Tag: commercial studies

Questions Related to commercial studies

For the development of a country the credit should be _____.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. For a short period

  2. Easily available

  3. Cheap and affordable

  4. For a long period

Show answer
Correct Option: C
Explanation:

Economic growth is prerequisite for the economic development of the country.
Cheap and affordable credit (low-interest rates) is one of the prerequisites for economic growth of any country. 

An asset that a borrower uses as a guarantee is called _____.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. collateral

  2. debit card

  3. credit card

  4. deposits

Show answer
Correct Option: A
Explanation:
  • Collateral is an asset taken by the banks / money lenders for lending money to its customers.
  • Collateral is a type of a security taken by the banks from its customers.
  • Collateral can be in the form of fixed deposit, property documents, etc.

In rural areas farmers take credit for _____.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. family

  2. health

  3. crop production

  4. education

Show answer
Correct Option: C
Explanation:
  • In rural areas farmers take credit for crop production.
  • Farmers usually lend from from co-operative societies or banks or from money lenders if banks are not available.
  • Usually, co-operative banks charge lower interest rates as compared to money lenders.

Paper notes and coins are accepted as a medium of exchange because they are _____.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Light in weight

  2. Easy to carry

  3. Authorised by the government

  4. Issued by the Resrve Bank of India

Show answer
Correct Option: C
Explanation:
  • In Modern times paper notes and coins are used as medium of exchange.
  • Paper notes and coins are printed and circulated by RBI in India except One Rupee notes and coins.
  • One Rupee coins are printed by the Finance Ministry.
  • Only paper notes and coins printed by Government are authorised to use.

Which of the following does the terms of credit NOT include?

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Interest rate

  2. Collateral

  3. Documentation

  4. Lender's land

Show answer
Correct Option: D
Explanation:

  • 1:Credit refers to a loan, an agreement in which the lender supplies the borrower with money, goods or services which is to be returned in future
    2:Terms of credit include interest rate, collateral (security) and documentation related to the lending of money.

The terms of credit comprise of _____.

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. fixed deposit

  2. voter card

  3. collateral

  4. pan card

Show answer
Correct Option: C
Explanation:
Interest rate, collateral and documentation requirement and the mode of repayment together comprise what is called the terms of credit.
They may vary depending on the nature of the lender and the borrower.

Which of the following is a source of formal sector loan?

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Relatives

  2. Banks

  3. Moneylenders

  4. Traders

Show answer
Correct Option: B
Explanation:

The loan extended by banks and co-operative institutions constitutes formal sector of credit. The functioning of these financial institutions is supervised by the Reserve Bank of India.

In rural areas, what is the major reason behind taking the credit?

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Telecommunication

  2. Crop production

  3. Establishment of factory

  4. For buying luxuries

Show answer
Correct Option: B
Explanation:
  • About 60% of the Indian population is dependent on agriculture.
  • Most of the Indian farmers are small and marginal farmers.
  • Rural farmers savings are very less.
  • Rural farmers seek credit for the production of crops as there are no savings left with them from the last year.

What do you mean by 'collateral'?

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. It is a liability that the borrower bears while taking loan

  2. It is a document used in the process of taking credit

  3. An asset that a borrower owns and the lender uses it as a guarantee until the loan is re-paid

  4. It is an asset

Show answer
Correct Option: C
Explanation:

1:Collateral is a type of a security/guarantee taken by the banks from its customers.
2:Usually collateral are taken by the banks for lending money to its customers.
3:Collateral can be in the form of fixed deposit documents, property, documents, etc.

Why is money called a 'medium of exchange' ?

commercial studies money loans from banks and financial institutions introduction to money - barter system owned fund and borrowed fund

  1. Because money can create loan

  2. Because money adds to the value of a commodity

  3. Because money is portable

  4. Because money acts as an intermediate in the process of exchange

Show answer
Correct Option: D
Explanation:

Money helps to facilitate trade because people in the economy generally recognize it as valuable. Money is called medium of exchange because money is a widely accepted token that can be used for exchange of any good or service. In old days, barter system was used as medium of exchange and later it was gold.