Mba Finance Interview Questions And Answers

Mba Finance Interview Questions And Answers

 Financial Quiz Questions With Answers

1. Which of the following makes a financial institution a bank?

a) Accepting borrowings

b) Lending

c) Accepting demand deposits

d) Accepting time deposits

Ans:- c

2. Creation of money by commercial banks refers to

a) Creation of bank deposits

b) Issuing currency

c) Both a) and b)

d) Neither a) nor b)

Ans – a

3. How much money are banks able to create is determined by

a) Initial deposits

b) SLR

c) CRR

d) All of these

 Ans – d

4. The Value of Money Multiplier equal

a) 1/SLR

b) 1/CRR

c) 1/(SLR + CRR)

d) None of these

Ans – c

5. When the central bank sells securities in the market, the credit creation capacity of the commercial banks is likely to

a) Rise

b) Fall

c) May rise or may fall

d) No effect

Ans – b

6. Lowering of CRR by the central bank has the following impact on the credit creation capacity of the commercial banks

a) Negative

b) Positive

c) Can be negative or can be positive

d) No effect

Ans – b

7. Raising Reverse Repo Rate by the central bank is likely to have the following impact on demand for goods and services in the economy

a) Rise

b) Fall

c) May rise or may fall

d) No effect

Ans – b

8.With lowering margin requirements by the Central bank, the borrowing capacity of the borrowers

a) Rises

b) Falls

c) May rise or may fall

d) No effect

Ans:- a

9. What items are not included in the Money supply measure?

a) Currency and coins with the public

b) inter-bank deposits

c) Other deposits with RBI

d) Net demand deposits with banks

Ans – b

10. High powered Money consists of

a) Currency and coins held by the public

b) Currency, cash reserves with banks, and demand deposits

c) Currency held by the public and cash reserves with banks

d) Currency and demand deposits

Ans – c

11. Money Supply refers to

a) Total volume of money held by the public at a particular point in time

b) Total volume of money held by the public over a period of time

c) Total volume of money held by the government

d) Both a) and b)

Ans – a

12. Money Supply is a______concept

a) Stock

b) Flow

c) Both a) and b

d) Neither a) nor b)

Ans – a

13. Which one of these is a limitation of the barter exchange?

a) lack of double coincidence of wants

b) lack of store of value

c) lack of a common measure of value

d) All of these

Ans – d

14. Who regulates the money supply in India?

a) Government of India

b) Reserve Bank of India

c) Commercial Banks

d) Planning Commission

Ans – b

15. Which of the following is not a problem with the barter system of exchange?

a) Store of value

b) Double Coincidence of wants

c) Unit of Account

d) Unemployment

Ans – d

16. Money supply includes

a) All deposits in Banks

b) Only Demand deposits in Banks

c) Only Time Deposits in Banks

d) Currency with the Banks

Ans – b

17. Supply of money refers to the quantity of money

a) As on 31st March

b) During any specified period of time

c) As on any point of time

d) During a fiscal year

Ans – c

18. ______is the main source of money supply in an economy

a) Central Bank

b) Commercial Banks

c) Both a) and b)

d) Government

Ans – c

19. This bank operates in the public interest without any profit motive

a) Reserve bank of India

b) State bank of India

c) Canara Bank

d) Allahabad Bank

Ans – a

20. Through the process of______commercial banks are able to create credit, which is in far excess of the initial deposits

a) Advancing loans

b) Money creation

c) Accepting Deposits

d) None of these

Ans – b

21. What will be the effect of an increase in the ‘Repo Rate on the Money Supply?

a) Money supply will increase

b) Money supply will decrease

c) Money supply will remain the same

d) Money supply will initially increase and then it will decrease

Ans – b

22. Banks create credit

a) Out of nothing

b) on the basis of their securities

c) on the basis of their total assets

d) on the basis of deposits

Ans – d

23. Which of the following will increase the money supply?

a) Fall in repo rate

b) Purchase of securities in the open market

c) Decrease in, the cash reserve ratio

d) All of these

Ans:- d

24. In order to reduce credit in the country, RBI may

a) Buy securities in the open market

b) Sell securities in the open market

c) Reduce cash reserve ratio

d) Reduce Repo Rate

Ans – b

25. The one rupee note and coins are issued by

a) RBI (Central Bank)

b) Commercial Bank

c) Ministry of finance

d) Central Government

Ans – c

26. Which of these is not the function of the central bank?

a) Accepting deposits of general public

b) Custodian of foreign exchange reserve

c) Banker’s Bank

d) Currency Authority

Ans – a 

27. Other name of legal reserve requirement is

a) Cash reserve ratio

b) Statutory liquidity ratio

c) required reserve ratio

d) Bank rate

Ans – c

28. Which of the following is not the function of the central Bank

a) Banking facilities to government

b) Banking facilities to the public

c) Lending to the government

d) Lending to commercial banks

Ans – b

29. Which bank controls the banking and monetary structure of India?

a) Reserve bank of India

b) State Bank of India

c) World Bank

d) Axis Bank

Ans – a

30. Which institution performs the activity of credit creation

a) Commercial Banks

b) Central bank

c) Both a) and b)

d) Neither a) nor b)

