Banking Financial Awareness · Commerce Accountancy

Credit, Debt, and Finance

1,382 Questions

This topic covers essential concepts of credit, debt, and finance including bankruptcy, debt recovery, and financial acts. These questions are frequently asked in banking and IBPS exams. Test your knowledge of financial terminology and loan classifications.

Debt recovery actsBankruptcy filing proceduresFinancial classificationsMedium term financeCredit loss management

Credit, Debt, and Finance Questions

Multiple choice

What was the term used for moneylenders charging excessive interest, in Germany?

  1. Users

  2. Usurers

  3. USP

  4. Usage
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Usurers are moneylenders who charge excessively high interest rates on loans, often exploiting vulnerable borrowers. The term has historically carried negative connotations and was used to criticize lenders in medieval and early modern economic systems. The term derives from Latin 'usura' meaning interest.

Multiple choice

Creditor is a person

  1. To whom the guarantee is given

  2. Who gives the guarantee

  3. In respect of whose default the guarantee is given

  4. Who given loan from of money or kind
Reveal answer Fill a bubble to check yourself
D Correct answer
Multiple choice

Directions: Choose the option similar in meaning to the given word.

Lien

  1. legal claim until a debt on it is repaid

  2. culprit

  3. creditor

  4. debtor
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A lien is a legal right or claim on a property (like a house) that must be paid off when the property is sold, securing a debt. Option A correctly defines this legal concept, while the other options refer to people rather than the claim itself.

Multiple choice

What is debt?

  1. Stock-flow hypothesis

  2. Flow hypothesis

  3. Stock hypothesis

  4. None of these
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Debt is considered a stock variable in economics because it represents the accumulated value of borrowing at a specific point in time, not a flow over time. Stock variables are measured at a point in time, while flow variables are measured over a period of time.

Multiple choice

Amortized loan means ____________.

  1. loan with scheduled periodic payments of both principal and interest

  2. government finances the banks to refinance the local money lenders

  3. giving huge loans to costumers by taking security

  4. not providing cash to costumers, but providing a loan in the form of goods

  5. loans given by RBI
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Yes, its the correct choice. An amortized loan means a loan with scheduled periodic payments of both principal and interest.

Multiple choice

Money borrowed or lent for one day is called

  1. call money

  2. notice money

  3. term money

  4. Options (2) and (3)

  5. None of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Yes, if money is borrowed or lent for one day it is called call money. This option is correct.

Multiple choice

Many times we read about the 'Prime Lending rate' charged by the banks. What is the meaning of Prime Lending rate?

  1. The rate at which banks normally give loan to their most favoured customers.
  2. The rate at which banks get money from the RBI.
  3. The rate which is paid normally by the banks on their fixed deposits kept with them for a period of five years or above.

  1. Only 1

  2. Only 2

  3. Only 3

  4. All 1, 2 and 3
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Prime Lending Rate (PLR) is the interest rate at which banks lend to their most creditworthy customers (Statement 1 correct). Statement 2 is incorrect as banks get money from RBI at repo rate, not PLR. Statement 3 is incorrect as PLR is a lending rate, not a deposit rate for fixed deposits. PLR serves as the benchmark for pricing most loans.

Multiple choice

Time barred debt can be claimed as

  1. set off

  2. counterclaim

  3. afresh suit

  4. None of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If any debt is barred by time, that means it is barred by law. It cannot be claimed by the way of instituion of suit. Time barred debt does not mean that the debt does not exist.

Multiple choice

Garnishee means

  1. Judgement Debtor

  2. Judgement Creditor

  3. Judgement Debtor’s Debtor

  4. Guarantor
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Garnishee means a judgment debtor’s debtor. He is a person or institution that is indebted to another whose property has been subject to garnishment. 

Multiple choice

Consideration for lease is

  1. license

  2. price

  3. debt

  4. premium
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A lease of immovable property is a transfer of a right to enjoy such property made for a certain time, express or implied or in perpetuity, in consideration of a price paid or promised or of money, a share of crops, service or any other thing of value.

Multiple choice

Mortgage is a

  1. security on movable property for a loan given by a bank

  2. security on immovable property for a loan given by a bank

  3. concession on immovable property for a loan given by a bank

  4. facility on immovable property for a loan given by a bank

  5. security on immovable property for a deposit received by a bank

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A mortgage is a security interest on immovable property (like land or house) created for a loan given by a bank. The property serves as collateral for the loan. Movable property security is called hypothecation, not mortgage. A concession is not relevant, and mortgage is specifically for loans, not deposits.