Banking Financial Awareness · Commerce Accountancy

Credit, Debt, and Finance

1,435 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

Debenture is a

  1. certificate, promising payment of specified payment at a fixed rate after a specified period

  2. certificate for investment in shares

  3. certificate for bonus shares

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

A debenture is a debt instrument used by companies to borrow money at a fixed interest rate. It is essentially a loan certificate issued by the company to the investor.

Multiple choice

Directions: The question carries the meaning of any one of the four options that follow. You are required to select the correct option.

"The one who cannot pay off his debts”

  1. Colleague

  2. Contemporary

  3. Bankrupt

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

(1) Colleague = a person working in the same institution (2) Contemporary = persons living at the same time (3) Bankrupt = the one who cannot pay off his debts (4) Domicile = a place of permanent residence

Multiple choice

Convertible debentures are those on which

  1. accumulated interest payable is converted into equity shares

  2. interest is not paid when the company is running on a loss

  3. interest is payable and keeps on accumulating, if not paid

  4. equity shares may be exchanged at the option of the debentures holders
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Convertible debentures provide the holder with the option to convert their debt instrument into equity shares of the company after a specified period.

Multiple choice

Which of the following is not the current liabilities?

  1. Bank overdraft

  2. Redeemable debentures

  3. Provisions for doubtful debts

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

Redeemable debentures are long-term liabilities, not current liabilities, as they are typically repayable over a period exceeding one year. Bank overdrafts, provisions for doubtful debts, and accounts payable are all standard current liabilities.

Multiple choice

CRISIL rating AAA indicates

  1. high safety of a long-term debt

  2. highest safety of medium-term debt

  3. highest safety of short-term debt

  4. highest safety of long-term debt
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice

Which is Factors of Pricing?

  1. Cash discount and allowances

  2. Period of Credit

  3. Condition of Period

  4. All of these

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

Pricing decisions are influenced by various factors including discounts, credit periods, and the specific conditions attached to those credit terms.

Multiple choice

What is subrogation?

  1. Creditor's right

  2. Principal debtor's right

  3. Surety's right

  4. Third party's right
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

It is right of the surety. When he makes payment to the creditor on behalf of principal debtor then he becomes invested with all the rights which the creditor had against the principal debtor.

Multiple choice

Holder in due course is

  1. a person who acquires a bill of exchange, in good faith, for value, and before date of maturity

  2. a person who accepts the bill

  3. a person who promises to pay the amount

  4. none of these
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

 A holder in due course is one, who acquires a bill of exchange in good faith, for value, and before date of maturity. The holder acquires a good title ,even if the title of the transferor, is defective. Suppose B acquires a bill of exchange from A by duping him. B then passes on the bill to C. C is a holder in due course, as he is not aware of what B did to get the bill. C is entitled to receive the payment , and A has no claim against C.

Multiple choice

Since NGOs charge 15-22% rate of interest, we can say they:

  1. are exploitative

  2. are like any other bank

  3. are justified because borrowers do not mind

  4. none of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

From the information available in passage the following line “yet the high rate of repayment is the best evidence of affordability” gives us clue to answer this question that high rate of interest charge by NGO is justified. Thus correct option (3). The rate being exploitative is contention used by leftist against NGO’s. Thus correct answer is option (3).