Static Quiz 11 August 2023
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Static Quiz 11 August 2023 for UPSC Prelims
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- Question 1 of 5
1. Question
Consider the following statements regarding Bharat Bond ETF
1. It will provide retail investors easy and low-cost access to bond markets, with smaller amount
as low as Rs1,00,000.
2. It will have a fixed maturity of three and ten years and will trade on the stock exchanges.
Which of the statements given above is/are correct?CorrectCorrect Answer : B
Bharat Bond ETF
Context: The government has approved the launch of Bharat Bond ETF,India’s first
corporate bond exchange traded fund, comprising debt of state-run companies.
Significance:
This move will allow retail investors to buy government debt.
It will provide retail investors easy and low-cost access to bond markets, with
smaller amount as low as ₹1,000.Hence, statement 1 is incorrect.
They will provide tax efficiency as compared to bonds, as coupons (interest) from
the bonds are taxed depending on the investor’s tax slab.
Key features of Bharat Bond ETF:
1. It is a basket of bonds issued by central public sector enterprises/undertakings or any
other government organization bonds.
2. It will have a fixed maturity of three and ten years and will trade on the stock
exchanges.
3. It will invest in a portfolio of bonds of state-run companies and other government
entities.
4. It will track an underlying index on risk replication basis, matching credit quality and
average maturity of the index.
5. The index will be constructed by an independent index provider, National Stock
ExchangeIncorrectCorrect Answer : B
Bharat Bond ETF
Context: The government has approved the launch of Bharat Bond ETF,India’s first
corporate bond exchange traded fund, comprising debt of state-run companies.
Significance:
This move will allow retail investors to buy government debt.
It will provide retail investors easy and low-cost access to bond markets, with
smaller amount as low as ₹1,000.Hence, statement 1 is incorrect.
They will provide tax efficiency as compared to bonds, as coupons (interest) from
the bonds are taxed depending on the investor’s tax slab.
Key features of Bharat Bond ETF:
1. It is a basket of bonds issued by central public sector enterprises/undertakings or any
other government organization bonds.
2. It will have a fixed maturity of three and ten years and will trade on the stock
exchanges.
3. It will invest in a portfolio of bonds of state-run companies and other government
entities.
4. It will track an underlying index on risk replication basis, matching credit quality and
average maturity of the index.
5. The index will be constructed by an independent index provider, National Stock
Exchange - Question 2 of 5
2. Question
Which of the following is/are part of Balance on Invisibles under Current Account?
1. Services trade, including both factor and non-factor income
2. Value of exports and imports of goods
3. Sale of service products like shipping and tourism
How many of the given statements are correct?CorrectCorrect Answer : B
Balance of Trade (BOT) is the difference between the value of exports and value of
imports of goods of a country in a given period of time.Hence, statement 2 is
incorrect.IncorrectCorrect Answer : B
Balance of Trade (BOT) is the difference between the value of exports and value of
imports of goods of a country in a given period of time.Hence, statement 2 is
incorrect. - Question 3 of 5
3. Question
Which of the following is/are part of the Capital Account?
1. If an Indian buy a UK Car Company.
2. Sale of share of an Indian company to a Chinese customer.
3. Receipt of loans from abroad
How many of the given statements are correct?CorrectCorrect Answer : C
IncorrectCorrect Answer : C
- Question 4 of 5
4. Question
Consider the following statements regarding exchange rate under fixed exchange rate system
1. When some government action increases the exchange rate (thereby, making domestic
currency cheaper) is called Depreciation.
2. Appreciation is said to occur, when the Government decreases the exchange rate (thereby,
making domestic currency costlier) in a fixed exchange rate system.
Which of the statements given above is/are correct?CorrectCorrect Answer : D
In a fixed exchange rate system, when some government action increases the
exchange rate (thereby, making domestic currency cheaper) is called Devaluation. On
the other hand, a Revaluation is said to occur, when the Government decreases the
exchange rate (thereby, making domestic currency costlier) in a fixed exchange rate
system. Hence, both statement 1 and 2 are incorrect.IncorrectCorrect Answer : D
In a fixed exchange rate system, when some government action increases the
exchange rate (thereby, making domestic currency cheaper) is called Devaluation. On
the other hand, a Revaluation is said to occur, when the Government decreases the
exchange rate (thereby, making domestic currency costlier) in a fixed exchange rate
system. Hence, both statement 1 and 2 are incorrect. - Question 5 of 5
5. Question
Which of the following are merits of flexible exchange rate system?
1. The main feature of the flexible exchange rate system is that there must be credibility that the
government will be able to maintain the exchange rate at the level specified.
2. The movements in the exchange rate automatically take care of the surpluses and deficits in
the BoP.
3. Under flexible exchange rate system, the government need not maintain large stocks of
foreign exchange reserves.
How many of the given statements are correct?CorrectCorrect Answer : B
The main feature of the fixed exchange rate system is that there must be credibility
that the government will be able to maintain the exchange rate at the level
specified. Hence, statement 1 is incorrect.IncorrectCorrect Answer : B
The main feature of the fixed exchange rate system is that there must be credibility
that the government will be able to maintain the exchange rate at the level
specified. Hence, statement 1 is incorrect.
