Untitled Quiz

Investment banks are financial intermediaries in the business of providing investment and advisory services to companies, governments and investors.

False

<p>Investment banking differs from commercial banking in the sense that they do not accept deposits and grant retail loans. While commercial banks mobilize savings in the form of deposits and lend these funds to individuals, corporates and government, investment banks bring both the lender as well as the borrower together and help the lenders invest directly in the business of the borrowers.</p> Signup and view all the answers

<p>The primary functions of investment banks include Initial Public Offering (IPO), underwriting, mergers and acquisitions (M&amp;A), providing financial advice to investors, assisting investors and helping the Government in disinvestment of PSUs.</p> Signup and view all the answers

<p>All of the above</p> Signup and view all the answers

<p>Providing loans to individuals and small businesses</p> Signup and view all the answers

<p>Standby underwriting is a type of guarantee provided by an investment bank where they agree to purchase any unsold securities during an initial public offering (IPO) or other securities issuance.</p> Signup and view all the answers

<p>In M&amp;A, 'sell-side' refers to advising a company that is looking to sell itself or a part of its business, while 'buy-side' refers to advising a company that is looking to acquire another company.</p> Signup and view all the answers

<p>A depository system is an electronic system for holding and transferring securities, eliminating the need for physical certificates.</p> Signup and view all the answers

<p>The two primary depositories in India are NSDL (National Securities Depository Limited) and CDSL (Central Depository Services Limited).</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>A depository participant (DP) is a market intermediary that acts as a link between investors and depositories, facilitating the opening and management of demat accounts.</p> Signup and view all the answers

<p>A credit rating is a numerical representation of an entity's creditworthiness, encompassing individuals, businesses, and governments.</p> Signup and view all the answers

<p>AAA</p> Signup and view all the answers

<p>Credit rating agencies exist to assist investors in their investment decisions by assessing the creditworthiness of borrowers, providing a more comprehensive evaluation of risk.</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>Factoring is a financial service where a business sells its accounts receivable to a factor (financial intermediary) at a discount, receiving immediate cash flow. It is a continuing arrangement whereby the factor purchases the client's accounts receivable / book debts either with or without recourse to the client.</p> Signup and view all the answers

<p>Forfaiting is a specialized financial service that involves the discounting of international trade receivables at 100%, providing immediate cash flow to exporters.</p> Signup and view all the answers

<p>Housing finance is a business of financial intermediation wherein money is raised through various sources and lent to borrowers for purchasing a house.</p> Signup and view all the answers

<p>The National Housing Bank (NHB) is the apex-level financial institution for the housing sector in India. It is a wholly owned subsidiary of the Reserve Bank of India (RBI) and the regulator of non-banking HFCs. NHB was established on July 9, 1988, to function as a principal agency to promote HFIs and to provide financial and other support to such institutions.</p> Signup and view all the answers

<p>Leasing is an alternative form of financing or acquisition of an asset/assets, where instead of owning the asset, an entrepreneur gets the right to use the asset for a specified period of time and pays a lease rental. It is a method of acquiring right to use an equipment or asset for a consideration.</p> Signup and view all the answers

<p>Inventory Lease</p> Signup and view all the answers

<p>The lease is non-cancellable in nature</p> Signup and view all the answers

<p>The asset is leased for a short period of time</p> Signup and view all the answers

<p>The main purpose of a sale and leaseback is to free up the original owner's capital while allowing the owner to retain possession and use of the property.</p> Signup and view all the answers

<p>Leverage leasing is a leasing arrangement where a third party (lender) is involved. The lessor borrows a part of the purchase cost of the asset from the lender, with the asset serving as security. The lender is repaid directly from the lease rentals by the lessee, with any surplus going to the lessor.</p> Signup and view all the answers

<p>In a close-ended lease, the asset gets transferred to the lessor at the end of the lease contract period. However, in an open-ended lease, the lessee has the option of purchasing the asset.</p> Signup and view all the answers

<p>In an upfront lease, higher lease rentals are charged in the initial years and lower rentals in the later years of the contract. Conversely, in a back-end lease, lower rentals are charged in the initial years and they increase in the later years.</p> Signup and view all the answers

