Banking and Financial Concepts Quiz

Acceptance in banking refers to the agreement of a bank to honor a draft or bill of exchange when it matures, indicating its willingness to pay a specific amount.

Endorsement is the act of signing the back of a cheque or bill of exchange, allowing it to be transferred to another party for payment.

Credit control is a monetary policy tool used by central banks to regulate the supply of credit in the economy, influencing interest rates and lending practices.

<p>Open market operations involve the buying and selling of government securities by a central bank to regulate the money supply and influence interest rates.</p> Signup and view all the answers

<p>The money market is a segment of the financial market where short-term instruments are traded. Its main function is to provide liquidity and to manage short-term financing needs.</p> Signup and view all the answers

<p>Loan syndication is the process where multiple lenders come together to provide a large loan to a single borrower, sharing the risks and rewards.</p> Signup and view all the answers

<p>Venture capital refers to funds invested in startups and small businesses with high growth potential. It is significant as it provides essential funding and mentorship that can help a business succeed.</p> Signup and view all the answers

<p>Internet banking allows customers to perform banking transactions online through a secure website or app, providing convenience and accessibility.</p> Signup and view all the answers

<p>Commercial paper is an unsecured, short-term debt instrument issued by corporations to finance short-term liabilities. It is typically issued by large companies and financial institutions.</p> Signup and view all the answers

<p>Speculative risk refers to a situation where there is a chance of both profit and loss, often associated with investments in volatile markets.</p> Signup and view all the answers

<p>Inflation indexed bonds are securities that provide protection against inflation by adjusting the principal and interest payments based on inflation rates. Their value rises with inflation, ensuring the purchasing power of returns.</p> Signup and view all the answers

<p>An insurance agent acts as an intermediary between the insurance company and the policyholder, facilitating the sale of insurance products and providing advice.</p> Signup and view all the answers

<p>Rolling settlement refers to a settlement system where transactions are settled on a continuous basis, typically on the next business day. This system enhances liquidity and reduces the risk of default.</p> Signup and view all the answers

<p>Factoring is a financial transaction where a business sells its receivables to a third party (factor) at a discount to receive immediate cash. Its purpose is to improve cash flow and reduce credit risk.</p> Signup and view all the answers

<p>Leasing is a financial arrangement that allows a user to obtain the use of an asset without owning it, through rental payments. Unlike hire purchase, the lessee does not own the asset at the end of the lease term.</p> Signup and view all the answers

<p>Mutual funds play a critical role in economic development by pooling investors' funds to invest in a diversified portfolio, which promotes capital market growth. They enhance investment opportunities and enable small investors to participate in financial markets.</p> Signup and view all the answers

<p>The primary components of a developed financial system include financial institutions, financial markets, financial instruments, and regulatory frameworks.</p> Signup and view all the answers

<p>A capital market is for long-term securities, while a money market focuses on short-term debt instruments.</p> Signup and view all the answers

<p>The Indian money market facilitates the borrowing and lending of short-term funds and provides liquidity to improve cash management.</p> Signup and view all the answers

<p>Commercial banks provide essential services like accepting deposits, providing loans, and facilitating payments, which stimulate economic growth.</p> Signup and view all the answers

<p>A stock exchange is a marketplace where securities are bought and sold, primarily facilitating liquidity and price discovery.</p> Signup and view all the answers

<p>Mutual funds pool money from multiple investors to invest in diversified portfolios of stocks, bonds, or other securities.</p> Signup and view all the answers

<p>Insurable interest refers to the legitimate interest an insured party has in the subject matter of the insurance policy, ensuring that one stands to gain if the insured event does not occur.</p> Signup and view all the answers

<p>The Liquidity Adjustment Facility (LAF) is a monetary policy tool used by the Reserve Bank of India to manage short-term liquidity mismatches in the banking system.</p> Signup and view all the answers