Ans – a

Financial Quizzes

1. Which bank controls the banking and monetary structure of India?

a) Reserve bank of India

b) State Bank of India

c) World Bank

d) Axis Bank

Ans – a

2. Which institution performs the activity of credit creation

a) Commercial Banks

b) Central bank

c) Both a) and b)

d) Neither a) nor b)

Ans – a

3. Which of these conditions is needed for a financial institution to become a bank?

a) Accepting deposits

b) Advancing loans

c) Both a) and b)

d) Neither a) nor b)

Ans – c

4. Reverse Repo Rate is the rate at which Central Bank

a) Lends Money to Commercial Banks for short term

b) Lends Money to Commercial Banks for long term

c) Accepts deposits from the commercial Banks

d) None of these

Ans – c

5. Demand Deposits include

a) Saving Account deposits and fixed deposits

b) Saving Account deposits and current account deposits

c) Current account deposits and fixed deposits

d) All types of deposits

Ans – b

6. What is the defect of the barter system?

(A) Lack of double coincidence of wants

(B) Difficulty in the measurement of value

(C) Difficulty in store of value

(D) All of these

Answer: (D) 

7. Which of the following is the credit money?

(A) Cheque and draft

(B) Promissory note

(C) Exchange note

(D) All of these

Answer: D

8. In order to encourage investment in the economy, the Central Bank may ____

(A) Reduce Cash Reserve Ratio

(B) Increase Cash Reserve Ratio

(C) Sell Government securities in the open market

(D) Increase Bank Rate

Answer: (A) Reduce Cash Reserve Ratio

9. What are the alternative measures of money supply in India?

(A) M1

(B) M2

(C) M3 and M4

(D) All of these

Answer: (D) All of these

10. When was the minimum reserve system started in India?

(A) 1947

(B) 1948

(C) 1951

(D) 1957

Answer: (D) 1957

11. High Powered Money includes

(A) C + DD + OD

(B) C + R + OD

(C) C + R + TD

(D) C + DD + TD

Answer: (B) C + R + OD

12. Who has the right of note issue?

(A) Central Bank

(B) Commercial Bank

(C) Government

(D) Co-operative Bank

Answer: (A) Central Bank

13. What are the advantages of the Barter System?

(a) Simple System

(b) More Mutual Cooperation

(c) No Economic Disparities

(d) All the above

Answer: (d) All the above

14. Money is what money does.” Who said it?

(a) Hartley Withers

(b) Hawtrey

(c) Thomas

(d) Keynes

Answer: (a) Hartley Withers

15. Money is a pivot around which the whole economy clusters.” Who said it?

(a) Keynes

(b) Robertson

(c) Marshall

(d) Hawtrey

Answer: (c) Marshall

16. The functions of money include

(a) Value determination

(b) Store of value

(c) Means of exchange

(d) All of these

Answer: (d) All of these

17. Which of the following is not a function of money?

(a) Medium of exchange

(b) Price stability

(c) Store of value

(d) Unit of account

Answer: (b) Price stability

18. Which is the Agency Function of Commercial Banks?

(a) Advancing Loans

(b) Accepting Deposits

(c) Act as Trustee

(d) Locker Facility

Answer: (c) Act as Trustee

19. Credit Multiplier is

(a) 1/CRR

(b) cash×1 CRR 

(c) Cash x CRR

(d) None of these

Answer: (a) 1/CRR

20. Credit money is increased when CRR

(a) Falls

(b) Rises

(c) Both (a) and (b)

(d) None of these

Answer: (a) Falls

21. The full form of ATM is

(a) Any Time Money

(b) All Time Money

(c) Automated Teller Machine

(d) Both (a) and (b)

Answer: (c) Automated Teller Machine

22. The main function of a commercial bank is

(a) Credit control

(b) Loaning to other banks

(c) Accept deposits from customers

(d) All the above

Answer: (c) Accept deposits from customers

23. What is the Central Bank of India?

(a) Commercial Bank

(b) Central Bank

(c) Private Bank

(d) None of these

Answer: (a) Commercial Bank

24. Which type of currency is issued by the Central Bank?

(a) Currency

(b) Credit Money

(c) Coins

(d) All of these

Answer: (a) Currency

25. Which is the major objective of credit control?

(a) To maintain Price Stability

(b) To stabilize Exchange Rate

(c) To production and Employment

(d) All the above

Answer: (b) To stabilize Exchange Rate

26. Which is not a quantitative method of credit control?

(a) Bank Rate

(b) Moral Suasion

(c) Open Market Operations

(d) Change in CRR

Answer: (b) Moral Suasion

27. Reserve Bank of India was established in 

(a) 1947

(b) 1935

(c) 1937

(d) 1945

Answer: (b) 1935

28. Banking Sector Reforms in India began in

(a) 1969

(b) 1981

(c) 1991

(d) 2001

Answer: (c) 1991

29. 14 big scheduled commercial banks in India were nationalised in

(a) 1949

(b) 1955

(c) 1969

(d) 2000

Answer: (c) 1969

30. The function of money is

(a) Medium of exchange

(b) Measure of value

(c) Store of value

(d) All of the above

Answer: (a) Medium of exchange

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