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Previous Year Question Paper of Finance and Management RBI GRADE B Phase II 2018

Previous Year Question Paper of Finance and Management RBI GRADE B Phase II 2018

Exam: RBI GRADE B 2018 Phase II
Subject: Paper III – Finance and Management
Instructions:
Type of Paper: Objective Type
Total Questions: 65
Total Marks: 100
Marking:
· Question no.1 to 35 will carry 2 marks each.
· Question no.36 to 65 will carry 1 mark each.
· For every wrong answer marked by you, 1/4th of the marks
assigned to that question will be deducted as penalty.
Total Time: 90 Minutes
Note: We have tried our best to provide the exact questions asked in
RBI GRADE B Phase II EXAM. Questions mentioned in Paper are
approximately similar to questions asked in RBI GRADE B Phase II but
Pattern is 100% similar to RBI GRADE B Phase II EXAM.

Answer the Question no. 1 to 4 based on the statement given below:
Statement: The Lok Sabha passed the Insolvency and Bankruptcy Code(Second Amendment)
Bill, 2018 that recognises homebuyers as financial creditors to real estate developers. The bill
also proposes a special dispensation for small sector enterprises. The IBC Amendment Bill now
requires clearance from Rajya Sabba to replace the earlier ordinance that sought to put these
amendments into force to aid quick resolution of several bankrupt firms.
Moving the bill in Lok Sabha, interim finance minister Piyush Goyal said, “We want to address
concerns expressed by the MSME sector and homebuyers. We have learnt from two years of
implementation of IBC, and through the amendments, we want to strengthen IBC Bill.” The
minister also said that the objective of the bill was not to liquidate the companies but to save
jobs in those companies.
“After years of lethargy in recovering bank loans, finally we now have a new law — the
Insolvency and Bankruptcy Code 2016, which has started bringing big bank defaulters to the
book and made banks recover loans from them,” the minister tweeted. Goyal also rejected
Opposition’s charge that the government has come out with an ordinance to amend the code
to favour a big corporate house.
The bill says that homebuyers will get due representation in the committee of creditors (CoC)
that takes a call on resolution proposals, making them an integral part of the decision making
process. It also provides some reliefs for micro, small and medium enterprises (MSMEs). It does
not disqualify promoter of an MSME firm from bidding for his enterprise undergoing corporate
insolvency resolution process (CIRP), provided he is not a wilful defaulter and does not attract
other disqualifications not related to default.
1. IBC is applicable to which of the following:
A. Individuals
B. Partnership firms
C. Companies
D. LLPs
E. All of the above
2. Resolution plan for LLP and companies is approved by:
1. NCLT
2. Government
3. Supreme Court
4. DRT
5. None of the above

3. Order of liquidation in the structure of IBC:
A. Secured creditors, Insolvency cost, Govt dues, workman dues
B. Insolvency cost, secured creditors, workman dues, Govt dues
C. Workman dues, Insolvency cost, secured creditors, Govt dues
D. Govt dues, workman dues, secured creditors, Insolvency cost

4. Maximum time for resolution process without time extension in IBC structure:
1. 60 days
2. 90 days
3. 120 days
4. 180 days
5. 270 days

Answer the Question no. 5 to 7 based on the statement given below:
Statement: The global economic meltdown of 2008, triggered by the Lehman Brothers’
collapse, set alarm bells ringing for financial institutions. The Basel III accord is designed to
mitigate such risks by making the banking sector stronger and more efficient. The norms call for
improvement of the quantity and quality of capital of banks, stronger supervision, more
stringent risk management and disclosure standards.
As per the Reserve Bank of India’s direction, the Basel III capital regulation is being
implemented from April 1, 2013, in India in phases, and will be fully adopted by March 31,
2019.
As of now, Indian banks fare well on compliance with the capital norms, with an average capital
adequacy of 13.3% as of March 2017. The continued stressed scenario of the industry is likely to
bring this down by a further 2 percentage points by March 2018. However, many of India’s
banks, especially PSBs, are under-prepared to meet the stipulated deadline for total
compliance. Macroeconomic headwinds as well as underlying infrastructural issues have
necessitated strong actions and stricter discipline by the banks.

