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

When is stamp duty on bonds payable?

  1. At the time of issuance of the bond

  2. At the time of transfer of the bond

  3. Both at the time of issuance and transfer

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

Stamp duty on bonds is payable both at the time of issuance of the bond and at the time of transfer of the bond.

Multiple choice

What is the consequence of not paying stamp duty on bonds?

  1. The bond is void

  2. The issuer and the purchaser are liable to pay a penalty

  3. Both the bond is void and the issuer and the purchaser are liable to pay a penalty

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

If stamp duty is not paid on a bond, the bond is void and the issuer and the purchaser are liable to pay a penalty.

Multiple choice

Can stamp duty on bonds be refunded?

  1. Yes, if the bond is cancelled

  2. Yes, if the bond is transferred

  3. Yes, in both cases

  4. No, in neither case
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Stamp duty on bonds can be refunded if the bond is cancelled, but not if the bond is transferred.

Multiple choice

What is the consequence of not paying stamp duty on debentures?

  1. The debentures will be void

  2. The company will be liable to pay a penalty

  3. Both the debentures will be void and the company will be liable to pay a penalty

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

If stamp duty is not paid on debentures, the company will be liable to pay a penalty.

Multiple choice

What is the penalty for late payment of stamp duty on debentures?

  1. 1% of the face value of the debentures

  2. 2% of the face value of the debentures

  3. 3% of the face value of the debentures

  4. 4% of the face value of the debentures
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The penalty for late payment of stamp duty on debentures is 2% of the face value of the debentures.

Multiple choice

Is there any difference in the stamp duty rate for secured and unsecured debentures?

  1. Yes

  2. No

  3. It depends on the state in which the debentures are issued

  4. It depends on the face value of the debentures
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

There is no difference in the stamp duty rate for secured and unsecured debentures.

Multiple choice

Which type of bond offers a fixed rate of interest throughout its maturity period?

  1. Floating rate bond

  2. Fixed rate bond

  3. Zero coupon bond

  4. Perpetual bond
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Fixed rate bonds provide a consistent and predictable rate of interest over the entire duration of the bond, making them attractive to investors seeking stable returns.

Multiple choice

Which type of bond does not pay periodic interest payments?

  1. Coupon bond

  2. Zero coupon bond

  3. Floating rate bond

  4. Perpetual bond
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Zero coupon bonds, also known as deep discount bonds, do not pay regular interest payments. Instead, they are sold at a deep discount to their face value and redeemed at maturity for the full face value, providing a return to investors through capital appreciation.

Multiple choice

Which New Deal program provided financial assistance to homeowners and helped to prevent foreclosures?

  1. Home Owners' Loan Corporation

  2. Federal Housing Administration

  3. Public Works Administration

  4. National Recovery Administration
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The Home Owners' Loan Corporation was a New Deal program that provided financial assistance to homeowners and helped to prevent foreclosures.

Multiple choice

What is the term used to describe the practice of charging minority borrowers higher interest rates than white borrowers?

  1. predatory lending

  2. subprime lending

  3. redlining

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

Predatory lending is the practice of charging minority borrowers higher interest rates than white borrowers.

Multiple choice

Which of the following is NOT a type of external debt?

  1. Treasury bills

  2. Treasury bonds

  3. Eurobonds

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

Municipal bonds are a type of domestic debt, as they are issued by local governments to finance infrastructure projects and other local expenditures.

Multiple choice

Which type of debt is generally considered to be more sustainable in the long run?

  1. Domestic debt

  2. External debt

  3. Both are equally sustainable

  4. Neither is sustainable
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Domestic debt is generally considered to be more sustainable in the long run, as it is less exposed to fluctuations in foreign exchange rates and is less likely to be affected by external economic shocks.

Multiple choice

Which of the following is NOT a tool used in public debt management?

  1. Debt restructuring

  2. Issuance of new debt instruments

  3. Buybacks of existing debt

  4. Printing new currency
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Printing new currency is not a tool used in public debt management, as it can lead to inflation and undermine the value of the domestic currency.

Multiple choice

Which of the following is NOT a type of treasury bond?

  1. Fixed-rate bonds

  2. Floating-rate bonds

  3. Zero-coupon bonds

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

Municipal bonds are issued by local governments, not by the central government. Fixed-rate bonds, floating-rate bonds, and zero-coupon bonds are all types of treasury bonds.

Multiple choice

What is the term for the rate at which banks charge for loans?

  1. Exchange Rate

  2. Inflation Rate

  3. Interest Rate

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

Interest Rate is the rate at which banks charge for loans.