Question 1

When the risk perception is high, investor prefers to get the bond at&#10;A)Higher rate&#10;B)Reduced rate&#10;C)Par rate&#10;D)None of these

Accepted Answer

When the risk perception is high, investors prefer to get the bond at a reduced rate to compensate for the higher perceived risk, making the investment more attractive by offering a higher yield.

Question 2

If the maturity period of bond is more, investor prefers&#10;A)Lesser return&#10;B)Higher return&#10;C)Zero return&#10;D)None of these

Accepted Answer

Investors typically demand higher returns for longer maturity periods due to the increased risk associated with the extended time frame. Longer maturities mean more exposure to interest rate changes, inflation, and default risk, hence the preference for higher returns to compensate for these risks.

Question 3

Par value means&#10;A)Value of the instrument traded in the market&#10;B)Value of the instrument at the time of issue&#10;C)Intrinsic value of the instrument&#10;D)None of these

Accepted Answer

Par value refers to the face value of a bond or stock at the time it is issued, not its market value or intrinsic value.

Question 4

Risk that a borrower may not pay interest/principal timely is&#10;A)Call risk&#10;B)Liquidity risk&#10;C)Default risk&#10;D)None of these

Accepted Answer

Default risk is the risk that a borrower may not make payments of interest and principal on time.

Question 5

Foreign currency appreciation will result in rupee receipts&#10;A)Lower&#10;B)Higher&#10;C)Unchanged&#10;D)None of these

Accepted Answer

Foreign currency appreciation means the value of foreign currency has increased relative to the rupee. This means that when you convert foreign currency to rupees, you will get more rupees for the same amount of foreign currency. Therefore, rupee receipts will be higher.

Question 6

CRISIL was established in&#10;A)1987&#10;B)1991&#10;C)1994&#10;D)None of these

Accepted Answer

CRISIL was established in 1987 as India's first credit rating agency.

Question 7

BBB rating indicates&#10;A)Adequate safety&#10;B)Reasonable safety&#10;C)Moderate safety&#10;D)None of these

Accepted Answer

A BBB rating, in the context of bond credit quality, indicates moderate safety. This rating suggests that the entity has an adequate capacity to repay its financial obligations, but adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay back.

Question 8

The tenure of commercial paper instrument is&#10;A)Minimum one year&#10;B)minimum five yare&#10;C)Minimum 15 days and maximum one year&#10;D)none of these

Accepted Answer

Commercial paper is a short-term unsecured promissory note issued by corporations, typically used for the financing of accounts receivable, inventories, and meeting short-term liabilities. Its maturity period ranges from a minimum of 15 days to a maximum of one year from the date of issuance, making option C correct.

Question 9

Certificate of deposits are issued by&#10;A)RBI&#10;B)commercial banks&#10;C)SBI only&#10;D)none of these

Accepted Answer

Commercial banks issue Certificates of Deposit (CDs) as a type of time deposit, offering a fixed interest rate over a specified period.

Question 10

Inter bank participation certificate is a&#10;A)money market instrument&#10;B)very popular instrument&#10;C)Instrument used by companies&#10;D)None of these

Accepted Answer

Inter bank participation certificates are money market instruments that banks use to lend and borrow from one another for short-term needs.

Question 11

-----is a market where money is brought and sold&#10;A)Money market&#10;B)capital market&#10;C)share market&#10;D)none of these

Accepted Answer

The answer of -----is a market where money is brought...

Question 12

Interest rate on money market funds are ------&#10;A)Individual determined&#10;B)market determined&#10;C)RBI determined&#10;D)all of these

Accepted Answer

The answer of Interest rate on money market funds are...

Question 13

------occupies the pivotal position in the Indian money market&#10;A)RBI&#10;B)SEBI&#10;C)SBI&#10;D)none of these

Accepted Answer

The answer of ------occupies the pivotal position in the Indian...

Question 14

---control s the money supply in a country&#10;A)RBI or central bank&#10;B)SEBI&#10;C)government&#10;D)all of these

Accepted Answer

The answer of ---control s the money supply in a...

Question 15

----is the rate banks receive for depositing funds with the central bank&#10;A)reverse repo rate&#10;B)repo rate&#10;C)interest rate&#10;D)all of these

Accepted Answer

The answer of ----is the rate banks receive for depositing...

Question 16

----------policy is taken by RBI&#10;A)Monetary policy&#10;B)fiscal policy&#10;C)both of them&#10;D)all of these

Accepted Answer

The answer of ----------policy is taken by RBI&#10;A)Monetary policy&#10;B)fiscal policy&#10;C)both...

Question 17

Rate at which RBI lends to bank is&#10;A)Repo rate&#10;B)reverse repo&#10;C)interest arte&#10;D)bank rate

Accepted Answer

The answer of Rate at which RBI lends to bank...

Question 18

---------are unsecured promissory note issued by a well rated corporate&#10;A)commercial paper&#10;B)certificate of deposit&#10;C)commercial bill&#10;D)all of these

Accepted Answer

The answer of ---------are unsecured promissory note issued by a...

Question 19

----is a must for issuing commercial paper&#10;A)good credit rating&#10;B)good bank balance&#10;C)goodwill&#10;D)all of these

Accepted Answer

The answer of ----is a must for issuing commercial paper&#10;A)good...

Question 20

which is not a constituent of money market&#10;A)Call money market&#10;B)discount houses&#10;C)share market&#10;D)acceptance market

Accepted Answer

The answer of which is not a constituent of money...

Question 21

Money market provides fund for&#10;A)More than one year&#10;B)for a period of up to one year&#10;C)one week to about six weeks&#10;D)none of these

Accepted Answer

The answer of Money market provides fund for&#10;A)More than one...

Question 22

Which is not a constituent of capital market?&#10;A)public finance institution&#10;B)stock exchange&#10;C)commercial bank&#10;D)unit trust of India

Accepted Answer

The answer of Which is not a constituent of capital...

Question 23

---------- is the other name for Zero Coupon bonds.&#10;A)bond ,&#10;B)debenture ,&#10;C)Deep discount bonds&#10;D)coupon bond

Accepted Answer

The answer of ---------- is the other name for Zero...

Question 24

Holders of fixed income securities are ---------- of the issuer.&#10;A)debtors&#10;B)Creditor&#10;C)issuer&#10;D)banker

Accepted Answer

The answer of Holders of fixed income securities are ----------...

Question 25

Bonds which are issued at a discount and repaid at a face value are called ----------.&#10;A)bond ,&#10;B)debenture ,&#10;C)Deep discount bonds&#10;D)Zero coupon bonds

Accepted Answer

The answer of Bonds which are issued at a discount...

Deck 4: Money and Bond Market