34 + Interview Questions in FINANCIAL MARKETS IN GENERAL AWARENESS Page 1 InterviewSolution

1.	Find the odd one out.(a) Call money market(b) Commercial bill market(c) Treasury bill market(d) New issue market
Answer» (d) New issue market.

Discussion

2.	Which among the following is not related with Money Market?(a) Call money market(b) Equity shares(c) Commercial Paper(d) Certificate of Deposit
Answer» (b) Equity shares

Discussion

3.	Smt. Faseela is a shareholder of ABC Co. Ltd. She gets allotment of 50 shares free of cost from the company.(i) Find out the method of share allotment referred here. (ii) How it will affect ownership?
Answer» (i) Bonus shares/Stock dividend (ii) Issue of bonus shares does not affect the capital structure of the company.

3.

Smt. Faseela is a shareholder of ABC Co. Ltd. She gets allotment of 50 shares free of cost from the company.(i) Find out the method of share allotment referred here. (ii) How it will affect ownership?

Answer»

(i) Bonus shares/Stock dividend

(ii) Issue of bonus shares does not affect the capital structure of the company.

Discussion

4.

‘Money market is a wholesale market and capital market is a retail market.’ Do you agree with this statement? Give other 5 differences between them.

Answer»

(a) Yes

Capital Market	Money Market
(1) Market deals only long term fund.	(1) Market deals only short term fund.
(2) It arranges large amount of fund.	(2) It arranges small amount of fund.
(3) Return is high.	(3) Return is high.
(4) The instruments used are equity shares, preference shares, debentures and bonds.	(4) The instruments used are call money, treasury bills, trade bills, commercial paper and certificate of deposit
(5) SEBI is the market regulator.	(5) SEBI is the market regulator.
(6) Capital market instruments are highly risky.	(6) Money market instruments are safe

Discussion

5.	Manoj purchased 250 shares of Coal India Ltd. from the primary market. Later, he sold the shares of Coal India and earned a profit of Rs. 7,500/-. But all these transactions were done without physical transfer of share certificate. What is this system? What are the advantages of this system
Answer» Dematerialisation : It is a process by which physical share certificates are converted into an equivalent number of securities to be held in electronic form and credited in the investors’ account. For this, the investor has to open a Demat account with an organisation called a depository. Benefits of Depository Services and Demat Account (1) Sale and Purchase of shares and stocks of any company make easy. (2) Saves time. (3) No paperwork. (4) Lower transaction costs. (5) Ease in trading. (6) Transparency in transactions. (7) No counterfeiting of security certificate. (8) Physical presence of investor is not required in stock exchange.

5.

Manoj purchased 250 shares of Coal India Ltd. from the primary market. Later, he sold the shares of Coal India and earned a profit of Rs. 7,500/-. But all these transactions were done without physical transfer of share certificate. What is this system? What are the advantages of this system

Answer»

Dematerialisation :

It is a process by which physical share certificates are converted into an equivalent number of securities to be held in electronic form and credited in the investors’ account. For this, the investor has to open a Demat account with an organisation called a depository.

Benefits of Depository Services and Demat Account

(1) Sale and Purchase of shares and stocks of any company make easy.

(2) Saves time.

(3) No paperwork.

(4) Lower transaction costs.

(5) Ease in trading.

(6) Transparency in transactions.

(7) No counterfeiting of security certificate.

(8) Physical presence of investor is not required in stock exchange.

Discussion

6.	At present trading in stock exchanges is taking place through ……
Answer» Online trading

Discussion

7.	“It is the regulatory & development agency of Indian Capital Market.Identify the agency referred here, Explain the functions performed by this agency.
Answer» SEBI Functions of SEBI 1. Regulatory Functions (a) Registration of brokers and subbrokers and other players in the market. (b) Registration of Mutual Funds. (c) Regulation of stock brokers, portfolio exchanges, underwriters, etc. (d) Regulation of takeover bids by companies (e) Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries. (1) Levying fee or other charges for carrying out the purposes of the Act. (2) Development Functions (a) Training of intermediaries of the securities market. (b) Conducting research and publishing information useful to all market participants. (c) Undertaking measures to develop the capital markets by adapting a flexible approach. (3) Protective Functions (a) Prohibition of fraudulent and unfair, trade practices. (b) Controlling insider trading price rigging etc. and imposing penalties for such practices. (c) Undertaking steps for investor protection. (d) Promotion of fair practices and code of conduct in securities market.

7.

“It is the regulatory & development agency of Indian Capital Market.Identify the agency referred here, Explain the functions performed by this agency.

Answer»

SEBI

Functions of SEBI

1. Regulatory Functions

(a) Registration of brokers and subbrokers and other players in the market.

(b) Registration of Mutual Funds.

(c) Regulation of stock brokers, portfolio exchanges, underwriters, etc.

(d) Regulation of takeover bids by companies

(e) Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries.

