1. The expenditure made on education, training and health is called:
1. Capital formation
2. Human capital
3. Technical progress
4. Health formation
5. None of the above
Option “2” is correct. · Education investment is recognized as one of the main sources of human capital along with other sources like health, migration, on-job training, and information. · Human capital refers to the capabilities, experience, and skill sets that employees bring to a business organization. · Investment in education is considered one of the main sources of human capital.
2. Under which of the following ECGC comes?
1. EXIM Bank
2. Ministry of Commerce and Industry
3. Director General Foreign Trade
4. RBI
5. SEBI
Option “2” is correct. Export Credit Guarantee Corporation of India (ECGC) · It is an Indian enterprise which is administered by the Government of India through the Ministry of Commerce and Industry. ECGC which is wholly owned by the Indian Government was set up in the year 1957 with the intention to promote exports by offering credit risk insurance and allied services to the exporters. · Export Credit Guarantee Corporation of India is fundamentally an export promotion organization, which seeks to enhance the competitiveness of Indian exports by offering them credit insurance covers. Over the years ECGC has considered various export credit risk insurance products suiting the needs of Indian exporters. · This corporation was set up for ensuring the smooth functioning of Indian exporters by minimizing the risks associated with the payments emanating from other nations. This insurance cover which is provided by ECGC also assists the Indian exporters with better access to the credit facilities from banks and other financial institutions. ECGC is the 5th largest credit insurance company dealing with the exports of any country. · Export Credit Guarantee Corporation of India offers protection against the non-payment by an importer. Due to this insurance cover, the financial institutions are better placed for lending and providing larger credit to exporters. ECGC also offers credit ratings as well as shares the information on various countries and risks associated with doing business with/in those countries.
3. A contract between a buyer and a seller entered into today regarding a transaction to be fulfilled at a future point in time is called-
1. Fixed contract
2. Derivative contract
3. Forward contract
4. Future contract
5. None of the above
Option “4” is correct. Futures contract is a standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, between parties not known to each other. The asset transacted is usually a commodity or financial instrument.
4. Over the life of the derivative contract, the value of the derivative-
1. Fluctuates with the price of the so-called “underlying” of the contract
2. Decreases
3. Increases
4. Remains Constant
5. None of the above
Option “1” is correct. Derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, index, or security. Depending on the type of derivative, its fair value or price will be calculated in a different manner. Futures contracts are based on the spot price along with a basis amount, while options are priced based on time to expiration, volatility, and strike price.
5. In India, NIFTY and SENSEX are calculated on the basis of-
1. Market Capitalization
2. Paid up Capital
3. Free -float Capitalization
4. Authorized Share Capital
5. None of the above
Option “1” is correct. Value of Sensex = (Total free float market capitalization/ Base market capitalization) * Base period index value. The base period (year) for Sensex calculation is 1978-79. The base value index is 100.
6. Break-even of a Put option occurs when spot price is equal to-
1. Strike price + Premium
2. Strike Price – Premium
3. Premium
4. Strike price
5. None of the above
Option “1” is correct. For a call buyer, the breakeven point is reached when the underlying is equal to the strike price plus the premium paid, while the BEP for a put position is reached when the underlying is equal to the strike price minus the premium paid.
7. The time value of a call option before its expiry date is known as-
Option “2” is correct. Time value is calculated by taking the difference between the option’s premium and the intrinsic value, and this means that an option’s premium is the sum of the intrinsic value and time value: Time Value = Option Premium – Intrinsic Value. Option Premium = Intrinsic Value + Time Value.
8. Mr. X has to pay Rs 5,00,000 in a three month time for the imports made by him. Correct hedging policy for him would be to-
1. Buy a Rs Call Option
2. Sell a Rs Call Option
3. Buy a Rs Put Option
4. Sell a Rs Put Option
5. None of the above
Option “1” is correct. You buy an options contract, it grants you the right but not the obligation to buy or sell an underlying asset at a set price on or before a certain date. A call option gives the holder the right to buy a stock and a put option gives the holder the right to sell a stock.
9. If the spot rate of $ in Mumbai is Rs. 45.50 and one month forward rate is Rs. 45.65, then which is correct for forward market?
1. That $ is at premium
2. That $ is at discount
3. Rupee is at premium
4. Rupee is at discount
5. None of the above
Option “1” is correct. If the spot rate of $ in Mumbai is Rs. 45.50 and 1 month forward rate is Rs. 45.65, then the $ is at premium.
10. Which of the following is the benefit of Depositories?
1. Reduction in the share transfer time to the buyer
2. Reduced Risk of stolen, fake, forged shares
3. No Stamp duty on transfer of shares in dematerialized form
4. All of the above
5. None of the above
Option “2” is correct. A depository ensures that only pre-verified assets with good title are traded. Therefore, an investor is always assured of assets with good title. Moreover, the problems of bad deliveries and all the risks associated with physical certificates, such as loss, theft, mutilation etc. are avoided.In case of transfer of shares in demat form through stock exchanges, the stock exchanges shall collect the stamp duty. However, in case of the initial issue of shares or transfer of shares other than through stock exchanges in demat form, the depositories shall collect the stamp duty.
