MORE 100 MCQS Chapter 10: Financial Markets
CBSE BOARD 2024
1. A market for the creation and exchange of financial assets is known as a:
A) Product Market
B) Financial Market
C) Wholesale Market
D) Consumer Market
Correct Answer: B) Financial Market.
2. The process by which allocation of funds is done from surplus units (savers) to deficit units (investors) is called:
A) Financial Engineering
B) Capital Budgeting
C) Financial Intermediation
D) Profit Maximization
Correct Answer: C) Financial Intermediation.
Board Tip: Banks and Financial Markets are the two major financial intermediaries in an economy.
Board Tip: Banks and Financial Markets are the two major financial intermediaries in an economy.
COMPETENCY BASED
3. By providing a platform where buyers and sellers can easily find each other to trade securities, financial markets save time, effort, and money. Which function of financial markets is highlighted here?
A) Mobilization of savings
B) Facilitating price discovery
C) Providing liquidity to financial assets
D) Reducing the cost of transactions
Correct Answer: D) Reducing the cost of transactions.
Analysis: Because the market provides valuable information and a ready platform, investors don't have to spend money searching for buyers/sellers.
Analysis: Because the market provides valuable information and a ready platform, investors don't have to spend money searching for buyers/sellers.
CBSE BOARD 2023
4. How do financial markets facilitate "Price Discovery" of a financial asset?
A) The government fixes the price.
B) The SEBI determines the price of all shares.
C) Through the interaction of the forces of demand and supply of funds.
D) The company's board of directors votes on the price.
Correct Answer: C) Through the interaction of the forces of demand and supply of funds.
Logic: Just like the price of potatoes is set by buyers and sellers in a vegetable market, the price of shares is set by buyers and sellers in the financial market.
Logic: Just like the price of potatoes is set by buyers and sellers in a vegetable market, the price of shares is set by buyers and sellers in the financial market.
ASSERTION-REASON
5. Assertion (A): Financial markets provide liquidity to financial assets.
Reason (R): They provide a ready market where investors can easily convert their financial assets into cash whenever required.
Reason (R): They provide a ready market where investors can easily convert their financial assets into cash whenever required.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
Correct Answer: A) Both (A) and (R) are true and (R) is the correct explanation.
CBSE SAMPLE PAPER 2025
6. The financial market is broadly classified into Money Market and Capital Market based on:
A) The geographic location of the market
B) The maturity period of the financial instruments traded
C) The size of the companies issuing the instruments
D) The level of government regulation
Correct Answer: B) The maturity period of the financial instruments traded.
Note: Money market is for short-term funds (up to 1 year). Capital market is for medium and long-term funds (more than 1 year).
Note: Money market is for short-term funds (up to 1 year). Capital market is for medium and long-term funds (more than 1 year).
TRICKY QUESTION
7. The instruments traded in the Money Market are generally characterized by:
A) High risk and high return
B) Low liquidity and high default risk
C) High liquidity, short maturity, and low default risk
D) Long maturity and tax-free status
Correct Answer: C) High liquidity, short maturity, and low default risk.
Board Tip: Because they are issued by the RBI, large banks, and huge corporations for less than a year, they are considered highly safe.
Board Tip: Because they are issued by the RBI, large banks, and huge corporations for less than a year, they are considered highly safe.
CASE SCENARIO
8. The Reserve Bank of India (RBI) issues a short-term instrument on behalf of the Central Government to meet its short-term requirement of funds. What is this instrument called?
A) Commercial Paper
B) Call Money
C) Treasury Bill (T-Bill)
D) Certificate of Deposit
Correct Answer: C) Treasury Bill (T-Bill).
CBSE BOARD 2022
9. Treasury Bills are also known as:
A) Junk Bonds
B) Zero Coupon Bonds
C) Promissory Notes
D) Bearer Bonds
Correct Answer: B) Zero Coupon Bonds.
Note: They do not pay regular interest (coupons). They are issued at a discount and redeemed at par. The difference is the investor's profit.
Note: They do not pay regular interest (coupons). They are issued at a discount and redeemed at par. The difference is the investor's profit.
