Static Quiz 27 December 2024 (Economy)
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Static Quiz 27 December 2024 (Economy) For UPSC Exam
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- Question 1 of 5
1. Question
T+0 Settlement
Consider the following statements regarding the recent introduction of T+0 settlement by the Securities and Exchange Board of India (SEBI):
1. T+0 settlement implies that trades are settled on the same day they are executed.
2. The T+0 settlement cycle has been made mandatory for all stocks listed on the Indian stock exchanges.
3. The primary aim of introducing T+0 settlement is to reduce settlement risk and enhance market efficiency.
Which of the above statements is/are correct?
CorrectCorrect Answer: (B)
Explanation:
● Statement 1 is correct as T+0 means same-day trade settlement.
● Statement 2 is incorrect because T+0 is optional for the top 500 stocks by market capitalization, not mandatory for all stocks.
● Statement 3 is correct as reducing settlement risk and enhancing efficiency is a key objective.
IncorrectCorrect Answer: (B)
Explanation:
● Statement 1 is correct as T+0 means same-day trade settlement.
● Statement 2 is incorrect because T+0 is optional for the top 500 stocks by market capitalization, not mandatory for all stocks.
● Statement 3 is correct as reducing settlement risk and enhancing efficiency is a key objective.
- Question 2 of 5
2. Question
Real Estate Investment Trusts (REITs)
Consider the following statements regarding Real Estate Investment Trusts (REITs):
Statement-I: Rental income distributed to investors by REITs is exempted from tax, but the dividend income is taxable.
Statement-II: REITs are allowed to raise funds through the issuance of debt securities under the SEBI (Real Estate Investment Trusts) Regulations, 2014.
Which one of the following is correct in respect of the above statements?
CorrectCorrect Answer: (D)
Explanation:
● Statement-I: Rental income distributed by REITs is taxable in the hands of investors, not exempt. Dividend income may be tax-exempt or taxable depending on the SPV’s tax status.
● Statement-II: REITs can raise funds via debt securities under SEBI’s regulations, enabling real estate and infrastructure funding.
IncorrectCorrect Answer: (D)
Explanation:
● Statement-I: Rental income distributed by REITs is taxable in the hands of investors, not exempt. Dividend income may be tax-exempt or taxable depending on the SPV’s tax status.
● Statement-II: REITs can raise funds via debt securities under SEBI’s regulations, enabling real estate and infrastructure funding.
- Question 3 of 5
3. Question
Liquidity Adjustment by RBI
Which one of the following measures by the Reserve Bank of India (RBI) is considered to be part of ‘liquidity adjustment’ in the banking system?
CorrectCorrect Answer: (B)
Explanation:
● Liquidity adjustment involves managing short-term liquidity through the Liquidity Adjustment Facility (LAF):
● Repo Operations: RBI lends money to banks, injecting liquidity.
● Reverse Repo Operations: RBI absorbs liquidity from banks.
● Other options relate to regulatory or developmental roles, not direct liquidity management.
IncorrectCorrect Answer: (B)
Explanation:
● Liquidity adjustment involves managing short-term liquidity through the Liquidity Adjustment Facility (LAF):
● Repo Operations: RBI lends money to banks, injecting liquidity.
● Reverse Repo Operations: RBI absorbs liquidity from banks.
● Other options relate to regulatory or developmental roles, not direct liquidity management.
- Question 4 of 5
4. Question
: Instruments in Money Markets
Consider the following instruments:
1. Commercial Papers
2. Equity Shares
3. Debentures
4. Certificate of Deposits
How many of the above are included in money markets?
CorrectCorrect Answer: (B)
Explanation:
Money Market deals with short-term instruments (maturity ≤ 1 year).
Analysis:
1. Commercial Papers: Short-term instruments—part of the money market.
2. Equity Shares: Long-term instruments—part of the capital market.
3. Debentures: Long-term debt—part of the capital market.
4. Certificate of Deposits: Short-term instruments—part of the money market.
Thus, only Commercial Papers and Certificate of Deposits are included in the money market.
IncorrectCorrect Answer: (B)
Explanation:
Money Market deals with short-term instruments (maturity ≤ 1 year).
Analysis:
1. Commercial Papers: Short-term instruments—part of the money market.
2. Equity Shares: Long-term instruments—part of the capital market.
3. Debentures: Long-term debt—part of the capital market.
4. Certificate of Deposits: Short-term instruments—part of the money market.
Thus, only Commercial Papers and Certificate of Deposits are included in the money market.
- Question 5 of 5
5. Question
Which of the following best describes the Capital Adequacy Ratio (CAR) in banking?
CorrectAnswer:
D. A percentage that measures a bank’s financial health by comparing its capital to its risk-weighted assets.Explanation:
The Capital Adequacy Ratio (CAR) is a key metric in banking that assesses a bank’s ability to absorb potential losses and ensures financial stability. It is calculated by dividing a bank’s capital by its risk-weighted assets, ensuring that the bank maintains adequate capital to handle its risk exposure.IncorrectAnswer:
D. A percentage that measures a bank’s financial health by comparing its capital to its risk-weighted assets.Explanation:
The Capital Adequacy Ratio (CAR) is a key metric in banking that assesses a bank’s ability to absorb potential losses and ensures financial stability. It is calculated by dividing a bank’s capital by its risk-weighted assets, ensuring that the bank maintains adequate capital to handle its risk exposure.
