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Daily Quiz: September 19
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- Question 1 of 7
1. Question
1 pointsCategory: EconomyHedging is used by companies to:
Correct
- MNEs possess a multitude of cash flows that are sensitive to changes in exchange rates, interest rates, and commodity prices.
- These three financial price risks are the subject of the growing field of financial risk management.
Many firms attempt to manage their currency exposures through hedging
- Hedging is the taking of a position, acquiring either a cash flow, an asset, or a contract (including a forward contract) that will rise (fall) in value and offset a fall (rise) in the value of an existing position.
- While hedging can protect the owner of an asset from a loss, it also eliminates any gain from an increase in the value of the asset hedged against.
- The value of a firm, according to financial theory, is the net present value of all expected future cash flows.
- The fact that these cash flows are expected emphasizes that nothing about the future is certain.
- Currency risk is defined roughly as the variance in expected cash flows arising from unexpected exchange rate changes.
- A firm that hedges these exposures reduces some of the variance in the value of its future expected cash flows.
Incorrect
- MNEs possess a multitude of cash flows that are sensitive to changes in exchange rates, interest rates, and commodity prices.
- These three financial price risks are the subject of the growing field of financial risk management.
Many firms attempt to manage their currency exposures through hedging
- Hedging is the taking of a position, acquiring either a cash flow, an asset, or a contract (including a forward contract) that will rise (fall) in value and offset a fall (rise) in the value of an existing position.
- While hedging can protect the owner of an asset from a loss, it also eliminates any gain from an increase in the value of the asset hedged against.
- The value of a firm, according to financial theory, is the net present value of all expected future cash flows.
- The fact that these cash flows are expected emphasizes that nothing about the future is certain.
- Currency risk is defined roughly as the variance in expected cash flows arising from unexpected exchange rate changes.
- A firm that hedges these exposures reduces some of the variance in the value of its future expected cash flows.
- Question 2 of 7
2. Question
1 pointsCategory: EconomyConsider the following statements about ‘Initial Coin Offering (ICO)’:
- ICO is a unregulated means of crowd funding of a project.
- An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks.
- In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tender or other cryptocurrencies.
Which of the above statement/s is are correct?
Correct
An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tenderor other cryptocurrencies, but usually for Bitcoin.
Recently, The People’s Bank of China (PBC), central bank of China has banned individuals and organisations from raising funds through initial coin offerings saying that practice constituted illegal fund-raising.
Incorrect
An unregulated means by which funds are raised for a new cryptocurrency venture. An Initial Coin Offering (ICO) is used by startups to bypass the rigorous and regulated capital-raising process required by venture capitalists or banks. In an ICO campaign, a percentage of the cryptocurrency is sold to early backers of the project in exchange for legal tenderor other cryptocurrencies, but usually for Bitcoin.
Recently, The People’s Bank of China (PBC), central bank of China has banned individuals and organisations from raising funds through initial coin offerings saying that practice constituted illegal fund-raising.
- Question 3 of 7
3. Question
1 pointsCategory: EconomyWhich of the following statements is correct about the Systemically Important Banks?
- Systemically important banks are perceived as banks that are ‘Too Big To Fail (TBTF)’
- The International Monetary Fund (IMF) publishes the list of Global Systemically Important banks (G-SIBs).
- RBI identifies the Domestic Systemically Important Banks (D-SIBs).
- SIBs are required to maintain additional Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
Select the correct answer using the codes given below:
Correct
Statement 1 is Correct: Systemically important bank or a bank that is ‘too big to fail’, is one whose failure will have nationwide or worldwide repercussions.
Statement 2 is Incorrect: Basel Committee on Banking Supervision (BCBS) identifies the global systemically important banks (G-SIBs).
Statement 3 is Correct: The D-SIB Framework requires the Reserve Bank to disclose the names of banks designated as D-SIBs every year. Recently, RBI has added HDFC Bank, the second largest private sector lender of country in list of D-SIBs.
Statement 4 is Incorrect: SIBs are required to maintain additional Common Equity Tier 1 (CET1).
