1. The market price of a share of common stock is determined by

A. The board of directors of the firm. B. The stock exchange on which the stock is listed. C. The president of the company. D. Individuals buying and selling the stock. E. Securities and Exchange Board of India

Answer: Option D
Explanation: The market price of a share of common stock is determined by the market forces ie. Individuals buying and selling the stock.
2. Which of the following is not a reason why a company may prefer debt financing to equity financing?

A. Debt can be raised for finite time periods B. Debt, unlike equity finance, will not need to be secured against assets C. Debt is cheaper than equity finance D. Interest payments are tax-deductible E. Debt finance can be raised more quickly than equity finance

Answer: Option B
Explanation: Debt, unlike equity finance, will not need to be secured against assets is not a reason why a company may prefer debt financing to equity financing
3. High operating leverage of the firm indicates

A. A small change in sales results in a large change in net income. B. A small change in sales results in a small change in net income. C. A small change in earnings before interest and taxes result in a small change in net income. D. A small change in net income results in a small change in the firm's earnings before interest and taxes. E. A small change in the number of units a firm produces and sells result in a similar change in the firm's earnings before interest and taxes.

Answer: Option A
Explanation: High operating leverage of the firm indicates a small change in sales results in a large change in net income
4. With an aim to bring foreign policy to the masses the External Affairs Ministry has come up with an initiative called SAMEEP. SAMEEP stands for ----.

A. Students and Ministers Engagement Program B. Students and MEA Enrolment Program C. Students and MEA Engagement Program D. Students and MEA Encouragement Program E. Students and MEA Effort Program

Answer: Option C
Explanation: With an aim to bring foreign policy to the masses the External Affairs Ministry has come up with an initiative called SAMEEP - 'Students and MEA Engagement Programme'. Under these MEA officials will talk to students to help them better understand foreign policy.
5. Which of the following is not a function performed by financial system?

A. Savings function B. Liquidity function C. Risk function D. Social function E. Policy function

Answer: Option E
Explanation: Saving function: Public saving finds its way into the hands of those in production through the financial system. The world’s financial markets provide liquidity (immediately spendable cash) for savers who hold financial instruments but are in need of money. Policy functions enable the regulators to take suitable measures through the market. Risk functions where require instruments are provided to hedge against risk.

1. According to the RBI data, what amount of bad loans banks has recovered in the fiscal ended March 2018?

A. Rs 40,400 crore B. Rs 37,500 crore C. Rs 33,300 crore D. Rs 42,500 crore E. Rs 47,800 crore

Answer: Option A
Explanation: According to the RBI data, in the fiscal ended March 2018, banks recovered Rs 40,400 crore worth of bad loans as against Rs 38,500 crore recovered in FY17. The various
2. State-owned United Bank of India announced that the government has decided to infuse ---- bank as part of Rs 28,615 crore capital infusion to be done in about half a dozen banks.

A. Rs 3,454 crore B. Rs 4,555 crore C. Rs 2,159 crore D. Rs 5,654 crore E. Rs 2,353 crore

Answer: Option C
Explanation: State-owned United Bank of India announced that the government has decided to infuse Rs 2,159 crore in the bank as part of Rs 28,615 crore capital infusion to be done in about half a dozen banks.
3. As per the Financial Stability Report, gross non- performing assets (GNPA) ratio of scheduled commercial banks (SCBs) has declined from 11.5% in March 2018 to ----- in September 2018.

A. 10.3% B. 11.1% C. 10.8% D. 11.3% E. 10.5%

Answer: Option C
Explanation: As per the Financial Stability Report, gross non-performing assets (GNPA) ratio of scheduled commercial banks (SCBs) has declined from 11.5% in March 2018 to 10.8% in September 2018
4. According to the Central Statistics Office (CSO), income earned by an average Indian per year doubled in 7 years. What is the income earned by an average Indian in 2018-19?

A. Rs 1.45 lakh B. Rs 96,500 C. Rs 1.01 lakh D. Rs 1.25 lakh E. Rs 86,000

Answer: Option D
Explanation: The income earned by an average Indian doubled in 7 years, from Rs 63,642 per year in 2011-12 to Rs 1.25 lakh in 2018- 19, the first advance estimates of national income released by the Central Statistics Office (CSO) show.
5. Central Statistics Office (CSO) stated that the growth in GDP during 2018-19 is estimated at ----.

A. 7.4% B. 6.9% C. 7.2% D. 7.5% E. 8.1%

Answer: Option C
Explanation: India Ratings and Research (Ind-Ra), a Fitch Group Company, estimated India’s GDP growth could touch 7.5 % in the financial year 2019-20 as against 7.2 % during current fiscal i.e. 2018-19. India Ratings believes investments are slowly but steadily gaining traction with gross fixed capital formation growing 12.2 % in FY19 and projected to clock 10.3 % in FY20.

1. When an agent asks a customer to invest in a mutual fund product without telling him/her about the risks involved in the investment, the process is termed as

A. Mis-selling B. Undertaking C. Misappropriation of funds D. cross-selling E. None of the given options is true

Answer: Option A
Explanation: Mis-selling is a significant problem in the financial services industry and financial industry regulators. Brokers, financial advisors, bank representatives or other salespeople of financial products or services who are compensated based on commissions may have significant incentives to sell investments or investment products based on how much they can earn rather than what is suitable or what is needed by a customer. Mis-selling may occur with insurance products, annuities, investments, mortgages and a variety of other financial products. A financial loss is not necessarily required to meet the definition of mis-spelling; the sale of an unsuitable product is enough.
2. In the capital market, the term arbitrage is used with reference to

A. Purchase of securities to cover the sale B. Sale of securities to reduce the loss on purchase C. The simultaneous purchase and sale of an asset to profit from an imbalance in the price D. Variation in different markets E. All of the above

Answer: Option C
Explanation: Arbitrage is the simultaneous purchase and sale of an asset to profit from an imbalance in the price. It is a trade that profits by exploiting the price differences of identical or similar financial instruments in different markets or in different forms.
3. The availability or cash and other cash like marketable instruments that are useful in purchases and investments are commonly known as ---?

A. Cash crunch B. Liquidity C. Credit D. Marketability E. None of the given options is true

Answer: Option B
Explanation: The availability or cash and other cash like marketable instruments that are useful in purchases and investments are commonly known as is liquidity.
4. In a company, the use of price-sensitive corporate information by the company people to make gains or cover losses is known as ----

A. Insider trading B. Future trading C. Foreign trading D. Stock trading E. None of the given options is true

Answer: Option A
Explanation: Insider trading is the trading of a public company's stock or other securities by individuals with access to non-public information about the company. In various countries, some kinds of trading based on insider information is illegal.
5. The actual return of an investor is reduced sometimes as the prices of the commodities go up all of a sudden. In financial sector, this type of phenomenon is known as ----

A. Probability risk B. Market risk C. Inflation risk D. Credit risk E. None of the given options is true

Answer: Option B
Explanation: Market risk is the possibility of an investor experiencing losses due to factors that affect the overall performance of the financial markets in which he or she is involved. Market risk, also called "systematic risk," cannot be eliminated through diversification, though it can be hedged against.