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

How do peer-to-peer (P2P) lending platforms facilitate borrowing and lending?

  1. They connect borrowers and lenders directly without intermediaries

  2. They typically offer lower interest rates than traditional banks

  3. They provide greater flexibility in loan terms and conditions

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

P2P lending platforms operate by directly connecting borrowers and lenders, eliminating the need for intermediaries such as banks. This often results in lower interest rates for borrowers and greater flexibility in loan terms and conditions, making them an attractive alternative to traditional lending institutions.

Multiple choice

What is the Income-Based Repayment Plan?

  1. A repayment plan that caps the monthly student loan payment at a percentage of the borrower's discretionary income.

  2. A repayment plan that extends the repayment period for federal student loans to 20 or 25 years.

  3. A repayment plan that allows borrowers to make smaller monthly payments while they are in school.

  4. A repayment plan that forgives the remaining balance of federal student loans after a certain number of years.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Income-Based Repayment Plan is a repayment plan that caps the monthly student loan payment at a percentage of the borrower's discretionary income. The percentage is based on the borrower's income and family size. The repayment period for the Income-Based Repayment Plan is typically 20 or 25 years.

Multiple choice

What is the Pay As You Earn Repayment Plan?

  1. A repayment plan that caps the monthly student loan payment at 10% of the borrower's discretionary income.

  2. A repayment plan that extends the repayment period for federal student loans to 20 or 25 years.

  3. A repayment plan that allows borrowers to make smaller monthly payments while they are in school.

  4. A repayment plan that forgives the remaining balance of federal student loans after a certain number of years.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Pay As You Earn Repayment Plan is a repayment plan that caps the monthly student loan payment at 10% of the borrower's discretionary income. The repayment period for the Pay As You Earn Repayment Plan is typically 20 years.

Multiple choice

What is the Revised Pay As You Earn Repayment Plan?

  1. A repayment plan that caps the monthly student loan payment at 5% of the borrower's discretionary income.

  2. A repayment plan that extends the repayment period for federal student loans to 20 or 25 years.

  3. A repayment plan that allows borrowers to make smaller monthly payments while they are in school.

  4. A repayment plan that forgives the remaining balance of federal student loans after a certain number of years.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Revised Pay As You Earn Repayment Plan is a repayment plan that caps the monthly student loan payment at 5% of the borrower's discretionary income. The repayment period for the Revised Pay As You Earn Repayment Plan is typically 20 years.

Multiple choice

Selective credit controls are a qualitative instrument of monetary policy that involves:

  1. Directing credit to specific sectors or activities

  2. Restricting credit to specific sectors or activities

  3. Both (A) and (B)

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

Selective credit controls can be used to either direct or restrict credit to specific sectors or activities.

Multiple choice

Which of the following is not a type of selective credit control?

  1. Margin requirements

  2. Credit rationing

  3. Reserve requirements

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

Reserve requirements are a quantitative instrument of monetary policy.

Multiple choice

Which of the following is not a type of selective credit control?

  1. Margin requirements

  2. Credit rationing

  3. Reserve requirements

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

Reserve requirements are a quantitative instrument of monetary policy.

Multiple choice

What is the practice of redlining?

  1. The practice of drawing red lines on a map to indicate areas that are considered to be high-risk for lending.

  2. The practice of denying loans to people who live in certain areas.

  3. The practice of charging higher interest rates to people who live in certain areas.

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

Redlining is the practice of denying loans to people who live in certain areas, often based on race or ethnicity. This practice was widespread in the United States from the 1930s to the 1960s, and it had a devastating impact on communities of color.

Multiple choice

What are some of the ways that redlining is still practiced today?

  1. Mortgage discrimination.

  2. Predatory lending.

  3. Steering.

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

Redlining is still practiced today in a number of ways, including mortgage discrimination, predatory lending, and steering. Mortgage discrimination is the practice of denying loans to people of color or charging them higher interest rates. Predatory lending is the practice of targeting people of color with high-cost loans that they cannot afford. Steering is the practice of directing people of color to certain neighborhoods or communities, often those that are considered to be high-risk.

Multiple choice

Which of the following is not a component of the COVID-19 Tourism and Hospitality Relief Fund?

  1. Working capital loans

  2. Interest subvention on loans

  3. Wage support

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

Tax breaks are not a component of the COVID-19 Tourism and Hospitality Relief Fund.

Multiple choice

What is the tenure of loans under the ECLGS?

  1. 1 year

  2. 2 years

  3. 3 years

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

The tenure of loans under the ECLGS is 4 years, including a moratorium period of 12 months.

Multiple choice

Which of the following is NOT a type of federal student loan?

  1. Direct Subsidized Loan

  2. Direct Unsubsidized Loan

  3. Direct PLUS Loan

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

The Perkins Loan is not a type of federal student loan.

Multiple choice

Which of the following is NOT a common repayment plan for federal student loans?

  1. Standard Repayment Plan

  2. Graduated Repayment Plan

  3. Extended Repayment Plan

  4. Income-Based Repayment Plan
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The Income-Based Repayment Plan is not a common repayment plan for federal student loans.

Multiple choice

Which of the following is NOT a common financial concern for elderly individuals?

  1. Managing retirement savings

  2. Paying off debts

  3. Covering medical expenses

  4. Saving for a down payment on a house
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Saving for a down payment on a house is not typically a financial concern for elderly individuals, as they are likely to have already purchased a home or may not be planning to move.

Multiple choice

What is the formula for calculating the debt-to-equity ratio?

  1. Total Debt / Total Equity

  2. Total Debt / Shareholders' Equity

  3. Long-Term Debt / Total Equity

  4. Short-Term Debt / Shareholders' Equity
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The debt-to-equity ratio is calculated by dividing a company's total debt by its shareholders' equity.