5. Which of the following are the pillars under Basel II?
a. Capital Requirement and Supervisory Review
b. Supervisory Review and Market Discipline
c. Capital Requirement, Supervisory Review and Market Discipline
d. None of the above

6. Which of the following risk is not covered under Basel II?
a. Liquidity Risk
b. Market Risk
c. Credit Risk
d. Operational Risk

7. Which of the following are the component of capital under Basel III:
a. AT 1
b. CET 1
c. TIER 1
d. CCB
e. All of the above

Answer the Question no. 8 to 10 based on the statement given below:
Statement: In a bid to give a leg-up to priority sector lending, the Reserve Bank of India said
that all scheduled commercial banks will be allowed to co-originate loans with Non-Banking
Financial Companies (NBFCs) for creating eligible priority sector assets.
The central bank, however, has excluded regional rural banks (RRBs) and small finance banks
(SFBs) from co-origination as most of the loans they originate are priority sector loans. Further,
only NBFCs classified as Non-Deposit Taking- Systemically Important can get into co-origination
arrangements with scheduled commercial banks.
Priority sector loans include loans given to the agriculture sector (farm credit, agriculture
infrastructure and ancillary activities), micro, small and medium enterprises (MSMEs), export
credit, education, housing, social infrastructure, and renewable energy, among others.
The RBI said the co-origination arrangement should entail joint contribution of credit by both
lenders at the facility-level. It should also involve sharing of risks and rewards between the
banks and the NBFCs for ensuring appropriate alignment of respective business objectives as
per their mutual agreement.
In its ‘Statement on Developmental and Regulatory Policies’, which was issued along with the
third bi-monthly monetary policy statement, the RBI said the guidelines on co-origination of
priority sector loans would be issued by the end of September 2018.
8. In 40 percent of Adjusted Net Bank Credit, what is the share of agriculture?
a. 10%
b. 12%
c. 18%
d. 26%
9. Under Priority Sector Lending, what is the Education loan limits for India and
abroad?
a. 10 lacs, 15 lacs
b. 10 lacs, 20 lacs
c. 5 lacs, 10 lacs
d. 15 lacs, 30 lacs

10. Priority Sector Lending limit for housing loan in Metros (with population of ten lakh and
above) and non – metros are?
a. Metro (Loan 30 lacs, Project Cost 45) Non Metro (Loan 20 Project Cost 30)
b. Metro (Loan 15 lacs, Project Cost 25) Non Metro (Loan 10 Project Cost 20)
c. Metro (Loan 35 lacs, Project Cost 45) Non Metro (Loan 25 Project Cost 30)
d. Metro (Loan 25 lacs, Project Cost 40) Non Metro (Loan 20 Project Cost 30)

Answer the Question no. 11 to 14 based on the statement given below:

Statement: According to J. Batty “the term accounting ratio is used to describe significant
relationships between figures shown on a Balance Sheet, in a Profit and Loss Account, in a
Budgetary Control System or in any part of the accounting organisation.” In simple words, it is
an assessment of significance of any figure in relation to another.
The accounting ratios indicate a quantitative relationship which is used for analysis and
decision-making. It provides basis for inter-firm as well as intra-firm comparisons. Besides, in
order to make the ratios effective, they are compared with ratios of base period or with
standards or with the industry average ratios.
Different kinds of ratios are selected for different types of situations:
Balance Sheet Ratios: These ratios are also known as financial ratios. These ratios deal with
relationship between two items or group of items which are both available in Balance sheet.
Examples of these ratios are: Current ratio, Liquid ratio, Debt-Equity ratio, Capital bearing ratio,
Proprietary ratio, etc.
Profit and Loss Account Ratios: These ratios deal with the relationship between two items or
group of items which are usually taken out from the profit and loss account.
Examples of these ratios are: Gross profit ratio, Net profit ratio, Operating ratio, Operating
profit ratio, Interest coverage ratio etc.

