Question 1

Which of the following was set up mainly for providing finance to private sector?

Accepted Answer

ICICI (Industrial Credit and Investment Corporation of India) was specifically set up to provide finance to the private sector, focusing on project finance, infrastructure development, and various financial services to support the growth of the private sector in India.

Question 2

Interest rate in the money market funds are

Accepted Answer

Interest rates in the money market funds are determined by market forces, which include the supply and demand for money, inflation expectations, and the overall economic conditions.

Question 3

Money market include

Accepted Answer

The money market includes both organized and unorganized players, encompassing a wide range of financial institutions, including banks, finance companies, and informal financial entities, all participating in short-term borrowing, lending, buying, and selling with original maturities of one year or less.

Question 4

Income - Expenses = -------------.

Accepted Answer

Savings are what remains when you subtract expenses from income.

Question 5

------------- is postponement of current consumption

Accepted Answer

Savings represent the postponement of current consumption, as individuals set aside a portion of their income for future use rather than spending it immediately.

Question 6

-------------.means a number of securities/assets put together.

Accepted Answer

A portfolio refers to a collection of investments or financial assets held by an individual or an institution. These can include stocks, bonds, commodities, currencies, and other financial instruments.

Question 7

Debenture trading is ------------- in India.

Accepted Answer

The answer of Debenture trading is ------------- in India.
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Question 8

Debt instruments which have a maturity of less than one year called -------------.

Accepted Answer

Debt instruments with a maturity of less than one year are referred to as money market instruments. These are short-term finance options typically used for borrowing and lending in the money market.

Question 9

------------- is a vehicle to get entry into the asset classes.

Accepted Answer

Mutual funds are vehicles that allow investors to pool their money and invest in a diversified portfolio of assets. This gives investors access to asset classes that they may not be able to invest in directly, such as stocks, bonds, and real estate.

Question 10

-------------- creates high risk and is illegal.

Accepted Answer

Gambling is illegal in many jurisdictions and can lead to high financial losses.

Question 11

The pivotal position in the Indian money market is adorned by

Accepted Answer

The Reserve Bank of India (RBI) holds the pivotal position in the Indian money market as it is the country's central banking institution, which controls the monetary policy and regulates the banking sector.

Question 12

The rate at which RBI lends short term funds to bank is

Accepted Answer

The repo rate is the rate at which the Reserve Bank of India (RBI) lends short-term funds to commercial banks.

Question 13

The proportion of deposits that banks have to keep with RBI is

Accepted Answer

CRR (Cash Reserve Ratio) is the proportion of deposits that banks are required to keep with the Reserve Bank of India (RBI).

Question 14

for issuing commercial papers

Accepted Answer

Prior approval of RBI is not required for issuing commercial papers. Commercial papers are short-term debt instruments issued by companies, and the issuance is regulated by the Reserve Bank of India (RBI) guidelines, which do not require prior approval from the RBI.

Question 15

For issuing commercial papers,

Accepted Answer

Credit rating is mandatory for issuing commercial papers as it helps investors assess the credit risk associated with the paper.

Question 16

Money market instruments have a maturity of

Accepted Answer

Money market instruments are short-term financial instruments that typically have a maturity of less than one year.

Question 17

Debt market instruments have a maturity of

Accepted Answer

Debt market instruments typically have a maturity of more than one year, distinguishing them from money market instruments, which have shorter maturities.

Question 18

Irredeemable bond is also known as

Accepted Answer

A perpetual bond, also known as an irredeemable bond, is a bond with no maturity date. These bonds pay interest indefinitely without the principal being repaid.

Question 19

Floating rate bonds carry

Accepted Answer

Floating rate bonds carry a varying rate of interest, which means the interest payments can change over time based on the underlying benchmark or index rates.

Question 20

Zero coupon bonds mean

Accepted Answer

Zero coupon bonds do not pay periodic interest. Instead, they are issued at a discount to their face value and mature at face value, the difference representing the interest earned by the investor.

Quiz 3: Financial Concepts and Regulations in the Money Market