IAS Prelims 2013 Paper 2 CSAT Solved (Part 13 of 18)

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Directions for the following 4 (four) items:

Read the following passage and answer the four items that follow. Your answers to these items should be based on the passage only.


Financial markets In India have acquired greater depth and liquidity over the years. Steady reforms since 1991 have led to growing linkages and integration of the Indian economy and its financial system with the global economy. Weak global economic prospects and continuing uncertainties in the international financial markets therefore, have had their impact on the emerging market economies. Sovereign risk concerns, particularly in the Euro area, affected financial markets for the greater part of the year, with the contagion of Greece's sovereign debt problem spreading to India and other economies by way of higher than normal levels of volatility.

The funding constraints in international financial markets could impact both the availability and cost of foreign funding for banks and corporates. Since the Indian financial system is bank dominated, banks ability to withstand stress is critical to overall financial stability. Indian banks, however, remain robust, notwithstanding a decline in capital to risk-weighted assets ratio and a rise in non-performing asset levels in the recent past. Capital adequacy levels remain above the regulatory requirements. The financial market infrastructure continues to function without any major disruption. With further globalization, consolidation1 deregulation, and diversification of the financial system, the banking business may become more complex and riskier. Issues like risk and liquidity management and enhancing skill therefore assume greater significance.

  1. According to the passage, the financial markets in the emerging market economies including India had the adverse impact in recent years due to

    1. weak global economic prospects.

    2. uncertainties in the international financial markets.

    3. sovereignity concerns in the Euro area.

    4. bad monsoons and the resultant crop loss.

    Select the correct answer using the code given below:

    1. 1 and 2 only

    2. 1, 2 and 3

    3. 2 and 3 only

    4. 2, 3 and 4

    Answer: b

  2. The Indian financial market are affected by global changes mainly due to the

    1. increased inflow of remittances from abroad.

    2. enormous increase in the foreign exchange reserves.

    3. growing global linkages and integration of the Indian financial markets.

    4. contagion of Greece's sovereign debt problem.

    Answer: c

  3. According to the passage, in the Indian financial system, banks'ability to withstand stress is critical to ensure overall financial stability because Indian financial systems is

    1. controlled by the Government of India.

    2. less integrated with banks.

    3. controlled by Reserve Bank of India.

    4. dominated by banks.

    Answer: d

  4. Risk and liquidity management assumes more importance in the Indian banking system in future due to

    1. further globalization.

    2. more consolidation and deregulation of the financial system.

    3. further diversification of the financial system.

    4. more financial inclusion in the country.

    Select the correct answer u6ing the code given below:

    1. 1, 2 and 3

    2. 2, 3 and 4

    3. 1 and 2 only

    4. 3 and 1 only

    Answer: a

  5. There are five hobby clubs in a college viz. photography yachting, chess, electronics and gardening. The gardening group meets every second day, the electronics group meets every third day, the chess group meets every fourth day, the yachting group meets every fifth day and the photography group meets every sixth day. How many times do all the five groups meet on the same day within 180 days?

    1. 3

    2. 5

    3. 10

    4. 18

    Answer: a

  6. A, B, C, D and E belong to five different cities P, Q, R, S and T (not necessarily in that order). Each one of them comes from a different city. Further it is given that:

    1. B and C do not belong to Q

    2. B and E do not belong W P and R

    3. A and C do not belong to R, S and T

    4. D and E do not belong to Q and T

    Which one of the following statements is not correct?

    1. C belongs to P

    2. D belongs to R

    3. A belongs to Q

    4. H belongs to S

    Answer: d

  7. Seven men, A, B, C, D, E, F and G are standing in a queue in that order. Each one is wearing a cap of a different colour like violet, indigo, blue, green yellow, orange and red. D is able to see in front of him green and blue, but not violet. E can ace violet and yellow, but not red. G can see caps of all colours other than orange. If E is wearing an indigo coloured cap, then the colour of the cap worn by F is

    1. Blue

    2. Violet

    3. Red

    4. Orange

    Answer: c