2nd Year Principles of Banking Chapter 8 TestBank Funds and their Use

Q1. Multiple choice questions (Attempt all · 10 × 1 = 10)

1. Which of the following is a highly marketable security:

   1. Document of title to goods

   2. Shares and debentures

   3. Immoveable property

   4. All the above

2. What is called a good security:

   1. Whose price can be determined easily

   2. Which does not have any government restriction

   3. Whose ownership is totally clear

   4. All the above

3. The security received by a bank against loan should not be:

   1. Durable

   2. Liquidable

   3. Under burden

   4. Insured

4. What is meant by the principle of diversity regarding issuance of loan:

   1. Lending only to those who can repay the debt at short notice

   2. Lending against some meterial security

   3. Lending in terms of sure repayment

   4. Lending to different businesses or individuals

5. The loans which are issued for the period of one to five year called:

   1. Demand loans

   2. Short term loans

   3. Medium term loans

   4. Long term loans

6. Long term loan period is consist of:

   1. Days

   2. Months

   3. Years

   4. All the above

7. Why does a bank grant loans to businessmen?

   1. To purchase raw material

   2. To pay wages

   3. To pay development expenditures

   4. All the above

8. In case of mortgage, the property remains in the possession of:

   1. Lender (creditors)

   2. Borrower (debtors)

   3. The government

   4. All the above

9. Pledge means transfer of rights to lender of:

   1. Moveable property

   2. Immoveable property

   3. Goods and production

   4. Costly documents

10. What is meant by hypothecation:

    1. To hand over the goods or documents of title of goods by a customer to the bank as a security against a debt

    2. To hand over the document or property  by a customer until the repayment of debt

    3. A type of security in which neither the ownership not the possession passes to the bank

    4. A receipt of loan which shows that money has been borrowed against an immovable property as a security