[Mission 2022] QUIZ – 2022: INSIGHTS STATIC QUIZ, 12 April 2022 – Economy – INSIGHTSIAS

Solution: c)

In corporate finance, a debenture is a medium- to long-term debt instrument used by large companies to borrow money, at a fixed rate of interest.

A debenture redemption reserve (DRR) is a provision stating that any Indian corporation that issues debentures must create a debenture redemption service in an effort to protect investors from the possibility of a company defaulting. This provision was added to the Indian Companies Act of 1956 in an amendment introduced in the year 2000.

Solution: c)

Sensex is the benchmark index of the BSE in India. It was launched on January 1, 1986 as a basket of 30 stocks representing the country’s largest, financially-sound companies listed on the BSE.

The Sensex reflects the movements in the Indian stock market. It is considered the benchmark index of the Indian stock market. 

In 2001 BSE launched DOLLEX-30, a dollar-linked version of the SENSEX.

Solution: b)

“Call Money” means borrowing or lending in unsecured funds on overnight basis;

The following entities shall be eligible to participate in the Call, Notice and Term Money Markets, both as borrowers and lenders:

(a) Scheduled Commercial Banks (excluding Local Area Banks);

(b) Payment Banks;

(c) Small Finance Banks;

(d) Regional Rural Banks;

(e) State Co-operative Banks, District Central Co-operative Banks and Urban Co-operative Banks (hereinafter Co-operative Banks); and

(f) Primary Dealers.

Solution: d)

A derivative is a contract between two or more parties whose value is based on an agreed-upon underlying financial asset, index, or security.

Futures contracts, forward contracts, options, swaps, and warrants are commonly used derivatives.

Derivatives can be used to either mitigate risk (hedging) or assume risk with the expectation of commensurate reward (speculation).

Solution: a)

Currency convertibility is the ease with which a country’s currency can be converted into gold or another currency. Currency convertibility is important for international commerce as globally sourced goods must be paid for in an agreed upon currency that may not be the buyer’s domestic currency.