Call Money Market MCQ | JAIIB PPB MCQ

March 21, 2021
call money market mcq jaiib ppb
Here is the next quiz in the quiz/MCQ series for Principles and Practices of Banking. This quiz covers the topics of Call Money Market MCQ. Answers are given at the end of the quiz.
Q1. What is the maximum maturity period of funds/instruments in money market?
  1. 1 day
  2. 7 days
  3. 14 days
  4. 1 year

Answer: (4)
The money market is a market for short-term financial assets that are close substitutes of money. The most important feature of a money market instrument is that it is liquid and can be turned over quickly at low cost and provides an avenue for equilibrating the short-term surplus funds of lenders and the requirements of borrowers. Maturity of money market instruments is usually up to one year.

Q2. What is maximum period for which money is lent under call money?

  1. 1 day
  2. 7 days
  3. 14 days
  4. 1 year

Answer: (1)
Under call money market, funds are transacted on overnight basis

Q3. What is maximum period for which money is lent under notice money?
  1. 1 day
  2. 7 days
  3. 14 days
  4. 1 year

Answer: (3)
Under notice money market, funds are transacted for the period between 2 days and 14 days.

Q4. What is maximum period for which money is lent under Term money?
  1. 1 day
  2. 7 days
  3. 14 days
  4. 1 year

Answer: (4)
Term Money refers to borrowing/lending of funds for period between 15 days and one year.

Q5. Who regulates the money market instruments in India?
  1. Ministry of Finance
  2. RBI
  3. Department of Economic Affairs
  4. MCA

Answer: (2)
RBI governs and regulates the money market instruments under sections 45K, 45L, and 45W of the RBI Act, 1934

Q5. How much % of its capital fund can be borrowed by scheduled commercial banks in the call/notice money market on any particular day? 
  1. 80%
  2. 100%
  3. 125%
  4. 150%

Answer: (3)
On a fortnightly average basis, borrowing outstanding should not exceed 100 per cent of capital funds (i.e., sum of Tier I and Tier II capital) of latest audited balance sheet. However, banks (scheduled commercial banks) are allowed to borrow a maximum of 125 per cent of their capital funds on any day, during a fortnight.

Q6. How much % of its capital fund can be lent by scheduled commercial banks in the call/notice money market on any particular day? 
  1. 50%
  2. 75%
  3. 100%
  4. 125%

Answer: (1)
On a fortnightly average basis, lending outstanding should not exceed 25 per cent of their capital funds. However, banks (scheduled commercial banks) are allowed to lend a maximum of 50 per cent of their capital funds on any day, during a fortnight

Q7. What % of aggregate deposit can be borrowed by cooperative banks in the call/notice money market?
  1. 1%
  2. 2%
  3. 3%
  4. No limit

Answer: (2)
Outstanding borrowings of State Co-operative Banks / District Central Co-operative Banks / Urban Co-operative Banks in call / notice money market, on a daily basis should not exceed 2.0 per cent of their aggregate deposits as at end March of the previous financial year.

Q8. What % of aggregate deposit can be lent by cooperative banks in the call/notice money market? 
  1. 1%
  2. 2%
  3. 3%
  4. No limit

Answer: (4)
No limit.

Q9. Primary Dealers are allowed to borrow, on average in a reporting fortnight, up to 225 per cent of their net owned funds (NOF) as at end-March of the previous financial year and lend  up to 25 per cent of their NOF in call/notice money market. 
  1. 100%, 25%
  2. 200%, 50%
  3. 225%, 25%
  4. 250%, 30%

Answer: (3)
Primary Dealers are allowed to borrow, on average in a reporting fortnight, up to 225 per cent of their net owned funds (NOF) as at end-March of the previous financial year and lend  up to 25 per cent of their NOF in call/notice money market

10. Name the system through which money market trades are conducted?
  1. NEFT
  2. E-Kuber
  3. UPI
  4. NDS-Call system

Answer: (4)
All dealings in Call/Notice/Term money executed on the Negotiated Dealing System-Call, i.e. NDS-Call

References

https://rbi.org.in/scripts/NotificationUser.aspx?Mode=0&Id=9858

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