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April 09, 2021 - Daily Quiz

1. The term ‘West Texas Intermediate’ sometimes found in news, refers to a grade of (a) Crude oil (b) Bullion (c) Rare earth elements (d) Uranium
2. In the context of the Indian economy, non-financial debt includes which of the following? 1. Housing loans owed by households. 2. Amounts outstanding on credit cards 3. Treasury bills Select the correct answer using the code given below: (a) 1 only (b) 1 and 2 only (c) 3 only (d) 1, 2 and 3 3. In India, why are some nuclear reactors kept “IAEA Safeguards” while others are not? (a) Some use uranium and others use thorium (b) Some use imported uranium and others use domestic supplies (c) Some are operated by foreign enterprises and others are operated by domestic enterprises (d) Some are State-owned and others are privately-owned 4. With reference to Trade-Related Investment Measures (TRIMS), which of the following statements is/are correct? 1. Quantitative restrictions on imports by foreign investors are prohibited. 2. They apply to investment measures related to trade in both goods and services. 3. They are not concerned with the regulation of foreign investment. Select the correct answer using the code given below: (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 1, 2 and 3 5. What is the importance of the term “Interest Coverage Ratio” of a firm in India? 1. It helps in understanding the present risk of a firm that a bank is going to give loan to. 2. It helps in evaluating the emerging risk of a firm that a bank is going to give loan to. 3. The higher a borrowing firm’s level of Interest Coverage Ratio, the worse is its ability to service its debt. Select the correct answer using the code given below: (a) 1 and 2 only (b) 2 only (c) 1 and 3 only (d) 1, 2 and 3   ANSWERS 1. (a) West Texas Intermediate (WTI) crude oil is a specific grade of crude oil and one of the main three benchmarks in oil pricing, along with Brent and Dubai Crude. WTI is known as a light sweet oil because it contains 0.24% sulfur, making it "sweet," and has a low density, making it "light." It is the underlying commodity of the New York Mercantile Exchange's (NYMEX) oil futures contract and is considered a high-quality oil that is easily refined. 2. (d) Non-financial debt consists of credit instruments issued by governmental entities, households and businesses that are not included in the financial sector. It shares most of the same characteristics with financial debt, except the issuers are non-financial. It includes industrial or commercial loans, Treasury bills and credit card balances. 3. (b) There are at present 22 operational reactors, of which 14 are under the International Atomic Energy Agency (IAEA) safeguards as they use imported fuel. India currently imports uranium from Russia, Kazakhstan and Canada. Plans are also afoot to procure the fuel from Uzbekistan and Australia. The remaining "military" facilities remained off-limits to international inspectors. By placing the reactors under the IAEA safeguards, India gives the international nuclear energy watchdog access to them. This step was taken by the country in 2014 to demonstrate that its nuclear energy programme was for peaceful purposes. This is a necessary step under the Indo-US nuclear deal. 4. (c) The Agreement on Trade-Related Investment Measures (TRIMS) recognizes that certain investment measures can restrict and distort trade. It states that WTO members may not apply any measure that discriminates against foreign products or that leads to quantitative restrictions, both of which violate basic WTO principles. A list of prohibited TRIMS, such as local content requirements, is part of the Agreement. The TRIMS Committee monitors the operation and implementation of the Agreement and allows members the opportunity to consult on any relevant matters. As an agreement that is based on existing GATT disciplines on trade in goods, the Agreement is not concerned with the regulation of foreign investment. The disciplines of the TRIMs Agreement focus on investment measures that discriminate between imported and exported products and/or create import or export restrictions. 5. (a) One of the significant and most crucial liquidity ratios is the Interest Coverage Ratio, which indicates the level of a company's ability to afford the interest that is to be paid by the company for raising debt. It does not measure the ability to make principal payments on the debt; instead it depicts how much the company can afford to pay the interests on the debt promptly. • The interest coverage ratio is used to see how well a firm can pay the interest on outstanding debt. • Also called the times-interest-earned ratio, this ratio is used by creditors and prospective lenders to assess the risk of lending capital to a firm. • A higher coverage ratio is better, although the ideal ratio may vary by industry


POSTED ON 09-04-2021 BY ADMIN
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