(1) Levying fee or other charges for carrying out the purposes of the Act.

(2) Development Functions

(a) Training of intermediaries of the securities market.

(b) Conducting research and publishing information useful to all market participants.

(c) Undertaking measures to develop the capital markets by adapting a flexible approach.

(3) Protective Functions

(a) Prohibition of fraudulent and unfair, trade practices.

(b) Controlling insider trading price rigging etc. and imposing penalties for such practices.

(c) Undertaking steps for investor protection.

(d) Promotion of fair practices and code of conduct in securities market.

Discussion

8.	Mercy, a computer operator of a private firm, wishes to buy some shares from stock exchange.1) Can she buy shares directly from the stock ex-change? State the reason. (2) Can she purchase shares of all companies from the stock exchange? State the reasons.
Answer» (1) No. Only members of stock exchange are allowed to enter the stock exchange. (2) No. Only listed and govt, securities are permitted to be traded in the stock exchange.

8.

Mercy, a computer operator of a private firm, wishes to buy some shares from stock exchange.1) Can she buy shares directly from the stock ex-change? State the reason. (2) Can she purchase shares of all companies from the stock exchange? State the reasons.

Answer»

(1) No. Only members of stock exchange are allowed to enter the stock exchange.

(2) No. Only listed and govt, securities are permitted to be traded in the stock exchange.

Discussion

9.	The issuing company will give a price band at which securities will be offered and gives the investors an opportunity to bid. Can you suggest the name for this method?
Answer» Book building

Discussion

10.	These shares are issued as fully paid shares to the existing shareholders in the ratio of shares held by them. Identify the share.
Answer» Bonus shares

Discussion

11.	………. is the mirror which reflects the economic policies of a nation?
Answer» Stock exchange

Discussion

12.	This is the agency which regulates the securities market and protects the interest of investors.Identify the agency and explain its functions
Answer» SEBI Functions of SEBI 1. Regulatory Functions (a) Registration of brokers and sub brokers and other players in the market. (b) Registration of Mutual Funds. (c) Regulation of stock brokers, portfolio exchanges, underwriters, etc. (d) Regulation of takeover bids by companies (e) Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries. (1) Levying fee or other charges for carrying out the purposes of the Act. (2) Development Functions (a) Training of intermediaries of the securities market. (b) Conducting research and publishing information useful to all market participants. (c) Undertaking measures to develop the capital markets by adapting a flexible approach. (3) Protective Functions (a) Prohibition of fraudulent and unfair, trade practices. (b) Controlling insider trading price rigging etc. and imposing penalties for such practices. (c) Undertaking steps for investor protection. (d) Promotion of fair practices and code of conduct in securities market.

12.

This is the agency which regulates the securities market and protects the interest of investors.Identify the agency and explain its functions

Answer»

SEBI

Functions of SEBI

1. Regulatory Functions

(a) Registration of brokers and sub brokers and other players in the market.

(b) Registration of Mutual Funds.

(c) Regulation of stock brokers, portfolio exchanges, underwriters, etc.

(d) Regulation of takeover bids by companies

(e) Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries.

(1) Levying fee or other charges for carrying out the purposes of the Act.

(2) Development Functions

(a) Training of intermediaries of the securities market.

(b) Conducting research and publishing information useful to all market participants.

(c) Undertaking measures to develop the capital markets by adapting a flexible approach.

(3) Protective Functions

(a) Prohibition of fraudulent and unfair, trade practices.

(b) Controlling insider trading price rigging etc. and imposing penalties for such practices.

(c) Undertaking steps for investor protection.

(d) Promotion of fair practices and code of conduct in securities market.

Discussion

13.	Stock exchanges are termed as the barometer of the economic progress in a country.(a) Do you agree with this statement? (b) Analyse the statement by connecting with the functions of stock exchange.
Answer» (a) Yes. (b) Functions of a Stock Exchange (1) Providing Liquidity and Marketability to Existing Securities: Stock Exchange provides a ready and continuous market for the sale and purchase of securities. (2) Pricing of Securities : A stock exchange is a mechanism of constant valuation through which the prices of secuqjies are determined. It is based on the forces of demand and supply. (3) Safety of Transaction: Stock exchange has its own well defined rules and regulations. This ensures safety and fair dealings to investors. (4) Contributes to Economic Growth : Stock exchange provides a platform by which savings are channelised into the most productive investment proposals, which leads to capital formation and economic growth. (5) Providing Scope for Speculation : Stock exchange provides scope within the provisions of Law for speculation in a restricted and controlled manner. (6) Economic barometer: A stock exchange serves as a barometer of a country’s economic condition. Price trends in stock exchange indicate whether economy is going through boom or depression

13.

Stock exchanges are termed as the barometer of the economic progress in a country.(a) Do you agree with this statement? (b) Analyse the statement by connecting with the functions of stock exchange.

