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All questions of Corporate Debt Restructuring for B Com Exam
Which of the following credit rating agencies is India's first credit rating agency?- a)ICRA
- b)CARE
- c)CRISIL
- d)Moody's
Correct answer is option 'C'. Can you explain this answer?
a)
ICRA
b)
CARE
c)
CRISIL
d)
Moody's
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Dev Patel answered |
India's first credit rating agency is CRISIL (Credit Rating and Investor Services of India Ltd).
What is the primary reason behind higher returns from investments compared to savings accounts?- a)Investments are risk-free.
- b)Investments have lower liquidity.
- c)Investments expose capital to market growth.
- d)Investments have higher taxation.
Correct answer is option 'C'. Can you explain this answer?
a)
Investments are risk-free.
b)
Investments have lower liquidity.
c)
Investments expose capital to market growth.
d)
Investments have higher taxation.
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Dev Patel answered |
The primary reason for higher returns from investments compared to savings accounts is that investments expose capital to market growth. Investments have the potential for capital appreciation, resulting in higher returns.
What are the key qualifications required for individuals appointed to the Serious Fraud Investigation Office (SFIO)?- a)Knowledge of foreign languages.
- b)Experience in agriculture.
- c)Expertise in fields like banking, corporate affairs, taxation, and law.
- d)IT certification.
Correct answer is option 'C'. Can you explain this answer?
a)
Knowledge of foreign languages.
b)
Experience in agriculture.
c)
Expertise in fields like banking, corporate affairs, taxation, and law.
d)
IT certification.
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Dev Patel answered |
Individuals appointed to the Serious Fraud Investigation Office (SFIO) must have expertise in fields like banking, corporate affairs, taxation, and law. These experts are crucial for conducting in-depth investigations into financial frauds.
What is the primary benefit for lenders in granting a debt restructuring package to a company facing financial distress?- a)Maximizing immediate profits.
- b)Reducing non-performing assets on their balance sheets.
- c)Liquidating the company's assets.
- d)Eliminating the need for further lending.
Correct answer is option 'B'. Can you explain this answer?
a)
Maximizing immediate profits.
b)
Reducing non-performing assets on their balance sheets.
c)
Liquidating the company's assets.
d)
Eliminating the need for further lending.
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Dev Patel answered |
Lenders benefit from granting a debt restructuring package by reducing non-performing assets on their balance sheets and giving the company an opportunity to recover.
What is the primary objective of debt restructuring in the context of corporate financial distress?- a)To maximize profits for creditors.
- b)To liquidate the company's assets.
- c)To ensure the company's long-term viability.
- d)To increase interest rates on existing loans.
Correct answer is option 'C'. Can you explain this answer?
a)
To maximize profits for creditors.
b)
To liquidate the company's assets.
c)
To ensure the company's long-term viability.
d)
To increase interest rates on existing loans.
|
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Dev Patel answered |
Debt restructuring in the context of corporate financial distress aims to ensure the company's long-term viability by managing its assets and liabilities in a way that allows it to continue its operations successfully.
What is the primary purpose of establishing the Serious Fraud Investigation Office (SFIO) by the Central Government?- a)To regulate the stock market.
- b)To investigate corporate frauds and protect the interests of investors.
- c)To manage pension funds.
- d)To facilitate foreign investments.
Correct answer is option 'B'. Can you explain this answer?
a)
To regulate the stock market.
b)
To investigate corporate frauds and protect the interests of investors.
c)
To manage pension funds.
d)
To facilitate foreign investments.
|
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Dev Patel answered |
The primary purpose of establishing the Serious Fraud Investigation Office (SFIO) by the Central Government is to investigate corporate frauds and protect the interests of investors. SFIO is responsible for dealing specifically with the investigation of serious cases of fraud under the company's law.
Under the Corporate Debt Restructuring (CDR) mechanism in India, what percentage of creditors' approval is required for a debt restructuring package to be binding on all creditors?- a)25%
- b)50%
- c)75%
- d)100%
Correct answer is option 'C'. Can you explain this answer?
a)
25%
b)
50%
c)
75%
d)
100%
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Dev Patel answered |
In the CDR mechanism in India, a debt restructuring package must be approved by a super-majority of 75% of creditors (by value) to be binding on all creditors.
What is the significance of the 10% limit for debt equity swap with respect to preference shares in India's debt restructuring?- a)It encourages companies to convert all debt into equity.
