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 5 of 16

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Q41.
What category of investments is an insurer expected to invest in?

a.

Any category of investments

b.

Categories listed in the regulations

c.

Categories listed in the Insurance Act of 1938

d.

Categories listed in the guidelines issued by the Authority

Discuss
Answer: (d).Categories listed in the guidelines issued by the Authority Explanation:An insurer is expected to invest in the exhaustive category of investments listed in the guidelines issued by the Authority.
Q42.
What does Risk on Investment refer to?

a.

Probability of earning high returns

b.

Chance of loss of expected return on investment

c.

Marketability of investment

d.

Tax benefits on investment

Discuss
Answer: (b).Chance of loss of expected return on investment Explanation:Risk on Investment refers to the chance of loss of expected return on investment.
Q43.
How is Variance defined in the context of investment evaluation?

a.

Mean of the squares of the deviations of returns

b.

Sum of the squares of the deviations of returns

c.

Square root of the mean of the deviations of returns

d.

Average value of the deviations of returns

Discuss
Answer: (a).Mean of the squares of the deviations of returns Explanation:Variance is defined as the mean of the squares of the deviations of returns with reference to their average value.
Q44.
What is the significance of Beta in investment evaluation?

a.

Reflects volatility of return relative to market swings

b.

Measures marketability of investment

c.

Indicates liquidity of an investment

d.

Determines tax benefits on investment

Discuss
Answer: (a).Reflects volatility of return relative to market swings Explanation:Beta reflects the volatility of return on an investment relative to market swings.
Q45.
Why is high marketability considered a desirable factor in investment?

a.

It ensures high returns

b.

It minimizes tax liabilities

c.

It allows investors to change their decisions easily

d.

It guarantees no loss on investment

Discuss
Answer: (c).It allows investors to change their decisions easily Explanation:High marketability or liquidity is considered a desirable factor as it allows investors to change their decisions and rectify possible errors or mistakes in earlier investment decisions.
Q46.
What does Initial Tax Benefit refer to?

a.

Tax relief associated with periodic returns

b.

Tax relief enjoyed at the time of making investment

c.

Relief from taxation upon investment realization

d.

Tax exemption on dividend income

Discuss
Answer: (b).Tax relief enjoyed at the time of making investment Explanation:Initial tax benefit refers to tax relief enjoyed by the investor at the time of making the investment.
Q47.
Under which section can an individual or HUF enjoy tax deduction for investments made in Equity Savings Scheme?

a.

Section 80C

b.

Section 80CCG

c.

Section 10

d.

Section 115-O

Discuss
Answer: (b).Section 80CCG Explanation:Under sec. 80CCG, any investment made under any Equity Savings Scheme is subject to deduction, subject to a limit of Rs.25000.
Q48.
What type of tax benefit is associated with periodic returns from investments?

a.

Initial Tax Benefit

b.

Continuing Tax Benefits

c.

Terminal Tax Benefits

d.

Tax exemption on dividend income

Discuss
Answer: (b).Continuing Tax Benefits Explanation:Continuing Tax benefits represent tax relief associated with the periodic returns from investments.
Q49.
When does Terminal Tax Benefit occur?

a.

At the time of making the investment

b.

Upon periodic returns from the investment

c.

Upon investment realization or liquidation

d.

During the market fluctuations

Discuss
Answer: (c).Upon investment realization or liquidation Explanation:Terminal Tax-Benefits refer to relief from taxation when an investment is realized or liquidated.
Q50.
What is an example of Terminal Tax Benefit?

a.

Tax exemption on dividend income

b.

Tax on Dividend paid by a domestic company

c.

Withdrawal from a Public Provident Fund account

d.

Tax relief associated with periodic returns

Discuss
Answer: (c).Withdrawal from a Public Provident Fund account Explanation:Withdrawal from a Public Provident Fund account is not subject to tax and is an example of Terminal Tax-Benefit.
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