COMPETENCY BASED
10. An investor buys a Treasury Bill with a face value of ₹1,00,000 for ₹96,000. Upon maturity, the investor receives ₹1,00,000. What does the ₹4,000 difference represent?
A) The broker's commission
B) Tax deducted at source (TDS)
C) Interest receivable (Discount) earned by the investor
D) Flotation cost
Correct Answer: C) Interest receivable (Discount) earned by the investor.
CBSE BOARD 2024
11. What is the minimum amount for which a Treasury Bill can be issued?
A) ₹10,000 and multiples thereof
B) ₹25,000 and multiples thereof
C) ₹1,00,000 and multiples thereof
D) ₹5,00,000 and multiples thereof
Correct Answer: B) ₹25,000 and multiples thereof.
Board Tip: This is a highly repeated 1-mark factual question in CBSE exams.
Board Tip: This is a highly repeated 1-mark factual question in CBSE exams.
CASE SCENARIO
12. A large, highly creditworthy company needs short-term funds to meet its seasonal working capital needs. It issues an unsecured promissory note with a maturity of 90 days. Identify the instrument.
A) Commercial Bill
B) Call Money
C) Commercial Paper
D) Treasury Bill
Correct Answer: C) Commercial Paper.
Analysis: Commercial papers are issued by large, reputed corporations. Because they are "unsecured," only companies with excellent credit ratings can find buyers for them.
Analysis: Commercial papers are issued by large, reputed corporations. Because they are "unsecured," only companies with excellent credit ratings can find buyers for them.
CBSE BOARD 2021
13. When a company issues equity shares in the primary market, it incurs heavy flotation costs. It can issue a short-term money market instrument to temporarily cover these flotation costs. This practice is known as:
A) Margin Trading
B) Bridge Financing
C) Trading on Equity
D) Underwriting
Correct Answer: B) Bridge Financing.
Logic: Commercial Paper is the instrument typically used for Bridge Financing to "bridge" the gap until long-term funds are fully raised.
Logic: Commercial Paper is the instrument typically used for Bridge Financing to "bridge" the gap until long-term funds are fully raised.
TRICKY QUESTION
14. What is the standard maturity period for a Commercial Paper?
A) 1 to 14 days
B) 15 days to 1 year
C) 1 year to 5 years
D) Minimum 91 days
Correct Answer: B) 15 days to 1 year.
CBSE SAMPLE PAPER 2025
15. Which money market instrument is primarily used for inter-bank transactions to maintain the Cash Reserve Ratio (CRR) mandated by the RBI?
A) Treasury Bill
B) Certificate of Deposit
C) Call Money
D) Commercial Bill
Correct Answer: C) Call Money.
Note: When one bank falls short of its required cash reserves, it borrows overnight from another bank that has surplus cash.
Note: When one bank falls short of its required cash reserves, it borrows overnight from another bank that has surplus cash.
ASSERTION-REASON
16. Assertion (A): Call money rates are highly volatile.
Reason (R): The demand for call money changes on a day-to-day and sometimes hour-to-hour basis as banks adjust their daily cash reserves.
Reason (R): The demand for call money changes on a day-to-day and sometimes hour-to-hour basis as banks adjust their daily cash reserves.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
Correct Answer: A) Both (A) and (R) are true and (R) is the correct explanation.
17. There is an inverse relationship between call money rates and other short-term money market instruments. This means if call money rates rise, banks will prefer to:
A) Borrow more call money
B) Raise funds through cheaper alternatives like Commercial Paper or Certificates of Deposit
C) Stop lending to businesses entirely
D) Issue long-term equity shares
Correct Answer: B) Raise funds through cheaper alternatives like Commercial Paper or Certificates of Deposit.
CBSE BOARD 2023
18. A negotiable, unsecured, short-term promissory note issued by Commercial Banks and Development Financial Institutions during periods of tight liquidity (when deposit growth is slow but demand for credit is high) is called:
A) Commercial Paper
B) Call Money
C) Certificate of Deposit (CD)
D) Commercial Bill
Correct Answer: C) Certificate of Deposit (CD).
