Banking Financial Awareness · 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 book keeping and accountancy accounting equation meaning, objectives and need of adjustments need for adjustments accounting equations and transactions

For contingency exposure of foreign exchange, the best derivative that can be used to hedge is ________________.

  1. Forwards.

  2. Futures.

  3. Options.

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

For contingency exposure of foreign exchange, the best derivative that can be used to hedge is Options. Options are financial instruments that are derivatives based on the value of underlying securities such as stocks. An options contract offers the buyer the opportunity to buy or sell depending on the type of contract they hold the underlying asset.

Multiple choice business organisation and correspondence partnership 3 - registration of a partnership firm partnership deed registration of partnership registration of partnership firm

Interest on capital will be allowed only when _________________.

  1. There are heavy losses in the firm

  2. There are no profits and no losses

  3. There are profits

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

Interest on capital will be allowed only when there are profits. Interest on capital is only given to partners when there are profits. In case of losses, partners are not given interest on capital. Interest on capital can be defined as the amount charged as interest on partner's capital.

Multiple choice economics economic reconstruction economics of planning objectives of economic planning in india major economic problems

Which of the following is an argument for the relevance of dividends?

  1. Informational content

  2. Reduction of uncertainty

  3. Some investors' preference for current income

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

Dividend is the allocation of reward from a segment of the company's income and is paid to a class of its shareholders. Dividends are decided and managed by the company's board of directors, although they must be accepted by the shareholders from side to side their voting rights. 

Walter and Gordon not compulsory that shareholders favour current dividend and therefore a positive relation­ship exist between dividend and market value. The reason put following this argument is that investor is generally risk-averse and that they prefer current the dividend, attaching lesser importance to future divi­dends or capital gains.

The correct answer is D.

Multiple choice commercial studies basic accounting terms basic accounting terminologies introduction to financial accounting and financial accounts basic accounting terminology meaning and features of balance sheet income-expenditure account meaning, importance and specimen of journal objectives, functions, and importance of accounting stages and functions of accounting qualitative characteristics, objectives and roles of accounting

General reserve account and dividend equalization fund account are ______________.

  1. Personal A/C

  2. Real A/C

  3. Nominal A/C

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

General reserves and dividend equalization funds are appropriations of profit. They are not personal accounts (people) or real accounts (assets), but rather nominal accounts representing equity reserves.

Multiple choice economics mineral resources in rajasthan climate and season cycle climate, soil, natural vegetation and animals of rajasthan position of rajasthan in indian economy

Disadvantages of Diversification included _________________.

  1. Excenive ambition

  2. mismanaged diverfication

  3. Both are correct

  4. None of them is correct.
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Disadvantage of diversification includes both mismanaged diversification or excesive ambition, thatleads to a  company over pending into too many new direction at the same time.

Multiple choice economics ancient indian economic concepts goods, wealth and welfare major definitions of economics wealth, capital and money

Wealth can be classified as _____.

  1. Private Wealth

  2. Public Wealth

  3. National Wealth

  4. International Wealth

  5. All of these
Reveal answer Fill a bubble to check yourself
E Correct answer
Explanation

Wealth can be classified as personal wealth, social wealth or collective wealth, national wealth, and international wealth.

Personal Wealth (Individual Wealth): The wealth of a person consists of both material and non-material goods. Thus the wealth of the person includes such material things as land, houses, furniture, machinery and so on.

Social Wealth (Collective Wealth): Social wealth consists of all these goods that can be enjoyed by all members of a society. Social wealth includes public roads, public parks, public schools, government hospitals, public libraries, museums and so on.

National Wealth: National wealth includes individual wealth as well as the collective wealth of its members. That is, it includes besides individual wealth all kinds of public property, such as roads and canals, buildings and parks and water works.

Cosmopolitan Wealth: Cosmopolitan wealth is the wealth of the world. It belongs to no one nation in particular. A common example of cosmopolitan wealth is the ocean.

Multiple choice organization of commerce and management business services 1 importance, types and documentation in warehousing meaning of warehousing and warehousing warehousing

Rate of return which considers riskiness and an available returns on investments is classified as _______________.

  1. constant dividend

  2. constant rate

  3. maximum rate of return

  4. minimum acceptable rate of return
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

The minimum acceptable rate of return (MARR) is the minimum rate a project must earn to be considered financially viable, accounting for risk and alternative investment opportunities.

