Banking & General Financial Awareness
Banking & General Financial Awareness Multiple Choice Questions (MCQs) and Answers with explanation for All Banking Exams of 2024-25 such as IBPS Bank PO, IBPS Bank Clerical, RRB PO and Clerical, SBI PO and SBI Clerical, IBPS Recruitments, RBI Grade B and RBI Banking Examinations.
41. What is the purpose of a “market circuit breaker” mechanism in Indian stock exchanges?
[A] To allow faster execution of trades
[B] To halt trading when indices move beyond specified limits to curb excessive volatility
[C] To encourage high-frequency trading
[D] To limit the maximum number of trades allowed per investor
Show Answer
Correct Answer: B [To halt trading when indices move beyond specified limits to curb excessive volatility]
Notes:
A market circuit breaker mechanism is used to temporarily halt trading when an index or stock moves beyond a predetermined percentage in a single trading session, preventing panic selling or buying.
42. What does “short selling” mean in stock trading?
[A] Buying stocks with the intention of holding them for a long period
[B] Selling stocks that an investor does not own, hoping to buy them back at a lower price
[C] Selling stocks immediately after buying them
[D] Selling stocks in a different currency
Show Answer
Correct Answer: B [Selling stocks that an investor does not own, hoping to buy them back at a lower price]
Notes:
Short selling is a trading strategy where an investor borrows shares and sells them, expecting the price to decline, so they can buy them back at a lower price and return the borrowed shares.
43. Who is responsible for managing the process of an Initial Public Offering (IPO) in India?
[A] SEBI
[B] Registrar to the issue
[C] Lead manager
[D] Stock exchange
Show Answer
Correct Answer: C [Lead manager]
Notes:
The lead manager is appointed by the issuing company to manage the entire process of an IPO, including regulatory compliance, pricing, and marketing.
44. Book building is used to:
[A] Fix the final issue price based on demand from investors
[B] Ensure that shares are allotted only to promoters
[C] Guarantee a fixed return to investors
[D] Issue only debt instruments
Show Answer
Correct Answer: A [Fix the final issue price based on demand from investors]
Notes:
Book building is a process where investors bid for shares, and the final issue price is determined based on the bids received.
45. What is the primary role of a debenture trustee?
[A] To guarantee fixed returns on debentures
[B] To protect the interests of debenture holders
[C] To underwrite the issue of debentures
[D] To manage share allotments
Show Answer
Correct Answer: B [To protect the interests of debenture holders]
Notes:
A debenture trustee is appointed to protect the interests of debenture holders by ensuring that the issuer complies with the terms of the debenture issue.
46. What is the purpose of a credit rating agency in capital markets?
[A] To regulate stock exchanges
[B] To assign ratings to debt instruments based on credit risk
[C] To trade in government securities
[D] To manage IPO allotments
Show Answer
Correct Answer: B [To assign ratings to debt instruments based on credit risk]
Notes:
Credit rating agencies assign ratings to debt instruments based on the issuer’s creditworthiness, helping investors assess the risk of default.
47. The Insurance Act, 1938, was amended in which year to increase the FDI limit in insurance to 49%?
[A] 1999
[B] 2005
[C] 2015
[D] 2019
Show Answer
Correct Answer: C [2015]
Notes:
The Insurance Act, 1938, was amended in 2015 to increase the FDI limit in the insurance sector to 49%.
48. In India, a health insurance policy with maternity benefits typically has:
[A] No waiting period
[B] A waiting period of 2-4 years
[C] A waiting period of 6 months
[D] Immediate coverage upon purchase
Show Answer
Correct Answer: B [A waiting period of 2-4 years]
Notes:
Health insurance policies with maternity benefits often have a waiting period of 2-4 years before claims can be made.
49. Which of the following insurance products is designed for farmers in India?
[A] Crop Insurance
[B] Fire Insurance
[C] Life Insurance
[D] Health Insurance
Show Answer
Correct Answer: A [Crop Insurance]
Notes:
Crop insurance is designed to protect farmers from losses due to crop failure caused by natural calamities, pests, and diseases.
50. Which term refers to an agreement between a buyer and seller to exchange goods and services without using cash or credit?
[A] Forfaiting
[B] Barter
[C] Factoring
[D] Leasing
Show Answer
Correct Answer: B [Barter]
Notes:
Barter refers to an arrangement where goods and services are exchanged directly without the use of money or credit.
