1.
205 FMBO
MCQ

2.
• In which year CIBIL was incorporated?
1. 2000
2. 2001
3. 2003
4. 2005
Answer: (1)
Established in 2000, TransUnion CIBIL Limited (formerly
known as Credit Information Bureau (India) Limited) is India’s
first Credit Information Company. It collects and maintains
credit-related information of individuals and corporates,
including loans and credit cards.

3.
• Which among the following is not a fund
based service offered by banks?
1. Working capital
2. Export credit
3. Bill discounting
4. Bank guarantee
Answer: (4)
A bank guarantee is a promise from a lending
institution that ensures the bank will step up if a
debtor can’t cover a debt.

4.
• Name the banking service that caters to
the cross border transactions?
1. Wholesale Banking
2. International Banking
3. Retail Banking
4. Investment Banking
Answer: (2)
International banking is a type of banking that has
presence across international borders. It is a financial
entity that offers financial services like lending
opportunities and payment accounts to foreign clients

5.
• Banks provides pre-shipment finance facility
to exporters. This type of facility is called?
1. Bank Guarantee
2. Working Capital
3. Export Packing Credit
4. Investment Credit
Answer: (3)
‘Pre-shipment / Packing Credit’ means any loan or advance granted or any other
credit provided by a bank to an exporter for financing the purchase, processing,
manufacturing or packing of goods prior to shipment / working capital expenses
towards rendering of services on the basis of letter of credit opened in his favour
or in favour of some other person, by an overseas buyer or a confirmed and
irrevocable order for the export of goods / services from India or any other
evidence of an order for export from India having been placed on the exporter or
some other person, unless lodgement of export orders or letter of credit with the
bank has been waived.

6.
• Which account is maintained in foreign currency with
an Authorised Dealer that enables foreign exchange
earners to credit 100 per cent of their foreign exchange
earnings to the account?
1. Exchange Earners’ Foreign Currency Account (EEFC)
2. NOSTRO Account
3. VOSTRO Account
4. FFC
Answer: (1)
Exchange Earners’ Foreign Currency Account (EEFC) is an account
maintained in foreign currency with an Authorised Dealer Category – I
bank i.e. a bank authorized to deal in foreign exchange. It is a facility
provided to the foreign exchange earners, including exporters, to credit
100 per cent of their foreign exchange earnings to the account, so that
the account holders do not have to convert foreign exchange into
Rupees and vice versa, thereby minimizing the transaction costs.

7.
• Which model allows banking company to enter
into strategic alliance with insurance
companies for distribution of insurance
products across their banking network?
1. Bancinsurance
2. Bankassurance
3. Bancassurance
4. Bankinsurance
Answer: (3)
Bancassurance means selling insurance through banks.
Banks and insurance companies collaborate in a
partnership, where the bank sells the partner insurance
company’s products to its customers.

8.
• Which instrument allows investors to
hold shares in equity of other
countries?
1. Bonds
2. Depository receipts
3. Debentures
4. Fixed Deposits
Answer: (2)
A depository receipt (DR) is a negotiable certificate issued by a bank
representing shares in a foreign company traded on a local stock
exchange. The depositary receipt gives investors the opportunity to hold
shares in the equity of foreign countries and gives them an alternative to
trading on an international market

9.
• Who issues participatory notes?
1. RBI
2. Foreign Companies
3. SEBI
4. Foreign Institutional Investor (FII)
Answer: (4)
A participatory note, commonly known as a P-note or PN, is
an instrument issued by a registered foreign institutional
investor (FII) to an overseas investor who wishes to invest
in Indian stock markets without registering themselves with
the market regulator, the Securities and Exchange Board of
India (SEBI)

10.
• What is the maximum maturity period of
funds/instruments in money market?
1. 1 day
2. 7 days
3. 14 days
4. 1 year
Answer: (4)
The money market is a market for short-term financial assets that are
close substitutes of money. The most important feature of a money
market instrument is that it is liquid and can be turned over quickly at low
cost and provides an avenue for equilibrating the short-term surplus
funds of lenders and the requirements of borrowers. Maturity of money
market instruments is usually up to one year.

