserve Bank of India
Explanation: The Reserve Bank of India is responsible for managing India’s currency and maintaining foreign exchange reserves to manage the country’s balance of payments and influence the national currency’s exchange rate.
A) Mobilizing savings for investment
B) Facilitating company growth
C) Regulating direct tax for the government
D) Providing liquidity to shareholders
Correct Answer: C) Regulating direct tax for the government
Explanation: Regulating direct taxes is not a function of the stock market. Stock markets are primarily involved in mobilizing savings for investment, facilitating company growth, and providing liquidity.
A) Cost leadership
B) Monopolizing
C) Value pricing
D) Predatory pricing
Correct Answer: D) Predatory pricing
Explanation: Predatory pricing is the illegal act of setting prices low in an attempt to eliminate the competition. It is considered an unfair competition practice by many legal jurisdictions.
A) Volume of trade in goods and services
B) General price level of goods and services
C) Level of unemployment in an economy
D) Rate of interest on loans
Correct Answer: B) General price level of goods and services
Explanation: Deflation is the general decline in prices for goods and services occurring when the inflation rate falls below 0%.
A) Individual commercial banks
B) Reserve Bank of India
C) Ministry of Finance
D) Securities Exchange Board of India
Correct Answer: A) Individual commercial banks
Explanation: The Base Rate is the minimum rate set by individual banks below which they are not allowed to lend to their most credit-worthy customers. It is decided by the banks themselves based on the cost they incur on lending.
A) It is the total value of a company’s assets only
B) It is the value per share of a mutual fund or an ETF
C) It represents the intrinsic worth of a company
D) It is the total liabilities of a company
Correct Answer: B) It is the value per share of a mutual fund or an ETF
Explanation: Net Asset Value (NAV) is the price at which shares of closed-end funds are traded in the market. It is calculated by dividing the total value of all the assets in the portfolio, minus liabilities, by the number of shares outstanding.
A) Regulating international trade
B) Reducing agricultural subsidies
C) Currency devaluation
D) Education reforms
Correct Answer: C) Currency devaluation
Explanation: The Plaza Accord was an agreement among the G5 nations (France, Germany, the US, the UK, and Japan) in 1985 to manipulate exchange rates by depreciating the US Dollar relative to the Japanese Yen and German Deutsche Mark.
A) Trade deficit
B) Political instability
C) High inflation
D) High interest rates
Correct Answer: D) High interest rates
Explanation: High interest rates attract foreign capital and cause the exchange rate to rise. The impact of higher interest rates is mitigated if inflation in the country is much higher than in others, or if additional factors serve to drive the currency down.
A) Open market operations
B) Public spending
C) Bank rate policy
D) Reserve requirements
Correct Answer: B) Public spending
Explanation: Public spending is typically a tool of fiscal policy, not monetary policy. Monetary policy tools include open market operations, bank rate adjustments, and reserve requirements.
A) Large corporations
B) Established medium-sized enterprises
C) Small and individual business ventures
D) Government projects
Correct Answer: C) Small and individual business ventures
Explanation: Microfinance provides small-scale financial services to unemployed or low-income individuals or groups who would otherwise have no other means of gaining financial services.
A) Globalization
B) Nationalization
C) Privatization
D) Liberalization
Correct Answer: A) Globalization
Explanation: Globalization refers to the process by which businesses or other organizations develop international influence or start operating on an international scale, integrating economically with the rest of the world.
A) Economic boom
B) Economic recovery
C) Economic expansion
D) Economic development
Correct Answer: C) Economic expansion
Explanation: Economic expansion is an increase in the level of economic activity, and typically a period when the gross domestic product grows for two or more consecutive quarters.
A) Current And Savings Account
B) Credit And Savings Association
C) Corporate And Securities Account
D) Cash And Security Allocation
Correct Answer: A) Current And Savings Account
Explanation: CASA stands for Current And Savings Account; it refers to the amount of money that a bank has in its current accounts and savings accounts.
A) Commercial Paper
B) Corporate Bond
C) Preferred Stock
D) Certificate of Deposit
Correct Answer: A) Commercial Paper
Explanation: Commercial Paper is an unsecured, short-term debt instrument issued by a company, typically used for the financing of payroll, accounts payable, inventories, and meeting other short-term liabilities.
A) Increasing consumer spending
B) Reducing government debt
C) Increasing the money supply
D) Reducing the money supply
Correct Answer: C) Increasing the money supply
Explanation: Quantitative Easing is a monetary policy whereby a central bank buys predetermined amounts of government bonds or other financial assets in order to inject money directly into the economy.
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