Answer»

(a) Yes.

(b) Functions of a Stock Exchange

(1) Providing Liquidity and Marketability to Existing Securities:

Stock Exchange provides a ready and continuous market for the sale and purchase of securities.

(2) Pricing of Securities :

A stock exchange is a mechanism of constant valuation through which the prices of secuqjies are determined. It is based on the forces of demand and supply.

(3) Safety of Transaction:

Stock exchange has its own well defined rules and regulations. This ensures safety and fair dealings to investors.

(4) Contributes to Economic Growth :

Stock exchange provides a platform by which savings are channelised into the most productive investment proposals, which leads to capital formation and economic growth.

(5) Providing Scope for Speculation :

Stock exchange provides scope within the provisions of Law for speculation in a restricted and controlled manner.

(6) Economic barometer:

A stock exchange serves as a barometer of a country’s economic condition. Price trends in stock exchange indicate whether economy is going through boom or depression

Discussion

14.	Certificate of Deposit is issued by(a) Bank (b) Mutual Fund (c) Government
Answer» Certificate of Deposit is issued by Bank

Discussion

15.	‘SEBI’ is the watch dog of the securities market.’ Substantiate your answer.
Answer» Functions of SEBI 1. Regulatory Functions (a) Registration of brokers and sub brokers and other players in the market. (b) Registration of Mutual Funds. (c) Regulation of stock brokers, portfolio exchanges, underwriters, etc. (d) Regulation of takeover bids by companies (e) Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries. (1) Levying fee or other charges for carrying out the purposes of the Act. (2) Development Functions (a) Training of intermediaries of the securities market. (b) Conducting research and publishing information useful to all market participants. (c) Undertaking measures to develop the capital markets by adapting a flexible approach. (3) Protective Functions (a) Prohibition of fraudulent and unfair, trade practices. (b) Controlling insider trading price rigging etc. and imposing penalties for such practices. (c) Undertaking steps for investor protection. (d) Promotion of fair practices and code of conduct in securities market.

15.

‘SEBI’ is the watch dog of the securities market.’ Substantiate your answer.

Answer»

Functions of SEBI

1. Regulatory Functions

(a) Registration of brokers and sub brokers and other players in the market.

(b) Registration of Mutual Funds.

(c) Regulation of stock brokers, portfolio exchanges, underwriters, etc.

(d) Regulation of takeover bids by companies

(e) Calling for information by undertaking inspection, conducting enquiries and audits of stock exchanges and intermediaries.

(1) Levying fee or other charges for carrying out the purposes of the Act.

(2) Development Functions

(a) Training of intermediaries of the securities market.

(b) Conducting research and publishing information useful to all market participants.

(c) Undertaking measures to develop the capital markets by adapting a flexible approach.

(3) Protective Functions

(a) Prohibition of fraudulent and unfair, trade practices.

(b) Controlling insider trading price rigging etc. and imposing penalties for such practices.

(c) Undertaking steps for investor protection.

(d) Promotion of fair practices and code of conduct in securities market.

Discussion

16.	Exchange of paper certificate of securities into electronic form is called ……
Answer» De-mat (De Materialisation

Discussion

17.	The process by which physical share certificate are converted into an equivalent number of securities to be held in electronic form is termed as ………
Answer» Dematerialisation

Discussion

18.	Your teacher told you to prepare a table showing various money market instruments and their maturity periods. How will you prepare such a table?
Answer» Call money market – 1 -14 days Commercial Bill Market – 90 days Treasury Bill Market – 14- 364 days Commercial Paper – 3-12 Months Certificate of deposit – 3-12 Months

18.

Your teacher told you to prepare a table showing various money market instruments and their maturity periods. How will you prepare such a table?

Answer»

Call money market – 1 -14 days

Commercial Bill Market – 90 days

Treasury Bill Market – 14- 364 days

Commercial Paper – 3-12 Months

Certificate of deposit – 3-12 Months

Discussion

19.	Complete the series:Bombay Stock Exchange -1875Cochin Stock Exchange -1978National Stock Exchange – ?
Answer» National stock exchange – 1992

Discussion

20.

It is a market for short term financial assets having a maturity period of less than one year.(a) Explain the concept referred above. (b) How it differs from capital market?