<p>In a percentage lease, the lessee pays fixed lease rentals plus a certain percentage of the previous year's gross revenue.</p> Signup and view all the answers

<p>A 3N Lease refers to 'Net' and 'Net-net' leases, where the lessee is responsible for maintenance, insurance, and taxes of the property.</p> Signup and view all the answers

<p>A Cross-border Lease, also known as an International Lease, involves a lease agreement between a lessee and lessor who are situated in two different countries.</p> Signup and view all the answers

<p>A Wet Lease is a leasing arrangement where one airline (lessor) provides an aircraft, complete crew, maintenance, and insurance to another airline (lessee), who pays by hours operated. A 'Dry Lease' involves leasing the aircraft alone. A wet lease without crew is occasionally referred to as a 'moist lease.'</p> Signup and view all the answers

<p>The advantages of leasing include no large outlay (avoiding upfront purchase cost), tax advantages (deductible lease payments), budgeting (predictable lease payments), and hedging against the risk of obsolescence (lessor manages obsolescence).</p> Signup and view all the answers

<p>Hire Purchase is a type of credit arrangement where an individual or business purchases goods by making an initial down payment and then paying the remainder of the purchase price in installments over a specified period. The buyer does not own the asset until all installments are fully paid.</p> Signup and view all the answers

<p>The advantages of 'Hire Purchase' include a low initial cost, flexible payments, and the possibility of owning the asset at the end of the installment period.</p> Signup and view all the answers

<p>Financial inclusion refers to making financial services accessible and affordable to all individuals, especially those who are typically underserved, such as low-income groups, rural populations, and marginalized communities.</p> Signup and view all the answers

<p>Financial inclusion brings the savings of the poor into the formal financial intermediation system. Large number of low-cost deposits help banks manage liquidity risks. It provides opportunities to the poor to build savings, make investments and avail credit. It helps transfer payments to vulnerable consumers. It helps the poor insure themselves against income shocks and equip them to meet emergencies such as illness or loss of employment.</p> Signup and view all the answers

<p>Microfinance is the provision of financial services to the poor. It is a holistic concept, encompassing not only micro-credit but also support services such as savings, insurance, payments, market and technical assistance, and capacity building.</p> Signup and view all the answers

<p>The clients of microfinance are typically landless laborers engaged in agriculture, mining and construction, small and marginal farmers, rural artisans and weavers, self-employed in urban informal sector, and self-employed in non-farm activities.</p> Signup and view all the answers

<p>In 1976, Dr. Mohammed Yunus, a professor in Chittagong University, Bangladesh, pioneered the concept of lending to groups of poor women. This group was loaned money without any collateral, but with higher interest rates. This joint liability put a social pressure which produced a very high repayment rate.</p> Signup and view all the answers

<p>Microfinance loans in India are typically characterized by borrowers from low-income backgrounds, small loan amounts (microloans), short loan tenures, no collateral requirement, frequent repayments, and the purpose being income generation.</p> Signup and view all the answers

<p>Financial regulation encompasses the rules, laws, and guidelines imposed by governments or regulatory authorities to oversee and control financial institutions and markets. The aim of financial regulation is to ensure the stability, integrity, transparency, and fairness of financial systems.</p> Signup and view all the answers

<p>All of the above</p> Signup and view all the answers

<p>The Reserve Bank of India (RBI) is the central bank of India. It was established in 1934 through the Reserve Bank of India Act, 1934. Its central office is in Mumbai. It is fully owned by the Government of India. The RBI's primary function is to formulate, implement, and monitor the monetary policy.</p> Signup and view all the answers

<p>All of the above</p> Signup and view all the answers

<p>The RBI plays the following key roles in India: Monetary Authority of the Country, Regulator and Supervisor of the Financial System, Banker to the Government, Manager of Exchange Control, Issuer of Currency, Developmental Role, and Banker to the Banks.</p> Signup and view all the answers

<p>The broad objectives of monetary policy in India are to maintain price stability and ensure adequate flow of credit to productive sectors to assist growth.</p> Signup and view all the answers

<p>The RBI seeks to maintain public confidence in the financial system, protect depositors' interest, and provide cost-effective banking services to the public.</p> Signup and view all the answers

