Investment of Insurance Companies And IRDA Regulations MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Investment of Insurance Companies And IRDA Regulations, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Investment of Insurance Companies And IRDA Regulations MCQs are designed to help you grasp the core concepts and excel in solving problems.

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Investment of Insurance Companies And IRDA Regulations MCQs | Page 3 of 16

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Q21.
Why is it essential for insurance companies to understand the characteristics of various investment alternatives?

a.

To compete in the insurance market

b.

To comply with international regulations

c.

Due to rapid development and integration of financial markets

d.

To focus on real asset investments

Discuss
Answer: (c).Due to rapid development and integration of financial markets Explanation:Insurance companies need to understand the characteristics of various investment alternatives due to the rapid development and integration of financial markets, making them significant partners in these markets.
Q22.
Why are time and risk considered key factors in investment decisions?

a.

They determine the market value of investments

b.

They influence systematic analysis and careful planning

c.

They impact the classification of bonds and debentures

d.

They are characteristics of different investment avenues

Discuss
Answer: (b).They influence systematic analysis and careful planning Explanation:Time and risk are considered key factors in investment decisions as they influence systematic analysis, careful planning, and prudent investment decisions.
Q23.
What positive feature do Preference Shares have?

a.

Unlimited voting rights

b.

Fixed rate of return and redeemable after a fixed period

c.

Guaranteed dividend payments

d.

High market liquidity

Discuss
Answer: (b).Fixed rate of return and redeemable after a fixed period Explanation:Preference shares have the positive feature of bonds, including a fixed rate of return and redeemability after a fixed period, along with voting rights.
Q24.
What does Par Value refer to in the context of bonds?

a.

Market value of the bond

b.

The value of the bond at the time of issue

c.

The promised face value of the bond at maturity

d.

The interest payable to the bondholder

Discuss
Answer: (c).The promised face value of the bond at maturity Explanation:Par Value refers to the face value of the bond and the amount the issuer promises to pay at the time of maturity.
Q25.
What is Coupon Rate in the context of bonds?

a.

The market interest rate

b.

The rate of return on investment

c.

The rate of interest payable to the bondholder

d.

The rate of tax on bond income

Discuss
Answer: (c).The rate of interest payable to the bondholder Explanation:Coupon Rate refers to the rate of interest payable to the bondholder.
Q26.
When does Maturity date of a bond occur?

a.

At the time of issue

b.

After the bondholder receives interest payments

c.

When the principal amount is payable by the borrower to the bondholder

d.

On the date of purchase

Discuss
Answer: (c).When the principal amount is payable by the borrower to the bondholder Explanation:Maturity date refers to the date when the principal amount of borrowings is payable by the borrower to the bondholder.
Q27.
What is the characteristic of Money Market Investments in terms of maturity?

a.

Maturity of more than one year

b.

Maturity of exactly one year

c.

Maturity of less than one year

d.

No fixed maturity

Discuss
Answer: (c).Maturity of less than one year Explanation:Money Market Investments are debt instruments with a maturity of less than one year at the time of issue, including Treasury Bills, Commercial papers, and Certificate of Deposits.
Q28.
How are Mutual Fund Investment schemes broadly classified?

a.

Profit and non-profit schemes

b.

Equity and hybrid schemes

c.

Short-term and long-term schemes

d.

Active and passive investment schemes

Discuss
Answer: (b).Equity and hybrid schemes Explanation:Mutual fund Investment schemes are broadly classified into Equity Schemes, Debt Schemes, and Balanced funds, among others.
Q29.
What is the significance of Real Estate investment?

a.

Provides steady income with low risk

b.

Draws tremendous attention of investors

c.

Has a short maturity period

d.

Is mainly focused on agricultural land

Discuss
Answer: (b).Draws tremendous attention of investors Explanation:Real estate investment has drawn the tremendous attention of investors due to its good rate of return on investment.
Q30.
What is the primary purpose of Financial Derivatives?

a.

Providing steady income

b.

Speculative purposes

c.

Minimizing return on investment

d.

Offering low-risk investment

Discuss
Answer: (b).Speculative purposes Explanation:Financial Derivatives, such as Options and Futures, are used for hedging risks as well as speculative purposes.
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