Select the proper option from the options given below and rewrite the completed sentences.
Overdraft facility is given to ________.
(a) Savings account
(b) Current account
(c) Fixed account
ANSWER:
Correct option - b
Overdraft facility is given to current account.
Explanation:
A current account holder enjoys the overdraft facility. The term “overdraft facility” means that a temporary arrangement is made whereby a customer is allowed to withdraw an amount of money greater than his prevailing account balance. For this overdraft facility, the bank charges interest on the amount overdrawn.
The account suitable for creating a saving habit is ________.
(a) Current account
(b) Recurring deposit account
(c) Saving account
ANSWER:
Correct option - c
The account suitable for creating saving habit is savings account.
Explanation:
A savings account is an account that caters to the needs of those individuals who wish to save a part of their incomes and earn interest on the amount saved. As this account does not allow customers to make frequent withdrawals from their accounts, it promotes the habit of saving among them.
There is no limit on the frequency of withdrawals from a ________.
(a) Saving account
(b) Fixed account
(c) Current account
ANSWER:
Correct option - c
There is no limit on the frequency of withdrawals from a current account.
Explanation:
Current accounts are generally meant for business class people, as they make and receive a large number of business payments. These people often need to make huge payments on a regular basis; therefore, they use current accounts in which there are no restrictions on the number of withdrawals that can be made.
Principle of utmost good faith is applicable to _________.
(a) Life insurance
(b) Marine insurance
(c) All types of insurance
ANSWER:
Correct option - c
The principle of utmost good faith is applicable to all types of insurance.
Explanation:
The principle of utmost good faith asserts that both parties—the insurer and the insured—must disclose all material facts clearly, completely and correctly. This implies that the insured as well as the insurer should be faithful towards each other. Trust and honesty are the two values that are needed in all types of insurance agreements. Thus, all insurance agreements must be made in utmost good faith.
Principle of indemnity is not applicable to ________.
(a) Life insurance
(b) Fire insurance
(c) Marine insurance
ANSWER:
Correct option - a
Principle of indemnity is not applicable to life insurance.
Explanation:
According to the principle of indemnity, the insurer assures the insured that he/she will bring the insured back to the position he/she was in prior to the occurrence of an uncertain event. As in the case of life insurance, the deceased person cannot be made alive again. Hence, the principle of indemnity is inapplicable here.
Insurable interest must exist in ________.
(a) Life insurance contract only
(b) Marine insurance contract only
(c) Every insurance contract
ANSWER:
Correct option - c
Insurable interest must exist in every insurance contract.
Explanation:
Insurable interest is a financial benefit that the insured derives from the existence of the product that is insured. For example, a person would have insurable interest in his own car and not in his neighbour's car. This simply implies that the insured has an interest in the subject matter of insurance. This insurable interest is essential to all insurance contracts.
Bonded warehouses are located at ________.
(a) Railway station
(b) Villages
(c) Ports
ANSWER:
Correct option - c
Bonded warehouses are located at ports.
Explanation:
Bonded warehouses are located at or near ports. Imported goods are kept in these warehouses before the payment of the custom duty. They are operated by both the government and customs authorities.
Perishable goods are stored in ________.
(a) Bonded warehouses
(b) Duty paid warehouses
(c) Cold storage warehouses
ANSWER:
Correct option - c
Perishable goods are stored in cold storage warehouses.
Explanation:
Goods like fish, dairy products, fruits and flowers that are perishable in nature and that are likely to get destroyed easily are generally preserved in cold storage warehouses. These products are stored at low temperatures to protect them from getting spoilt.
Postal services are administered by ________.
(a) Private companies
(b) Government of India
(c) Panchayat
ANSWER:
Correct option - b
Postal services are administered by Government of India.
Explanation:
Postal services come under the Ministry of Communication and Information Technology; they are administered by the Government of India. They provide services at rates easily affordable by everyone.
In case of urgency and to avoid delays ________ is sent.
(a) Registered post
(b) Speed post
(c) Insured post
ANSWER:
Correct option - b
In case of urgency and to avoid delays, speed post is sent.
Explanation:
Speed post is the postal service provided by the Indian Post and Telegraph Department that delivers letters, parcels and as the name suggests, documents are sent very fast (within 24 to 72 hours). But since it offers various benefits, the charges for this service are relatively higher than the ordinary mail.
