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Question 1 of 5
1. Question
1 pointsIn an economy with an inverted yield curve
1. It is more profitable when invested on bonds with a shorter duration than on bonds that have a longer duration.
2. Government bonds will always yield a higher return than corporate bonds.
Select the correct answer codeCorrect
Only 1 is correct.
The yield curve is a graph showing the relationship between interest rates earned on lending money for different durations.
Normally, someone who lent to the government or a corporation for one year (by buying a one-year government or corporate bond) would expect to get a lower interest rate than someone who lent for five or ten years, making the yield curve upward-sloping.
An inverted yield curve is when the yields on bonds with a shorter duration are higher than the yields on bonds that have a longer duration. It’s an abnormal situation that often signals an impending recession.
Statement 2: It applies irrespective of the kind of borrower/lender.Incorrect
Only 1 is correct.
The yield curve is a graph showing the relationship between interest rates earned on lending money for different durations.
Normally, someone who lent to the government or a corporation for one year (by buying a one-year government or corporate bond) would expect to get a lower interest rate than someone who lent for five or ten years, making the yield curve upward-sloping.
An inverted yield curve is when the yields on bonds with a shorter duration are higher than the yields on bonds that have a longer duration. It’s an abnormal situation that often signals an impending recession.
Statement 2: It applies irrespective of the kind of borrower/lender. -
Question 2 of 5
2. Question
1 pointsThe nationalisation of banks was a watershed moment in the history of Indian banking. It coincided with
Correct
Option d is correct.
The nationalisation of banks in 1969 was a watershed moment in the history of Indian banking. RBI was set up in 1935 under the Reserve Bank of India Act,1934.
The National Bank for Agriculture and Rural Development (NABARD) was constituted in 1982 to regulate and supervise the functions of cooperative banks and RRBs.
Industrial Policy Resolution of 1956 (IPR 1956) is a resolution adopted by the Indian Parliament in April 1956. It was the first comprehensive statement on industrial development of India.Incorrect
Option d is correct.
The nationalisation of banks in 1969 was a watershed moment in the history of Indian banking. RBI was set up in 1935 under the Reserve Bank of India Act,1934.
The National Bank for Agriculture and Rural Development (NABARD) was constituted in 1982 to regulate and supervise the functions of cooperative banks and RRBs.
Industrial Policy Resolution of 1956 (IPR 1956) is a resolution adopted by the Indian Parliament in April 1956. It was the first comprehensive statement on industrial development of India. -
Question 3 of 5
3. Question
1 pointsConsider the following statements.
1. Non-convertible debentures (NCDs) are debt instruments that companies issue to investors to raise money for their capital requirements.
2. The Government has made it mandatory for all listed companies, non-banking financial companies (NBFC) and housing finance companies (HFCs) to create a Debenture Redemption Reserve (DRR) for their outstanding bonds.
Which of the above statements is/are correct?Correct
Only 1 is correct.
One of the recent measures taken by the government to boost the fear-ridden bond market was the decision to do away with the requirement for all listed companies, non-banking financial companies (NBFC) and housing finance companies (HFCs) to create a Debenture Redemption Reserve (DRR) for their outstanding bonds.
Non-convertible debentures (NCDs) are debt instruments that companies issue to investors to raise money for their capital requirements. NCDs regularly pay interest at a fixed rate for a fixed tenure till maturity. However, there have been incidents where companies raising funds through NCDs at high rates of interest have failed to pay their dues. In order to protect the interests of retail investors in such cases, the Companies Act mandated that companies must maintain a redemption reserve. As per the Companies (Share Capital and Debentures) Rules 2014, all listed companies, NBFCs, HFCs and unlisted companies were to create a DRR with 25 per cent of the
value of outstanding debentures from their profits.
A DRR ensures that a company sets aside a portion of its profits toward repayment of long-term NCDs out of its current profits. The DRR requirement for unlisted companies (excluding unlisted NBFCs and HFCs) is still on, but at a lower rate of 10 per cent (against the earlier 25 per cent).Incorrect
Only 1 is correct.
One of the recent measures taken by the government to boost the fear-ridden bond market was the decision to do away with the requirement for all listed companies, non-banking financial companies (NBFC) and housing finance companies (HFCs) to create a Debenture Redemption Reserve (DRR) for their outstanding bonds.
Non-convertible debentures (NCDs) are debt instruments that companies issue to investors to raise money for their capital requirements. NCDs regularly pay interest at a fixed rate for a fixed tenure till maturity. However, there have been incidents where companies raising funds through NCDs at high rates of interest have failed to pay their dues. In order to protect the interests of retail investors in such cases, the Companies Act mandated that companies must maintain a redemption reserve. As per the Companies (Share Capital and Debentures) Rules 2014, all listed companies, NBFCs, HFCs and unlisted companies were to create a DRR with 25 per cent of the
value of outstanding debentures from their profits.
A DRR ensures that a company sets aside a portion of its profits toward repayment of long-term NCDs out of its current profits. The DRR requirement for unlisted companies (excluding unlisted NBFCs and HFCs) is still on, but at a lower rate of 10 per cent (against the earlier 25 per cent). -
Question 4 of 5
4. Question
1 pointsWhich of the following statements is correct regarding Accommodative monetary policy?
Correct
Accommodative monetary policy, also known as loose credit or easy monetary policy, occurs when a central bank attempts to expand the overall money supply to boost the economy when growth is slowing (as measured by GDP). These measures are meant to make money less expensive to borrow and encourage more spending.
Incorrect
Accommodative monetary policy, also known as loose credit or easy monetary policy, occurs when a central bank attempts to expand the overall money supply to boost the economy when growth is slowing (as measured by GDP). These measures are meant to make money less expensive to borrow and encourage more spending.
-
Question 5 of 5
5. Question
1 pointsWhen the Reserve Bank of India cuts the repo rate by 50 basis points, which of the following is likely to happen?
Correct
A decrease in the repo rate means the commercial banks can borrow more money from RBI at a cheaper rate, meaning lending rates for consumers may decrease.
Incorrect
A decrease in the repo rate means the commercial banks can borrow more money from RBI at a cheaper rate, meaning lending rates for consumers may decrease.
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