Banking Awareness - MCQs with answers - Part III
1. What is a Lease?a) A rental agreement between owner of a flat/house and the Tenant, whereby the Tenant pays specified amount on specified dates to the owner
b) A legal contract between the owner of an asset and its user, containing many conditions including payment of a specified amount by the user to the Owner for use of the asset
c) Both (a) and (b)
d) None of the above
View Answer / Hide AnswerANSWER: b) A legal contract between the owner of an asset and its user, containing many conditions including payment of a specified amount by the user to the Owner for use of the asset.
Lease financing for equipment is provided by banks, captives and independent finance companies.
a) An easy way of raising capital from a factoring company by small business
b) Selling of account receivables on a contract basis for cash payment to a factor before it is due
c) An arrangement for raising short term money against prepaid expenses
d) A method of discounting of long term bills
View Answer / Hide AnswerANSWER: b) Selling of account receivables on a contract basis for cash payment to a factor before it is due
The three parties involved are the one who purchases the receivable, the one who sells the receivable, and the debtor who has a Financial Liability.
a) Amortization
b) Moratorium
c) Subvention
d) None of the above
View Answer / Hide AnswerANSWER: b) Moratorium
The interest rate charged during the moratorium is charged quarterly or half yearly on simple interest basis.
a) Individual Banks Board
b) Interest Rate Commission of India
c) RBI
d) None of the above
View Answer / Hide AnswerANSWER: c) RBI
Base Rate is the rate below which no Bank can allow their lending to anyone.
a) Bad debts
b) Non-performing Assets
c) Out of order accounts
d) Overdrawn accounts
View Answer / Hide AnswerANSWER: b) Non-performing Assets
A Non-performing Asset is defined as a credit facility in respect of which the interest has remained 'past due' for a specified period of time.
a) Government employees
b) Minors
c) Senior citizens
d) All the above
View Answer / Hide AnswerANSWER: c) Senior citizens
Some financial institutions that provide the scheme in India are Dewan Housing Finance, State Bank of India, Punjab National Bank, Bank of Baroda, Central Bank of India, Union Bank of India, LIC Housing Finance, Indian Bank, Andhra Bank, Corporation Bank, Canara Bank.
a) Bad debts
b) Non-performing Assets
c) Out of order accounts
d) Overdrawn accounts
View Answer / Hide AnswerANSWER: a) Bad debts
The bad debts associated with accounts receivable is reported on the income statement as Bad Debts Expense or Uncollectible Accounts Expense.
a) Corporate Bonds
b) Debentures
c) Equities
d) Government Securities
View Answer / Hide AnswerANSWER: d) Government Securities
A primary dealer is a firm that buys government securities directly from a government with the intention of reselling them to others.
a) Less liquidity in the market
b) More liquidity in the market
c) No change in the market liquidity
d) Mobilisation of more deposits by commercial banks
View Answer / Hide AnswerANSWER: b) More liquidity in the market
Market liquidity is a market's ability to facilitate an asset being sold quickly without having to reduce its price.
a) Internal Rate of Return
b) Internal Reserve Ratio
c) Internal Rate of Ratio
d) Internal Recession Rate
View Answer / Hide AnswerANSWER: a) Internal Rate of Return
The internal rate of return is a rate of return used in capital budgeting to measure and compare the profitability of investments.