In India railways are owned and managed by ________.
(a) Private companies
(b) Government
(c) Individuals
ANSWER:
Correct option – b
In India railways are owned and managed by government.
Explanation:
The Indian railways is supervised by the Ministry of Railways and is governed by the Government of India. Thus, it is fully owned by the Government and no private player is allowed to provide this service.
Door to door services is offered by ________.
(a) Rail transport
(b) Road Transport
(c) Air transport
ANSWER:
Correct option - b
Door-to-door service is offered by road transport.
Explanation:
Road transport offers door-to-door services—that is, passengers or goods are picked up from a certain location and transported to the final destination. It is capable of reaching out to even those places where other modes of transportation cannot reach, for instance, hilly areas.
The costliest means of transport is ________.
(a) Rail transport
(b) Water Transport
(c) Air transport
ANSWER:
Correct option - c
The costliest means of transport is air transport.
Explanation:
Air transport is the costliest mode of transportation of goods and passengers, mainly because of its expensive fuel and high operational costs. However, this mode is the most effective and time-saving, especially for long-distance transportation. It is also effective during situations of natural calamities like earthquakes and floods.
Road transport is suitable for ________ distance.
(a) Short
(b) Long
(c) Medium
ANSWER:
Correct option - a
Road transport is suitable for short distance.
Explanation:
Road transport is suitable for short distances, as its carrying capacity is limited. It also offers door to door service. Thus, it is not economical for long-distance transportation.
Question 1.B1:
Match the correct pairs:
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GROUP ‘A’
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|
GROUP ‘B’
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a.
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RBI
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1.
|
Recurring deposit account
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b.
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Overdraft
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2.
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12 hours service
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c.
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Saving account
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3.
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Withdrawals after fixed period of time
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d.
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ATM
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4.
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Central Bank
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e.
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Fixed deposit account
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5.
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Current Account
|
|
|
6.
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Salaried people
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|
|
7.
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24 hours service
|
|
|
8.
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Commercial bank
|
|
|
9.
|
Cash credit
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|
|
10.
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Withdrawal before fixed period of time.
|
ANSWER:
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GROUP ‘A’
|
|
GROUP ‘B’
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a.
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RBI
|
4.
|
Central Bank
|
b.
|
Overdraft
|
5.
|
Current Account
|
c.
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Saving account
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6.
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Salaried people
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d.
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ATM
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7.
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24 hours service
|
e.
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Fixed deposit account
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10.
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Withdrawal after a fixed period of time
|
* In the book, for part (e), there is a mistake in the item 10. enlisted in Group B. It cannot be 'withdrawal before'. Indeed, it should be withdrawal after.
a) The Reserve Bank of India (RBI) is the central bank of India. It is the apex bank that supervises the monetary and banking system of India. It is responsible for maintaining the economic stability of the country. It prints notes and lays down rules and regulations for commercial banks.
b) Overdraft facility is given to current account holders. It is a temporary arrangement whereby a customer is allowed to withdraw amount more than that prevailing in his/her account. For the overdraft facility, the bank charges interest on the amount overdrawn.
c) Savings accounts are basically meant for people who have fixed incomes (like salaried people). This type of account encourages the habit of saving among people.
d) An automatic teller machine (ATM) is an electronic machine that offers convenience to customers, as they can deposit or withdraw money from their accounts anytime without having the need to visit the branch of the bank. ATMs provides 24×7 service facility.
e) A fixed deposit account is an account in which deposits are kept for a fixed period of time. Also, deposits cannot be withdrawn from this account before maturity. More the time period, the greater is the interest rate earned. The rate of interest is decided by the RBI.
Question 1.B2:
Match the correct pairs :
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GROUP ‘A’
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GROUP ‘B’
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a.
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Life Insurance
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1.
|
Claim made by insured
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b.
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Mitigation of loss
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2.
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Perishable goods
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c.
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Premium
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3.
|
Insurable interest
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d.
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Cold storage
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4.
|
Maximum loss
|
e.
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Warehousing
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5.
|
Transfer of goods from one place to other
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|
|
6.
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To minimise the loss
|
|
|
7.