11.
• What is maximum period for which
money is lent under call money?
1. 1 day
2. 7 days
3. 14 days
4. 1 year
Answer: (1)
Under call money market, funds are
transacted on overnight basis

12.
• What is maximum period for which
money is lent under notice money?
1. 1 day
2. 7 days
3. 14 days
4. 1 year
Answer: (3)
Under notice money market, funds are transacted
for the period between 2 days and 14 days.

13.
• What is maximum period for which
money is lent under Term money?
1. 1 day
2. 7 days
3. 14 days
4. 1 year
Answer: (4)
Term Money refers to borrowing/lending of funds
for period between 15 days and one year.

14.
• Who regulates the money market
instruments in India?
1. Ministry of Finance
2. RBI
3. Department of Economic Affairs
4. MCA
Answer: (2)
RBI governs and regulates the money market
instruments under sections 45K, 45L, and 45W of
the RBI Act, 1934

15.
• How much % of its capital fund can be
borrowed by scheduled commercial banks in
the call/notice money market on any particular
day?
1. 80%
2. 100%
3. 125%
4. 150%
Answer: (3)
On a fortnightly average basis, borrowing outstanding should not exceed
100 per cent of capital funds (i.e., sum of Tier I and Tier II capital) of
latest audited balance sheet. However, banks (scheduled commercial
banks) are allowed to borrow a maximum of 125 per cent of their capital
funds on any day, during a fortnight.

16.
• How much % of its capital fund can be
lent by scheduled commercial banks in
the call/notice money market on any
particular day?
1. 50%
2. 75%
3. 100%
4. 125%
Answer: (1)
On a fortnightly average basis, lending outstanding should not exceed
25 per cent of their capital funds. However, banks (scheduled
commercial banks) are allowed to lend a maximum of 50 per cent of
their capital funds on any day, during a fortnight

17.
• What % of aggregate deposit can be
borrowed by cooperative banks in the
call/notice money market?
1. 1%
2. 2%
3. 3%
4. No limit
Answer: (2)
Outstanding borrowings of State Co-operative Banks /
District Central Co-operative Banks / Urban Co-operative
Banks in call / notice money market, on a daily basis should
not exceed 2.0 per cent of their aggregate deposits as at
end March of the previous financial year.

18.
• What % of aggregate deposit can be lent
by cooperative banks in the call/notice
money market?
1. 1%
2. 2%
3. 3%
4. No limit
Answer: (4)
No limit.

19.
• Primary Dealers are allowed to borrow, on average in a
reporting fortnight, up to 225 per cent of their net
owned funds (NOF) as at end-March of the previous
financial year and lend up to 25 per cent of their NOF
in call/notice money market.
1. 100%, 25%
2. 200%, 50%
3. 225%, 25%
4. 250%, 30%
Answer: (3)
Primary Dealers are allowed to borrow, on average in a
reporting fortnight, up to 225 per cent of their net owned
funds (NOF) as at end-March of the previous financial year
and lend up to 25 per cent of their NOF in call/notice
money market

20.
• Name the system through which money
market trades are conducted?
1. NEFT
2. E-Kuber
3. UPI
4. NDS-Call system
Answer: (4)
All dealings in Call/Notice/Term money
executed on the Negotiated Dealing System-
Call, i.e. NDS-Call

21.
• How many types of treasury bills are
issued in India?
1. One
2. Two
3. Three
4. Four
Answer: (3)
Treasury bills (T-bills) offer short-term investment
opportunities, generally up to one year. They are thus useful
in managing short-term liquidity. At present, the Government
of India issues three types of treasury bills

22.
• Which among the following is not a type
of treasury bill issued in India?
1. 45 day
2. 91 day
3. 182 day
4. 364 day
Answer: (1)
Treasury bills (T-bills) offer short-term investment
opportunities, generally up to one year. They are thus useful
in managing short-term liquidity. At present, the Government
of India issues three types of treasury bills, namely, 91-day,
182-day and 364-day

23.
• In India, Treasury bill is quoted at
discounted price to par value of _____?
1. Rs 50
2. Rs 100
3. Rs 150
4. Rs 200
Answer: (2)
T-bills are issued at a discount from the par value (also
known as the face value, generally Rs 100) of the bill,
meaning the purchase price is less than the face value of
the bill.

