Finance Management (FM) Questions for RBI Grade B Phase 2 Exam
Finance Management (FM) Questions for RBI Grade B Phase 2 Exam

RBI Grade B Finance Management (FM) Questions for Phase 2

Finance Management Questions for RBI Grade B. RBI Grade B Finance and Management Note PDF. RBI Grade B FM Study Material PDF. RBI Finance and Management (FM) Books, PDF, Previous Papers, Question Set, and study material. As we all know that RBI Grade B Notification 2024 is out. The Reserve Bank of India (RBI) conducted the RBI Grade B Phase I Exam for the post of Grade B (Grade ‘B’ (DR) – (General) & others). It’s the right time when you should start your RBI Grade B Phase 2 preparation at full pace.

If you are preparing for RBI Grade B (Phase 2), you will come across a section on “Finance and Management (FM)” wherein 65 questions will be there carrying 50 marks. Here we are providing you with “Finance and Management (FM) Questions for RBI Grade B” with answers based on the latest pattern of your daily practice.

FM Questions for RBI Grade B Phase 2 | Test-3

1. National Housing Bank’s RESIDEX is the first official housing price index launched in 2007 by the National Housing Bank (NHB). The base year used for computing RESIDEX is?

  1. 2011-12
  2. 2012-13
  3. 2010-11
  4. 2014-15
  5. None of the above

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Correct Answer: B. 2012-13

Explanation: NHB RESIDEX is the first official housing price index launched in 2007 by the National Housing Bank(NHB). The base year has been revised to FY 2012-13 to ensure capturing the latest information and accurately reflect the current economic situation in the country.

2. Mr. X, a regular defaulter has defaulted again on the home loan repayment. As per the information gathered, he has defaulting habits since his college days. Bank wants to take strict actions against him. As a result, Citibank wants to know that as per section 13(2) of the SARFAESI Act, a demand notice of how many days needs to be sent to X?

  1. 10 days
  2. 20 days
  3. 30 days
  4. 60 days
  5. 45 days

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Correct Answer:  D. 60 days

Explanation: As per section 13(2) of SARFAESI Act, 2002,  Where any borrower, who is under a liability to a secured creditor under a security agreement, makes any default in repayment of secured debt or any instalment thereof, and his account in respect of such debt is classified by the secured creditor as on- performing asset, then, the secured creditor may require the borrower by notice in writing to discharge in full his liabilities to the secured creditor within sixty days from the date of notice failing which the secured creditor shall be entitled to e ercise all or any of the rights under sub- section (4).

3. A banking company acquired a building from its NPA customers and leased out the same to its employees and started earning rental income from the same. The process continued for several years and one fine day, Risk focussed Internal Audit take place and the auditor pointed that as per the banking regulation act, section 6, no banking company shall hold any immovable property howsoever acquired, except such as is required for its own use, for any period exceeding seven years from the acquisition thereof or from the commencement of this Act, whichever is later or any extension of such period as in this section provided, and such property shall be disposed of within such period or extended period, as the case may be. However, the bank was not aware of such law and requested the auditor not to report the same. The auditor said there is one way you can escape the reporting. Inform us the way, reporting can be escaped.

  1. Bribe the auditor to keep his mouth close
  2. Request RBI for an extension of 5 years after a period of 7 years has elapsed from the date the building was acquired by the bank from NPA holder.
  3. Let the tenant stay at the building and do not accept any rent from him
  4. Request RBI for an extension of 3 years as bank will file a suitable buyer within the period
  5. Request RBI for an extension of 5 years as the extension would be in the interest of depositors.

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Correct Answer: B. Request RBI for an extension of 5 years after a period of 7 years has elapsed from the date the building was acquired by the bank from NPA holder

Explanation: As per section 9 of banking regulation act 1949, Notwithstanding anything contained in section 6, no banking company shall hold any immovable property howsoever acquired, except such as is required for its own use, for any period exceeding seven years from the acquisition thereof or from the commencement of this Act, whichever is later or any extension of such period as in this section provided, and such property shall be disposed of within such period or extended period, as the case may be: PROVIDED that the banking company may, within the period of seven years as aforesaid deal or trade in any such property for the purpose of facilitating the disposal thereof: PROVIDED FURTHER that the Reserve Bank may in any particular case extend the aforesaid period of seven years by such period not exceeding five years where it is satisfied that such extension would be in the interests of the depositors of the banking company.

