Merchant Banking & Financial Service (306 Fin)

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| By Tanaji Chavan
Tanaji Chavan, Professor of Finance
Tanaji, an Associate Professor of Finance, brings extensive expertise to academia. With a passion for financial studies, he guides students, contributes to research, and advances the field through his dedicated teaching and scholarly pursuits.
Quizzes Created: 2 | Total Attempts: 339
| Attempts: 164
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  • 1/20 Questions

    Full form of SLR is 

    • Statutory Liquidity Ratio
    • State Level Recovery
    • Sundry Leverage Ratio
    • State Liquidity Reserve
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About This Quiz

This quiz covers key concepts in investment banking and financial services, including markets, securities, and regulatory fundamentals.

Merchant Banking & Financial Service (306 Fin) - Quiz

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  • 2. 

    What is CRR?

    • Cash Reserve Ratio

    • Current Ratio Rate

    • Credit Rating Record.

    • Cash Review Report

    Correct Answer
    A. Cash Reserve Ratio
    Explanation
    CRR stands for Cash Reserve Ratio, which is a monetary policy tool used by central banks to regulate the amount of cash commercial banks need to maintain as reserves. It is a percentage of the total deposits that banks must keep with the central bank. By increasing or decreasing the CRR, the central bank can control the liquidity in the banking system and influence lending and inflation rates. Therefore, the correct answer is Cash Reserve Ratio.

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  • 3. 

    Which of these is not a credit rating agency?

    • Price water house

    • Moody

    • Standard & Poors

    • ICRA

    Correct Answer
    A. Price water house
    Explanation
    Price water house is not a credit rating agency. It is a multinational professional services network and one of the "Big Four" accounting firms. Credit rating agencies are responsible for assessing the creditworthiness of individuals, companies, and governments, while Price water house provides auditing, tax, and consulting services.

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  • 4. 

    NABARD refinance for financing Self Help Groups is to the extent of

    • 75%

    • 25%

    • 50%

    • 100%

    Correct Answer
    A. 75%
    Explanation
    NABARD refinance for financing Self Help Groups is to the extent of 75%. This means that NABARD provides financial support to Self Help Groups by refinancing 75% of their loan amount. This refinance helps SHGs to access funds at a lower interest rate and with more favorable terms, enabling them to carry out their activities and promote self-employment and entrepreneurship among group members.

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  • 5. 

    Plastic Cards implanted with computer chip to the data is known as

    • Smart Card

    • SME Card

    • Credit Card

    • ATM Card

    Correct Answer
    A. Smart Card
    Explanation
    A plastic card implanted with a computer chip that stores and processes data is known as a smart card. Smart cards are used for various purposes such as identification, authentication, and transaction processing. The embedded chip allows for secure storage and processing of information, making smart cards more advanced and secure compared to traditional magnetic stripe cards. They are commonly used for access control, payment systems, and public transportation.

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  • 6. 

    A portfolio that incurs the smallest risk for a given level of return is called

    • The efficient portfolio

    • The market portfolio

    • The efficient frontier

    • The optimal portfolio

    Correct Answer
    A. The efficient portfolio
    Explanation
    The efficient portfolio is the correct answer because it refers to a portfolio that offers the lowest possible level of risk for a given level of return. This means that, among all possible portfolios, the efficient portfolio provides the best risk-return trade-off. It is constructed by combining different assets in a way that maximizes returns while minimizing risk. By diversifying investments, the efficient portfolio aims to achieve the highest possible return for a given level of risk, making it an optimal choice for investors.

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  • 7. 

    A market for relatively long-term (greater than one year original maturity) financial instruments (e.g., bonds and stocks) is known as the __________ market.

