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Loans and Borrowings: NBSE Class 10 Financial Literacy notes
Here, you will find summaries, questions, answers, textbook solutions, pdf, extras, MCQs etc. of (Nagaland Board) NBSE Class 10 Financial Literacy Chapter 3: Loans and Borrowings. These solutions, however, should be only treated as references and can be modified/changed.
Summary
This chapter introduces the concept of loans, the different types of loans, and their specific features. A loan is an amount of money borrowed from someone with the promise to repay it at a future date. In a loan, there are two parties involved: the borrower, who takes the loan, and the lender, who provides the loan. The borrower is required to pay interest to the lender as the cost of borrowing.
Interest can be calculated using the simple interest formula: Simple Interest = (Principal × Rate × Time) / 100. Loans can be categorized as secured and unsecured loans. Secured loans require collateral or security, while unsecured loans do not require any collateral. Various types of loans include personal loans, home loans, education loans, vehicle loans, and agricultural loans.
Education loans are essential for students who want to pursue higher studies. These loans are provided by banks and financial institutions with relatively low-interest rates. The loan amount, security requirements, and repayment terms may vary from bank to bank. Education loans can be used for studying in India or abroad and cover expenses like tuition fees, hostel fees, examination fees, library fees, and laboratory fees. The repayment of education loans usually begins one year after the completion of the course, and the loan has to be repaid within 15 years.
Textual questions and answers
MCQs
1. The person who gets a loan from a bank can be termed as ______
Answer: (b) Borrower
2. Bank does not give loan against ______
Answer: (c) Lottery ticket
3. The basic difference between a secured & unsecured loan is the requirement of ______
Answer: (b) Collateral
4. Education Loans ______
Answer: (c) Both
5. Bank charges interest on ______
Answer: (b) Loans
Fill in the blanks (Though fill in the blanks don’t come in exams, they can be included as MCQs)
1. ______ is the amount paid by the borrower to the bank for availing the loan.
Answer: Interest
2. Loan for which someone has to pay security or collateral to the lender is called ______.
Answer: Secured Loan
3. Education Loan is to be repaid in ______ years after the commencement of repayment.
Answer: 15
4. EMI consists of a part of the ______ amount as well as ______ amount.
Answer: Principal, Interest
5. The property purchased with the home loan is usually required to be ______ with the bank.
Answer: Hypothecated
Extra/additional MCQs
Q. A loan is a certain amount of money which is ________ from someone with a promise to repay it at a future date.
A. Invested B. Lent C. Borrowed D. Donated
Answer: C. Borrowed
Q. The basic difference between a secured & unsecured loan is the requirement of ________.
A. Interest B. Collateral C. Repayment period D. Credit score
Answer: B. Collateral
Q. In case of a secured loan, if you are unable to repay the loan, the bank may initiate action against the ________.
A. Borrower B. Lender C. Asset D. Interest
Answer: C. Asset
Q. Which type of loan typically has a lower interest rate and longer repayment period?
A. Secured B. Unsecured C. Personal D. Home
Answer: A. Secured
Q. Which type of loan typically has a higher interest rate and shorter repayment period?
A. Secured B. Unsecured C. Personal D. Home
Answer: B. Unsecured
Q. Which loan is taken for personal purposes like medical emergencies or marriage?
A. Personal Loan B. Home Loan C. Secured Loan D. Unsecured Loan
Answer: A. Personal Loan
Q. Personal loan is an ________ loan.
A. Secured B. Unsecured C. Interest-free D. Long-term
Answer: B. Unsecured
Q. The rate of interest on a personal loan is typically the ________.
A. Lowest B. Highest C. Same as home loan D. Variable
Answer: B. Highest
Q. Which loan is offered by banks and other financial institutions for buying a house?
A. Personal Loan B. Home Loan C. Secured Loan D. Unsecured Loan
Answer: B. Home Loan
Q. Home loan can also be taken for purchasing a _______, for construction of your house.
A. Car B. Furniture C. Land D. Apartment
Answer: C. Land
Q. Home loans are usually ________ loans.
A. Secured B. Unsecured C. Interest-free D. Short-term
Answer: A. Secured
Q. In a home loan, the property purchased is usually required to be ________ with the bank.
A. Registered B. Insured C. Mortgaged D. Leased
Answer: C. Mortgaged
Q. The rate of interest for home loans is amongst the ________.
A. Lowest B. Highest C. Variable D. Fixed
Answer: A. Lowest
Q. For both secured and unsecured loans, the bank will check the borrower’s ________.
A. Address B. Employment history C. Credit score D. Age
Answer: C. Credit score
Q. Personal loans may help a family to have money in case of ________.
A. Investment B. Business expansion C. Urgent requirement D. Buying a car
Answer: C. Urgent requirement
Q. The asset which you may give as collateral or security for a secured loan can be a _______, car, or documents relating to any investment.
