Micro Finance Mock Test

Approved & Edited by ProProfs Editorial Team
The editorial team at ProProfs Quizzes consists of a select group of subject experts, trivia writers, and quiz masters who have authored over 10,000 quizzes taken by more than 100 million users. This team includes our in-house seasoned quiz moderators and subject matter experts. Our editorial experts, spread across the world, are rigorously trained using our comprehensive guidelines to ensure that you receive the highest quality quizzes.
Learn about Our Editorial Process
| By Catherine Halcomb
Catherine Halcomb
Community Contributor
Quizzes Created: 1379 | Total Attempts: 6,106,345
Questions: 14 | Attempts: 6,419

SettingsSettingsSettings
Micro Finance Mock Test - Quiz

Are you looking for a micro finance mock test? Microfinance, also called microcredit​, is a type of banking service provided to unemployed or low-income individuals or groups who otherwise would have no other access to financial services. Have a Micro Finance Exam coming up? Don't worry. Take this Micro Finance Pre-Test and prepare well. All the best to you, and do not forget to share this quiz with other people.


Questions and Answers
  • 1. 

    Rotating savings and unions credit associations transform into Accumulating Savings and Credit Associations when one of the following is done among others:

    • A.

      Members can borrow from an accumulated fund outside contributions

    • B.

      Some money is saved in a lock box or in some other more secure manner

    • C.

      At the end of the cycle, members can choose to start a new round or disband

    • D.

      ​​​​​​A pre-determined amount of money brought to weekly meetings is collected and passed to a different member each week on a rotating basis

    Correct Answer
    D. ​​​​​​A pre-determined amount of money brought to weekly meetings is collected and passed to a different member each week on a rotating basis
    Explanation
    Accumulating Savings and Credit Associations are formed when a pre-determined amount of money is brought to weekly meetings and collected. This money is then passed to a different member each week on a rotating basis. This process allows members to accumulate savings over time and also provides them with the opportunity to borrow from an accumulated fund outside of their own contributions. Additionally, the other options mentioned in the question, such as saving money in a secure manner and the ability to start a new round or disband at the end of the cycle, may also be features of Accumulating Savings and Credit Associations, but they are not the defining characteristic.

    Rate this question:

  • 2. 

    According to the Stakeholder concept, a microfinance employee would be …… in a typical microfinance sector.

    • A.

      ​​​​​​A primary stakeholder

    • B.

      A​​​​​​ secondary stakeholder

    • C.

      ​​​​​​A solid stakeholder

    • D.

      ​​​​​A client stakeholder

    Correct Answer
    A. ​​​​​​A primary stakeholder
    Explanation
    According to the Stakeholder concept, a microfinance employee would be considered a primary stakeholder in a typical microfinance sector. This means that the employee has a direct and significant interest in the success and outcomes of the microfinance sector. They are closely involved in the operations and decision-making processes of the sector and their actions and contributions have a significant impact on its overall performance.

    Rate this question:

  • 3. 

    Which one of these will be categorized as a semi-formal microfinance institution?

    • A.

      Building society

    • B.

      Rotating savings and unions credit association

    • C.

      Rural bank

    • D.

      ​​​​​​Village bank

    Correct Answer
    D. ​​​​​​Village bank
    Explanation
    A village bank will be categorized as a semi-formal microfinance institution. Village banks are community-based organizations that provide financial services to individuals and small businesses in rural areas. They typically offer small loans, savings accounts, and other financial products to help promote economic development in the local community. While they may not have the same level of formality as traditional banks, village banks play a crucial role in providing access to financial services in underserved areas.

    Rate this question:

  • 4. 

    Which one of these will be categorized as an informal microfinance institution?

    • A.

      ​​​​​​Building Society

    • B.

      ​​​​​​​Rotating savings and unions credit association

    • C.

      Rural bank

    • D.

      Village bank

    Correct Answer
    B. ​​​​​​​Rotating savings and unions credit association
    Explanation
    A rotating savings and unions credit association can be categorized as an informal microfinance institution because it operates on a rotating basis, where members take turns receiving loans from the pooled savings of the group. This type of institution is typically community-based and provides financial services to individuals who may not have access to formal banking services. Unlike formal institutions like building societies, rural banks, or village banks, rotating savings and unions credit associations are less regulated and often rely on trust and social relationships among members.

    Rate this question:

  • 5. 

    The following are all development objectives of MFIs except:

    • A.

      Adverse selection

    • B.

      Employment creation

    • C.

      Empower women or other disadvantaged population groups

    • D.