    • Secondary

    • Primary

    • Tertiary

    • Capital

    Correct Answer
    A. Secondary
    Explanation
    A market for relatively long-term financial instruments such as bonds and stocks is known as the secondary market. In this market, these instruments are bought and sold by investors who are not the original issuers. The secondary market provides liquidity to investors, allowing them to easily buy or sell these financial instruments. This market is distinct from the primary market, where new securities are issued and sold for the first time. The tertiary market and capital market are not relevant to the given question.

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  • 8. 

    What should be the method of valuation for advances against shares/debenutres/ bonds? you like?

    • Market price

    • Face value

    • Book Value

    • Average Value

    Correct Answer
    A. Market price
    Explanation
    The method of valuation for advances against shares/debentures/bonds should be based on the market price. This is because the market price reflects the current value of the securities in the market, taking into account factors such as demand, supply, and market sentiment. It provides a more accurate representation of the actual worth of the securities, compared to the face value or book value which may not consider market conditions. Therefore, using the market price as the method of valuation ensures that the advances are assessed at their current market value.

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  • 9. 

    C. R. A. In banking parlance stands for

    • Credit Risk Assessment

    • Credit Rating Association

    • Credit Rating Agency

    • None of these

    Correct Answer
    A. Credit Risk Assessment
    Explanation
    The correct answer is Credit Risk Assessment. In banking parlance, C.R.A. refers to Credit Risk Assessment. This term is used to evaluate and measure the potential risk of default by a borrower or counterparty. It involves analyzing various factors such as the borrower's credit history, financial stability, and ability to repay the loan. By conducting a credit risk assessment, banks can make informed decisions about lending money and managing their overall credit exposure.

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  • 10. 

    _____________is not a major cause of systematic (undiversified)risk 

    • Company management change

    • World energy supply

    • A worldwide recession

    • A world war

    Correct Answer
    A. Company management change
    Explanation
    Company management change is not a major cause of systematic (undiversified) risk because it is a specific event that affects only one company. Systematic risk refers to risks that affect the entire market or a large segment of it, such as economic factors, political events, or natural disasters. While a change in company management can impact the performance of that particular company, it does not have a widespread impact on the entire market or economy. Therefore, it is not considered a major cause of systematic risk.

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  • 11. 

    _______________is/are not a major cause of unsystematic risk

    • Worldwide inflation

    • Wildcat strikes

    • New competitors

    • New product management

    Correct Answer
    A. Worldwide inflation
    Explanation
    Worldwide inflation is not a major cause of unsystematic risk because it affects all companies and industries uniformly. Unsystematic risk refers to risks that are specific to a particular company or industry and can be diversified away through portfolio diversification. Inflation, on the other hand, affects the entire economy and is a systematic risk that cannot be eliminated through diversification. Therefore, it is not considered a major cause of unsystematic risk.

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  • 12. 

    The full form of RBS is

    • Risk Based Supervision

    • Rating by System

    • Role Based Supervision

    • Rating Bank Security

    Correct Answer
    A. Risk Based Supervision
    Explanation
    RBS stands for Risk Based Supervision. This approach involves assessing and managing risks within a supervisory framework to ensure the stability and soundness of the financial system. It focuses on identifying and addressing potential risks that banks may face, such as credit risk, operational risk, and market risk. By adopting a risk-based approach, supervisors can allocate their resources effectively and prioritize their supervisory activities based on the level of risk posed by individual banks. This helps in enhancing the overall effectiveness and efficiency of the supervision process.

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  • 13. 

    Interest rates being charged by Banks in India has shown trend in recent years

    • Falling

    • Rising

    • Stable

    • Volatile

    Correct Answer
    A. Falling
    Explanation
    The correct answer is "Falling". This suggests that the interest rates being charged by banks in India have been decreasing over the recent years. This could be due to various factors such as changes in monetary policy, decreased inflation rates, or increased competition among banks. Lower interest rates can have implications for borrowing and investment activities in the economy.

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  • 14. 

    Gilt edged securities refer to

    • Securities issued by first class companies

    • Government Securities

    • Securities issued by municipal corporations

    • Securities issued by NBFCs.