24.
• What is the minimum tradable amount at
which treasury bill is quoted in
secondary market?
1. Rs 5,00,000
2. Rs 2,50,000
3. Rs 1,00,000
4. Rs 25,000
Answer: (4)
Treasury bills are issued at a minimum price of Rs.
25000 and in the same multiples thereof.

25.
• The tenor of certificate of deposit issued
by commercial banks ranges from
______ to ________
1. 7 days, 1 year
2. 14 days, 1 year
3. 1 year, 3 years
4. 14 days, 3 years
Answer: (1)
The tenure for Certificates of Deposit issued by
commercial banks varies between 7 days and 1
year

26.
• The tenor of certificate of deposit issued
by Financial Institutions (FIs) ranges
from ______ to ________
1. 7 days, 1 year
2. 14 days, 1 year
3. 1 year, 3 years
4. 14 days, 3 years
Answer: (3)
The maturity term for CDs issued by financial
institutions varies from 1 year to 3 years.

27.
• What is the minimum amount for which
certificate of deposit can be issued?
1. Rs 5,00,000
2. Rs 1,00,000
3. Rs 50,000
4. Rs 25,000
Answer: (2)
Minimum amount of a Certificate of Deposit (CD)
should be Rs.1 lakh, i.e., the minimum deposit that
could be accepted from a single subscriber should
not be less than Rs.1 lakh, and in multiples of Rs. 1
lakh thereafter.

28.
• Who among the following cannot issue
certificate of deposit?
1. Scheduled Commercial Banks
2. Select FIs
3. Corporates
4. None of the Above
Answer: (3)
CDs can be issued by (i) scheduled commercial banks
{excluding Regional Rural Banks and Local Area Banks};
and (ii) select All-India Financial Institutions (FIs) that have
been permitted by RBI to raise short-term resources within
the umbrella limit fixed by RBI.

29.
• Who among the following cannot issue
commercial papers?
1. Scheduled Commercial Banks
2. Corporates
3. Primary dealers (PDs)
4. All-India Financial Institutions (FIs)
Answer: (1)
Corporates, primary dealers (PDs) and the All-
India Financial Institutions (FIs) are eligible to
issue Commercial Paper (CP).

30.
• What is the minimum tangible networth that a
corporate must have in order to be eligible to
issue commercial paper?
1. Rs 1 crore
2. Rs 2 crore
3. Rs 3 crore
4. Rs 4 crore
Answer: (4)
A corporate would be eligible to issue CP provided –
a. the tangible net worth of the company, as per the latest audited
balance sheet, is not less than Rs. 4 crore
b. company has been sanctioned working capital limit by bank/s or all-
India financial institution/s; and
c. the borrowal account of the company is classified as a Standard
Asset by the financing bank/s/ institution/s.

31.
• What is the minimum credit rating of company
to be eligible to issue commercial paper?
1. A-1
2. A-2
3. B-1
4. B-2
Answer: (2)
The minimum credit rating should be A-2 [As per rating symbol and
definition prescribed by Securities and Exchange Board of India (SEBI)].
All eligible participants should obtain the credit rating for issuance of
Commercial Paper either from Credit Rating Information Services of
India Ltd. (CRISIL) or the Investment Information and Credit Rating
Agency of India Ltd. (ICRA) or the Credit Analysis and Research Ltd.
(CARE) or the FITCH Ratings India Pvt. Ltd. or such other credit rating
agency (CRA) as may be specified by the Reserve Bank of India from
time to time, for the purpose.

32.
• The tenor of commercial paper ranges
from _____ to _____
1. 7 days, 1 year
2. 14 days, 1 year
3. 1 year, 3 years
4. 14 days, 3 years
Answer: (1)
Commercial Paper (CP) can be issued for maturities
between a minimum of 7 days and a maximum of
up to one year from the date of issue.

33.
• What is the minimum amount for which
commercial paper can be issued?
1. Rs 25,000
2. Rs 50,000
3. Rs 1,00,000
4. Rs 5,00,00
Answer: (4)
CP can be issued in denominations of Rs.5 lakh or
multiples thereof.