Q.11 If 1:1 bonus shares are issued, which of the following will be impacted:
a. Face value reduces
b. Debt equity ratio will reduce
c. No impact on net Tangible net worth 
d. None
e. market value will reduce

Q.12 Which of the following is most important driver of market price of a share?
a. Dividend
b. EPS
c. Profit
d. None

Q.13 Return on Investment measures which of the following ratio?
a. Profitability ratio
b. Solvency ratio
c. Liquidity ratio
d. None of the above

Q.14 The share price and earning per share for 5 different bank as follows, which
bank has the highest P/E ratio:
Name of the bank   Share price   Earnings per share
AXIS Bank                1020                        60
ICICI Bank               1240                         52
HDFC Bank              2060                       67
CITI Bank                 830                         44
YES Bank                 1450                          70
a. YES Bank
b. CITI Bank
c. HDFC Bank
d. ICICI Bank
e. AXIS Bank

Answer the Question no. 15 to 19 based on the statement given below:
Statement: While a great deal has been said about international differences in leadership styles
and their effectiveness, another issue probably matters more for most organizations: How can
we develop leaders who are effective across cultural boundaries? Is it possible to create a truly
global leadership style that will extend across cultures? Some recent forays into the field of
cross-cultural leadership highlight possibilities for how global organizations might proceed.
Some of the leadership styles we have described in this chapter do seem to generalize across
cultures. For example, research suggests charismatic leadership is effective in a variety of
national contexts. In many cultures, terms like visionary, symbolizer, and self-sacrificer appear
as descriptors of effective leaders, and positive leader– member exchanges also are associated
with high performance across a variety of cultures. Culturally intelligent leaders are flexible and
adaptable, tailoring their leadership styles to the specific and changing needs of the global
workforce. Researchers agree that learning to be a global leader requires gaining active
experience in dealing with multiple cultures simultaneously. These experiences give leaders a
chance to observe how different leadership styles work with different groups of people and
build confidence in working across cultural boundaries.

15. The leadership style Leadership theory where leaders have complete trust in Subordinates
and seek frequent suggestions from them and use them constructively:
a. Paternalistic
b. Participative
c. Consultative
d. Authoritative
e. Exploitative

16. Leadership theory where leader removes obstacles to reach objectives:
a. Trait theory
b. Great Man Theory
c. Leader-Member Exchange theory
d. Path Goal Theory

17. Subordinate’s perception that the supervisor has power to punish or withhold key
resources:
a. Reward Power
b. Coercive Power
c. Expert Power
d. Legitimate Power
e. Referent Power

18. Managers can identify how they with respect to their concern for production and people
with which of the following Model:
a. The University of Michigan Studies
b. Managerial Grid Model
c. Likert’s Management System
d. Fiedler’s Contingency Model

19. The leadership theory in which Leader and Follower helps each other to move to higher
level of motivation and morale:
a. Trait theory
b. Behavioral theory
c. Transactional leadership
d. Transformational leadership

20. FRBM paved the way for removal of:
a. Ad Hoc Bill
b. Ways and Means Advance Limit
c. Long term loans
d. None of these

21. Which of the following is not motivation factor as per Herzberg’s theory:
a. Opportunity for achievement
b. Recognition for achievement
c. Responsibility for task
d. Interpersonal relations at work

22. Which of the following is not a Liquidity Management Tool used by RBI:
a. Repo
b. MSS
c. MSF
d. OMO
e. Interest rate swaps

23. CCIL provides guaranteed clearing and settlement functions for transactions in:
a. Money Market
b. G-Secs
c. Foreign Exchange
d. Derivative markets
e. All of the above

Answer the Question no. 24 to 26 based on the statement given below:
Statement: Work Specialization is the degree to which tasks in an organization are divided into
separate jobs. In some companies or organizations this is also referred to as division of labor.
Work specialization is something that helps companies become more efficient, and productive.
It is always important for a company’s productivity to go up and or stay stable. An example of
where work specialization may be used to help productivity and efficiency would possibly be in
a shop, or an assembly line setting. One of the first businessmen to implement this idea of work
specialization in a blue collar fashion was Henry Ford. He believed the assembly line was
beneficial to his company and indeed it was. The assembly line focused on workers only
performing one specific task and passing it to the next person. It was well-organized, fast, and
efficient, something that the auto industry needed to implement in order to be successful, and
Ford did just that.
24. Organization Structure using both Functional and Divisional structure:
a. Matrix Organization
b. Project Organization
c. Functional Organization
d. None of these

