Risk & Diversification

Credit risk, NPLs, and portfolio ideas. Ideal for competitive exams and economics prep.

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Risk & Diversification
QUESTION NO 01
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Credit risk is the risk that?

Answer: A borrower fails to repay
Lenders assess default probability.
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QUESTION NO 02
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Diversification aims to?

Answer: Reduce risk by spreading investments
Not all assets move together.
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QUESTION NO 03
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The money supply commonly includes?

Answer: Currency and various deposit aggregates
Definitions vary (M0, M1, M2…).
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QUESTION NO 04
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A mortgage is typically?

Answer: A loan secured by property
Property is collateral for the loan.
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QUESTION NO 05
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Open market operations involve?

Answer: Central bank buying/selling securities to affect liquidity
A key monetary policy tool.
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QUESTION NO 06
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A debit card typically spends?

Answer: Funds from your own account
Unlike credit cards, it draws your balance.
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QUESTION NO 07
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Compound interest means?

Answer: Interest earns interest over time
Growth accelerates with compounding.
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QUESTION NO 08
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An IPO is?

Answer: A company’s first public share offering
Initial Public Offering.
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QUESTION NO 09
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NPL in banking usually means?

Answer: Non-performing loan
Loans not paying as scheduled.
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QUESTION NO 10
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Capital adequacy rules aim to?

Answer: Ensure banks hold enough capital against risks
They protect solvency and stability.
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Published By

Shahzad Mahota

@shahzad-mahota

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