01 Class Quiz MCQs SECURITIES, CHARGES ,

DP , MARGIN AND INSURANCE

1. A partnership firm has been allowed a cash credit
pledge limit of Rs.5 lac for which it maintains stocks
of Rs.8 lac but obtains insurance for Rs.6 lac. A hire
has occurred due to which stock worth Rs.1 lac have
been damaged. What is the amount of claim which
the insurance company would settle for this loss:
a. Rs.1 lac
b. Rs.80000
c. Rs.75000
d. Rs.50000
e. Rs.25000

2. Your branch has sanctioned a cash credit limit of

Rs.12 lac to a trading firm with 40 % margin
against the goods in trade. To avail this limit fully,
what should be amount of stocks with the party:
a. Rs.20 lac
b. Rs.18 lac
c. Rs.16 lac
d. Rs.14 lac
e. Rs.12 lac

3. When banks sanction credit facilities, they insist on

margin from the borrowers also, which means:
a: Market value of security less amount of loan is
known as margin
b: Contribution of the borrower from long term
sources in the business
c: Current assets minus current liabilities
d: a to b
e: a to c
4. Margin maintained by the bank on the securities
depends on:
a. The price fluctuations
b. Credit reputation of the party
c. RBI/banks own guidelines for certain securities
d. All the above
5. In what respect, a charge hypothecation is different
from pledge. The goods are:
a. In possession of bank but ownership with the borrower
b. Both the possession and ownership rest with borrower
c. Neither the possession nor the ownership is with the
bank
d. Both (b) and (c) above
e. There is no difference and both are similar

6. In an agreement of hypothecation, the borrower

undertakes to:
a. Hand over the possession of the security when asked by
the bank
b. The bank according to its will can convert hypothecation
into pledge at any time by giving notice
c. Hypothecated goods are with the borrower as a trustee
for the bank
d. A and b
e. A to c
7. Through a charge on assets:
a. The banker becomes the owner of the security
b. The bank gets certain rights in the security
c. Security is transferred in favour of the bank
d. Rights can be enforced without court intervention
e. None of the above
8. After the conversion of hypothecation into pledge
the bank will have the same right as that of:
a. Pledgee
b. Mortgagee
c. Pledger
d. Hypothecatee
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e. Hypothecator
9. Which of the following mortgages is not required to
be registered with Registrar of Assurances?
a. Equitable mortgage
b. Simple mortgage
c. Registered mortgage
d. Legal mortgage
e. All of the above

10. On which among the following, the charge of

assignment cannot be created
a. Land and building
b. Plant and machinery
c. Claim on a Debtor
d. A and b above
e. All the above
11. Define security.
12. Elaborate equitable mortgage