ABM C - Unit 20 - Motivational Banker

1. A DPG is issued by the bank for___________, by its client.

Sale of goods

Purchase of goods

Sale of capital goods

Purchase of capital goods

Question 1 of 25

2. Which of the following statements is not true for an infrastructure project?

It has long gestation period

It reduces the risk for the lender as her funds get assured deployment for a long time.

The debt equity ratio is normally high for an infrastructure project

The implementation period is usually long

Question 2 of 25

3. Which of the following is not a source of funds for meeting the cost of purchase of fixed assets by an enterprise?

Credit by supplier of assets

Internal accruals

Debentures

DPG

Question 3 of 25

4. Which of the following is a ratio indicative of the repayment capacity of a borrower?

Quick ratio

TOL/INW

DSCR

DER

Question 4 of 25

5. Which of the following is not correct regarding term loans by the banks?

Asset liability matching is an important consideration in term financing

Instalment of term loan, payable within one year is considered as current liability

Repayment of a term loan can be in equated monthly instalments

Current ratio is the most important ratio in appraisal of a term loan

Question 5 of 25

6. Project loans can be given by the bank to_____________?

Only corporates

Only corporates and partnership firms

Only corporate, partnership firms and societies

Any business entity

Question 6 of 25

7. Which of the following is not correct regarding financing of infrastructure project by the banks?

Banks are allowed to funds promoters' equity in certain circumstances

Exposure norms are relaxed by RBI

Asset liability mismatch has been permitted by RBI

IDFC provides liquidity support to banks

Question 7 of 25

8. Which of the following statements is not correct for project appraisal?

Examination of technical feasibility is carried out

The contribution of promoters forms a part of financial appraisal

Promoters' background is part of the management appraisal

Capacity of promoters to arrange for additional funds, in case of contingencies, forms a part of economic appraisal.

Question 8 of 25

9. What is the primary purpose of term loans provided by banks?

Personal expenses

Acquiring fixed assets

Educational expenses

Sustaining working capital

Question 9 of 25

10. In what situations do banks provide Working Capital Term Loans (WCTL)?

To acquire fixed assets

To sustain working capital

To invest in infrastructure projects

To fund personal expenses

Question 10 of 25

11. How are working capital loans typically repaid?

Monthly

Quarterly

On demand

As per the agreed repayment schedule

Question 11 of 25

12. Which ratio assumes greater importance when considering term loans?

Liquidity ratios

Debt service coverage ratio (DSCR)

Current ratio

Debt to equity ratio

Question 12 of 25

13. What determines the repayment schedule for term loans?

Uniform schedule for all loans

Borrower's cash surplus

Government regulations

Industry standards

Question 13 of 25

14. What is the purpose of a Deferred Payment Guarantee (DPG)?

To finance personal expenses

To finance working capital needs

To finance the purchase of fixed assets with deferred payment terms

To provide credit to individuals

Question 14 of 25

15. What happens if the purchaser defaults on payment in a Deferred Payment Guarantee?

The bank cancels the guarantee

The bank pays the amount to the supplier and the exposure becomes fund-based

The bank increases the guarantee amount

The bank extends the repayment schedule

Question 15 of 25

16. How does a Deferred Payment Guarantee differ from a term loan?

DPGs are fund-based, while term loans are non-fund based

DPGs have a fixed repayment schedule, while term loans have variable repayment schedules

DPGs finance working capital needs, while term loans finance fixed assets

DPGs involve deferred payments, while term loans do not

Question 16 of 25

17. What is the primary risk associated with a Deferred Payment Guarantee?

Liquidity risk

Credit risk

Market risk

Operational risk

Question 17 of 25

18. What distinguishes term loan appraisal from project appraisal?

Term loan appraisal focuses on technical feasibility, while project appraisal focuses on financial viability.

Term loan appraisal assesses working capital requirements, while project appraisal does not.

Term loan appraisal evaluates specific loan requests, while project appraisal evaluates entire ventures.

Term loan appraisal involves detailed risk analysis, while project appraisal focuses on financial projections.

Question 18 of 25

19. In term loan appraisal, what is the primary focus of assessment?

Technical feasibility of the proposed project

Detailed analysis of working capital requirements

Comprehensive evaluation of all aspects of the proposed venture

Viability and repayment capacity of the specific loan request

Question 19 of 25

20. How does project appraisal differ from term loan appraisal in terms of complexity?

Project appraisal involves simpler analysis compared to term loan appraisal.

Term loan appraisal requires more in-depth analysis than project appraisal.

Both involve equally complex analyses of financial metrics.

Project appraisal is more comprehensive and requires a deeper analysis than term loan appraisal.

Question 20 of 25

21. Which factor is typically considered in project appraisal but not in term loan appraisal?

Debt-Service Coverage Ratio (DSCR)

Technical feasibility of the project

Working capital requirements

Viability of specific loan requests

Question 21 of 25

22. What requirement must the borrower meet in terms of maintenance of stipulated margins for bank loans financing acquisition of equity shares by promoters?

No specific requirement

Maintenance of margins not necessary

Maintenance of stipulated margins at all times

Maintenance of margins only during the first year of loan disbursement

Question 22 of 25

23. Deferred Payment Guarantees (DPGs) issued by banks are mainly for:

Short-term working capital needs

Financing personal expenses

Financing the acquisition of fixed assets

Guaranteeing deferred payments to suppliers of capital equipment

Question 23 of 25

24. How does project appraisal differ from term-loan appraisal?

Project appraisal does not consider managerial aspects

Project appraisal focuses solely on financial ratios

Project appraisal involves examination of techno-economic feasibility and managerial aspects

Project appraisal is only concerned with short-term financing

Question 24 of 25

25. Which sector involves infrastructure projects such as roads, bridges, power, and telecommunication?

Manufacturing sector

Service sector

Financial sector

Infrastructure sector

Question 25 of 25

ABM C – Unit 20

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