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4. A bond of Rs. 1,000 bearing a coupon rate of 9% is redeemable after 12 years at a premium of 5%. Find out the value of the bond if the required rate of return is 10%. It is known that the PVAF (Present Value Annuity Factor) of one rupee at 10% for a 12 year period would be 6.814 and PVF (Present Value Factor) of one rupee at 10% for a 12 year period would be 0.319.
A. Rs. 801.85
B. Rs. 889.90
C. Rs. 901.25
D. Rs. 948.21
E. Rs. 981.10

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Correct Answer:  D. Rs. 948.21

Explanation: B¬0= Interest (PVAF10%,12Y) + RV (PVF10%, 12Y)

= 90 (6.814) + 1050 (0.319)

= 613.26 + 334.95 = Rs. 948.21

5. Select the incorrect statements with respect to Savings Bonds, 2018:

  1. The Bonds will be issued at par i.e. at Rs.1000.00 for a minimum amount of Rs.1000/- (face value) and in multiples thereof.
  2. The Bonds will have a maturity of 8 years carrying interest at 7.75% per annum payable half- yearly.
  3. Individuals (including Joint Holdings) , Hindu Undivided Families and NRIs are also eligible for making investments in these Bonds.
  4. The Bonds are  tradeable in the Secondary market and are eligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions.
  5. Interest on the Bonds will not be taxable.
  1. 1 & 2 only
  2. 2 & 3 only
  3. 2 & 4 only
  4. 1 & 5 only
  5. All Incorrect
Show Correct Answers

Correct Answer: E. All Incorrect

Explanation: The Bonds will be issued at par i.e. at Rs.100.00.

  • The Bonds will be issued for a minimum amount of Rs.1,000/- (face value) and in multiples thereof. Accordingly, the issue price, will be Rs.1,000/- for every Rs.1,000/- (Nominal).
  • The Bonds will have a maturity of 7 years carrying interest at 7.75% per annum payable half- yearly.
  • The Bonds are open to investment by individuals (including Joint Holdings) and Hindu Undivided Families. NRIs are not eligible for making investments in these Bonds.
  • The Bonds are not tradeable in the Secondary market and are not eligible as collateral for loans from banking institutions, non-banking financial companies or financial institutions.
  • Interest on the Bonds will be taxable under the Income-tax Act, 1961 as applicable according to the relevant tax status of the bond holder.

6. Which of the following is not an amendment introduced to the Prevention of Money-laundering Act, 2002 through Finance Act, 2018:

  1. The present amendment shall allow to proceed against property equivalent to proceeds to crime held outside the country also.
  2. The amendment would make the applicability of bail conditions uniform to all the offences under PMLA, instead of only those offences under the schedule which are liable to imprisonment of more than 3 years.
  3. Further limit of Rs.one crore shall allow court to apply bail provisions more leniently to less serious PMLA cases.
  4. Corporate frauds are included as Scheduled offence.
  5. Present amendment allows Special Court, if it thinks fit, to consider the claims of the claimants for the purposes of restoration of such properties adversely affected by PMLA investigation even during trial also, in such manner as may be prescribed
  1. 1 & 2 only
  2. 2 & 3 only
  3. 1, 2 & 5 only
  4. 3 & 5 only
  5. All are amendments introduced under the Finance Act 2018
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Correct Answer: E. All are amendments introduced under the Finance Act 2018

Explanation: — The present amendment shall allow to proceed against property equivalent to proceeds to crime held outside the country also.

— The amendment would make the applicability of bail conditions uniform to all the offences under PMLA, instead of only those offences under the schedule which are liable to imprisonment of more than 3 years.

— Further limit of Rs.one crore shall allow court to apply bail provisions more leniently to less serious PMLA cases.

— Corporate frauds are included as Scheduled offence.

— Present amendment allows Special Court, if it thinks fit, to consider the claims of the claimants for the purposes of restoration of such properties adversely affected by PMLA investigation even during trial also, in such manner as may be prescribed.

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7. Which of the following is not the feature of tax heavens?