Answer»

(a) Money Market

Capital Market	Money Market
(1) Market deals only long term fund	(1) Market deals only short term fund.
(2) It arranges large amount of fund	(2) It arranges small amount of fund.
(3) Return is high.	(3) Return is high.
(4) The instruments used are equity shares, preference shares, debentures and bonds.	(4) The instruments used are call money, treasury bills, trade bills, commercial paper and certificate of deposit
(5) SEBI is the market regulator.	(5) SEBI is the market regulator
(6) Capital market instruments are highly risky.	(6) Money market _ instruments are safe

Discussion

21.	It is a long term financial market. It is divided as ….. and ……
Answer» Capital market, Primary market, Secondary market

Discussion

22.	Explain the features of Certificate of Deposit (CD).
Answer» Money Market Instruments 1. Treasury Bill: They are issued by the RBI on behalf of the Central Government to meet its short term requirement of funds. They are issued at a discount on the face value of the instruments and repayable at par. They are issued in the form of promissory notes. They are also known as Zero Coupon Bonds as no interest is paid on such bills.They are highly liquid. The maturity period of these bills may be between 14 to 364 days. 2. Commercial Paper: Commercial paper is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a maturity period of 15 days to one year. It is sold at a discount and redeemed at par. 3. Call Money: Call money is short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter bank transactions. 4. Certificate of Deposit: Certificates of Deposit (CDs) are short term instruments issued by Commercial Banks and Special Financial Institutions (SFIs), which are freely transferable from one party to another. The maturity period of CDs ranges from 91 days to one year. 5. Commercial Bill: A commercial bill is a Bill of Exchange used to finance the working capital requirements of business firms. When goods are sold in credit, the seller draws the bill and the buyer accepts it. The seller can discount the bill before its maturity with the bank. When a trade bill is accepted by a commercial bank it is known as commercial bills.

22.

Explain the features of Certificate of Deposit (CD).

Answer»

Money Market Instruments

1. Treasury Bill:

They are issued by the RBI on behalf of the Central Government to meet its short term requirement of funds. They are issued at a discount on the face value of the instruments and repayable at par.

They are issued in the form of promissory notes. They are also known as Zero Coupon Bonds as no interest is paid on such bills.They are highly liquid. The maturity period of these bills may be between 14 to 364 days.

2. Commercial Paper:

Commercial paper is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a maturity period of 15 days to one year. It is sold at a discount and redeemed at par.

3. Call Money:

Call money is short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter bank transactions.

4. Certificate of Deposit:

Certificates of Deposit (CDs) are short term instruments issued by Commercial Banks and Special Financial Institutions (SFIs), which are freely transferable from one party to another. The maturity period of CDs ranges from 91 days to one year.

5. Commercial Bill:

A commercial bill is a Bill of Exchange used to finance the working capital requirements of business firms. When goods are sold in credit, the seller draws the bill and the buyer accepts it. The seller can discount the bill before its maturity with the bank. When a trade bill is accepted by a commercial bank it is known as commercial bills.

Discussion

23.	State the market for medium and long term funds.(a) Money market (b) Capital market (c) Commodity market (d) Exchange market
Answer» (b) Capital market

Discussion

24.

It is a market for short term financial assets having a maturity period of less than one year.1. Explain the concept referred above.2. How does it differ from capital market?

Answer»

1. Money market

2. Difference between capital market and money market

Capital Market	Money Market
(1) Market deals only long term fund.	(1) Market deals only short term fund.
(2) It arranges large amount of fund.	(2) It arranges small amount of fund.
(3) Return is high.	(3) Return is law.
(4) The instruments used are equity shares, preference shares, debentures and bonds.	(4) The instruments used are call money, treasury bills, trade bills, commercial paper and certificate of deposit.
(5) SEBI is the market regulator.	(5) RBI is the market regulator.
(6) Capital market instruments are highly risky.	(6) Money market instruments are safe.

Discussion

25.	State the two categories into which financial markets are classified?
Answer» Two categories into which financial markets are classified: 1. Money Market 2. Capital Market

25.

State the two categories into which financial markets are classified?

Answer»

Two categories into which financial markets are classified:

1. Money Market

2. Capital Market

Discussion

26.	It is a market for medium and long term instruments having a period of maturity of more than one year is?(a) Money market(b) Capital market(c) Commercial bill market (d) Call market
Answer» (b) Capital market

Discussion

27.	“These are markets for short term funds.” Identify the type of financial market and list out its various instruments.
Answer» Money Market Money Market Instruments (1) Treasury Bill : They are issued by the RBI on behalf of the Central Government to meet its short term requirement of funds. They are issued at a discount on the face value of the instruments and repayable at par. They are issued in the form of promissory notes. They are also known as Zero Coupon Bonds as no interest is paid on such bills. They are highly liquid. The maturity period of these bills may be between 14 to 364 days. (2) Commercial Paper : Commercial paper is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a maturity period of 15 days to one year. It is sold at a discount and redeemed at par. (3) Call Money : Call money is short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter bank transactions. (4) Certificate of Deposit: Certificates of Deposit (CDs) are short term instruments issued by Commercial Banks and Special Financial Institutions (SFIs), which are freely transferable from one party to another. The maturity period of CDs ranges from 91 days to one year. (5) Commercial Bill: A commercial bill is a Bill of Exchange used to finance the working capital requirements of business firms. When goods are sold in credit, the seller draws the bill and the buyer accepts it. The seller can discount the bill before its maturity with the bank. When a trade bill is accepted by a commercial bank it is known as commercial bills.