A. Phone B. House C. Watch D. Laptop
Answer: B. House
Q. In the case of an unsecured loan, the bank will consider your past ________ records.
A. Employment B. Residential C. Financial D. Criminal
Answer: C. Financial
Q. Banks offer lower interest rates and longer repayment periods for secured loans because they are ________ risky to the bank.
A. More B. Less C. Equally D. Unpredictably
Answer: B. Less
Q. Home loans can be taken for repair and ________ of your existing house.
A. Demolition B. Decoration C. Extension D. Inspection
Answer: C. Extension
Q. Banks & financial institutions provide education loans for ________ students.
A. Deserving B. Wealthy C. Employed D. Undergraduate
Answer: A. Deserving
Q. Education loans can be taken for studying in ________ as well as abroad.
A. India B. Europe C. Asia D. America
Answer: A. India
Q. The repayment of an education loan commences ________ after completion of the course.
A. Six months B. One year C. Two years D. Three years
Answer: B. One year
Q. For an education loan, you usually need to repay the loan after you ________.
A. Graduate B. Get a job C. Apply for a job D. Start a business
Answer: B. Get a job
Q. When you avail a car loan, the car being purchased is ________ to the bank.
A. Sold B. Leased C. Hypothecated D. Registered
Answer: C. Hypothecated
Q. Agricultural loans are provided to support ________ and farming.
A. Factories B. Infrastructure C. Farmers D. Retailers
Answer: C. Farmers
Q. Education loans generally cover graduation and post-graduation courses, including regular ________ or professional Degree or Diploma courses.
A. Technical B. Art C. Humanities D. Language
Answer: A. Technical
Q. Education loans can also cover the cost of ________, equipment, instruments, and uniforms.
A. Books B. Furniture C. Electronics D. Vehicles
Answer: A. Books
Q. The maximum loan amount for studies in India is usually ₹________.
A. 5 lacs B. 10 lacs C. 15 lacs D. 20 lacs
Answer: B. 10 lacs
Q. For an education loan, security is required for loan amounts above ₹________.
A. 5 Lacs B. 7.5 Lacs C. 10 Lacs D. 15 Lacs
Answer: B. 7.5 Lacs
Q. EMI stands for ________.
A. Equal Monthly Income B. Estimated Monthly Installment C. Equated Monthly Installment D. Essential Monthly Installment
Answer: C. Equated Monthly Installment
Q. The maximum loan amount for studies abroad is usually Rs ________.
A. 10 lacs B. 15 lacs C. 20 lacs D. 25 lacs
Answer: C. 20 lacs
Q. Education loan covers fees payable to ________ and hostel fees.
A. College B. School C. Training centers D. Extracurricular activities
Answer: A. College
Q. A ________ is required for applying for an education loan.
A. Letter of admission B. Letter of recommendation C. Letter of intent D. Letter of enquiry
Answer: A. Letter of admission
Q. Agricultural loans can be used to purchase ________, insecticides, tractors, and other equipment needed for agriculture.
A. Seeds B. Food C. Livestock D. Machinery
Answer: A. Seeds
Q. Education loans from banks cover courses and trainings like teacher training, nursing courses, and ________.
A. Culinary arts B. Aeronautical C. Painting D. Fashion design
Answer: B. Aeronautical
Q. EMI consists of a part of the principal amount as well as the ________ amount.
A. Discount B. Interest C. Inflation D. Tax
Answer: B. Interest
Q. For education loans, the repayment period is usually ________ years after the commencement of repayment.
A. 5 B. 10 C. 15 D. 20
Answer: C. 15
Q. Courses conducted by colleges/universities approved by UGC/ AICTE/Govt. or autonomous institutions like IIT, IIM, etc., are ________ for education loans.
A. Eligible B. Ineligible C. Limited D. Partially eligible
Answer: A. Eligible
Q. For an education loan, the student and parent/guardian must provide their ________ card for applying.
A. PAN B. Voter ID C. Ration D. Credit
Answer: A. PAN
Q. A ________ is a fixed amount of money the borrower has to pay to the lender every month for repaying a loan.
A. Down payment B. Monthly fee C. EMI D. Subscription
Answer: C. EMI
Q. Simple Interest is calculated as (Principal × Rate × Time) / ________.
A. 50 B. 100 C. 1000 D. 10000
Answer: B. 100
Q. Education loans can cover expenses like examination, library, and ________ fees.
A. Graduation B. Application C. Laboratory D. Extracurricular
Answer: C. Laboratory
Q. Education loan applicants usually need to submit their student/co-borrower/guarantor’s bank account statement for the last ________ months.
A. 3 B. 6 C. 9 D. 12
Answer: B. 6