  1. A tax haven is a country that offers foreign individuals and businesses a minimal tax liability
  2. No financial information is shared with foreign tax authorities
  3. Tax havens do require individuals to reside in or businesses to operate out of their countries to benefit from local tax policies
  4. Mauritius is one of the most well-known tax heavens
  5. All of the above
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Correct Answer: C. Tax havens do require individuals to reside in or businesses to operate out of their countries to benefit from local tax policies

Explanation: A tax haven is a country that offers foreign individuals and businesses a minimal tax liability in a politically and economically stable environment, with little or no financial information shared with foreign tax authorities. Tax havens do not require individuals to reside in or businesses to operate out of their countries to benefit from local tax policies. Due to the globalization of business operations, an increasing number of U.S. corporations, including Microsoft, Apple and Alphabet, are keeping cash in offshore tax havens to minimize corporate taxes. The list of tax haven countries includes Andorra, the Bahamas, Belize, Bermuda, the British Virgin Islands, the Cayman Islands, the Channel Islands, the Cook Islands, Hong Kong, The Isle of Man, Mauritius, Lichtenstein, Monaco, Panama, and St. Kitts and Nevis.

8. Identify the correct statements regarding the Reserve Money:-

  1. It is also referred to as High Powered Money
  2. It includes currency in circulation
  3. Includes Bankers’ Deposit with RBI
  4. Includes Other Deposit with RBI
  5. Includes demand Deposits with Banks

A. B, C, D, E
B. B, C, D
C. A, B, C, D
D. A, B, C, E
E. All of the above

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Correct Answer: C. A, B, C, D

Explanation: There are different forms of money supply – reserve money, narrow money, broad money etc. But the most important indicator of all these is reserve money. It is also called as high powered money, base money and central bank money. In economics, the monetary base in a country is defined as the portion of the commercial banks’ reserves that are maintained in accounts with their central bank plus the total currency circulating in the public (which includes the currency, also known as vault cash, that is physically held in the banks’ vault).

Reserve money = Currency in Circulation + Bankers’ Deposits with RBI + ‘Other’ Deposits with RBI

9. Consider the following statements regarding Board for Regulation and Supervision of Payment and Settlement Systems. Which of the following is/are correct?

I. It is a sub-committee of the Central Board of the RBI

II. It is empowered to authorize, prescribe policies and set standards to regulate and supervise all the payment and settlement systems in the country.

III. Recently Ratan Watan committee recommended to have separate independent Payment and Settlement board.

  1. Only I and II
  2. Only II and III
  3. All
  4. None
  5. Only I and III
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Correct Answer: C. All

Explanation: It is a sub-committee of the Central Board of the RBI. It is the highest policy making body on payment systems. It is empowered to authorize, prescribe policies and set standards to regulate and supervise all the payment and settlement systems in the country. It secretariat is at the Department of Payment and Settlement Systems of RBI. It is a statutory body set as per Payment and Settlements systems Act 2007. Recently Ratan Watan committee was set up to study digital payment promotion which recommended to have separate independent Payment and Settlement board.

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10. Yield to maturity is a more advanced yield calculation that shows the total return an investor receives if he holds the bonds till maturity. What is the basic underlying assumption for the concept of yield to maturity to hold true?

  1. It assumes that the investor will reinvest the interest payments at the higher rate as the current yield on the bond.
  2. It assumes that the investor will reinvest the interest payments at the lower rate as the current yield on the bond.
  3. It assumes that the investor will reinvest the interest payments at the same rate as the current yield on the bond.
  4. It assumes that the investor will not reinvest the interest payments
  5. None of these

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Correct Answer: C. It assumes that the investor will reinvest the interest payments at the same rate as the current yield on the bond.

Explanation: Yield to maturity (YTM) is the total return anticipated on a bond if the bond is held until the end of its lifetime. Yield to maturity is considered a long-term bond yield, but is expressed as an annual rate. In other words, it is the internal rate of return of an investment in a bond if the investor holds the bond until maturity and if all payments are made as scheduled.

Calculations of yield to maturity assume that all coupon payments are reinvested at the same rate as the bond’s current yield, and take into account the bond’s current market price, par value, coupon interest rate and term to maturity. YTM is a complex but accurate calculation of a bond’s return that can help investors compare bonds with different maturities and coupons.

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Finance & Management (FM) Quizzes For RBI Grade B

Set-20 Set-19 Set-18 Set-17 Set-16
Set-15 Set-14 Set-13 Set-12 Set-11
Set-10 Set-9 Set-8 Set-7 Set-6
Set-5 Set-4 Set-3 Set-2 Set-1

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