RBI Grade B 2019 Booster Series - Part 2

Q: 1: 

Diversified conglomerate Larsen & Toubro (L&T) is set to launch a hostile bid to acquire mid-tier IT services company Mindtree. What is “Hostile bid”?

1. Target company's board rejects the offer and bidder buyer get majority stake from market
2. Target company's board rejects the offer and bidder trying to convince the board
3. Target company's board accepts the offer due to financial crises
4. Government takes over the company
5. None of the above

Solution: 1. Target company's board rejects the offer and bidder buyer get majority stake from market.

A takeover is considered hostile if the target company's board rejects the offer, and if the bidder continues to pursue it, or the bidder makes the offer directly after having announced its firm intention to make an offer. Development of the hostile tender is attributed to Louis Wolfson.

Q: 2: 

What is the full form of (REIT) ? 

1. Real estate investment trust 
2. Real estate investment term 
3. Real estate interest trust 
4. Real estate interest term 
5. None of the above 

Solution: 1. Real estate investment trust 

• REITs are securities linked to real estate that can be traded on stock exchanges once they get listed. The structure of REITs is similar to that of a mutual fund. Just like mutual funds, there are sponsors, trustees, fund managers and unit holders in REITs. However, unlike mutual funds, where the underlying asset is bonds, stocks and gold, REITs invest in physical real estate. 
• The money collected is deployed in income-generating real estate. This income gets distributed among the unit holders. Besides regular income from rents and leases, gains from capital appreciation of real estate also form an income for the unit holders. 
• The first REIT initial public offering (IPO) by Embassy Office Parks, a Bangalore-based real estate developer backed by Blackstone Group LP, a global private equity firm, is open for investment between March 18 and 20, 2019. The Embassy Office Parks REIT plans to raise Rs.4,570 crore through the IPO. The per unit price of the REIT has been kept in the range of Rs.299-300, with the minimum application bid of 800 units. This means that an investor will have to invest at least Rs.2.4 lakh in this product. Thereafter, one can increase the lot size in multiples of 400 units.

Q: 3: 

As per Reserve Bank of India (Prevention of Market Abuse) Directions, 2019, Participants found guilty of market abuse may be subject to regulatory action, including __________ 

1. Denied access to markets in one or more instruments for a period that may not exceed one month 
2. Denied access to markets in one or more instruments for a period that may not exceed two month 
3. Denied access to markets in one or more instruments for a period that may not exceed three month 
4. Denied access to markets in one or more instruments for a period that may not exceed 1 year 
5. None of the above

Solution: 1. Denied access to markets in one or more instruments for a period that may not exceed one month 

• Market manipulation: Market participants shall not engage in, or attempt to engage in, market manipulation. Market participants shall not undertake transactions on an ETP that may disrupt or delay its functioning. 
• Benchmark manipulation: Market participants, either acting independently or in collusion, shall not undertake any action, with the intention to manipulate the calculation of a benchmark rate or a reference rate. No market participant shall carry out a transaction or initiate any action with the sole or dominant intention of influencing a benchmark rate or a reference rate. 
• Misuse of information: A market participant that is in possession of ‘Non-public price-sensitive information’ shall not use it for any material benefit to itself or to others. Market participants shall not use ‘Price-sensitive customer information’ for transacting on their own account in a manner that adversely affects the outcome for the customer in that (those) transaction(s). They shall maintain the confidentiality of price-sensitive customer information. Market participants shall not intentionally create or transmit false or inaccurate information, or, withhold timely information that is required to be reported or made public, that influences or is likely to influence the price of any financial instrument.

Q: 4: 

Which organisation releases the Global Environment Outlook Report? 

1. World Bank Environment Programme 
2. United Nations Environment Programme 
3. Paris Convention Environment Programme 
4. Council of Global Environment Programme 
5. None of the above

Solution: 2. United Nations Environment Programme 

The United Nations Environment Programme has released the Global Environment Outlook 2019. The report notes that a quarter of all premature deaths and diseases worldwide are due to manmade pollution and environmental damages.

Q: 5: 

The European Union has expanded which of its naming & shaming list by including 10 more countries to 

1. Tax Blacklist 
2. Arms Blacklist 
3. Corruption Blacklist 
4. Black Money Blacklist 
5. None of the above

Solution: 1. Tax Blacklist 

• Seven countries- Aruba, Belize, Bermuda, Fiji, Oman, Vanuatu and Dominica were moved from greylist to blacklist due to their inability towards reform commitments. 
• Three other countries added into the list are Barbados, the United Arab Emirates and the Marshall Islands.