Credit, Debt, and Finance

Sources of information for underwriting The first stage in any numerical (or statistical) analysis is the collection of data. When pricing a risk, an underwriter should gather as much information as possible to aid accurate assessment. Sources of information for underwriter are:

i. Proposal form or underwriting presentation ii. Risk surveys iii. Historic claims experience data

The capital of IMF (International Monetary Fund) is made up by contributions from member nations. Each member country is assigned a quota based on its economic size and position in the global economy. Member nations pay their quota subscriptions in full, with part paid in reserve assets and part in their own currency. These quota contributions form the core of IMF's financial resources, which are then used to provide financial assistance to member countries facing balance of payments problems.

The initial corpus for the Farmers Debt Relief Fund was Rs 10,000 crore. The Agricultural Debt Waiver and Debt Relief Scheme (ADWDRS) was announced in the 2008 budget to help farmers facing distress, with implementation targeted for completion by June 30, 2008.

Treasury bills are money market instruments to finance the short term financial requirements of the Government of India. These are discounted securities and are issued at a discount to face value. All three are the components of internal debt of a country.

The Money Market is the market for short-term debt instruments (maturity less than one year). It deals specifically in short-term loans and investments, including treasury bills, commercial papers, and certificates of deposit. While call money and treasury bill markets are subsets, the money market is the broader category.

Correct answer is (4). 

CRR stands for Cash Reserve Ratio - the percentage of deposits that banks must keep with the Reserve Bank. It's a key monetary policy tool. The other options are incorrect - C stands for Cash, R for Reserve, and R for Ratio (not Rate).

Bank rate is a quantitative credit control tool as it directly affects the cost of borrowing and money supply. Moral suasion is qualitative, while regulation of consumer credit and margin requirements are selective credit controls, not general quantitative tools.

According to RBI prudential norms for asset classification, debts overdue for more than 18 months are classified as 'doubtful assets'. Standard assets are performing loans (overdue up to 12 months). Sub-standard assets are overdue for 12-18 months. Loss assets are those identified as uncollectible with little recovery value. The 18-month threshold marks the transition from sub-standard to doubtful category, indicating higher credit risk and requiring higher provisioning by banks.

The International Monetary Fund's capital is composed of contributions from its member nations, known as quotas. These quotas are based on each country's economic size and determine their voting power and access to resources. The IMF does not primarily rely on borrowings or credit/debit financing for its basic capital structure.

Explanation: Debts are seen by the promptness with which the debtors meet their obligations. When the debts are not recovered for a long time by the seller of goods and services the chances of recovery seems to be bleak. That is why, we treat the debtors which are older than 6 months and above are not recognized as current assets. However, it does not mean that they are not recoverable. .

Explanation: When cash sales are effected, cash comes into the business immediately. There is no case of non-recovery. However, in case of credit sales, the seller gives time to the debtor to pay the money for the goods purchased by the buyer. There are chances of money going bad (non-recovery).

Explanation: Ans; Once a bad is written off from the profit and loss account, any subsequent recovery is treated as a windfall income and credited to the P & L account as an additional income or “income from other sources”

Insurance policies are commercial contracts between individuals and insurance companies, not government borrowing instruments. National Savings Certificates, long-term government bonds, and Provident Fund represent direct government liabilities or debt obligations to citizens.

Transfer payments are payments made without receiving any goods or services in return. Interest on public debt fits this definition because the government pays interest to bondholders without receiving any current service or product. National income calculation excludes transfer payments. Interest payments by households and enterprises are not transfer payments.