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Question 1 of 5
1. Question
Consider the following statements regarding Commercial Paper (CP).
- Commercial Paper (CP) is a secured money market instrument issued in the form of a promissory note.
- CP will be issued at a discount to face value as may be determined by the issuer.
- All the corporates are automatically eligible to issue CP.
Which of the above statements is/are correct?
Correct
Solution: b)
Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note.
CP will be issued at a discount to face value as may be determined by the issuer.
The following conditions have to be fulfilled by corporates to receive privileges for issuing commercial paper:
- The tangible net worth of the company should not be less than 4 Crores, as per the latest audited Balance-Sheet.
- The companies should have the ‘sanctioned working capital limit’ by the banks or any Financial Institutions (FIs).
- The Financial Institutions or Banks should classify the ‘Borrowal Account’ as a Standard asset.
Incorrect
Solution: b)
Commercial Paper (CP) is an unsecured money market instrument issued in the form of a promissory note.
CP will be issued at a discount to face value as may be determined by the issuer.
The following conditions have to be fulfilled by corporates to receive privileges for issuing commercial paper:
- The tangible net worth of the company should not be less than 4 Crores, as per the latest audited Balance-Sheet.
- The companies should have the ‘sanctioned working capital limit’ by the banks or any Financial Institutions (FIs).
- The Financial Institutions or Banks should classify the ‘Borrowal Account’ as a Standard asset.
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Question 2 of 5
2. Question
Consider the following statements regarding Rahn Curve.
Correct
Solution: c)
The Rahn curve is a graph used to illustrate an economic theory, proposed in 1996 by American economist Richard W. Rahn, which indicates that there is a level of government spending that maximizes economic growth. The theory is used by classical liberals to argue for a decrease in overall government spending and taxation. The inverted-U-shaped curve suggests that the optimal level of government spending is 15–25% of GDP.
Incorrect
Solution: c)
The Rahn curve is a graph used to illustrate an economic theory, proposed in 1996 by American economist Richard W. Rahn, which indicates that there is a level of government spending that maximizes economic growth. The theory is used by classical liberals to argue for a decrease in overall government spending and taxation. The inverted-U-shaped curve suggests that the optimal level of government spending is 15–25% of GDP.
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Question 3 of 5
3. Question
The term Stagflation is often seen in news. The conditions associated with Stagflation are
- Inflation
- Low economic growth
- High employment
Select the correct answer code:
Correct
Solution: b)
Stagflation is a condition of slow economic growth and relatively high unemployment, or economic stagnation, accompanied by rising prices, or inflation. It can also be defined as inflation and a decline in gross domestic product (GDP).
Incorrect
Solution: b)
Stagflation is a condition of slow economic growth and relatively high unemployment, or economic stagnation, accompanied by rising prices, or inflation. It can also be defined as inflation and a decline in gross domestic product (GDP).
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Question 4 of 5
4. Question
Which of the following statements best describes the term Mezzanine financing?
Correct
Solution: c)
Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert the debt to an equity interest in the company in case of default, generally, after venture capital companies and other senior lenders are paid. In terms of risk, it exists between senior debt and equity.
Incorrect
Solution: c)
Mezzanine financing is a hybrid of debt and equity financing that gives the lender the right to convert the debt to an equity interest in the company in case of default, generally, after venture capital companies and other senior lenders are paid. In terms of risk, it exists between senior debt and equity.
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Question 5 of 5
5. Question
Consider the following statements regarding Factor Income.
- Factor income is income received from the factors of production.
- The factor income of all normal residents of a country is referred to as the national income.
- It can be used to expose disparities in income distribution.
Which of the above statements is/are correct?
Correct
Solution: d)
Factor income is the flow of income that is derived from the factors of production—the general inputs required to produce goods and services.
Factor income on the use of land is called rent, income generated from labor is called wages, and income generated from capital is called profit.
The factor income of all normal residents of a country is referred to as the national income, while factor income and current transfers together are referred to as private income.
Factor income is most commonly used in macroeconomic analysis, helping governments to determine the difference between gross domestic product (GDP) and gross national product (GNP).
It can also be used to expose disparities in income distribution.
Incorrect
Solution: d)
Factor income is the flow of income that is derived from the factors of production—the general inputs required to produce goods and services.
Factor income on the use of land is called rent, income generated from labor is called wages, and income generated from capital is called profit.
The factor income of all normal residents of a country is referred to as the national income, while factor income and current transfers together are referred to as private income.
Factor income is most commonly used in macroeconomic analysis, helping governments to determine the difference between gross domestic product (GDP) and gross national product (GNP).
It can also be used to expose disparities in income distribution.
