Banking and financial terms - Banking awareness questions on current affairs
Dear Readers, Welcome to Banking Awareness objective type questions (MCQ) with answers on Banking and financial terms. These questions on Banking and financial terms are useful for bank exams and interviews like IBPS, Bank PO, SBI PO, RRB, Specialist Officer, Clerk, SSC, UPSC etc.
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1) What methodology has been proposed by RBI on 1st Sep’15 to make Base Rate sensitive to policy changes?
- Published on 08 Sep 15
a. Marginal cost of funds Methodology
b. Funds Methodology
c. Currency Methodology
d. All of these
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Answer
Explanation
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ANSWER: Marginal cost of funds Methodology
Explanation:
The new methodology is aimed at bringing uniformity among Base Rate of banks so that they will be more sensitive to any changes in policy rates of the RBI like Cash Reserve Ratio (CRR), Statutory Liquidity Ratio (SLR), etc. At present, banks are following different methodologies in computing their Base Rate like on the basis of average cost of funds, marginal cost of funds or blended cost of funds (liabilities).
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2) Which of the following is a financial ratio that gives a measure of a company's ability to meet its financial losses?
- Published on 20 Jul 15
a. Cash Reverse Ratio
b. Leverage Ratio
c. Statutory Liquidity Ratio
d. Loan-to-Value Ratio
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3) What is the full form of CRR?
- Published on 20 Jul 15
a. Cash Reserve Rate
b. Cash Reserve Ratio
c. Cash Recession Ratio
d. Core Reserve Rate
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Answer
Explanation
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ANSWER: Cash Reserve Ratio
Explanation:
Cash Reserve Ratio is a specified minimum fraction of the total deposits of customers, which commercial banks have to hold as reserves with the central bank.
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4) What is the full form of NIM?
- Published on 20 Jul 15
a. Net Interest Margin
b. Net Involvement Margin
c. Net Involution Margin
d. None of these.
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Answer
Explanation
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ANSWER: Net Interest Margin
Explanation:
Net Interest Margin (NIM) is a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders.
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5) When financial institutions and banks undertake activities related to banking like investment, issue of debit and credit card etc then it is known as _____________________.
- Published on 20 Jul 15
a. Internet banking
b. Universal banking
c. Virtual Banking
d. Wholesale banking
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Answer
Explanation
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ANSWER: Universal banking
Explanation:
Universal banks may offer credit, loans, deposits, asset management, investment advisory, payment processing, securities transactions, underwriting and financial analysis.
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6) Which of the following is known as the concept of a standard contract to buy or sell a specified commodity at a certain date in future and at a market driven price?
- Published on 20 Jul 15
a. Forward Contract
b. Futures Contract
c. Market Contract
d. Standard Contract
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Answer
Explanation
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ANSWER: Futures Contract
Explanation:
Their main purpose is to mitigate risk of default by either party in the intervening period.
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7) What does 'MAT' stand for?
- Published on 20 Jul 15
a. Maximum Alternate Tax
b. Minimum Alternate Tax
c. Maximum Alternate Time
d. Minimum Alternate Time
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Answer
Explanation
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ANSWER: Minimum Alternate Tax
Explanation:
The intent of introducing MAT was to ensure that no taxpayer with substantial income can avoid tax liability by using exclusions, deductions and incentives.
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8) What is the full form of CBS?
- Published on 20 Jul 15
a. Core Banking Solution
b. Core Banking Software
c. Core Banking System
d. Core Banking Service
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Answer
Explanation
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ANSWER: Core Banking Solution
Explanation:
Core Banking Solution (CBS) is a delivery channel for quick and fast delivery.
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9) On which rate bases, overnight money is needed by bank from RBI?
- Published on 20 Jul 15
a. MSF
b. Repo rate
c. Reverse repo
d. Bank rate
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Answer
Explanation
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ANSWER: MSF
Explanation:
Marginal Standing Facility (MSF) has been introduced by RBI with the main aim of reducing volatility in the overnight lending rates in the inter-bank market and to enable smooth monetary transmission in the financial system.
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10) What is the full form of FCCB?
- Published on 20 Jul 15
a. Foreign Currency Convertible Bond
b. Foreign Currency Convertible Bank
c. Foreign Currency Convertible Board
d. Foreign Convertible Currency Board
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Answer
Explanation
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ANSWER: Foreign Currency Convertible Bond
Explanation:
Corporates issue Foreign Currency Convertible Bonds (FCCBs) to raise money in foreign currencies.
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