27.

“These are markets for short term funds.” Identify the type of financial market and list out its various instruments.

Answer»

Money Market

Money Market Instruments

(1) Treasury Bill :

They are issued by the RBI on behalf of the Central Government to meet its short term requirement of funds. They are issued at a discount on the face value of the instruments and repayable at par. They are issued in the form of promissory notes. They are also known as Zero Coupon Bonds as no interest is paid on such bills. They are highly liquid. The maturity period of these bills may be between 14 to 364 days.

(2) Commercial Paper :

Commercial paper is a short term unsecured promissory note, negotiable and transferable by endorsement and delivery with a maturity period of 15 days to one year. It is sold at a discount and redeemed at par.

(3) Call Money :

Call money is short term finance repayable on demand, with a maturity period of one day to fifteen days, used for inter bank transactions.

(4) Certificate of Deposit:

Certificates of Deposit (CDs) are short term instruments issued by Commercial Banks and Special Financial Institutions (SFIs), which are freely transferable from one party to another. The maturity period of CDs ranges from 91 days to one year.

(5) Commercial Bill:

A commercial bill is a Bill of Exchange used to finance the working capital requirements of business firms. When goods are sold in credit, the seller draws the bill and the buyer accepts it. The seller can discount the bill before its maturity with the bank. When a trade bill is accepted by a commercial bank it is known as commercial bills.

Discussion

28.	Write two protective functions performed by SEBI.
Answer» (a) Prohibition of fraudulent and unfair, trade practices. (b) Controlling insider trading price rigging etc. and imposing penalties for such practices.

28.

Write two protective functions performed by SEBI.

Answer»

(a) Prohibition of fraudulent and unfair, trade practices.

(b) Controlling insider trading price rigging etc. and imposing penalties for such practices.

Discussion

29.	Pick out from the following a short term money instrument having a maternity period of one day to fifteen days used for meeting, cash reserve ratio requirement by commercial bank:(a) Treasury Bills (b) Call Money (c) Commercial Paper (d) Certificate of Deposits
Answer» (b) Call money

Discussion

30.	National Stock Exchange of India (NSE) started its operation in(a) 1992 (b) 1994 (c) 1993 (d) 2000
Answer» National Stock Exchange of India (NSE) started its operation in 1994

Discussion

31.	The settlement cycle in NSE is(a) T + 3 (b) T + 2 (c) T + 1(d) T + 4
Answer» The settlement cycle in NSE is T + 2

Discussion

32.	State the minimum capital requirement for a company to be listed with OTCEI
Answer» For company to be listed with OTCEI minimum paid up capital Rs. 30 Lack or more.

Discussion

33.	To be listed on OTCEI, the minimum capital requirement for a company is ……. (a) Rs. 5 crore (b) Rs. 30 lakh (c) Rs. 6 crore (d) Rs. 1 crore
Answer» (b) Rs. 30 lakh

