SLO

Objective Banking Awareness : Banking Functions and Business-4

1.

Which of the following is NOT a correct statement?
[A]Interest rates on unsecured loans is higher than the secured loans
[B]Mortgage Loan is a kind of secured loan
[C]Credit Card is a kind of secured loan
[D]Unsecured loans are given out on the basis of credit worthiness of the borrowers

Credit Card is a kind of secured loan
In unsecured loans, the borrowers assets are not pledged as collateral. Examples of such loans are personal loans, education loans, credit cards etc. They are given out on the basis of credit worthiness of the borrowers.

2.

“No Risk, No reward”. This quote is most closely associated with__?
[A]Risk Diversification
[B]Collateral Damage
[C]Risk-return trade-off
[D]None of the above

Risk-return trade-off
The principle of Risk-return trade-off says that higher the potential return, higher is the risk. Low risk is associated with low potential returns, whereas high risk is associated with high potential returns.

3.

In which among the following accounts, no cheque book is issued?
[A]Minor Account
[B]Joint Account
[C]Illiterate Account
[D]Non Resident Account

Illiterate Account
Illiterate accounts are opened on discretion of the banks if the person personally goes to the bank along with a witness already known to the bank and the depositor. No cheque books are issued for such accounts. Any withdrawal is done by a thumb impression of the depositor in presence of the bank officer who is able to verify the identity

4.

In which year, Foreign Currency Non-Resident Account Bank or FCNR (B) was first introduced?
[A]1991
[B]1993
[C]1995
[D]1996

1993
Foreign Currency Non-Resident Account Bank or FCNR (B) was first introduced in 1993. While NRERA Account is a rupee account and the depositor is exposed to the Currency rates risk; FCNR is opened in foreign currency only. Currently, FCNR Account can be opened in six designated currencies viz. US Dollar (USD), Great Britain Pound (GBP), Euro (EUR), Japanese Yen (JPY), Canadian Dollar (CAD) and Australian Dollar (AUD).

5.

A syndicated loan is a form of lending in which__:
[A]a group of lenders collectively extend a loan to a single borrower
[B]a lender extend a loan to group of borrowers
[C]a loan made by a single lender to a single borrower
[D]a group of lenders collectively extend a loan to group of borrowers

a group of lenders collectively extend a loan to a single borrower
Syndicated lending is a form of lending in which a group of lenders collectively extend a loan to a single borrower. The group of lenders is called a syndicate. The loan is called a syndicated loan.

6.

If a bank ties up with a retail vendor and then both of them sponsor a credit card, then such card would be known as __:
[A]Retail Credit Card
[B]Vendor Card
[C]Co-branded Card
[D]Cash back Card

Co-branded Card
It is a special type of credit card which is sponsored by both the credit card issuing company and the participating retail company or vendor. Co-branded credit card carries special deals and savings from the participating merchants.

7.

In terms of Banking Terminology, Affinity Card refers to __:
[A]The Credit Cards that are linked to special organizations
[B]The Credit Cards with zero interest rate on repayments
[C]The Credit Cards exclusively for the Bank’s employees
[D]All of above

The Credit Cards that are linked to special organizations
Credit cards linked to special organizations like sports clubs, exclusive clubs and charities. Affinity credit cards can also help raise funds, when a part of income from every transaction goes toward the benefit of relevant organization.

8.

From which country, the concept of Credit Card originated?
[A]United Kingdom
[B]United States
[C]France
[D]Australia

United States
The use of Credit Card first started in 1920s in United States of America for selling the fuel to the automobile owners. Later, it reached the customers when Diners Club was launched in early 1950s. In 1958, the Bank of America issued the BankAmericard in the California state and this is known to be the first successful modern credit card.

9.

The business entity that is authorized to accept cards for the payment of goods and services is called?
[A]Issuer
[B]Acquirer
[C]Merchant
[D]Authorised Issuer

Merchant
Merchant or Point of sale is any business entity that is authorized to accept cards for the payment of goods and services; it can be a brick and mortar shop or a website.

10.

The international standard which defines the shape and size of the I-Cards is __:
[A]ISO/IEC 5200
[B]ISO/IEC 9910
[C]ISO/IEC 14000
[D]ISO/IEC 7810

ISO/IEC 7810
ISO/IEC 7810 is the international standard which defines the shape and size of the I-Cards including debit / credit cards.

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