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Imported goods
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|
|
8.
|
Principle of indemnity
|
|
|
9.
|
Storage of goods
|
|
|
10.
|
Payment made by policy holder
|
ANSWER:
|
GROUP ‘A’
|
|
GROUP ‘B’
|
a.
|
Life insurance
|
8.
|
Principle of indemnity
|
b.
|
Mitigation of loss
|
6.
|
To minimise loss
|
c.
|
Premium
|
10.
|
Payment made by policyholder
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d.
|
Cold storage
|
4.
|
Maximum loss
|
e.
|
Warehousing
|
9.
|
Storage of goods
|
a. According to the principle of indemnity, the insurer assures the insured that he/she will bring the insured back to the position he/she was in prior to the occurrence of an uncertain event. Because in case of life insurance, there can obviously be no compensation for the life lost, the principle of indemnity is inapplicable here.
b. Mitigation is the principle that states that the insured must take all necessary measures and steps to control and minimise the loss. In other words, the insured should not remain inactive when an accident occurs.
c. A fixed, regular, periodic payment made by a policyholder for his/her insurance is called premium. The policyholder pays the premium periodically which covers him against the risk for a fixed period of time under a given insurance plan.
d. Cold storage is used to preserve goods that are perishable in nature, i.e., the goods that get destroyed easily. Fish, dairy products, fruits, flowers, etc., are generally kept in these storage warehouses at very low temperatures so that they can be preserved for a longer duration and used later on.
e. Some goods are produced in a specific period but are consumed or demanded throughout the year. These goods are stored in warehouses to ensure their regular supply in the market. Warehouses also perform various functions such as consolidation, bulk breaking and stockpiling.
Question 1.B3:
Match the correct pairs :
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GROUP ‘A’
|
|
GROUP ‘B’
|
a.
|
Road transport
|
1.
|
Government owned
|
b.
|
Rail transport
|
2.
|
Co-operative societies
|
c.
|
Air transport
|
3.
|
Self employed
|
d.
|
Postal department
|
4.
|
Owned by private companies
|
e.
|
Courier services
|
5.
|
Door to door service
|
|
|
6.
|
Owned by individuals
|
|
|
7.
|
Costliest means of transport
|
|
|
8.
|
Huge carrying capacity
|
|
|
9.
|
Difficulty in transport
|
|
|
10.
|
Cheapest means of transport
|
ANSWER:
|
GROUP ‘A’
|
|
GROUP ‘B’
|
a.
|
Road transport
|
5.
|
Door-to-door service
|
b.
|
Rail transport
|
8.
|
Huge carrying capacity
|
c.
|
Air transport
|
7.
|
Costliest means of transport
|
d.
|
Postal department
|
1.
|
Government owned
|
e.
|
Courier services
|
4.
|
Owned by private companies
|
a. Road transport offers door-to-door service—that is, passengers or goods are picked up from a certain location and transported to the final destination. It is capable of reaching out to even those places where other modes of transport cannot reach, for instance, hilly areas.
b. The carrying capacity of rail transport is huge. Rail transport helps in carrying heavy and costly goods conveniently and safely, even to distant locations. It is a safe and secure means of transporting goods from one place to another.
c. Air transport is the costliest mode of transportation of goods and passengers, mainly because of its expensive fuel and high operational costs. However, this mode is the most effective and time-saving, especially for long-distance transportation. It is also effective during situations of natural calamities like earthquakes and floods.
d. The department comes under the Ministry of Communication and Information Technology and is administered by the Government of India. The department offers financial services, mail services and direct post services.
e. Courier services are governed and owned by private companies. Under these services, goods and mails are transported from one place to another. Courier companies ensure speedy and safe transmission of goods from one place to another. DHL, FedEx and TNT are examples of courier companies.
Write a word or phrase or a term which can substitute each one of the following:
The account suitable for salaried people.
ANSWER:
The account suitable for salaried people - Savings account
Explanation:
Salaried people have a fixed income; therefore, they want to save a part of their income to secure their future. They deposit their income in the savings accounts to earn interest on their savings.
Thus, we can say that a savings account is suitable for salaried people.
Overdraft facility is given to a certain definite account holder.
ANSWER:
Overdraft facility is given to a certain definite account holder. - Current account holder
Explanation:
Overdraft facility is provided to current account holders. According to this facility, a current account holder can withdraw amount more than what he/she has in his/her account but interest is charged over the amount overdrawn.