25. A Flexible Organisation without defined lines is called:
a. Matrix Organization
b. Project Organization
c. Functional Organization
d. Boundary less Organization

26. Departmentalization based on unique occupational speciality or Processes:
a. Production Department
b. Process Department
c. Quality Department
d. None of these

Answer the Question no. 27 to 30 based on the statement given below:
Statement: Inventory Management includes managing and controlling raw materials, stocks,
finished goods, warehousing, storage and other aspects which help reach the product from
production to distributor or retailer. Each organization regularly strives on efficient inventory
management to uphold optimum inventory to be able to meet its necessities and avoid over or
under inventory that can impact the monetary statistics of the firm.
Inventory is forever dynamic. A prerequisite of inventory management is steady and vigilant
assessment of exterior and interior factors and control via planning and evaluation. Most of the
businesses have an individual department of inventory planners who incessantly observe,
control and evaluate inventory and interface with manufacturing, procurement and finance
sections of the firm.
In a business or association, all the functions are interlinked and coupled to each other and are
time and again overlapping. Some key features like supply chain management, logistic handling
and inventory management form the spine of the business delivery function. Therefore these
functions are very significant to the managers.
27. Inventory Management system with focus on Minimizing holding, ordering costs:
a. JIT
b. EOQ
c. ABC analysis
d. None of these

28. Inventory Management System in which cards are being used:
a. Abc analysis
b. Just in time
c. Kanban
d. Kaizan

29. Control system which automates the process of control:
a. Cybernetic
b. Non cybernetic
c. Strategic
d. Feedback Control

30. Control method which involves speculating deviations rather than comparing variations
after completion of the activity:
a. Reactive
b. Concurrent
c. Feedback Control
d. None of the above

31. If rupee breached level of 70 per dollar, what should RBI do?
a. Sell Dollars
b. Buy G-Sec
c. Sell G-Sec
d. None of these

32. if the average inflation is more than the upper tolerance level of 4% + 2%, that is, 6%,
or less than the lower tolerance level of 4% – 2%, that is 2%, for any three consecutive
quarters, then who is answerable to the central government:
a. RBI Deputy Governor
b. RBI Governor
c. Finance Secretary
d. None of these

33. Repo Injects Liquidity while Reverse Repo …..Liquidity
a. Sucks
b. Injects
c. Increases
d. None of these

34. Decision metric under which the worst outcome is selected among many and the worst
pay off related with the outcome is used in decision making:
a. Expected Value
b. Maximax
c. Maximin
d. Minimax

35. As per budget, corporates have to raise____ capital through bonds:
a. 15%
b. 10%
c. 35%
d. 25%

Note: Question no. 36 to 65 will carry one marks each:
36. The Control System in Materials Management which Focuses on increasing
productivity:
a. Quality Control
b. Inventory Control
c. Operational control
d. None of these

37. As per Herzberg’s two factor theory of motivation which of the following is Not a Hygiene
Factor:
a. Salary and perquisites
b. Status in the organization
c. Job Security
d. Company’s credibility in the industry
e. Recognition for achievement

38. Control technique which attempt to identify what can possibly go wrong and try to
minimize the occurrence before the activity is initiated:
a. Reactive
b. Concurrent
c. Feedback Control
d. Feed-forward control

39. OCR in Banking means:
a. Optical character recognition
b. Optimized character recognition
c. Optical cheque recognition
d. Optical character reader

40. The appraisal method in which Appraisal is done based on feedback from Supervisor,
Subordinate and Colleagues:
a. 360 degree
b. Graphic Rating Scales
c. Forced Distribution Method
d. Paired Comparisons Method