Discussion

34.	Class 12 Business Studies MCQ Questions Financial Markets with Answers?
Answer» NCERT Class 12 Business Studies MCQ Questions Financial Markets with Answers are regarded as an extremely helpful book while preparing for the CBSE Class 12 Business Studies examinations. This study material owns a deep knowledge and the Solutions collected by the subject matter wizards are no different. MCQ Questions for Class 12 Business Studies– Financial Markets provides us a comprehensive introduction to all the concepts. It provides a clear picture of what is the Financial Market and how it has functioned. Free Online MCQ Questions for Class 12 Business Studies with Answers was Prepared Based on Latest Exam Pattern and Syllabus. Students can solve the Important MCQ Questions with Answers to know their preparation level. 1. Which one of the following is not a function of financial market? (a) Mobilization of savings (b) Price determination of securities (c) Floating of companies (d) Lowering transaction cost 2. Which one of the following is a money market instrument? (a) Unit of mutual fund (b) Debenture (c) Bond (d) Treasury bill 3. Primary and secondary markets develop simultaneously because they (a) complement each other. (b) complement with each other (c) control each other. (d) function independently. 4. Secondary market is in the form of (a) stock exchange. (b) money market (c) new issue market. (d) commercial exchange 5. SEBI is a regulator of (a) capital market. (b) money market (c) commodity market. (d) overseas market 6. ___ is a short-term unsecured promissory note issued by reputed business organisations at a price lower than its face value and redeemable at par. (a) Treasury bill (b) Commercial paper (c) Certificate of deposit (d) Promissory note 7. Which of the following statements is not true with regard to money market? (a) It involves low market risk. (b) It is situated at specific locations. (c) Deals in unsecured and short-term debt instruments. (d) The instruments traded are highly liquid. 8. Which of the following statements is not true with regard to Treasury bills? (a) Are issued in the form of a promissory note. (b) They are highly liquid and have assured yield (c) They carry high risk of default. (d) They are available for a minimum amount of ₹25,000 and in multiples thereof. 9. Which of the following statements is not true with regard to Commercial paper? (a) Is a long-term unsecured promissory note with a fixed maturity period. (b) It usually has a maturity period of 15 days to one year. (c) It is sold at a discount and redeemed at par. (d) Companies use this instrument for bridge financing. 10. Which of the following statements is not true with regard to Call money? (a) It is short-term finance repayable on demand. (b) Its maturity period ranges from one day to fifteen days. (c) There is a direct relationship between call rates and other short-term money market instruments. (d) It is used for inter-bank transactions. 11. Which of the following statements is not true with regard to primary market? (a) Is also known as the old issues market. (b) It facilitates the transfer of investible funds from savers to entrepreneurs. (c) It deals with new securities being issued for the first time. (d) It facilitates the transfer of investible funds from savers to entrepreneurs. 12. Which of the following statements is not true with regard to capital market? (a) The funds are raised for a short period of time. (b) Both debt and equity funds can be raised. (c) It is classified into two types. (d) All of the above. 13. _______ is a link between savers & borrowers, helps to establish a link between savers & investors (a) Marketing (b) Financial market (c) Money market (d) None of these 14. Which of the following is the function of financial market? (a) Mobilization of savings (b) Price fixation (c) Provide liquidity to financial assets (d) All of the above 15.__________ is the organisations, institutions that provide long term funds. (a) Capital market (b) Money market (c) Primary market (d) Secondary market 16. When securities are allotted to institutional investors & some selected individuals is referred to as _________. (a) Initial public offer (b) Offer through prospectus (c) Private placement (d) Offer for sale 17. Stock exchange is known as __________ market for securities. (a) Primary market (b) Secondary market (c) Capital market (d) None of the above 18. _________ is a market for lending & borrowing of short term funds. (a) Money market (b) Primary market (c) Capital market (d) All of the above 19. ____________ is also called zero coupon bond. (a) Trade bills (b) Call money (c) Treasury bills (d) Commercial papers 20. Which of the following are the instruments of money market? (a) Call money (b) Certificate of deposits (c) Trade bills (d) All of the above 21. Primary and secondary markets: (i) Control each other (ii) Complement each other (iii) Compete with each other (iv) Function independently 22. The settlement cycle in NSE is (i) T+5 (ii) T+3 (iii) T+2 (iv) T+1 23. NSE commenced futures trading in the year: (i) 1999 (ii) 2000 (iii) 2001 (iv) 2002 24. Secondary market is in the form of (i) stock exchange. (ii) money market (iii) new issue market. (iv) commercial exchange 25. Which of the following statements is not true with regard to Commercial paper? (i) Is a long-term unsecured promissory note with a fixed maturity period (ii) It usually has a maturity period of 15 days to one year. (iii) It is sold at a discount and redeemed at par. (iv) Companies use this instrument for bridge financing. Answer: 1. Answer (c) Floating of companies 2. Answer (d) Treasury bill 3. Answer (a) complement each other. 4. Answer (a) stock exchange. 5. Answer (a) capital market. 6. Answer (b) Commercial paper 7. Answer (b) It is situated at specific locations. Explanation: (b) it has no physical locations 8. Answer (c) They carry high risk of default. (c) they carry no risk of default 9. Answer (a) Is a long-term unsecured promissory note with a fixed maturity period. Explanation: (a) it is a short-term instrument 10. Answer (c) There is a direct relationship between call rates and other short-term money market instruments. Explanation: (c) There is an inverse relationship between call rates and other short-term money market instruments 11. Answer (a) Is also known as the old issues market. Explanation: (a) it is a new issue market 12. Answer (a) The funds are raised for a short period of time. Explanation: (a) it deals in long term funds 13. Answer (b) Financial market 14. Answer (d) All of the above 15. Answer (a) Capital market 16. Answer (c) Private placement 17. Answer (b) Secondary market 18. Answer (a) Money market 19. Answer (c) Treasury bills 20. Answer (d) All of the above 21. Answer (ii) Complement each other 22. Answer (iii) T+2 23. Answer (ii) 2000 24. Answer (i) stock exchange. 25. Answer (i) Is a long-term unsecured promissory note with a fixed maturity period

34.

Class 12 Business Studies MCQ Questions Financial Markets with Answers?

Answer»

NCERT Class 12 Business Studies MCQ Questions Financial Markets with Answers are regarded as an extremely helpful book while preparing for the CBSE Class 12 Business Studies examinations. This study material owns a deep knowledge and the Solutions collected by the subject matter wizards are no different.

MCQ Questions for Class 12 Business Studies– Financial Markets provides us a comprehensive introduction to all the concepts. It provides a clear picture of what is the Financial Market and how it has functioned. Free Online MCQ Questions for Class 12 Business Studies with Answers was Prepared Based on Latest Exam Pattern and Syllabus. Students can solve the Important MCQ Questions with Answers to know their preparation level.

