RBI Grade B Finance Management (FM) Questions | Test-10
Attempt Free RBI Grade B Finance Management (FM) Questions for Phase 2 exam. Get RBI Grade B Finance and Management Notes PDFs, ESI Question Paper & Quizzes.
Finance Management (FM) Questions for RBI Grade B Phase 2 Exam
RBI Grade B Finance Management (FM) Questions for Phase 2
RBI Grade B Finance Management (FM) Questions for Phase 2 exam. 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.
RBI Grade B Finance Management (FM) Questions | Test-10
1. In the case of private placement, which of the following provisions are to be complied with?
The companies act
SEBI Act
SCRA
All the above
None of the above
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Correct Answers: D. All the above
Explanation- It is also to be noted that the provisions for private placement applies to the issue of “securities” and not “shares”. Thus the new provisions have widened the scope and cover a whole host of instruments such as shares, bonds, debentures and other marketable securities etc. The Act, 2013 under section 42(4) mandates a company to comply with the provisions of SEBI Act & SCRA, if any offer or invitation is not in compliance with the provisions of the section and such offer or invitation shall be treated as a public offer.
2. Which of the following statement is NOT true regarding the alterations on bad loans divergence rule for banks?
Banks should disclose bad loan divergence if the additional provisioning has exceeded 10% of the company’s profit before provision and contingencies.
Banks should disclose bad loan divergence if the additional provisioning has exceeded 15% of the company’s profit before provision and contingencies.
There is no change in the rules that permit lenders to reveal divergences of the additional gross non-performing asset(NPA) exceeded 15% of the reported incremental gross NPAs.
Both a and b
None of the above
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Correct Answers: B. Banks should disclose bad loan divergence if the additional provisioning has exceeded 15% of the company’s profit before provision and contingencies.
Explanation- RBI altered the additional provisioning requirements which previously stated that banks should disclose divergences if the provisioning has exceed 15% of net profit after tax. Now it is 10% of the company’s profit before provision and contingencies. And there is no change in the rules that permit lenders to reveal divergences of the additional gross non-performing asset(NPA) exceeded 15% of the reported incremental gross NPAs. Thus, statement B is not true.
3. In a Portfolio Investment, there are two types of risk – systematic risk and unsystematic risk. Which of the following risks is/are the systematic risk?
Financial Risk
Default Risk
Regulatory Risk
Business Risk
All of the above
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Correct Answers: C. Regulatory Risk
Explanation- There are two types of risk in a portfolio investment:
Systematic Risk – It is the risk which cannot be eliminated by diversification. No investors can avoid or eliminate this risk.
Types of systematic risk-
* Interest Rate Risk
* Social or Regulator Risk
* Purchasing Power Risk
Unsystematic Risk – it is the risk that can be eliminated by diversification.
Types of unsystematic Risk-
4. The policy rate is the key lending rate of the central bank in a country. It is a monetary Policy instrument used by the central bank – RBI – to regulate the cost, availability and use of money and credit. Which of the following is referred as policy rate in monetary policy?
Cash Reserve Ratio(CRR)
Statutory Liquidity Ratio(SLR)
Interest Rate
Bank Rate
Repo Rate
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Correct Answers: E. Repo Rate
Explanation- The RBI and Government of India signed the Monetary Policy Framework Agreement on 20 February 2015 to give the responsibility for price stability and inflation targeting to RBI. The term “policy rate” got first defined in that Agreement. Subsequently after in the proposal of Union Budget 2016-17, section 2 of RBI Act, 1934 is amended which defines “Policy Rate” as the “repo-rate”. Repo rate is the rate at which RBI lends money to commercial banks.
5. What percent of equity has been allowed for NRIs to acquire after the cabinet gives the nod for FDI policy on civil aviation?
74%
49%
76%
100%
All of the above.
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Correct Answers: D. 100%
Explanation- Cabinet gives nod for FDI policy on civil aviation; NRIs can acquire up to 100% equity in Air India. The Cabinet approved Foreign Direct Investment, FDI policy on civil aviation.
6. Which of the following is not part of DuPont analysis formula?
Financial Leverage
Total asset turnover
Cash balance
Profit margin
Both a and b
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Correct Answers: C. Cash balance
Explanation- DuPont analysis examines the return on equity (ROE) analysing profit margin, total asset turnover, and financial leverage. The DuPont Corporation developed DuPont analysis in the 1920s.
A company can increase its Return on Equity if it-
Generates a high Net Profit Margin.
Effectively uses its assets so as to generate more sales
Has a high Financial Leverage
According to DuPont analysis:
Return on Equity = Profit margin × Total asset turnover × Financial Leverage.
7. According to the Insolvency and Bankruptcy Code 2016, a creditor means any person to whom a debt is owed and includes which among the following as creditors?
Financial Creditor
Operational Creditor
Secured Creditor
Unsecured Creditor
All of the above
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Correct Answers: E. All of the above
Explanation- A Creditor means any person to whom a debt is owed and includes a financial creditor, an operational creditor, a secured creditor, an unsecured creditor, and a decree-holder.
8. Which of the following measures can be used to Provide Early Warning Signals of Impending Liquidity Crisis in the NBFC sector?
Credit Score
Novel Health Score
Financial Score
Rural Score
All of the Above
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Correct Answers: B. Novel Health Score
Explanation- Sudden payment default without any prior warning by NBFCs like IL and FS triggered panic and caused liquidity crisis in NBFCs sector. Economic Survey has come out with a composite health score: an indicator of financial health of NBFCs. This Health score could be used to provide early warning signals of impending rollover risk problem in NBFCs and set prudential threshold of permitted funding to firm in NBFC sector.
9. As the new guidelines of the Securities and Exchange Board of India what is the investment limit for Mutual Funds in debt instruments with special features such as additional tier-I?
5%
7%
10%
12%
All of the above.
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Correct Answers: C. 10%
Explanation- Wiser after the Franklin Templeton crisis, market regulator SEBI has capped the mutual funds investment in debt instruments issued by single issuer at 10 per cent. Mutual fund will not invest over 10 per cent of its NAV of the debt portfolio of the scheme in instruments with special features and not more than 5 per cent of its NAV of the debt portfolio in instruments issued by a single issuer. Banning close-ended schemes from investing in perpetual bonds, SEBI said the maturity of all perpetual bonds will be treated as 100 years from the date of issuance for the purpose of valuation. The revised SEBI norms will come into effect from April 1.
10. Herzberg Hygiene factor and motivation theory explains the number of factors affecting an employee’s motivation. Which of the following would be classified as one of the Hygiene factors?
Achievement
Promotion
Company Policy
Personal Growth
Responsibility
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Correct Answers: C. Company Policy
Explanation- Hygiene factors are the factors that characterize the context or environment of a person’s work. They can cause a dissatisfaction in job unless appropriately applied by an organization. Some examples of hygiene factors are: Organizational policies and procedures, supervision, relationships with co-workers and supervisors, physical work environment, job security, and compensation.