COMPETENCY BASED
19. Mr. A sells goods on credit to Mr. B. To ensure payment, Mr. A draws a bill of exchange on Mr. B, which Mr. B accepts. If Mr. A needs funds immediately, he can get this bill discounted with a bank. This instrument is known as a:
A) Treasury Bill
B) Commercial Bill
C) Certificate of Deposit
D) Promissory Note
Correct Answer: B) Commercial Bill.
Analysis: A commercial bill (trade bill) is used to finance the working capital requirements arising from credit sales.
Analysis: A commercial bill (trade bill) is used to finance the working capital requirements arising from credit sales.
CBSE BOARD 2022
20. The primary participants in the Money Market are:
A) Retail investors and small business owners
B) RBI, Commercial Banks, LIC, and Large Corporate Houses
C) Foreign venture capitalists
D) Stock brokers and sub-brokers
Correct Answer: B) RBI, Commercial Banks, LIC, and Large Corporate Houses.
Logic: Because the instruments are issued in massive denominations (e.g., minimum ₹25,000 for T-bills, often reaching into the crores), small retail investors rarely participate directly in the money market.
Logic: Because the instruments are issued in massive denominations (e.g., minimum ₹25,000 for T-bills, often reaching into the crores), small retail investors rarely participate directly in the money market.
TRICKY QUESTION
21. While Money Market instruments have lower expected returns than Capital Market instruments, they offer much higher:
A) Default Risk
B) Safety and Liquidity
C) Capital Gains
D) Maturity Periods
Correct Answer: B) Safety and Liquidity.
Board Tip: There is always a trade-off. Money market gives you your money back quickly and safely, but the interest (return) is lower.
Board Tip: There is always a trade-off. Money market gives you your money back quickly and safely, but the interest (return) is lower.
CASE SCENARIO
22. An economy has two alternative mechanisms for the allocation of funds from savers to investors: Banks and Financial Markets. If households prefer higher returns and are willing to take some risk, they will likely route their savings through:
A) Banks
B) Financial Markets
C) Government Post Offices
D) Keeping cash at home
Correct Answer: B) Financial Markets.
Analysis: Banks offer safe, low-interest fixed deposits. Financial markets (like buying shares) offer higher potential returns but carry higher risk.
Analysis: Banks offer safe, low-interest fixed deposits. Financial markets (like buying shares) offer higher potential returns but carry higher risk.
CBSE BOARD 2024
23. Which of the following instruments does NOT belong to the Money Market?
A) Commercial Paper
B) Call Money
C) Equity Shares
D) Treasury Bills
Correct Answer: C) Equity Shares.
Note: Equity shares are long-term instruments traded in the Capital Market.
Note: Equity shares are long-term instruments traded in the Capital Market.
ASSERTION-REASON
24. Assertion (A): Financial markets help in capital formation in the country.
Reason (R): They mobilize savings from households and channel them into the most productive business investments.
Reason (R): They mobilize savings from households and channel them into the most productive business investments.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
Correct Answer: A) Both (A) and (R) are true and (R) is the correct explanation.
FINAL MASTER QUESTION
25. Match the Money Market Instrument with its specific purpose:
(i) Call Money
(ii) Commercial Paper
(iii) Treasury Bill
(iv) Commercial Bill
With:
(a) Issued by RBI for Govt. short-term funds
(b) Used for Bridge Financing by companies
(c) Used by banks to maintain CRR
(d) Used to finance credit sales between businesses
(i) Call Money
(ii) Commercial Paper
(iii) Treasury Bill
(iv) Commercial Bill
With:
(a) Issued by RBI for Govt. short-term funds
(b) Used for Bridge Financing by companies
(c) Used by banks to maintain CRR
(d) Used to finance credit sales between businesses
A) (i)-(c), (ii)-(b), (iii)-(a), (iv)-(d)
B) (i)-(a), (ii)-(c), (iii)-(b), (iv)-(d)
C) (i)-(c), (ii)-(d), (iii)-(a), (iv)-(b)
D) (i)-(b), (ii)-(c), (iii)-(d), (iv)-(a)
Correct Answer: A) (i)-(c), (ii)-(b), (iii)-(a), (iv)-(d).
Final Analysis: This matching effectively summarizes the entire Money Market section for your board exams!
