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 instruments of monetary policy and the reserve bank of india money and banking economics

Repo transactions are allowed in ________.

  1. Government securities/ Treasury bills of all maturity

  2. State Government securities

  3. PSU bonds/ Private corporate bonds

  4. All the three
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Repo transactions are permitted across a wide range of debt instruments, including government securities, state government securities, and certain corporate bonds, to facilitate liquidity in the money market.

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

Selective credit control method is used to __________.

  1. regulate credit for some specific purpose

  2. redirect credit for some specific purpose

  3. restrict supply of credit to check inflation

  4. restrict credit to some identified companies
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Selective credit control method of monetary policy includes those instruments which focus on the selected sectors of the economy and not the size of the total credit in economy as it is a qualitative method used by the central bank to change affected areas only and not the whole economy. It regulates the credit for some specific purpose which can be prices for a specific commodity etc. 

Multiple choice instruments of monetary policy and the reserve bank of india money and banking economics

Repo Market means _________.

  1. a money market instrument which helps in collateral short term borrowing and leading through sale and purchase operation in debt instrument

  2. a money market instrument which helps in collateral long term borrowing and leading through sale and purchase operation in debt instrument

  3. a money market instrument which helps in collateral short term leading through sale and purchase operation in debt instrument

  4. a money market instrument which helps in collateral short term borrowing through sale and purchase operation in debt instrument
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Repo market is a segment of the money market that allows for short-term borrowing and lending against collateral in the form of debt instruments.

Multiple choice history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

In order to control credit ______________.

  1. CRR should be increased and bank rate should be decreased

  2. CRR should be decreased and bank rate should be decreased

  3. CRR should be increased and bank rate should be increased

  4. CRR should be decreased and bank rate should be increased
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In order to control credit, CRR and bank rate should be increased and both will assist in control of credit.

Multiple choice history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

In the accounts of banks "loans and advances" are

  1. High interest income

  2. Loans given to customer

  3. Liabilities of bank

  4. Both a & b
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Loans and advances are assets for a bank because they represent money lent to customers that will be repaid with interest. Since they are loans given to customers, both the description of them as assets and the nature of the transaction are relevant.

Multiple choice history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

Land development banks provide loans for a period of  _____.

  1. 1 year

  2. 2 to 5 years

  3. 5 to 7 years

  4. 15 to 20 years
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Land development banks are specialized institutions designed to provide long-term credit to farmers for land improvement and agricultural development, typically ranging from 15 to 20 years.

Multiple choice history industrial sector growth of banks in india nationalisation and privatisation of banks private sector anddifference between public and private sector

A bank requiring a higher interest rate on an automobile loan than on a home mortgage loan is demonstrating the core principle that says __________.

  1. "Time has value."

  2. "Markets determine prices and allocate resoucers."

  3. "Risks requires compensation."

  4. "Information is the basis for decisions."
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Banks charge higher interest rates on riskier loans to compensate for the higher probability of default. This is a fundamental principle of finance where higher risk requires a higher potential return.

Multiple choice organisation of commerce and management concept of market and marketer meaning and importance of marketing meaning and definition of market introduction to marketing marketing environment meaning and definition of marketer role of marketing

Markets dealing with residential loans, industry real estate loans, agricultural loans and commercial loans are called _____________.

  1. residential markets

  2. mortgage markets

  3. agriculture markets

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

Markets that deal with various types of loans, including residential, industrial, agricultural, and commercial, are collectively referred to as mortgage markets.

Multiple choice infrastructure in india infrastructure tertiary sector economics

Rationing of credit is a_method of controlling credit.

  1. Qualitative

  2. Quantitative

  3. Both

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

Rationing of credit is a qualitative method used by central banks to direct credit flow to specific sectors, as opposed to quantitative methods that affect the total volume of money.

Multiple choice

The situation when a company does not have enough money to pay its debts

  1. Insolvency

  2. Solvent

  3. Debts

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

"Insolvency" is the financial state in which an individual or company can no longer meet their financial obligations to lenders as debts become due. "Solvent" is the opposite state of having assets exceed liabilities, while "debts" and "poor" are too general.

Multiple choice

Charging more than the maximum legal interest rate is...

  1. ratification

  2. forbearance

  3. adhesion

  4. usury
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Usury is the illegal action or practice of lending money at unreasonably high rates of interest, exceeding the maximum rate established by law. Ratification is approving an unauthorized act, forbearance is refraining from doing something, and adhesion refers to standard-form contracts.

Multiple choice

A payment offered in full settlement by the debtor and accepted by a creditor is known as:

  1. Liquidated Debt

  2. Contract termination

  3. Composition with Creditors

  4. Accord and Satisfaction
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accord and satisfaction is a legal contract where a debtor offers, and a creditor accepts, a different performance (often a lesser payment) to satisfy an existing, disputed debt. The "accord" is the agreement to settle, and the "satisfaction" is the execution of that agreement. A liquidated debt is one where the amount is certain and undisputed, which typically cannot be settled for less without additional consideration.

Multiple choice

Debts discharged in bankruptcy can still be reaffirmed by the debtor.

  1. TRUE

  2. FALSE
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A debtor can voluntarily choose to reaffirm a debt that would otherwise be discharged in bankruptcy, meaning they agree to remain personally liable for the debt after the bankruptcy case is over. Reaffirmation agreements must meet strict legal requirements, including court approval in many cases, to protect the debtor. Thus, the statement is true.

Multiple choice

How does identity theft affect your future?

  1. Ruin financial credit

  2. Takes time and money to clean up

  3. Target families and steal their money

  4. All are ways identity theft affects your future
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Identity theft can have widespread consequences, including ruining your financial credit score and taking significant time and money to resolve. It also frequently targets families to steal their hard-earned money, making all of these statements true.