AHSEC| CLASS 12| FINANCE| SOLVED PAPER - 2015| H.S. 2ND YEAR
2015
FINANCE
Full Marks: 100
Pass Marks: 30
Time: Three hours
The figures in the margin indicate full marks for the questions.
1. Answer as directed: 1x8=8
(a) What was the previous name of State Bank of India?
Ans:- Imperial Bank of India (IBI).
(b) Which method is adopted by the Reserve Bank of India for issuing notes?
Ans:- The Reserve Bank of India (RBI) uses the Minimum Reserve System (MRS) to issue currency.
(c) What is Mutual Fund?
Ans:- A mutual fund is a company that collects money from investors and invests it in securities such as stocks, bonds, and short-term loans. The combined holdings of a mutual fund are known as its portfolio.
(d) The IMF came into existence in the year December 27, 1945. (Fill in the gap)
(e) Write the full form of SIDC.
Ans:- SIDC stands for State Industrial Development Corporation.
(f) Give an example of Negotiable instrument.
Ans:- Negotiable instrument is a written document that promises to pay a certain amount of money to the holder of the document. These are used in commercial transactions and monetary transactions.
Some examples of negotiable instruments include:-
(i) Personal cheques
(ii) Money order
(iii) promissory note
(iv) Bills of exchange
(g) Governor of RBI is appointed for period of 4/5/10 years. (Choose the correct answer).
(h) What is bank rate?
Ans:- Bank rate is the interest rate charged by the central bank when lending money to commercial banks. This is also known as the discount rate.
2. Name any two Central banking functions performed by the State Bank of India. 2
Ans:- (i) It acts as a banker for the government.
(ii) It acts as a banker's bank.
3. What is full reserve system of note issue? 2
Ans:- Fractional reserve banking in which banks will need to keep the full amount in cash from each depositor for immediate return on demand. Funds deposited by customers in demand deposited accounts cannot be given a loan by the bank as the customer will be legally necessary to maintain a full deposit to ensure sufficient reserve for payment. , Proposals for full reserved banking systems usually do not collect restrictions which are not payable on demand, for example for time deposit or savings accounts.
4. Name two sub-market of Indian money market. 2
Ans:- (i) Call Money Market
(ii) Collateral Loan Market
5. Who is collecting banker? 2
Ans:- The banker is defined as the authority or banker who receives bills, checks, drafts, payment orders, etc. from the customers. The role of collecting bankers and the role of collecting bankers is in the form of agents and value of the collection.
6. Define holder under sec-8 of the Negotiable Instrument Act, 1881. 2
Ans:- According to Section 8 of the Perfect Instruments Act, 1881, a holder is a person who deserves possession of an ideal means and is to receive or recover the amount payable from the parties.
A holder can be an endorsement, PEI or bear. The rights and title of a holder depend on the transfer. In the appointed time, a holder is the one who becomes the owner of an ideal instrument before overdose. It can be a prominent note, exchange bill, or cheque that is payable or payable to Payi or Indersi. In the appointed time, the holder must get or hold a means in good faith and in exchange for value. They should not have any notice or doubt whether the instrument is overdue or malicious.
7. Briefly explain the agency services rendered by commercial banks. 3
Ans:- Various agency services provided by commercial banks have been discussed below:-
(i) Remittance of money: Banks help their customers to transfer money from one place to another through checks, drafts etc.
(ii) Collection and payment of credit instruments: banks collect and pay various credit instruments such as checks, bills of exchange, principal notes etc.
(iii) Purchase and sale of securities: Banks buy and sell various securities like shares, stocks, bonds, debates etc. on behalf of their customers. Banks neither give any advice to their customers about these investments, nor charge them for their service, but only fight with a broker.
(iv) Income Tax Consultation: Sometimes bankers also appoint income tax experts to prepare income tax returns for their customers, rather help them to return income tax in appropriate cases.
(v) Working as trustees and executives: Banks preserve their customers' will and do executive after their death.
