VFD Microfinance Bank Test Questions and Answers;
What is the primary purpose of microfinance institutions (MFIs)?
A) Providing loans to large corporations
B) Offering financial services to low-income individuals
C) Managing investment portfolios
D) Funding government projects
Answer: B
Which of the following is a common type of microfinance loan?
A) Mortgage
B) Auto loan
C) Microcredit
D) Student loan
Answer: C
What does the term "Savings and Credit Cooperative" (SACCO) refer to?
A) A type of agricultural machinery
B) A microfinance institution
C) A credit card company
D) A government agency
Answer: B
Which of the following is NOT typically a service offered by microfinance institutions?
A) Insurance
B) Savings accounts
C) Business training
D) Stock trading
Answer: D
What is the main purpose of collateral in microfinance lending?
A) To earn interest on assets
B) To provide security for the lender
C) To discourage borrowers from applying
D) To increase the loan amount
Answer: B
What is the Grameen Bank, founded by Muhammad Yunus, known for?
A) Offering high-interest loans
B) Providing microloans to the poor
C) Managing corporate mergers
D) Operating as an investment bank
Answer: B
Which organization sets global standards for microfinance institutions and social performance?
A) World Bank
B) United Nations
C) CGAP
D) IMF
Answer: C
What is the term for the interest rate charged on a microfinance loan?
A) APR
B) LIBOR
C) ROI
D) CPI
Answer: A
What is the primary source of funding for microfinance institutions?
A) Government grants
B) Donor contributions
C) Customer deposits
D) Stock market investments
Answer: C
What is the primary goal of microfinance institutions in helping clients become financially independent?
A) Accumulating wealth for the institution
B) Reducing poverty and improving livelihoods
C) Expanding their real estate holdings
D) Maximizing shareholder returns
Answer: B
Which of the following is a common risk associated with microfinance lending?
A) Low default rates
B) High interest rates
C) Excessive regulation
D) Limited outreach to the poor
Answer: B
In microfinance, what does "group lending" typically involve?
A) Lending to individuals with no co-signers
B) Lending to businesses only
C) Lending to groups of borrowers who are jointly responsible for repayment
D) Lending to government agencies
Answer: C
What is the primary purpose of a microfinance institution's "loan officer"?
A) Managing investment portfolios
B) Selling insurance policies
C) Evaluating loan applications and managing client relationships
D) Regulatory compliance
Answer: C
What is the term for the process of gradually saving and repaying a loan in small, regular installments?
A) Amortization
B) Collateralization
C) Default
D) Foreclosure
Answer: A
What is the "double bottom line" in microfinance?
A) Maximizing profits and minimizing losses
B) Achieving financial and social goals
C) Doubling the loan amount for each borrower
D) Reducing interest rates to zero
Answer: B
Which of the following is NOT a key principle of microfinance?
A) Interest-free loans
B) Targeting the poor
C) Group lending
D) Client-centered approach
Answer: A
What does the term "financial inclusion" refer to in the context of microfinance?
A) Providing access to financial services to all, especially those with low income
B) Exclusive financial services for the wealthy
C) Strict lending requirements
D) Restricting access to credit
Answer: A
What is a common benefit of microinsurance provided by microfinance institutions?
A) High premiums
B) Reducing financial risk for clients
C) Complex application processes
D) Limited coverage
Answer: B
Which organization plays a significant role in supporting and regulating microfinance institutions in various countries?
A) International Monetary Fund (IMF)
B) Central Bank
C) Accion
D) World Trade Organization (WTO)
Answer: B
What is the term for the process of assessing a borrower's ability to repay a loan based on their financial stability?
A) Credit scoring
B) Investment analysis
C) Stock market trading
D) Asset valuation
Answer: A.
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