Solution: (c)
A creditor is a party (e.g. person, organization, company, or government) that has a claim to the services of a second party. It is a person or institution to whom money is owed. The second party is frequently called a debtor or borrower. An incorporated entity is a separate legal entity that has been incorporated through a legislative or registration process established through legislation. Both bond holders and stock holders are creditors of a corporation.
The bank rate is the rate of interest:
(a) At which the public borrows money from Commercial Banks
(b) At which public borrows money from R.B.I.
(c) At which Commercial Banks borrow money from R.B.I.
(d) At which Commercial Banks borrow money from the public
Solution: (c)
Bank Rate is the interest rate at which a nation’s central bank lends money to domestic banks. Often these loans are very short in duration. Managing the bank rate is a preferred method by which central banks can regulate the level of economic activity. Regulation of the economy through management of the money supply is referred to as monetary policy.
A commercial bank law creates credit only if it has
(a) Cash in the vault
(b) Excess reserves
(c) Permission of Reserve Bank of India
(d) Cooperation with other banks
Solution: (a)
A commercial bank is a pro?t-seeking business ?rm, dealing in money and credit. It is a ?nancial institution dealing in money in the sense that it accepts deposits of money from the public to keep them in its custody for safety. So also, it deals in credit, i.e., it creates credit by making advances out of the funds received as the deposits to needy people. So it creates credit from the cash deposits with it.
“Legal Tender Money” refers to :
(a) Cheques
(b) Drafts
(c) Bill of exchange
(d) Currency notes
Solution: (d)
Legal tender is a medium of payment allowed by law or recognized by a legal system to be valid for meeting a financial obligation. Paper currency and coins are common forms of legal tender in many countries. Legal tender money is a type of payment that is protected by law. A legal tender, also known as the forced tender, is a very secured and it is impossible to deny the legal tender while subsiding a debt which is assigned in the same medium of exchange. The term legal tender does not represent the money itself; rather it is a kind of status which can be bestowed on certain types of money.
Bull and bear are related to which commercial activity?
(a) Banking
(b) E-commerce
(c) International trade
(d) Stock market
Solution: (d)
Both the terms are related to stock market. Investors who take a bull approach purchase securities under the assumption that they can be sold later at a higher price. A “bear” is considered to be the opposite of a bull. Bear investors believe that the value of a specific security or an industry is likely to decline in the future.