34.
• What is the underlying Collateral in repo
transaction?
1. Securities
2. Gold
3. Property
4. Stock of Top 10 NSE listed Companies
Answer: (1)
A repurchase agreement (repo) is a two-legged
transaction that resembles a collateralised loan. A
borrower of cash sells securities (the collateral) to
the lender and agrees to buy them back later at a
pre-specified price.

35.
• Who operates Collateralised Borrowing &
Lending Obligations (CBLO)?
1. SEBI
2. RBI
3. CCIL
4. NSDL
Answer: (3)
The CBLO is a money market instrument designed to meet the
borrowing and lending needs of banks and financial institutions, MFs,
NBFCs and corporates. The borrowing and lending of Collateralised
Borrowing & Lending Obligations are collateralized which means they
are secured using G-Sec or T-Bills. For added transparency, trades
are screen based with CCIL,

36.
• What is the maximum maturity period of
CBLO?
1. 1 day
2. 7 days
3. 30 days
4. 1 year
Answer: (4)
CBLO is a lending and borrowing instrument issued in an
electronic book entry form, for a maturity period ranging from
one day to one year. Borrowers and lenders carry out
transactions on the Clearing Corporation of India platform

37.
• Who publishes handbook of market
practices that act as guide for fixing
interest rates in money market?
1. RBI
2. FIMMDA
3. SEBI
4. AMFI
Answer: (2)
Handbook of Market Practices is published
by Fixed Income Money Market and
Derivatives Association of India (FIMMDA)

38.
• Which among the following does not fall under
the category of government securities?
1. Dated securities
2. Treasury bills
3. State Development Loans
4. Certificate of Deposits
Answer: (4)
Government Securities are debt instruments issued by the government to
borrow money. They are issued in the form of:
Treasury Bills (T-Bills), Government Bonds or Dated Securities,
State Development Loans (SDL)
Certificate of Deposit is not a type of government security. Certificate of
Deposit is a type of money market instrument issued against the funds
deposited by an investor with a bank in a dematerialized form for a specific
period of time

39.
• Identify the correct purpose behind issuing the
government securities?
1. To finance the government expenditure and
managing cash mismatch of the government
2. To decrease the fiscal deficit of government
3. To improve cash flow in market
4. None of the Above
Answer: (1)
Government securities are usually issued to
raise funds for government expenditures.

40.
Name the account that is maintained with RBI in
which government securities are held?
1. Nostro Account
2. Vostro Account
3. Subsidiary General Ledger (SGL)
4. Escrow Account
Answer: (3)
Government Securities are generally held in Subsidiary
General Ledger (SGL) accounts held with the RBI. In case
entities do not have a direct account with RBI, they may
open a Constituent SGL account with banks and Primary
Dealers or convert them into dematerialized form in demat
accounts maintained with the Depository Participants of
NSDL.

41.
• What is the minimum amount with which retail
investor can participate in government
securities auction?
1. Rs 5000
2. Rs 10000
3. Rs 20000
4. Rs 25000
Answer: (2)
The minimum amount for bidding is Rs 10,000 (face value)
and thereafter in multiples in Rs 10,000 as hitherto. In the
auctions of GoI dated securities, the retail investors can
make a single bid for an amount not more than Rupees
Two crore (face value) per security per auction.

42.
• Which among the following instrument is
not traded on NDS OM operated by RBI?
1. G-sec
2. T-bill
3. SDL
4. Commercial Papers
Answer:(4)
In August 2005, RBI introduced an anonymous screen-based order
matching module called NDS-OM. This is an order driven electronic
system, where the participants can trade anonymously by placing their
orders on the system or accepting the orders already placed by other
participants. Anonymity ensures a level playing field for various
categories of participants. NDS-OM is operated by the CCIL on behalf of
the RBI.

43.
• The rating of corporate bonds
upto ______ grade is generally
categorised as investment grade.
1. BBB
2. BB
3. C
4. A
Answer: (1)
The Corporate bonds with rating of BBB are
generally considered as investment grade bonds.

44.
Answer:

45.
Answer: