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[Solutions]
Q.1) Which of the following statements is/are correct about Global Depository Receipts?
1. It is an instrument to raise money from abroad.
2. It was earlier known as Euro issues.
3. These receipts are in the form of foreign currency.
Select the correct statements using the codes given below:
a) 1 and 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
Answer: (d)
Explanation:
Global Depository Receipts (GDRs) is a mechanism which allows one to buy and sell shares of a foreign company without having to bother about opening a foreign brokerage account.
Simply put, a GDR allows investors of any country to purchase and sell shares of a company in any other country, entitling the shareholders to partake in the dividend and capital gains of that foreign company. GDRs, thus, offer investors a way to diversify their portfolios.
How does the GDR work?
A GDR is set up when a company from one country intends to list its publically-traded shares in another country. These need not be shares alone; they could also be debt securities. Before this is allowed by a foreign country’s stock exchange, stiff conditions have to be met like the backing of a depository bank, and so on.
Depository banks: GDRs are usually backed by depository banks that provide companies, investors and traders opportunities to make global investments. These are banks whose primary task is to hold shares of companies based in another country. Such banks essentially sell the GDRs. They also ensure that investors receive their dividends and capital gains. Depository banks also handle all tax-related issues in the company’s home country. Since all GDR transactions have to go through a depository bank, investments made in them are safe. However, their valuations are always associated with normal market risks
Q.2) Consider the following statements:
1. Foot loose industries can be set up away from the market.
2. Green GDP is the total value of goods and services provided by industries that do not have banking risks associated with them.
Select the correct answer using the codes given below:
a) 1 only
b) 2 only
c) Both 1 and 2
d) None of the above
Answer: (a)
Explanation:
Footloose Industry: Footloose industry is a general term for an industry that can be placed and located at any location without effect from factors such as resources or transport. These industries often have spatially fixed costs, which mean that the costs of the products do not change despite where the product is assembled.
Green GDP: The green gross domestic product (green GDP) is an index of economic growth with the environmental consequences of that growth factored into a country’s conventional GDP. Green GDP monetizes the loss of biodiversity, and accounts for costs caused by climate change
Q.3) Which of the following currencies are part of Special Drawing Rights currency basket?
1. U. S. dollar
2. British Pound
3. Japanese Yen
4. Euro
Select the correct statement using the codes given below?
a) 1 and 4 only
b) 1, 3 and 4 only
c) 1, 2 and 4 only
d) 1, 2, 3 and 4
Answer: (d)
Explanation:
Recently IMF voted to include Chinese Yuan into SDR currency basket with other 4 currencies. It would increase the desirability of Chinese Yuan in the market.
Q.4) A country is said to be in a debt trap when
a) it has to abide by the conditionalities imposed by the International Monetary Fund
b) it has to borrow to make interest payment on outstanding loans
c) it has been refused loans or aid by creditors abroad
d) the World Bank charges a very high rate of interest on outstanding as well as new loans.
Answer: (b)
Explanation:
A country is said to be in debt trap when it has taken so much debt that in order to pay the interest of debt it has to take another debt.
Q.5) The “Give it Up” campaign recently in news is associated with
a) Curbing Domestic Violence by moral persuasion
b) Prohibition of Consumption of alcoholic Drinks in certain States
c) Surrendering Duplicate ration cards
d) LPG Subsidy
Answer (d)
Q.6) Which of the following encounters loss at the time of high inflation?
1. Individuals on fixed incomes
2. Retirees
3. Creditors (who lent at fixed rate of interest)
4. Debtors (who will pay back at fixed rate of interest)
Select the correct answer using the codes given below:
a) 2 and 3 only
b) 1 and 4 only
c) 1, 2 and 4 only
d) 1, 2 and 3 only
Answer: (d)
Explanation:
Inflation redistributes wealth from creditors to debtors i.e. lenders suffer and borrowers benefit out of inflation. Debtors gains at times in times of inflation.
Q.7) Which of the following schemes fall under EEE Scheme of Taxation?
1. Provident Fund
2. Kisan Vikas Patra
3. Unit Linked Insurance Plans
4. Sukanya Samriddhi Account
Select the correct answer using the codes given below.
a) 1 and 4 only
b) 1, 2 and 4 only
c) 1 only
d) 1, 2, 3 and 4
Answer: (a)
Explanation:
EEE Stands for Exemption on Investments, Exemption on Interest Earned and Exemption on Withdrawal with respect to investments and savings.
- Provident Funds (despite the budget proposals of 206-17) remain in the EEE category. Also note that there are three kinds of PFs – Public Provident Fund or PPF, Employee Provident Fund – that is EPF and Government Provident Fund ( GPF)
- Kisan Vikas Patra – KYP savings do not exemption on investment, interest earned or withdrawl.
- Unit Linked Insurance Plans are no longer completely under the EEE scheme.
The Annual Premium of ULIPs need to ten times the Sum Assured. What are ULIPS? – ULIP is a life insurance product, which provides risk cover for the policy holder along with investment options to invest in any number of qualified investments such as stocks, bonds or mutual funds.
Sukanya Samriddhi Yojana scheme falls under EEE.
Sukanya Samriddhi Account Yojana offers a small deposit investment for the girl children as an initiative under ‘Beti Bachao Beti Padhao’ campaign. One of the key benefits of the scheme is that it is quite affordable and offers one of the highest rates of interest.
Sukanya Samriddhi Account Yojana: Key Pointers
- Till a girl attains an age of 10 years, the Sukanya Samriddhi account yojana can be opened under her name.
- Only one account under this scheme is permissible for every girl child
- Walk into any post office or authorized banks to open the account
- To open an account under SSAY, Birth Certificate of the girl child would be required to submit
- The opening amount for the account is Rs 1,000. Thereafter a multiple of Rs 100 can be deposited to the account with a minimum of Rs 1,000 per year
- The maximum limit for deposits in the account is Rs 1,50,000 per year
- You have to pay in this scheme for 14 years. Suppose you have opened this account when the age of your girl child was X years then you have to pay in this scheme till your girl child age is X +14 years.
- The maturity duration of the account is 21 years from the date of opening the account.
- Sukanya Samriddhi Account is transferrable to anywhere in India from a Post office or bank to others
- The scheme comes from Ministry of Finance
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