Multiple choice india: security setup overview of india general knowledge

Long term funds in the capital market can be raised either by borrowing from certain institutions or through

  1. Issue of note

  2. Taking loan from Government

  3. Issue of securities

  4. Taking loan from foreign institutions
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Capital markets facilitate the raising of long-term funds through the issuance of financial securities like stocks, bonds, and debentures.

Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

Security payment type in which payments are made at equal intervals of time and every payment amount is same is classified as _______________.

  1. fixed interval investment

  2. fixed payment investment

  3. annuity

  4. lump sum amount
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

An annuity is a series of equal payments in equal time periods. Usually, the time period is $1$ year, which is why it is called an annuity, but the time period can be shorter, or even longer. These equal payments are called the periodic rent. The amount of the annuity is the sum of all payments.
such security payment type in which payments are made at equal intervals of time and every payment amount is same is classified as annuity.

Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

If payment of security is paid as $ $100$ at end of year for three years, it is an example of

  1. fixed payment investment

  2. lump sum amount

  3. fixed interval investment

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

The amount of the annuity is the sum of all payments.
such security payment type in which payments are made at equal intervals of time and every payment amount is same is classified as annuity.
If payment of security is paid as $100 at end of year for three years, it is an example of annuity.

Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

Which of the following is  true about annuity?

  1. It is sequence of equal instalments.

  2. It is sequence of unequal instalments.

  3. It is paid at unequal interval of time.

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

$\Rightarrow$  The true statement about annuity is $It\,\,is\,\,sequence\,\,of\,\,equal\,\,instalments.$

$\Rightarrow$  Series of payments at fixed intervals, guaranteed for a fixed number of years or the lifetime of one or more individuals.
$\Rightarrow$  Annuities are insurance products that provide long-term income through a stream of future payments. 

$\Rightarrow$  While investment annuities save money for retirement and beneficiaries, structured settlement annuities stem from personal-injury legal cases, wrongful-death claims or lottery payouts. When unexpected circumstances arise and require immediate funds, you can sell these payments for a lump sum of cash.

Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

Three types of annuities are

  1. Annuity certain

  2. Annuity contingent

  3. Annuity perpetual

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

$\Rightarrow$  Three types of annuities are : 

$(1)$ $Annuity\,\, certain$ - Annuity that, as a minimum, guarantees a fixed number of payments. It continues over the life of the annuitant, even if he or she lives beyond the number of payments specified in the annuity contract. In case the annuitant dies before exhausting the payments, a named beneficiary continues to receive the remaining number. Also called life annuity certain or life annuity certain and continuous.
$(2)$ $Annuity\,\, contingent$ - An annuity arrangement in which the beneficiary does not begin receiving payments until a specified event occurs. A contingent annuity may be set up to begin sending payments to a beneficiary upon the death of another individual who wishes to ensure financial stability for the beneficiary, or upon retirement or disablement of the beneficiary.
$(3)$ $Annuity\,\, perpetual$ - Annuity derived from an asset (such as an income generating security) where the life span of the annuitant (security holder or his or her beneficiary) is of no consequence.

Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

Identify the correct term for the following definition: It is a part of a bond indenture or preferred stock charter that requires the issuer to regularly set money aside in a separate custodial account for the exclusive purpose of redeeming the bonds or shares.

  1. Scholarship fund

  2. Sinking fund

  3. Endowment

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

"It is a part of a bond indenture or preferred stock charter that requires the issuer to regularly set money aside in a separate custodial account for the exclusive purpose of redeeming the bonds or shares." The correct term for these definition is $\text{Sinking fund}$.

A sinking fund is an account that is used to deposit and save money to repay a debt or replace a wasting asset in the future. 
In other words, it’s like a savings account that you deposit money in regularly and can only be used for a set purpose.
Private and public corporations often use these funds for bonds.

Multiple choice business mathematics and statistics insurance and annuity amount of an annuity annuities financial mathematics

Which of the following is correct regarding endowment?

  1. Endowments are given to non-profit organizations with the intention that they be used to advance the mission of the organization for the long term.

  2. Endowments of large institutions, sometimes become significant players in the financial world due to the significant amount of money that the endowment is investing.

  3. Both are correct

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

$A$ and $B$ both are correct statements regarding endowment which are:

Endowments are given to non-profit organizations with the intention that they be used to advance the mission of the organization for the long term.
Endowments of large institutions, sometimes become significant players in the financial world due to the significant amount of money that the endowment is investing.