Banking Financial Awareness ยท 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

Which of the following is not a type of internal public debt instrument?

  1. Treasury Bills

  2. Government Bonds

  3. Eurobonds

  4. Small Savings Schemes
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Eurobonds are a type of external public debt instrument, not internal public debt instrument.

Multiple choice

What is a private student loan?

  1. A loan that is made by a bank or credit union to a student to help pay for college.

  2. A loan that is made by the government to a student to help pay for college.

  3. A loan that is made by a private organization to a student to help pay for college.

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

Private student loans are loans that are made by banks, credit unions, or private organizations to students to help pay for college. Private student loans are not backed by the government, so they typically have higher interest rates than federal student loans.

Multiple choice

What is the repayment period for private student loans?

  1. 10 years

  2. 15 years

  3. 20 years

  4. 25 years
Reveal answer Fill a bubble to check yourself
Correct answer
Explanation

The repayment period for private student loans varies depending on the lender. Some lenders offer repayment periods of 10 years, while others offer repayment periods of up to 25 years.

Multiple choice

What are the drawbacks of private student loans?

  1. Higher interest rates than federal student loans.

  2. Less flexible repayment options.

  3. Origination fees.

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

Private student loans can have higher interest rates than federal student loans, less flexible repayment options, and origination fees.

Multiple choice

What is a discharge in bankruptcy?

  1. A court order that releases a debtor from liability for their debts.

  2. A type of bankruptcy that allows a debtor to keep their property.

  3. A process that allows a debtor to repay their debts over time.

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

A discharge in bankruptcy is a court order that releases a debtor from liability for their debts. This means that the debtor is no longer legally obligated to pay the debts that they owe.

Multiple choice

What is the means test?

  1. A test that determines whether a debtor is eligible for Chapter 7 bankruptcy.

  2. A test that determines whether a debtor is eligible for Chapter 13 bankruptcy.

  3. A test that determines whether a debtor is eligible for a discharge in bankruptcy.

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

The means test is a test that determines whether a debtor is eligible for Chapter 7 bankruptcy. The test is based on the debtor's income and expenses.

Multiple choice

What is a reaffirmation agreement?

  1. An agreement between a debtor and a creditor that allows the debtor to keep certain property after bankruptcy.

  2. An agreement between a debtor and a creditor that allows the debtor to repay a debt over time.

  3. An agreement between a debtor and a creditor that releases the debtor from liability for a debt.

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

A reaffirmation agreement is an agreement between a debtor and a creditor that allows the debtor to keep certain property after bankruptcy. The agreement must be approved by the bankruptcy court.

Multiple choice

What is a cramdown?

  1. A court order that forces a creditor to accept a lower payment than what is owed.

  2. A court order that forces a debtor to sell their property and distribute the proceeds to creditors.

  3. A court order that releases a debtor from liability for their debts.

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

A cramdown is a court order that forces a creditor to accept a lower payment than what is owed. This can happen in Chapter 13 bankruptcy if the debtor's plan is confirmed by the bankruptcy court.

Multiple choice

What is a preference?

  1. A payment that a debtor makes to a creditor within 90 days of filing for bankruptcy.

  2. A payment that a debtor makes to a creditor within 180 days of filing for bankruptcy.

  3. A payment that a debtor makes to a creditor within 365 days of filing for bankruptcy.

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

A preference is a payment that a debtor makes to a creditor within 90 days of filing for bankruptcy. This payment can be voided by the bankruptcy trustee if it is determined that the payment was made with the intent to give the creditor an advantage over other creditors.

Multiple choice

What is a clawback provision?

  1. A provision in a bankruptcy code that allows the bankruptcy trustee to recover payments that were made to creditors within a certain period of time before the bankruptcy filing.

  2. A provision in a bankruptcy code that allows the bankruptcy trustee to sell the debtor's property and distribute the proceeds to creditors.

  3. A provision in a bankruptcy code that allows the debtor to keep their property and repay their debts over time.

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

A clawback provision is a provision in a bankruptcy code that allows the bankruptcy trustee to recover payments that were made to creditors within a certain period of time before the bankruptcy filing. This provision is designed to prevent creditors from receiving preferential treatment.

Multiple choice

What is a setoff?

  1. A right that a creditor has to use a debt that the debtor owes to the creditor to offset a debt that the creditor owes to the debtor.

  2. A right that a debtor has to use a debt that the creditor owes to the debtor to offset a debt that the debtor owes to the creditor.

  3. A right that a creditor has to seize the debtor's property and sell it to satisfy a debt.

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

A setoff is a right that a creditor has to use a debt that the debtor owes to the creditor to offset a debt that the creditor owes to the debtor. This right is available to creditors in both bankruptcy and non-bankruptcy situations.

Multiple choice

What is a garnishment?

  1. A court order that requires a debtor's employer to withhold a portion of the debtor's wages and pay it to the creditor.

  2. A court order that requires a debtor's bank to freeze the debtor's account and pay the funds to the creditor.

  3. A court order that requires a debtor to sell their property and distribute the proceeds to creditors.

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

A garnishment is a court order that requires a debtor's employer to withhold a portion of the debtor's wages and pay it to the creditor. This type of collection action is often used by creditors to collect debts that are in default.

Multiple choice

What is the repayment period for loans taken from a Regional Rural Bank (RRB)?

  1. 1 year.

  2. 2 years.

  3. 3 years.

  4. It depends on the loan amount and purpose.
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The repayment period for loans taken from a Regional Rural Bank (RRB) depends on the loan amount and purpose.

Multiple choice

Who can file an insolvency petition under the Code?

  1. Only creditors

  2. Only debtors

  3. Both creditors and debtors

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

Both creditors and debtors can file an insolvency petition under the Insolvency and Bankruptcy Code, 2016. Creditors can file a petition if a default occurs on a debt, while debtors can file a petition if they are unable to repay their debts.

Multiple choice

What are the key elements of an insolvency resolution plan?

  1. Repayment of debts in full

  2. Restructuring of debts

  3. Sale of assets

  4. Continuation of business operations
Reveal answer Fill a bubble to check yourself
Correct answer
Explanation

An insolvency resolution plan can include a combination of elements such as repayment of debts in full, restructuring of debts, sale of assets, and continuation of business operations. The plan must be feasible and provide a better outcome for creditors compared to liquidation.