1. Which one of the following is not a function of financial market?

(a) Mobilization of savings
(b) Price determination of securities
(c) Floating of companies
(d) Lowering transaction cost

2. Which one of the following is a money market instrument?

(a) Unit of mutual fund
(b) Debenture
(c) Bond
(d) Treasury bill

3. Primary and secondary markets develop simultaneously because they

(a) complement each other.
(b) complement with each other
(c) control each other.
(d) function independently.

4. Secondary market is in the form of

(a) stock exchange.
(b) money market
(c) new issue market.
(d) commercial exchange

5. SEBI is a regulator of

(a) capital market.
(b) money market
(c) commodity market.
(d) overseas market

6. ___ is a short-term unsecured promissory note issued by reputed business organisations at a price lower than its face value and redeemable at par.

(a) Treasury bill
(b) Commercial paper
(c) Certificate of deposit
(d) Promissory note

7. Which of the following statements is not true with regard to money market?

(a) It involves low market risk.
(b) It is situated at specific locations.
(c) Deals in unsecured and short-term debt instruments.
(d) The instruments traded are highly liquid.

8. Which of the following statements is not true with regard to Treasury bills?

(a) Are issued in the form of a promissory note.
(b) They are highly liquid and have assured yield
(c) They carry high risk of default.
(d) They are available for a minimum amount of ₹25,000 and in multiples thereof.

9. Which of the following statements is not true with regard to Commercial paper?

(a) Is a long-term unsecured promissory note with a fixed maturity period.
(b) It usually has a maturity period of 15 days to one year.
(c) It is sold at a discount and redeemed at par.
(d) Companies use this instrument for bridge financing.

10. Which of the following statements is not true with regard to Call money?

(a) It is short-term finance repayable on demand.
(b) Its maturity period ranges from one day to fifteen days.
(c) There is a direct relationship between call rates and other short-term money market instruments.
(d) It is used for inter-bank transactions.

11. Which of the following statements is not true with regard to primary market?

(a) Is also known as the old issues market.
(b) It facilitates the transfer of investible funds from savers to entrepreneurs.
(c) It deals with new securities being issued for the first time.

(d) It facilitates the transfer of investible funds from savers to entrepreneurs.

12. Which of the following statements is not true with regard to capital market?

(a) The funds are raised for a short period of time.
(b) Both debt and equity funds can be raised.
(c) It is classified into two types.
(d) All of the above.

13. _______ is a link between savers & borrowers, helps to establish a link between savers & investors

(a) Marketing
(b) Financial market
(c) Money market
(d) None of these

14. Which of the following is the function of financial market?

(a) Mobilization of savings
(b) Price fixation
(c) Provide liquidity to financial assets
(d) All of the above

15.__________ is the organisations, institutions that provide long term funds.

(a) Capital market
(b) Money market
(c) Primary market
(d) Secondary market

16. When securities are allotted to institutional investors & some selected individuals is referred to as _________.

(a) Initial public offer
(b) Offer through prospectus
(c) Private placement
(d) Offer for sale

17. Stock exchange is known as __________ market for securities.

(a) Primary market
(b) Secondary market
(c) Capital market
(d) None of the above

18. _________ is a market for lending & borrowing of short term funds.

(a) Money market
(b) Primary market
(c) Capital market
(d) All of the above

19. ____________ is also called zero coupon bond.

(a) Trade bills
(b) Call money
(c) Treasury bills
(d) Commercial papers

20. Which of the following are the instruments of money market?

(a) Call money
(b) Certificate of deposits
(c) Trade bills
(d) All of the above

21. Primary and secondary markets:

(i) Control each other
(ii) Complement each other
(iii) Compete with each other
(iv) Function independently

22. The settlement cycle in NSE is

(i) T+5
(ii) T+3
(iii) T+2
(iv) T+1

23. NSE commenced futures trading in the year:

(i) 1999
(ii) 2000
(iii) 2001
(iv) 2002

24. Secondary market is in the form of

(i) stock exchange.
(ii) money market
(iii) new issue market.
(iv) commercial exchange

25. Which of the following statements is not true with regard to Commercial paper?

(i) Is a long-term unsecured promissory note with a fixed maturity period
(ii) It usually has a maturity period of 15 days to one year.
(iii) It is sold at a discount and redeemed at par.
(iv) Companies use this instrument for bridge financing.

