Banking Financial Awareness ยท Economics

Financial Markets and Instruments

1,955 Questions

Financial markets and instruments cover mutual funds, risk management, portfolio optimization, and investment strategies. These topics are critical for banking and financial awareness sections in competitive exams. Practice these questions to understand operational risk, asset valuation, and market regulations.

Portfolio optimizationOperational risk managementMutual funds valuationInvestment income typesHedging strategies

Financial Markets and Instruments Questions

Multiple choice general knowledge

Which of the following is not a sub-process of FTM :

  1. Define financial structure & plan

  2. b) Record / settle transactions

  3. Support decisions & compliance

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

Financial Transaction Management (FTM) encompasses financial structure planning, transaction recording and settlement, and decision support with compliance. Since all the listed options (A, B, C) are actually valid FTM sub-processes, 'None of these' is the correct answer to the negatively-framed question.

Multiple choice general knowledge

The Ratio Analysis can be used as an External Financial Control Tool

  1. True

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

Ratio analysis is indeed used as an external financial control tool by investors, creditors, and analysts outside the organization to evaluate financial health and performance. External stakeholders rely on these ratios to make investment decisions, assess creditworthiness, and compare companies across industries. This external perspective complements internal management's use of ratios for operational control.

Multiple choice general knowledge

There are 9 sub categories for Financial Ratios

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Financial ratios are typically categorized into fewer than 9 sub-categories. The standard classification includes 4-5 main categories: liquidity ratios, solvency/leverage ratios, profitability ratios, efficiency/activity ratios, and market value ratios. The claim of 9 sub-categories is excessive according to standard financial analysis frameworks taught in business schools.

Multiple choice general knowledge

In the context of Mutual Funds, SIP stands for..

  1. Systematic Investment Plan

  2. Scheduled Interest Plan

  3. Specific Insurance Plan

  4. Special Income Plan
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In Mutual Funds, SIP stands for Systematic Investment Plan. It is an investment strategy where an investor invests a fixed amount regularly in a mutual fund scheme, promoting disciplined investing and rupee cost averaging.

Multiple choice general knowledge

In the context of Mutual Funds, ELSS means

  1. Endowment Linked Savings Scheme

  2. Equity Linked Savings Scheme

  3. Established Line Savings Scheme

  4. Entrepreneur Line Savings Scheme
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

ELSS stands for Equity Linked Savings Scheme, a type of mutual fund that invests primarily in equities and offers tax benefits under Section 80C of the Income Tax Act. It has a mandatory 3-year lock-in period.

Multiple choice general knowledge

What is the main attribute of a Gilt-Edged stock?

  1. Bonds issued by the government whose likelihood of default is zero

  2. A stock backed by gold.

  3. Stocks which are linked to the inflation rate

  4. Stocks doing well in the capital market
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Gilt-edged stocks refer to high-quality government bonds (primarily UK government securities) that are considered extremely safe with minimal default risk. The term comes from the gold- or 'gilt'-edged certificates historically issued. The name has nothing to do with gold backing, inflation linking, or stock market performance.

Multiple choice general knowledge

What does ROI stand for?

  1. Return on Investment

  2. Return on Information

  3. Return on Induction

  4. Return on Initiation
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

ROI is one of the most fundamental business concepts, standing for Return on Investment. It measures the efficiency or profitability of an investment by comparing the gain or loss from the investment relative to its cost. The other options (Information, Induction, Initiation) are not what ROI stands for.

Multiple choice general knowledge

GMROI

  1. General margin return on investment

  2. General margin return on interest

  3. General margin return on incentive

  4. General margin return on insurance
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice general knowledge

FAST

  1. Funs available in the shortest time

  2. Funs available in the speedest time

  3. Funds available in the similar time

  4. Funds available in the shortest time
Reveal answer Fill a bubble to check yourself
A Correct answer
Multiple choice general knowledge culture

PFA

  1. Process friendly approach

  2. Procedure friendly approach

  3. Please find attached

  4. Please forward assets
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

PFA is standard email shorthand used when attaching files to a message, short for 'Please Find Attached'. It's one of the most common abbreviations in professional email communication. The other options are not recognized email abbreviations.

Multiple choice general knowledge

SIP9 (In the context of Mutual Funds)

  1. Systematic Investment Plan

  2. Scheduled Interest Plan

  3. Specific Insurance Plan

  4. Special Income Plan
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

SIP stands for Systematic Investment Plan in the context of mutual funds. It is an investment strategy where investors invest a fixed amount regularly at predefined intervals, promoting disciplined investing and rupee cost averaging.