      ​​​​​​​Poverty reduction

    Correct Answer
    A. Adverse selection
    Explanation
    The given answer is "Adverse selection". Adverse selection refers to the problem of asymmetric information in which one party has more information than the other, leading to a mismatch in the selection of borrowers. However, employment creation, empowerment of disadvantaged groups, and poverty reduction are all common development objectives of Microfinance Institutions (MFIs). These objectives aim to promote economic growth, social inclusion, and poverty alleviation in underserved communities.

    Rate this question:

  • 6. 

    ….………………… methodologies help in creating social collateral (peer pressure) that can effectively substitute physical collateral in the MFI sector

    • A.

      Formal

    • B.

      Group

    • C.

      Individual

    • D.

      Informal

    Correct Answer
    B. Group
    Explanation
    Group methodologies in the MFI sector help in creating social collateral (peer pressure) that can effectively substitute physical collateral. This means that when borrowers are part of a group, they have a collective responsibility to repay their loans. If one member of the group defaults, it puts pressure on the others to make sure they repay their loans on time. This peer pressure acts as a form of collateral, reducing the need for physical collateral such as property or assets. By relying on social collateral, MFIs can extend loans to individuals who may not have traditional forms of collateral, increasing access to credit for those in need.

    Rate this question:

  • 7. 

    A client would be classified as a(an) ………… and  stakeholder.

    • A.

      External, primary

    • B.

      External, secondary

    • C.

      Internal, primary

    • D.

      Internal, secondary

    Correct Answer
    A. External, primary
    Explanation
    A client would be classified as an external, primary stakeholder because they are not part of the organization but have a direct and significant interest in its activities. Clients are the main recipients of the organization's products or services and their satisfaction is crucial for the success of the organization. As primary stakeholders, clients have a high level of influence and their needs and expectations are prioritized in the decision-making process.

    Rate this question:

  • 8. 

    The government would be classified as a(an) ………… and stakeholder.

    • A.

      External, primary

    • B.

      External, secondary

    • C.

      Internal, primary

    • D.

      ​​​​​​​Internal, secondary

    Correct Answer
    B. External, secondary
    Explanation
    The government is considered an external stakeholder because it is not directly involved in the day-to-day operations of the organization. It has an interest in the organization's activities and outcomes but does not have a direct role in decision-making or management. Additionally, the government is considered a secondary stakeholder because its interests may be affected by the organization's actions, but it does not have a direct financial or contractual relationship with the organization.

    Rate this question:

  • 9. 

    Which of the following is NOT a benefit of regulation of Microfinance in a country?

    • A.

      ​​​​​​Financial soundness

    • B.

      Protect the client's interest

    • C.

      ​​​​​​Reinforcing public trust

    • D.

      Revising the cost of capital upwards

    Correct Answer
    D. Revising the cost of capital upwards
    Explanation
    Regulating microfinance in a country provides various benefits such as ensuring financial soundness, protecting the client's interest, and reinforcing public trust. However, revising the cost of capital upwards is not a benefit of regulation. This would increase the cost of borrowing for microfinance institutions, potentially making it more difficult for them to provide affordable loans to their clients, especially those who are financially vulnerable.

    Rate this question:

  • 10. 

    Which of the microfinance regulation is a major constraint to existing and new entrants in the industry?

    • A.

      Minimum capital requirement

    • B.

      Provision of business plan

    • C.

      Reserve requirement

    • D.

      Restriction to expansion

    Correct Answer
    A. Minimum capital requirement
    Explanation
    In the microfinance industry, the minimum capital requirement is a significant constraint for both new entrants and existing institutions. It establishes the amount of capital a microfinance institution must maintain to operate legally. This requirement ensures financial stability and protects clients, but it can be a barrier for new institutions that might struggle to raise enough capital. It can also limit existing institutions' growth or expansion if they need to maintain or increase their capital levels to meet regulatory standards. This constraint affects the industry by influencing who can enter the market and how established institutions can scale their operations.

    Rate this question:

  • 11. 

    Strategic Decision making based on stakeholder theory results in a process characterized by three main features: These include each of the following except:

    • A.

      Rationality

    • B.

      Intuition

    • C.

      Political behavior

    • D.

      ​​​​​​​Information

    Correct Answer
    D. ​​​​​​​Information
    Explanation
    Strategic decision making based on stakeholder theory involves considering the interests and needs of various stakeholders. Rationality refers to making decisions based on logical reasoning and analysis. Intuition involves relying on gut feelings and instincts in decision making. Political behavior refers to the influence and power dynamics among stakeholders in decision making. However, information is not a feature of the process as it is a necessary component for making informed decisions.

    Rate this question:

Quiz Review Timeline +

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

  • Current Version
  • Apr 24, 2024
    Quiz Edited by
    ProProfs Editorial Team
  • May 25, 2021
    Quiz Created by
    Catherine Halcomb
Back to Top Back to top
Advertisement
×

Wait!
Here's an interesting quiz for you.

We have other quizzes matching your interest.