(vi) To act as representatives and reporters: Sometimes banks act as representatives and reporters of their customers. They get passports, passengers, tickets, safe routes for their customers and get letters from them.
8. State the meaning of Non-Bank Financial Institutions with banks. 3
Ans:- Non-bank Financial Institutions (NBFIS), also known as non-banking financial companies (NBFCs), are businesses that provide services like banking without bank licenses. Banks are legally recognized financial institutions that provide financial services to consumers, such as depositing and lending money.
There are some differences between banks and NBFIs here:-
(i) Services: Banks offer a full range of financial services, while NBFIs provide a limited range.
(ii) Regulations: NBFIS are not subject to banking rules and inspections as banks.
(iii) Services given: Do not submit NBFI or do not take loans.
(iv) Services are not provided: NBFIS does not offer a full range of financial services.
9. Write a brief note about stock exchange. 3
Ans:- A stock exchange is a marketplace where financial securities, such as shares and bonds, are purchased and sold. Stock exchanges are part of the comprehensive capital market ecosystem.
Stock exchanges differ from other exchanges as traditional property is limited to stock, bonds and exchange traded products (ETPs).
Some works of the stock exchange include:-
(i) Fund Mobility: The stock market attracts investors to invest in shares, which raise money in the economy.
(ii) Helping companies to raise funds: Stock exchange companies help raising funds.
Some other types of investment, such as exchange-traded funds (ETFs) and notes (ETNs), also trading on stock exchanges.
Or
Write a brief note on Money Market.
Ans:- Money Market is a financial market where participants can lend and lend to short -term loans securities. The average maturity of these securities is one year or less.
The money market allows governments, banks and other large institutions to sell short -term securities to meet their cash flow needs. This allows continuous cash flow between corporations, banks, governments and financial institutions.
The money market is mainly used by governments and corporations to keep their cash flow stable, and to earn a nominal profit for investors.
Some benefits of money market investment are included:-
(i) It can be a relatively safe place to park cash in short term
(ii) It can be used to diversify development portfolio
Some losses of money market investment are involved:-
(i) Low return
(ii) Loss of purchasing power
(iii) Lack of FDIC Insurance
10. State the conditions for dishonour or cheque. 3
Ans:- A financial institution can dishonest a cheque for the following reasons:-
(i) Inadequate money: The funds of the account holder are inadequate to cover the value of the cheque. This is the most common cause of a cheque dishonest.
(ii) Closed cheque: The account holder has directed the bank not to pay the check.
(iii) Frozen funds: Funds of account holders are frozen.
(iv) Signature mismatched: Czech signature is missing or does not match the signature of the account holder.
(v) Account number mismatched: Account number on cheque number does not match the account number on the account.
(vi) An invaluable date: The date of the cheque is invalid, as if the cheque has been presented on the cheque six months after the date.
(vii) The amount mismatched: The amount written on the cheque does not match the amount written in words.
(viii) damaged cheque: The cheque is in damaged, burst or poor condition.
(ix) overdraft limit: The cheque overdraft is higher than the limit.
According to Section 138 of the negotiable Instruments Act, 1881, a dishonest cheque is a criminal offense. The issuer of a dishonest cheque may face criminal liability and the cheque holder may have a legal support.
Or
Explain the meaning of the term ‘material alteration’ of a cheque with illustrations.
Ans:- A material alteration is a change in a written tool that changes its legal language from the original. Physical alteration can occur when changes are made in a check without the knowledge of the drawer and after the check is issued.
Examples of material alteration include:-
(i) Changing the date of the instrument
(ii) Changing the amount payable
(iii) Changing the place of payment
(iv) Changing payment time
(v) Removing the name of the payment
(vi) Converting the word "order" into "bearer" after the name of the drink
(vii) tearing the physical part of the instrument
A material change can change the clear nature of the relationship between parties. It can also change the legal character and impact of the document.
A material alteration represents a negotiable tool zero against any person that is a party for the instrument and does not agree to change.
11. State any three differences between promissory note and cheque. 3
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