<p>The RBI regulates and supervises the banking system in India under the provisions of the Banking Regulation Act, 1949, and the Reserve Bank of India Act, 1934.</p> Signup and view all the answers

<p>The Reserve Bank manages the public debt of the central and state governments and acts as a banker to them. It provides a range of banking services to the Government such as accepting money on the Government account, payment/withdrawal of funds, and collection and transfer of funds by various means throughout India.</p> Signup and view all the answers

<p>The RBI's role in the foreign exchange market is to develop and regulate it. It aims to facilitate external trade and payment, and promote orderly development and maintenance of the foreign exchange market in India.</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>Besides its core functions, the RBI has played a significant role in economic development by helping to set up several financial institutions such as the Industrial Development Bank of India, the National Bank for Agriculture and Rural Development, the Industrial Reconstruction Bank of India, the National Housing Bank, and the Infrastructure Development Finance Company Limited. It has also played a key role in promoting and fostering financial markets by setting up the Unit Trust of India, the Discount and Finance House of India, and the Securities Trading Corporation of India.</p> Signup and view all the answers

<p>The RBI maintains banking accounts of all scheduled banks. It has powers to collect credit information from banking companies and can appoint any bank as its agent. It provides various financial facilities and accommodations. It manages temporary liquidity gaps through refinancing schemes, and acts as lender of last resort to maintain financial stability.</p> Signup and view all the answers

<p>The Insurance Regulatory and Development Authority of India (IRDAI) is an autonomous and statutory body responsible for managing and regulating the insurance and re-insurance industry in India.</p> Signup and view all the answers

<p>The IRDAI's key functions include issuing, renewing, modifying, withdrawing, suspending, or canceling registrations, protecting policyholders' interests, specifying qualifications, code of conduct, and training for intermediaries and agents, inspecting and investigating insurers, intermediaries, and relevant organizations, adjudicating disputes, specifying the form and manner of maintaining books of accounts and statements, and encouraging the systemic growth of the insurance industry.</p> Signup and view all the answers

<p>Reinsurance is a contract whereby an entity (reinsurer) shares a proportion of risk coverage with the insurance firm in return for a part of the insurance premium.</p> Signup and view all the answers

<p>The Securities and Exchange Board of India (SEBI) is a statutory regulatory body established in 1992. It is responsible for protecting the interests of investors investing in securities and regulating the securities market.</p> Signup and view all the answers

<p>The SEBI focuses on investor protection, preventing fraudulent practices and malpractices, developing a code of conduct for financial intermediaries, and maintaining a balance between statutory regulations and self-regulation.</p> Signup and view all the answers

<p>All of the above</p> Signup and view all the answers

<p>Insider trading is the illegal practice of trading securities based on non-public information that is likely to affect the price of those securities.</p> Signup and view all the answers

<p>Price rigging involves manipulating the market price of a security artificially, typically by creating false or misleading information, to benefit certain individuals or groups.</p> Signup and view all the answers

<p>The SEBI promotes fair practices by prohibiting insider trading, checking price rigging, and establishing guidelines for ethical conduct for market participants.</p> Signup and view all the answers

<p>False</p> Signup and view all the answers

<p>The Export Import Bank of India (EXIM Bank) is a wholly-owned subsidiary of the Indian Government, established in 1982, to promote international trade and investment by providing financial assistance to exporters and importers.</p> Signup and view all the answers

<p>The National Bank for Agriculture and Rural Development (NABARD) is India's apex development bank, established in 1982, to promote sustainable and equitable agriculture and rural development.</p> Signup and view all the answers

<p>Small Finance Banks (SFBs) are specialized banks that cater to the micro industries, small farmers, and the unorganized sector of the society by providing loans and financial assistance. They are governed by the central bank of the country.</p> Signup and view all the answers

<p>The primary objective of introducing Small Finance Banks (SFBs) was to further financial inclusion by primarily extending basic banking services to unserved and underserved sections, including small and marginal farmers, small business units, micro and small industries, and unorganized entities.</p> Signup and view all the answers

<p>SFBs offer basic banking services such as Savings Accounts, Current Accounts, Fixed Deposits, Recurring Deposits, Loans, etc. They also aim to provide access to bank credit and services to unbanked and under-banked regions of India.</p> Signup and view all the answers