41. The fiscal deficit target for the year 2018-19:
a. 3.5%
b. 3.3%
c. 2.5%
d. 3%

42. Maximum GST rate is:
a. 12%
b. 25%
c. 28%
d. 18%

43. Written Statement containing the Why and How Particular job is done, roles and
responsibilities etc. is:
a. Job Description
b. Job Analysis
c. Job Design
d. None of these

44. The base year of All-India WPI has been revised from 2004-05 to:
a. 2008-09
b. 2015-16
c. 2011-12
d. 2009-10

45. Communication flowing in every direction without anyone’s control on it:
a. Horizontal Communication
b. Upward communication
c. Downward communication
d. Grapevine communication

46. The method of raising capital online bypassing regulations:
a. Crowd Funding
b. Venture Capital
c. Angel funding
d. None of these

47. The first step in Kurt Lewin’s Change Model:
a. Unfreeze
b. Change
c. Freeze
d. None of these

48. Financial securities like stocks and bonds are held in dematerialized form with:
a. Merchant banker
b. Depository
c. Stock Exchange
d. Stock Broker

49. Making information or activity that is deemed illegal, unethical, or not correct within an
organization, known to outsiders:
a. Whistle-blowing
b. Horizontal Communication
c. Upward communication
d. Insider Trading

50. Leadership theory which states that leaders are born and not made
a. Behavioral theory
b. Path goal
c. Trait theory
d. Leader-Member Exchange theory

51. Which of the following are responsible for achieving the basic or strategic objectives of
the organization:
a. Line Authority
b. Staff Authority
c. Line and staff Authority
d. None of these

52. Leadership style when leader is sensitive about follower’s feelings and emotions, but
leader’s wish prevails:
a. Paternalistic
b. Participative
c. Consultative
d. Authoritative

53. R in ERG theory of motivation means:
a. Realistic
b. Relatedness
c. Representative
d. Reactive

54. UPI is monitored by:
a. RBI
b. NPCI
c. MoF
d. SEBI

55. Ratio of Output Input within Time with due consideration for quality is:
a. Efficiency
b. Efficacy
c. Effectiveness
d. Productivity

56. PPP mostly used to fund:
a. Large Infra Projects
b. Hotels
c. Housing Projects
d. None of these

57. Udyami Mitra was launched by SIDBI for which sector:
a. MSME
b. Housing Sector
c. Education Sector
d. e-commerce

58. The Managerial Grid theory was given by:
a. Max Weber
b. Rensis Likert
c. Blake & Mouton
d. Fred E. Fiedler

59. The manager’s power to reward, promote or grant key resources to an employee:
a. Reward Power
b. Coercive Power
c. Expert Power
d. Legitimate Power
e. Referent Power

60. Which theory of motivation states that the employees perceive what they get from a job
situation (outcomes) in relation to what they put into it (inputs) and then compare their
inputs- outcomes ratio with the inputs- outcomes ratios of others:
a. Maslow’s Need Hierarchy Theory
b. Herzberg’s two factor theory
c. Theory X and Theory Y
d. Equity Theory

61. Budget for infrastructure sector for 2018-19:
a. 5.97 lakh crore
b. 2.90 lakh crore
c. 3.54 lakh crore
d. 8.15 lakh crore

62., Govt. has proposed to allow a standard deduction of Rs. …….. in lieu of the present
exemption in respect of transport allowance and reimbursement of miscellaneous medical
expenses to salaried taxpayers in the budget for 2018-19:
a. 70,000
b. 50,000
c. 40,000
d. 20,000

63. An organizational structure which integrates the efforts of functional and project
authority, the vertical and horizontal lines of authority are combination of the authority flows
both down and across:
a. Matrix Organization
b. Project Organization
c. Functional Organization
d. None of these

64. The Rate which does not include the cost of funds but reflects the liquidity of banks:
a. MCLR
b. Base rate
c. MIBOR
d. None of these

65. A methodology aimed primarily at reducing cycle times of various activities within
production system as well as response times from suppliers and to customers:
a. JIT
b. EOQ
c. ABC analysis
d. None of these

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