Incorrect
Statement 1 is Correct: Systemically important bank or a bank that is ‘too big to fail’, is one whose failure will have nationwide or worldwide repercussions.
Statement 2 is Incorrect: Basel Committee on Banking Supervision (BCBS) identifies the global systemically important banks (G-SIBs).
Statement 3 is Correct: The D-SIB Framework requires the Reserve Bank to disclose the names of banks designated as D-SIBs every year. Recently, RBI has added HDFC Bank, the second largest private sector lender of country in list of D-SIBs.
Statement 4 is Incorrect: SIBs are required to maintain additional Common Equity Tier 1 (CET1).
- Question 4 of 7
4. Question
1 pointsCategory: EconomyConsider the following statements
- Structural Unemployment- occurs when a labor market is not able to provide jobs for everyone who is seeking employment.
- Frictional unemployment -It is the time period between jobs when a worker is searching for or transitioning from one job to another.
- Cyclical unemployment- occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work.
- Classical unemployment -occurs when real wages are kept above the market clearing wage rate, leading to a surplus of labour supplied.
Which of the above type/s of unemployment is/are correctly matched?
Correct
All are correctly matched.
Incorrect
All are correctly matched.
- Question 5 of 7
5. Question
1 pointsCategory: EconomyWhich of the following countries is/are not a part of proposed International North-South
Transport Corridor (INSTC)?
- Russia
- China
- India
- Iran
- Pakistan
Select the correct answer using the codes given below:
Correct
The International North-South Transport Corridor is the ship, rail, and road route for moving freight between India, Russia, Iran, Europe and Central Asia. The route primarily involves moving freight from India, Iran, Azerbaijan and Russia via ship, rail and road.
Incorrect
The International North-South Transport Corridor is the ship, rail, and road route for moving freight between India, Russia, Iran, Europe and Central Asia. The route primarily involves moving freight from India, Iran, Azerbaijan and Russia via ship, rail and road.
- Question 6 of 7
6. Question
1 pointsCategory: Economy. Which of the following reports are published by the World Economic Forum (WEF)?
- Global Competitive Index
- Environmental Performance Index
- World Economic Outlook
- Global Information Index
Select the correct answer using the code given below:
Correct
World Economic Outlook is published by the International Monetary Fund (IMF).
Incorrect
World Economic Outlook is published by the International Monetary Fund (IMF).
- Question 7 of 7
7. Question
1 pointsCategory: EconomyWhich of the following is/are correct about Preference Shares?
- A company is not bound to pay dividend on preference shares if its profits in a particular year are insufficient.
- Generally, preference shares do not carry voting rights.
- Dividend on preference shares has to be paid at a fixed rate.
- Preference shares create mortgage or charge on the assets of the company.
Select the correct answer using the code given below:
Correct
Statement 1, 2 and 3 is correct:
Preference shares are those shares which carry certain special or priority rights.
- A company is not bound to pay dividend on preference shares if its profits in a particular year are insufficient. It can postpone the dividend in case of cumulative preference shares also. No fixed burden is created on its finances.
- The rate of dividend on preference shares is fixed. Therefore, with the rise in its earnings, the company can provide the benefits of trading on equity to the equity shareholders.
- Generally, preference shares do not carry voting rights. Therefore, a company can raise capital without dilution of control. Equity shareholders retain exclusive control over the company
Statement 4 is incorrect:
Preference shares do not create any mortgage or charge on the assets of the company. The company can keep its fixed assets free for raising loans in future.
Incorrect
Statement 1, 2 and 3 is correct:
Preference shares are those shares which carry certain special or priority rights.
- A company is not bound to pay dividend on preference shares if its profits in a particular year are insufficient. It can postpone the dividend in case of cumulative preference shares also. No fixed burden is created on its finances.
- The rate of dividend on preference shares is fixed. Therefore, with the rise in its earnings, the company can provide the benefits of trading on equity to the equity shareholders.
- Generally, preference shares do not carry voting rights. Therefore, a company can raise capital without dilution of control. Equity shareholders retain exclusive control over the company
Statement 4 is incorrect:
Preference shares do not create any mortgage or charge on the assets of the company. The company can keep its fixed assets free for raising loans in future.