Answer:

1. Answer (c) Floating of companies

2. Answer (d) Treasury bill

3. Answer (a) complement each other.

4. Answer (a) stock exchange.

5. Answer (a) capital market.

6. Answer (b) Commercial paper

7. Answer (b) It is situated at specific locations.

Explanation: (b) it has no physical locations

8. Answer (c) They carry high risk of default.

(c) they carry no risk of default

9. Answer (a) Is a long-term unsecured promissory note with a fixed maturity period.

Explanation: (a) it is a short-term instrument

10. Answer (c) There is a direct relationship between call rates and other short-term money market instruments.

Explanation: (c) There is an inverse relationship between call rates and other short-term money market instruments

11. Answer (a) Is also known as the old issues market.

Explanation: (a) it is a new issue market

12. Answer (a) The funds are raised for a short period of time.

Explanation: (a) it deals in long term funds

13. Answer (b) Financial market

14. Answer (d) All of the above

15. Answer (a) Capital market

16. Answer (c) Private placement

17. Answer (b) Secondary market

18. Answer (a) Money market

19. Answer (c) Treasury bills

20. Answer (d) All of the above

21. Answer (ii) Complement each other

22. Answer (iii) T+2

23. Answer (ii) 2000

24. Answer (i) stock exchange.

25. Answer (i) Is a long-term unsecured promissory note with a fixed maturity period

Discussion

Explore topic-wise InterviewSolutions in .

Find the odd one out.(a) Call money market(b) Commercial bill market(c) Treasury bill market(d) New issue market

Which among the following is not related with Money Market?(a) Call money market(b) Equity shares(c) Commercial Paper(d) Certificate of Deposit

Smt. Faseela is a shareholder of ABC Co. Ltd. She gets allotment of 50 shares free of cost from the company.(i) Find out the method of share allotment referred here. (ii) How it will affect ownership?

‘Money market is a wholesale market and capital market is a retail market.’ Do you agree with this statement? Give other 5 differences between them.

Manoj purchased 250 shares of Coal India Ltd. from the primary market. Later, he sold the shares of Coal India and earned a profit of Rs. 7,500/-. But all these transactions were done without physical transfer of share certificate. What is this system? What are the advantages of this system

At present trading in stock exchanges is taking place through ……

“It is the regulatory &amp; development agency of Indian Capital Market.Identify the agency referred here, Explain the functions performed by this agency.

Mercy, a computer operator of a private firm, wishes to buy some shares from stock exchange.1) Can she buy shares directly from the stock ex-change? State the reason. (2) Can she purchase shares of all companies from the stock exchange? State the reasons.

The issuing company will give a price band at which securities will be offered and gives the investors an opportunity to bid. Can you suggest the name for this method?

These shares are issued as fully paid shares to the existing shareholders in the ratio of shares held by them. Identify the share.

………. is the mirror which reflects the economic policies of a nation?

This is the agency which regulates the securities market and protects the interest of investors.Identify the agency and explain its functions

Stock exchanges are termed as the barometer of the economic progress in a country.(a) Do you agree with this statement? (b) Analyse the statement by connecting with the functions of stock exchange.

Certificate of Deposit is issued by(a) Bank (b) Mutual Fund (c) Government

‘SEBI’ is the watch dog of the securities market.’ Substantiate your answer.

Exchange of paper certificate of securities into electronic form is called ……

The process by which physical share certificate are converted into an equivalent number of securities to be held in electronic form is termed as ………

Your teacher told you to prepare a table showing various money market instruments and their maturity periods. How will you prepare such a table?

Complete the series:Bombay Stock Exchange -1875Cochin Stock Exchange -1978National Stock Exchange – ?

It is a market for short term financial assets having a maturity period of less than one year.(a) Explain the concept referred above. (b) How it differs from capital market?

It is a long term financial market. It is divided as ….. and ……

Explain the features of Certificate of Deposit (CD).

State the market for medium and long term funds.(a) Money market (b) Capital market (c) Commodity market (d) Exchange market

It is a market for short term financial assets having a maturity period of less than one year.1. Explain the concept referred above.2. How does it differ from capital market?

State the two categories into which financial markets are classified?

It is a market for medium and long term instruments having a period of maturity of more than one year is?(a) Money market(b) Capital market(c) Commercial bill market (d) Call market

“These are markets for short term funds.” Identify the type of financial market and list out its various instruments.

Write two protective functions performed by SEBI.

Pick out from the following a short term money instrument having a maternity period of one day to fifteen days used for meeting, cash reserve ratio requirement by commercial bank:(a) Treasury Bills (b) Call Money (c) Commercial Paper (d) Certificate of Deposits

National Stock Exchange of India (NSE) started its operation in(a) 1992 (b) 1994 (c) 1993 (d) 2000

The settlement cycle in NSE is(a) T + 3 (b) T + 2 (c) T + 1(d) T + 4

State the minimum capital requirement for a company to be listed with OTCEI

To be listed on OTCEI, the minimum capital requirement for a company is ……. (a) Rs. 5 crore (b) Rs. 30 lakh (c) Rs. 6 crore (d) Rs. 1 crore

Class 12 Business Studies MCQ Questions Financial Markets with Answers?

Answer:

“It is the regulatory & development agency of Indian Capital Market.Identify the agency referred here, Explain the functions performed by this agency.