Final Analysis: This matching effectively summarizes the entire Money Market section for your board exams!
CBSE BOARD 2024
26. A market where organizations raise funds through the issue of medium and long-term securities is known as the:
A) Money Market
B) Capital Market
C) Commodity Market
D) Foreign Exchange Market
Correct Answer: B) Capital Market.
Board Tip: Capital market deals with debt and equity instruments with a maturity of more than one year.
Board Tip: Capital market deals with debt and equity instruments with a maturity of more than one year.
HOTS QUESTION
27. Which of the following is NOT a feature of the Capital Market?
A) It channels savings into their most productive use.
B) It deals in instruments like equity shares and debentures.
C) It satisfies the short-term working capital requirements of a firm.
D) It includes both the Primary and Secondary markets.
Correct Answer: C) It satisfies the short-term working capital requirements of a firm.
Logic: Short-term working capital needs are met by the Money Market, not the Capital Market.
Logic: Short-term working capital needs are met by the Money Market, not the Capital Market.
COMPETENCY BASED
28. When compared to the Money Market, the Capital Market offers:
A) Higher liquidity and lower risk
B) Lower returns and higher safety
C) Higher expected returns but higher risk
D) Shorter maturity periods
Correct Answer: C) Higher expected returns but higher risk.
Analysis: Because capital market instruments are tied up for a longer time and include equity (which is volatile), they carry a higher risk, but compensate with higher potential returns.
Analysis: Because capital market instruments are tied up for a longer time and include equity (which is volatile), they carry a higher risk, but compensate with higher potential returns.
CBSE BOARD 2023
29. The Primary Market is also commonly known as the:
A) Stock Exchange
B) Old Issue Market
C) New Issue Market
D) Unorganized Market
Correct Answer: C) New Issue Market.
Note: It is called the New Issue Market because securities are sold for the first time directly by the company to investors.
Note: It is called the New Issue Market because securities are sold for the first time directly by the company to investors.
ASSERTION-REASON
30. Assertion (A): There is no secondary market without a primary market.
Reason (R): The primary market deals with the issue of new securities. Only those securities which have been issued initially in the primary market can be traded in the secondary market.
Reason (R): The primary market deals with the issue of new securities. Only those securities which have been issued initially in the primary market can be traded in the secondary market.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
Correct Answer: A) Both (A) and (R) are true and (R) is the correct explanation.
CBSE SAMPLE PAPER
31. Which method of floatation involves a company inviting the general public to subscribe to its shares by issuing a formal advertisement?
A) Private Placement
B) Offer through Prospectus
C) Rights Issue
D) Offer for Sale
Correct Answer: B) Offer through Prospectus.
Board Tip: This is the most common method used by public companies to raise capital directly from the public.
Board Tip: This is the most common method used by public companies to raise capital directly from the public.
TRICKY QUESTION
32. Under the 'Offer for Sale' method, the company issues securities to the public:
A) Directly through a prospectus
B) Indirectly through intermediaries like issuing houses or stockbrokers
C) Only to its existing shareholders
D) Through an online stock exchange platform
Correct Answer: B) Indirectly through intermediaries like issuing houses or stockbrokers.
Logic: The company sells the entire lot of shares to a broker at an agreed price, and the broker then resells them to the public at a higher price.
Logic: The company sells the entire lot of shares to a broker at an agreed price, and the broker then resells them to the public at a higher price.
CASE SCENARIO
33. 'TechGrow Ltd.' is a public company that wants to raise ₹50 crores quickly. To save on the massive costs and time involved in issuing a public prospectus, they decide to sell the shares directly to Life Insurance Corporation (LIC) and a few selected mutual funds. This method is called:
A) E-IPO
B) Offer for Sale
C) Rights Issue
D) Private Placement
Correct Answer: D) Private Placement.
Analysis: Allotting securities to a select group of institutional investors instead of the general public saves massive flotation costs.
Analysis: Allotting securities to a select group of institutional investors instead of the general public saves massive flotation costs.
