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

Directions: The following question is based on VERBAL ANALOGIES. In the question, select the alternative that exhibits a similar relationship as shown by the QUESTION PAIR.

DEPOSIT : WITHDRAW

  1. tax : income

  2. lend : borrow

  3. come : arrive

  4. mend : repair
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The bridge here is a pair of antonyms. Deposit is an activity contrary to withdrawal. The only suitable pair of antonyms is in option (2), lend: borrow. Lend is act of giving and borrow is an act of taking.

Multiple choice

In comparison to which suggestion is ‘concessional financial assistance’ a better alternative?

  1. Giving aid to the developing countries without charging any interest

  2. Outstanding debt of the developing countries should be waived off by the developed countries

  3. Following the same policies adopted and applied by the developed countries

  4. Stopping the domestic as well as industrial use of Chlorofluorocarbons (CFCs)
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The last para begins with the phrase “A better alternative will be”. The suggestion to which this alternative is offered is contained in the last lines of the preceding para “forgiveness of the debt”.

Multiple choice

'Sub Prime Lending' is a term applied to the loans made to-

  1. those borrowers who do not have a good credit history

  2. those who wish to take loan against the mortgage of tangible assets

  3. those who have a good credit history and are known to bank since 10 years

  4. those borrowers who are most preferred customers of the Bank
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Subprime lending refers to the practice of lending to borrowers with poor credit histories or high risk profiles, who would not qualify for conventional loans.

Multiple choice

Which of the following is not considered as National Debt?

  1. National Savings Certificates

  2. Long-term Government Bonds

  3. Insurance policies

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

National Debt refers to liabilities of the government. Insurance policies are private contracts between an individual and an insurance company, not government debt.

Multiple choice

What is the full form of “DSCR” in banking terms?

  1. Debt Service Coverage Ratio

  2. Debt Service Coverage Rate

  3. Debit Service Coverage Reserve

  4. Debit Service Credit Ratio
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

DSCR stands for Debt Service Coverage Ratio, a financial metric used to measure a company's ability to use its operating income to repay all debt obligations.

Multiple choice

Bad debts recovered are shown in the

  1. debit side of trading A/c

  2. credit side of trading A/c

  3. debit side of profit and loss A/c

  4. credit side of profit and loss A/c
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Bad debts recovered an indirect income, is to be shown in the credit side of profit and loss A/c.

Multiple choice

If a bill is renewed,

  1. it is dishonoured on the due date

  2. it is paid on the due date

  3. the old bill is cancelled and a fresh bill is drawn

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

If drawee feels that he would be not able to pay the bill on due date, he requests the drawer to cancel the old bill and accept a fresh one. This is known as a renewal of bill.