An account holder enjoys the privileges of any number of withdrawals.
ANSWER:
An account holder enjoys the privileges of any number of withdrawals- Current account holders
Explanation:
Under current account, the holder can make any number of withdrawals. It is specially meant for the businesspersons who make and receive large number of business payments. However, they do not earn interest on the current account deposits.
An account where fixed amount is kept for a specific period.
ANSWER:
An account where fixed amount is kept for a specific period- Fixed account
Explanation:
In a fixed deposit account, an amount is deposited for a specific period. The amount deposited cannot be withdrawn before maturity. In case a person withdraws the amount before the expiry of the fixed period, the rate of interest that is to be paid becomes less than what was applicable.
A bank, which is known as banker's bank.
ANSWER:
A bank, which is known as banker’s bank - Central Bank
Explanation:
The central bank is known as the banker's bank because it controls the working of commercial banks and also provides them guidance. The central bank accepts deposits from commercial banks and holds them as reserves for them.
The type of insurance where the principle of indemnity is not applicable
ANSWER:
The type of insurance where the principle of indemnity is not applicable - Life insurance
Explanation:
According to the principle of indemnity, the insurer assures the insured that he/she will bring the insured back to the position he/she was in prior to the occurrence of an uncertain event. Because in case of life insurance, there can obviously be no compensation for the life lost, the principle of indemnity is inapplicable here.
The policy under which cargo is insured for a specific period & voyage.
ANSWER:
The policy under which cargo is insured for a specific period & voyage - Mixed policy
Explanation:
Mixed policy is a combination of voyage policy and time policy. Voyage policy provides insurance for a particular voyage, irrespective of time. On the other hand, time policy is for a specific period of time.
The principle of insurance under which the insurer and the insured must show complete faith towards each other
ANSWER:
The principle of insurance under which the insurer and insured must show complete faith towards each other - Principle of utmost good faith
Explanation:
The principle of utmost good faith states that the insurer and the insured should have faith in each other and in the contract. Each should disclose all the necessary information related to the subject matter of the insurance. Complete faith towards each other is the prime condition of every contract.
A device through which calls and messages can be sent and received
ANSWER:
A device through which calls and messages can be sent and received - Mobile phone
Explanation:
A mobile phone enables a person to connect with anyone, anywhere. The device can be used to make and receive calls and send and receive messages. Companies like Nokia, Sony and Samsung produce mobile phones.
An electronic letter through which the messages can be exchanged on the computer
ANSWER:
An electronic letter through which the message can be exchanged on the computer- E-mail
Explanation:
An e-mail enables the exchange of messages electronically using internet on the computer. The messages are delivered to the recipient instantly.
A warehouse where the goods can be stored after the payment of import duty
ANSWER:
A warehouse where the goods can be stored after the payment of import duty- Duty paid warehouse
Explanation:
Duty paid warehouses are public warehouses available to all importers. In this kind of warehouse, goods can be stored only after the payment of import duty. These warehouses provide facilities like sorting and repacking to importers.
The type of warehouse where perishable goods are stored
ANSWER:
The type of warehouse where perishable goods are stored - Cold storage warehouse
Explanation:
In cold storage warehouses, perishable goods like fish, dairy products, fruits and flowers are stored under very low temperatures. The basic purpose of these warehouses is to store and preserve perishable goods so that they can be used later on.
The costliest mode of transport
ANSWER:
The costliest mode of transport - Air transport
Explanation:
Air transport is the costliest mode of transportation of goods and passengers, mainly because of its expensive fuel and high operational costs. However, this mode is very effective and time-saving, especially for long-distance transportation. It is also effective during situations of natural calamities like earthquakes and floods.
Means of transport carrying bulk and heavy goods for international trade.
ANSWER:
Means of transport carrying bulk and heavy goods for international trade- Water Transport
Explanation:
Water transport is most suitable for the transportation of bulky and heavy goods for international trade purposes. It is more economical than air transport.
Mode of transport which helps to get goods and passengers at their door.
ANSWER:
Mode of transport which helps to get goods and passengers at their door - Road transport
Explanation:
Road transport facilitates the movement of goods and people from one place to another by means like car, cycle, truck and bus. Road transport offers door-to-door service, as it is the transport of goods and people from one place to another via roads.