CBSE BOARD 2022
34. A public company proposing to issue new shares must first offer them to its existing shareholders in proportion to the number of shares they already hold. This is known as:
A) Private Placement
B) Rights Issue
C) Offer through Prospectus
D) Dividend Declaration
Correct Answer: B) Rights Issue.
Note: This is a legal requirement under the Companies Act to protect the voting rights and control of the existing shareholders.
Note: This is a legal requirement under the Companies Act to protect the voting rights and control of the existing shareholders.
COMPETENCY BASED
35. When a company proposes to issue capital to the public through the online system of a stock exchange, it must enter into an agreement with the stock exchange. This modern method is called:
A) Electronic Initial Public Offer (e-IPO)
B) Digital Private Placement
C) E-Trading
D) Internet Rights Issue
Correct Answer: A) Electronic Initial Public Offer (e-IPO).
CBSE BOARD 2021
36. The Secondary Market is commonly referred to as the:
A) New Issue Market
B) Primary Market
C) Stock Exchange
D) Money Market
Correct Answer: C) Stock Exchange.
ASSERTION-REASON
37. Assertion (A): The Primary Market directly promotes capital formation in the country.
Reason (R): In the Primary Market, funds flow directly from savers (investors) to entrepreneurs (companies) for the establishment of new projects.
Reason (R): In the Primary Market, funds flow directly from savers (investors) to entrepreneurs (companies) for the establishment of new projects.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
Correct Answer: A) Both (A) and (R) are true and (R) is the correct explanation.
Logic: Secondary markets promote capital formation *indirectly* by providing liquidity, but primary markets put cash directly into the hands of companies.
Logic: Secondary markets promote capital formation *indirectly* by providing liquidity, but primary markets put cash directly into the hands of companies.
HOTS QUESTION
38. In which market can securities ONLY be bought by investors, but not sold?
A) Secondary Market
B) Primary Market
C) Money Market
D) Debt Market
Correct Answer: B) Primary Market.
Board Tip: In the primary market, you can only buy new shares from the company. To sell them, you must go to the secondary market (Stock Exchange).
Board Tip: In the primary market, you can only buy new shares from the company. To sell them, you must go to the secondary market (Stock Exchange).
CBSE BOARD 2024
39. How is the price of securities determined in the Primary Market?
A) By the forces of demand and supply
B) By the Securities and Exchange Board of India (SEBI)
C) By the management of the issuing company
D) By the stock exchange authorities
Correct Answer: C) By the management of the issuing company.
Note: When a company issues an IPO, its management decides the issue price. Once listed, the secondary market dictates the price via demand and supply.
Note: When a company issues an IPO, its management decides the issue price. Once listed, the secondary market dictates the price via demand and supply.
CASE SCENARIO
40. Mr. Sharma wants to sell 500 shares of Reliance Industries that he bought last year. To whom will he sell these shares, and in which market?
A) He will sell them back to Reliance Industries in the Primary Market.
B) He will sell them to another investor in the Secondary Market.
C) He will sell them to the RBI in the Money Market.
D) He will sell them to SEBI in the Capital Market.
Correct Answer: B) He will sell them to another investor in the Secondary Market.
Analysis: The secondary market facilitates the trading of *existing* (second-hand) securities between investors.
Analysis: The secondary market facilitates the trading of *existing* (second-hand) securities between investors.
TRICKY QUESTION
41. Which of the following statements about the geographical location of markets is correct?
A) Both Primary and Secondary markets have fixed geographical locations.
B) Neither Primary nor Secondary markets have fixed geographical locations.
C) The Primary market has no fixed geographical location, while the Secondary market has a specified place (Stock Exchange).
D) The Primary market is located in Mumbai, and the Secondary market is online.
Correct Answer: C) The Primary market has no fixed geographical location, while the Secondary market has a specified place (Stock Exchange).
CBSE SAMPLE PAPER
42. Which market imparts liquidity to existing investments?
A) Primary Market
B) Secondary Market
C) New Issue Market
D) Commercial Paper Market
Correct Answer: B) Secondary Market.
Logic: Because investors know they can easily sell their shares on the stock exchange (Secondary Market), they feel confident buying them in the first place.
Logic: Because investors know they can easily sell their shares on the stock exchange (Secondary Market), they feel confident buying them in the first place.