    Correct Answer
    A. Securities issued by first class companies
    Explanation
    Gilt edged securities refer to securities issued by first class companies. These are considered to be very safe and low-risk investments because they are backed by financially stable and reputable companies. Investors are confident in the ability of these companies to fulfill their financial obligations, making these securities highly sought after.

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  • 15. 

    A temporary combination of investment banking firms formed to sell a new security issue, can be referred to as a (an) __________.

    • Underwriting syndicate

    • Red herring

    • Registration statement

    • Standby arrangement

    Correct Answer
    A. Underwriting syndicate
    Explanation
    An underwriting syndicate is a temporary combination of investment banking firms that come together to sell a new security issue. This arrangement allows for the distribution of the securities to a wide range of investors. The underwriting syndicate helps to mitigate the risk associated with selling the securities by spreading it among the participating firms. This collaboration ensures a successful offering and helps to maximize the proceeds for the issuer.

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  • 16. 

    Which of the following is privately placed common stock that cannot be immediately resold?

    • Letter stock

    • Red herring

    • Initial public offering

    • Right

    Correct Answer
    A. Letter stock
    Explanation
    Letter stock refers to privately placed common stock that cannot be immediately resold. This means that the shares are issued to a specific individual or group of investors, and there are restrictions on selling or transferring the shares to others. Letter stock is typically used to provide ownership rights to certain individuals within a company, such as founders or key executives, while limiting their ability to sell the shares on the open market. This allows the company to maintain control and stability in its ownership structure.

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  • 17. 

    The VSAT communication network for banks and financial institutions launched by RBI is known as

    • INEINET

    • SWIFT

    • SBI NET

    • BANK NET

    Correct Answer
    A. INEINET
    Explanation
    The correct answer is INEINET. INEINET stands for Indian Banks' Network for Electronic Transfer. It is a VSAT communication network launched by the Reserve Bank of India (RBI) specifically for banks and financial institutions. This network facilitates secure and efficient electronic transfer of funds and other financial transactions between banks and their customers.

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  • 18. 

    The preliminary prospectus, which has a statement on its cover that the registration statement has not yet become effective, is referred to as a (an) __________.

    • Red herring

    • Registration statement

    • Underwriting syndicate

    • Standby arrangement

    Correct Answer
    A. Red herring
    Explanation
    A preliminary prospectus is a document that is issued before the registration statement becomes effective. It includes a statement on its cover indicating that the registration statement is not yet effective. This document is commonly known as a "red herring" because it contains all the necessary information about the offering, but it is not yet complete or final. It is used to generate interest and solicit potential investors, but it cannot be used to make actual sales until the registration statement becomes effective.

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  • 19. 

    According to a study by Levy and Lerman, an investment in U. S. Bonds compared to internationally diversified bond portfolios is _________

    • Less efficient

    • More efficient

    • About the same

    • Relatively efficient

    Correct Answer
    A. Less efficient
    Explanation
    According to the study by Levy and Lerman, investing in U.S. Bonds is considered less efficient compared to internationally diversified bond portfolios. This suggests that the returns or benefits from investing in U.S. Bonds may be lower or less favorable compared to the potential returns from investing in internationally diversified bond portfolios.

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  • 20. 

    Which of the following is a short-term option to buy a certain number of securities from the issuing corporation

    • Right

    • Red herring

    • Initial public offering

    • Letter stock

    Correct Answer
    A. Right
    Explanation
    A "right" is a short-term option to buy a certain number of securities from the issuing corporation. It is typically offered to existing shareholders as a way to maintain their ownership percentage when the company issues new shares. This allows shareholders to purchase additional shares at a discounted price before they are offered to the general public, giving them the right to maintain their proportional ownership in the company.

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Quiz Review Timeline (Updated): Feb 3, 2023 +

Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Feb 03, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Oct 17, 2016
    Quiz Created by
    Tanaji Chavan
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