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

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

Attempt Free RBI Grade B 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 FM Questions | Test-18

1. “The manager prepares lists of statements of very effective and ineffective behavior of an employee.” This procedure comes under which of the following method?

  1. Graphic method
  2. Rating scale method
  3. Management By Objective
  4. 3600 Feedback
  5. Critical Incident

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Correct Answers: E. Critical Incident

Explanation- All the above methods are various methods of performance appraisal.Critical Incidents: In this method, the manager prepares lists of statements of very effective and ineffective behavior of an employee. These critical incidents or events represent the outstanding or poor behavior of employees on the job. The manager maintains logs on each employee, whereby he periodically records critical incidents of the workers behavior. At the end of the rating period, these recorded critical incidents are used in the evaluation of the workers’ performance. It provides an objective basis for conducting a thorough discussion of an employee’s performance.

2. Find out the profit if the average inventory is Rs.60,000 inventory turnover ratio is 10 times goods are sold at a profit of 10% on cost.

  1. 60,000
  2. 50,000
  3. 70,000
  4. 80,000
  5. None of these

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Correct Answers:  A. 60,000

Explanation:

3. Bonds are one of the sources of finance and are intrinsically debt instruments with fixed terms of repayment and come with fixed interest payments which are made during the life of the bond. The interest of the bond is paid throughout the life of the bond and at regular intervals. The initial investment amount is repaid at the end of the loan term specified on the bond. Bonds can be bought and sold on financial markets. Publicly issued bonds have traditionally been considered low-risk investments.

Which of the following statements are false?

a) The implicit cost of retained earnings is the rate of return available to shareholders by investing the funds elsewhere
b) There is no difference between cost of preference capital before and after tax.
c) If we assume no taxes, then cost of irredeemable debt issued at par would be equal to interest rate on debt itself.
d) Cost of capital is that maximum rate of return which a firm is expected to earn on its investments so that the market value of its share is maintained.

  1. a
  2. b
  3. c
  4. d
  5. None of these

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Correct Answers: D. d

Explanation- Statement D is false as Cost of capital is that minimum rate of return which a firm is expected to earn on its investments so that the market value of its share maintained.

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4. Business ethics in Production deals with the duties of a company to ensure that their products and production processes do not cause harm to society at large, which of the following is not included under this?

  1. Misleading advertisements
  2. Defective, addictive and inherently dangerous products
  3. Ethical relations between the company and the environment
  4. Ethical problems arising out of new technologies
  5. Product testing ethics

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Correct Answers: A. Misleading advertisements

Explanation- Issues related to production ethics are:

  • Defective, addictive and inherently dangerous products
  • Ethical relations between the company and the environment include pollution, environmental ethics and carbon emissions trading.

5. In the process of examining, occurred changes in total revenues, operating income, and costs is known as-

  1. Revenue analysis
  2. Cost volume profit analysis
  3. Costs analysis
  4. Operating income analysis
  5. None of the above
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Correct Answers: B. Cost volume profit analysis

Explanation- In process of examining, occurred changes in total revenues, operating income and costs is known as cost volume profit analysis. Cost-volume-profit (CVP) analysis is a method of cost accounting that looks at the impact that varying levels of costs and volume have on operating profit.

6. Z ltd. Wants to redeem 5000, 5%debenture of 100 each at 5% premium. If company has already a balance of 25,000rs in debenture redemption reserve account so how much amount it must transfer to debenture redemption reserve?

  1. 100000
  2. 200000
  3. 300000
  4. 400000
  5. 450000
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Correct Answers: A. 100000

Explanation- 5000×100= 500000

Debenture redemption reserve id created 25% of face value of share 500000×25/100 =125000 – already balance 25 so 100000 must be transferred to DRR.

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7. Interest paid on debentures is:

  1. Transferred to general account
  2. Transferred to sinking fund investment account
  3. An appropriation of profits of the company
  4. A charge against profits of the company
  5. None of the above
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Correct Answers: D. A charge against profits of the company

Explanation-  An interest paid is an reward to all the debenture holders for investing in the debentures of an company. Whether the company having sufficient funds or not for payment of interest it will be treated as a charged.

8.

Consider the following statement about Brownfield Investments:

1) It occurs when an entity purchases or leases an existing facility to begin new production.

2) It may refer to the fact that the land on which a facility sits may be contaminated from the previous owner’s activities in the environmental context.

3) It run the risk of leading to buyer’s remorse.

Which of the following statements is correct?

  1. 1 and 2
  2. 2 and 3
  3. 1 and 3
  4. 1, 2 and 3
  5. 2 only

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Correct Answers: D. 1, 2 and 3

Explanation- Brownfield investments occur when an entity purchases or leases an existing facility to begin new production. Companies may consider this approach a great time and money saver since there is no need to go through the motions of building a brand new building. These investments run the risk of leading to buyer’s remorse.

9. Businessmen should follow a reasonable and justified working process in their organization is characteristics of which of the following business ethics principle?

  1. Principle of Purity
  2. Principle of Coordinate Ends and Means
  3. Principle of Conscience
  4. Principle of Due Process
  5. Principle of Esprit
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Correct Answers: D. Principle of Due Process

Explanation- Principle of Due Process emphasizes on reasonable and justified working process in business. All the persons and different employees, as engaged in business are required to involve in decision making process and different important task.

10. Hire purchase is best suitable for _____?

  1. Small Scale companies
  2. Large Scale companies
  3. Hiring of Expensive assets
  4. Both A and C
  5. Both B and C

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Correct Answers: D. Both A and C

Explanation- ADVANTAGES OF HIRE PURCHASE

• Immediate use of assets without paying the entire amount.
• Expensive assets can be utilized as the payment is spread over a period of time.
• Fixed rental payments make budgeting easier as all the expenditures are known in advance.
• Easy accessibility as it is a secured financing.
• No need to worry about the asset depreciating quickly in value as there is no obligation to buy the asset.

DISADVANTAGES OF HIRE PURCHASE

Hire Purchase suffers from the following disadvantages:
• Total amount paid towards the asset will be higher than the cost of the asset.
• The long duration of the rental payments.
• Ownership only at the end of the agreement. The hirer cannot modify the asset till then.
• The addition of any covenants increases the cost.
• If the hired asset is no longer needed because of any change in the business strategy, there may be a resulting penalty.

HIRE PURCHASE IS BEST SUITABLE FOR: Small-scale companies and entrepreneurs can benefit from Hire Purchase. Expensive and important assets can be hired and later owned. This ensures that they can start using the asset from very first day and use the money earned to later buy the same assets.

Get Complete RBI Grade B Study Material – Previous Year Papers PDF, eBooks & Online Quizzes

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

We already published “A Complete Book for RBI Grade B Finance & Management (FM)”. You can Download this EBook through the below link-

FM eBook 203 1

RBI Grade B Exam – Important Links

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Previous Year Cut-Off Marks Previous Year Questions Paper best books for RBI Grade B
RBI Grade B Phase-I Cracker eBook  Finance & Management (FM) eBook  Economic & Social Issues (ESI) eBook 
Descriptive Book for RBI Grade B How to Prepare for RBI Grade B FM Practice Questions
ESI Practice Questions RBI Grade B Result RBI Grade B Admit Card
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