Static Quiz 29 April 2024
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Static Quiz 29 April 2024 for UPSC Prelims
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- Question 1 of 5
1. Question
“It is a pooled investment fund that trades in relatively liquid assets. It makes extensive use of complex trading and risk management techniques such as short selling, leverage, and derivatives to make quick returns.”
Which of the following is best described by the passage given above?CorrectAnswer: A
IncorrectAnswer: A
- Question 2 of 5
2. Question
In the context of the Indian economy, consider the following statements with respect to the term ‘Bilateral Netting’:
1. It refers to the single net claim of the two counterparties in a financial contract to consolidate or offset all the claims against each other.
2. Bilateral netting is permitted under Indian financial contracts.
3. It is permitted only if both the counterparties are regulated by the Reserve Bank of India.
Which of the statements given above is/are correct?CorrectAnswer: B
According to the Act, qualified financial contracts (QFCs) between two qualified financial market participants are applicable only if at least one party is an entity regulated by the specified authorities (RBI, SEBI, IRDAI, PFRDA, or the IFSCA). Hence, statement 3 is not correct.IncorrectAnswer: B
According to the Act, qualified financial contracts (QFCs) between two qualified financial market participants are applicable only if at least one party is an entity regulated by the specified authorities (RBI, SEBI, IRDAI, PFRDA, or the IFSCA). Hence, statement 3 is not correct. - Question 3 of 5
3. Question
With reference to the ‘Debt Service Coverage Ratio (DSCR)’ of a firm, consider the following statements:
1. The ratio is used to determine if a company will be able to sustain its debt based on cash flow.
2. A DSCR of less than 1 means that the company is able to pay its current debt obligations without borrowing.
Which of the statements given above is/are correct?CorrectAnswer: A
Lenders typically assess a borrower’s DSCR before extending a loan. A DSCR of less than 1 indicates negative cash flow, meaning the borrower cannot cover current debt obligations without external sources, essentially borrowing more. For example, a DSCR of .95 means there is only enough net operating income to cover 95% of annual debt payments. Thus, statement 2 is not correct.IncorrectAnswer: A
Lenders typically assess a borrower’s DSCR before extending a loan. A DSCR of less than 1 indicates negative cash flow, meaning the borrower cannot cover current debt obligations without external sources, essentially borrowing more. For example, a DSCR of .95 means there is only enough net operating income to cover 95% of annual debt payments. Thus, statement 2 is not correct. - Question 4 of 5
4. Question
International Comparison Program (ICP) guided by the World Bank is aimed at the international comparison of:
CorrectAnswer: B
IncorrectAnswer: B
- Question 5 of 5
5. Question
Consider the following statements:
1. An increase in deposit rates will lead to an increase in the money multiplier.
2. If the money supply in an economy decreases, then the velocity of money will fall.
Which of the statements given above is/are correct?CorrectAnswer: D
An increase in the cash deposit ratio leads to a decrease in the money multiplier. Higher deposit rates prompt depositors to deposit more, decreasing the Cash to Aggregate Deposit ratio. Consequently, this raises the Money Multiplier. Hence, statement 1 is not correct. The velocity of money is GDP divided by the money supply. It shows how quickly money is being used for transactions in an economy. Money supply and the velocity of money are inversely related. A decrease in money supply results in a rise in the velocity of money, and vice versa. Hence, statement 2 is not correct.IncorrectAnswer: D
An increase in the cash deposit ratio leads to a decrease in the money multiplier. Higher deposit rates prompt depositors to deposit more, decreasing the Cash to Aggregate Deposit ratio. Consequently, this raises the Money Multiplier. Hence, statement 1 is not correct. The velocity of money is GDP divided by the money supply. It shows how quickly money is being used for transactions in an economy. Money supply and the velocity of money are inversely related. A decrease in money supply results in a rise in the velocity of money, and vice versa. Hence, statement 2 is not correct.