- b)It limits the extent to which debt can be converted into preference shares.
- c)It promotes higher voting rights for creditors in debt equity swaps.
- d)It eliminates the need for debt restructuring.
Correct answer is option 'B'. Can you explain this answer?
a)
It encourages companies to convert all debt into equity.
b)
It limits the extent to which debt can be converted into preference shares.
c)
It promotes higher voting rights for creditors in debt equity swaps.
d)
It eliminates the need for debt restructuring.
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Dev Patel answered |
The 10% limit for debt equity swap with respect to preference shares restricts the extent to which debt can be converted into preference shares, preventing companies from taking unfair advantage in debt restructuring.
What should investors do during a market downturn?- a)Panic and withdraw all investments.
- b)Continue investing as usual.
- c)Seek the highest-risk investments available.
- d)Avoid investing altogether.
Correct answer is option 'B'. Can you explain this answer?
a)
Panic and withdraw all investments.
b)
Continue investing as usual.
c)
Seek the highest-risk investments available.
d)
Avoid investing altogether.
|
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Dev Patel answered |
During a market downturn, investors should continue investing as usual. Panicking and withdrawing investments can lead to losses. It's an opportunity to invest at potentially lower prices, benefiting from the eventual market recovery.
What is the role of the Inter Creditor Agreement (ICA) in the corporate debt restructuring process?- a)To protect the interests of individual creditors.
- b)To facilitate coordination among creditors.
- c)To increase the debt burden on the company.
- d)To eliminate the need for debt restructuring.
Correct answer is option 'B'. Can you explain this answer?
a)
To protect the interests of individual creditors.
b)
To facilitate coordination among creditors.
c)
To increase the debt burden on the company.
d)
To eliminate the need for debt restructuring.
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Dev Patel answered |
The Inter Creditor Agreement (ICA) is essential to facilitate coordination among creditors, ensuring that individual creditors' rights are protected and that the debt restructuring process proceeds smoothly.
Why are credit rating agencies important for investors?- a)They guarantee investment returns.
- b)They provide low-cost information.
- c)They eliminate investment risks.
- d)They control inflation.
Correct answer is option 'B'. Can you explain this answer?
a)
They guarantee investment returns.
b)
They provide low-cost information.
c)
They eliminate investment risks.
d)
They control inflation.
|
|
Dev Patel answered |
Credit rating agencies are important for investors because they provide low-cost information. They assess the credit quality of firms and provide valuable insights to investors, helping them make informed investment decisions.
How can foreign lenders participate in India's Corporate Debt Restructuring (CDR) process?- a)Foreign lenders cannot participate in the CDR process.
- b)By collaborating with Indian lenders as part of a consortium.
- c)By applying directly to the CDR Cell.
- d)By seeking approval from the Reserve Bank of India.
Correct answer is option 'B'. Can you explain this answer?
a)
Foreign lenders cannot participate in the CDR process.
b)
By collaborating with Indian lenders as part of a consortium.
c)
By applying directly to the CDR Cell.
d)
By seeking approval from the Reserve Bank of India.
|
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Dev Patel answered |
Foreign lenders can participate in India's CDR process by collaborating with Indian lenders as part of a consortium, which is a common practice.
Why is it important to make investments to combat inflation?- a)Investments have no impact on inflation.
- b)Investments increase the money supply, leading to inflation.
- c)Investments keep money circulating in the market, preventing excessive inflation.
- d)Investments always result in deflation.
Correct answer is option 'C'. Can you explain this answer?
a)
Investments have no impact on inflation.
b)
Investments increase the money supply, leading to inflation.
c)
Investments keep money circulating in the market, preventing excessive inflation.
d)
Investments always result in deflation.
|
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Dev Patel answered |
Investments are essential to combat inflation because they keep money circulating in the market, preventing excessive inflation. When money is invested, it contributes to economic activity and helps maintain a balance in the supply of money, which can control inflation.
Why do public sector banks in India tend to be more lenient in granting CDR packages compared to private sector banks?- a)Public sector banks have fewer resources.
- b)Public sector banks have stricter lending policies.
- c)Public sector banks receive government incentives.
- d)Public sector banks face higher non-performing assets.
Correct answer is option 'D'. Can you explain this answer?
a)
Public sector banks have fewer resources.
b)
Public sector banks have stricter lending policies.
c)
Public sector banks receive government incentives.
d)
Public sector banks face higher non-performing assets.
|
|
Dev Patel answered |
Public sector banks in India tend to grant more CDR packages because they face higher non-performing assets, and they aim to reduce these assets through debt restructuring.