COMPETENCY BASED
43. During an e-IPO, the issuing company appoints SEBI registered brokers for the purpose of accepting applications and placing orders. What is the role of the Registrar to the Issue?
A) To set the price of the shares
B) To ensure that the electronic connectivity is maintained
C) To act as the stock exchange
D) To process the applications, allot shares, and handle refunds
Correct Answer: D) To process the applications, allot shares, and handle refunds.
CBSE BOARD 2023
44. A major disadvantage of raising funds through the 'Offer through Prospectus' method is:
A) It does not reach the general public
B) It involves huge flotation costs and is time-consuming
C) It dilutes the rights of existing shareholders without warning
D) It is illegal for public companies
Correct Answer: B) It involves huge flotation costs and is time-consuming.
ASSERTION-REASON
45. Assertion (A): Capital Market and Money Market are two mutually exclusive segments with no relationship.
Reason (R): One deals with short-term funds and the other with long-term funds.
Reason (R): One deals with short-term funds and the other with long-term funds.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is false, but (R) is true.
D) Both (A) and (R) are false.
Correct Answer: C) (A) is false, but (R) is true.
Logic: They are NOT mutually exclusive. They are highly integrated parts of the overall financial system. What happens in the money market (interest rates) heavily impacts the capital market.
Logic: They are NOT mutually exclusive. They are highly integrated parts of the overall financial system. What happens in the money market (interest rates) heavily impacts the capital market.
HOTS QUESTION
46. If a company wants to avoid the mandatory listing requirements and rigorous disclosures required by the stock exchange while raising capital, which method should it prefer?
A) Offer through Prospectus
B) Private Placement
C) E-IPO
D) Offer for Sale to the public
Correct Answer: B) Private Placement.
Analysis: Since the shares are not offered to the general public, many strict public disclosure and listing requirements can be bypassed.
Analysis: Since the shares are not offered to the general public, many strict public disclosure and listing requirements can be bypassed.
CBSE BOARD 2021
47. Who among the following is the ultimate "Deficit Unit" (borrower) in the financial system?
A) Households
B) Banks
C) Business firms and the Government
D) Stock Brokers
Correct Answer: C) Business firms and the Government.
Note: Households are the "Surplus Units" (savers).
Note: Households are the "Surplus Units" (savers).
CASE SCENARIO
48. To combat inflation, the RBI decides to increase the Cash Reserve Ratio (CRR). Consequently, banks fall short of cash reserves. Which market will immediately experience a massive spike in activity and interest rates?
A) The Secondary Equity Market
B) The Commercial Paper Market
C) The Call Money Market
D) The Primary Market
Correct Answer: C) The Call Money Market.
Analysis: Banks will desperately borrow overnight funds from each other to meet the newly raised CRR, driving up call money rates.
Analysis: Banks will desperately borrow overnight funds from each other to meet the newly raised CRR, driving up call money rates.
TRICKY QUESTION
49. Can a company raise funds in the Secondary Market?
A) Yes, by issuing an IPO.
B) No, the secondary market is only for investors to trade existing securities among themselves. The company gets no new capital.
C) Yes, through a Rights Issue.
D) Yes, by selling Treasury Bills.
Correct Answer: B) No, the secondary market is only for investors to trade existing securities among themselves. The company gets no new capital.
FINAL MASTER QUESTION
50. Match the Market with its primary characteristic:
(i) Money Market
(ii) Primary Market
(iii) Secondary Market
With:
(a) Liquidity for existing shares
(b) Direct Capital Formation (New Issues)
(c) Highly liquid, short-term instruments
(i) Money Market
(ii) Primary Market
(iii) Secondary Market
With:
(a) Liquidity for existing shares
(b) Direct Capital Formation (New Issues)
(c) Highly liquid, short-term instruments
A) (i)-(b), (ii)-(c), (iii)-(a)
B) (i)-(c), (ii)-(b), (iii)-(a)
C) (i)-(a), (ii)-(b), (iii)-(c)
D) (i)-(c), (ii)-(a), (iii)-(b)
Correct Answer: B) (i)-(c), (ii)-(b), (iii)-(a).