Why is it essential for investors to consider their risk tolerance when making investment decisions?- a)Risk tolerance has no impact on investments.
- b)High-risk investments always lead to higher returns.
- c)Risk tolerance helps in selecting investments that align with one's comfort level.
- d)Risk tolerance is only relevant for short-term investments.
Correct answer is option 'C'. Can you explain this answer?
a)
Risk tolerance has no impact on investments.
b)
High-risk investments always lead to higher returns.
c)
Risk tolerance helps in selecting investments that align with one's comfort level.
d)
Risk tolerance is only relevant for short-term investments.
|
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Dev Patel answered |
It is essential for investors to consider their risk tolerance when making investment decisions because risk tolerance helps in selecting investments that align with one's comfort level. This ensures that investors are not exposed to more risk than they can handle.
What is the purpose of a standstill agreement in debt restructuring?- a)To permanently freeze all financial transactions.
- b)To prevent creditors from taking legal action for a specified period.
- c)To force immediate repayment of all debts.
- d)To waive the company's liabilities entirely.
Correct answer is option 'B'. Can you explain this answer?
a)
To permanently freeze all financial transactions.
b)
To prevent creditors from taking legal action for a specified period.
c)
To force immediate repayment of all debts.
d)
To waive the company's liabilities entirely.
|
|
Dev Patel answered |
A standstill agreement is designed to prevent creditors from taking legal action against the company for a specified period, allowing time for the debt restructuring process to take place.
What is the purpose of the CDR Standing Forum in the corporate debt restructuring process in India?- a)To review decisions of the CDR Cell.
- b)To enforce legal action against the debtor.
- c)To provide additional funding to the debtor.
- d)To prepare financial reports for the company.
Correct answer is option 'A'. Can you explain this answer?
a)
To review decisions of the CDR Cell.
b)
To enforce legal action against the debtor.
c)
To provide additional funding to the debtor.
d)
To prepare financial reports for the company.
|
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Dev Patel answered |
The CDR Standing Forum reviews decisions of the CDR Cell and ensures the timely implementation of the CDR package.
What is the purpose of the CDR Empowered Group in the corporate debt restructuring process?- a)To prepare financial reports for the company.
- b)To decide whether a debt restructuring package is feasible.
- c)To enforce legal action against the debtor.
- d)To liquidate the company's assets.
Correct answer is option 'B'. Can you explain this answer?
a)
To prepare financial reports for the company.
b)
To decide whether a debt restructuring package is feasible.
c)
To enforce legal action against the debtor.
d)
To liquidate the company's assets.
|
|
Dev Patel answered |
The CDR Empowered Group assesses the feasibility of a debt restructuring package and determines whether it is potentially viable within a specific timeframe.
How does making investments in the market help increase wealth?- a)Investments are risk-free and always result in profit.
- b)Investments provide higher returns than savings accounts.
- c)Investments are a way to reduce wealth over time.
- d)Investments have no impact on wealth.
Correct answer is option 'B'. Can you explain this answer?
a)
Investments are risk-free and always result in profit.
b)
Investments provide higher returns than savings accounts.
c)
Investments are a way to reduce wealth over time.
d)
Investments have no impact on wealth.
|
|
Dev Patel answered |
Making investments in the market helps increase wealth because investments generally provide higher returns compared to savings accounts. Over time, these higher returns can significantly contribute to wealth accumulation.
What is one of the significant benefits of having a pension or retirement savings plan?- a)It guarantees high returns on investment.
- b)It eliminates the need to work after retirement.
- c)It allows you to depend on your children for financial support.
- d)It ensures financial security during retirement.
Correct answer is option 'D'. Can you explain this answer?
a)
It guarantees high returns on investment.
b)
It eliminates the need to work after retirement.
c)
It allows you to depend on your children for financial support.
d)
It ensures financial security during retirement.
|
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Dev Patel answered |
One of the significant benefits of having a pension or retirement savings plan is that it ensures financial security during retirement. It allows individuals to maintain their financial independence and not depend on their children for support.
Chapter doubts & questions for Corporate Debt Restructuring - Interdisciplinary Issues in Indian Commerce 2025 is part of B Com exam preparation. The chapters have been prepared according to the B Com exam syllabus. The Chapter doubts & questions, notes, tests & MCQs are made for B Com 2025 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests here.
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