Final Analysis: This covers the core conceptual definitions of all three major markets discussed in the chapter.
Final Analysis: This covers the core conceptual definitions of all three major markets discussed in the chapter.
CBSE BOARD 2024
51. The Stock Exchange acts as a reliable barometer of a country's economic condition. This statement relates to which function of the Stock Exchange?
A) Pricing of Securities
B) Economic Barometer
C) Safety of Transaction
D) Providing liquidity
Correct Answer: B) Economic Barometer.
Board Tip: The rise or fall in share prices indicates the boom or recession cycle of the economy, acting like a pulse or barometer.
Board Tip: The rise or fall in share prices indicates the boom or recession cycle of the economy, acting like a pulse or barometer.
HOTS QUESTION
52. A healthy stock exchange encourages people to invest their savings in corporate securities rather than in unproductive assets like gold. This function is known as:
A) Spreading of Equity Cult
B) Providing scope for speculation
C) Safety of transaction
D) Pricing of securities
Correct Answer: A) Spreading of Equity Cult.
Logic: By educating the public and ensuring smooth operations, stock exchanges encourage wider ownership of corporate shares (equity cult).
Logic: By educating the public and ensuring smooth operations, stock exchanges encourage wider ownership of corporate shares (equity cult).
COMPETENCY BASED
53. To ensure that trading is fair, a certain degree of healthy speculation is permitted on the stock exchange to provide liquidity and price continuity. Which function does this highlight?
A) Contributing to economic growth
B) Providing scope for speculation
C) Spread of equity cult
D) Barometer of the economy
Correct Answer: B) Providing scope for speculation.
Analysis: Speculation within legal bounds ensures that there are always buyers and sellers available in the market.
Analysis: Speculation within legal bounds ensures that there are always buyers and sellers available in the market.
CBSE BOARD 2023
54. What is the mandatory document required by an investor to open a Demat Account and trade in the Indian stock market?
A) Voter ID Card
B) Ration Card
C) Passport
D) PAN Card (Permanent Account Number)
Correct Answer: D) PAN Card (Permanent Account Number).
ASSERTION-REASON
55. Assertion (A): An investor cannot directly buy or sell shares on the stock exchange.
Reason (R): Trading on a stock exchange can only be done through SEBI registered brokers or sub-brokers.
Reason (R): Trading on a stock exchange can only be done through SEBI registered brokers or sub-brokers.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
Correct Answer: A) Both (A) and (R) are true and (R) is the correct explanation.
CBSE SAMPLE PAPER
56. The process of converting physical paper share certificates into an electronic form is called:
A) Digitization
B) Materialization
C) Dematerialization (Demat)
D) Electronic Trading
Correct Answer: C) Dematerialization (Demat).
Board Tip: This process eliminates the risks associated with paper certificates, such as theft, loss, or forgery.
Board Tip: This process eliminates the risks associated with paper certificates, such as theft, loss, or forgery.
HOTS QUESTION
57. In the trading procedure, once a trade is executed, the broker issues a legally binding document within 24 hours containing details of the number of shares, price, date, and brokerage. This document is known as a:
A) Trade Confirmation Slip
B) Contract Note
C) Unique Order Code
D) Demat Receipt
Correct Answer: B) Contract Note.
Logic: The Contract Note is crucial because it acts as legally enforceable proof of the transaction in case of any dispute.
Logic: The Contract Note is crucial because it acts as legally enforceable proof of the transaction in case of any dispute.
CASE SCENARIO
58. Rohan wants to invest in shares. He approaches a bank, which acts as an agent connecting him to the Depository (like NSDL or CDSL). In this context, the bank is acting as a:
A) Stock Broker
B) Depository Participant (DP)
C) Clearing House
D) Jobber
Correct Answer: B) Depository Participant (DP).
Analysis: A DP serves as the vital intermediary between the investor and the Depository, maintaining the investor's electronic securities account.
Analysis: A DP serves as the vital intermediary between the investor and the Depository, maintaining the investor's electronic securities account.
CBSE BOARD 2022
59. The day on which the broker makes payment or delivers shares to the stock exchange is called:
A) Pay-out day
B) Settlement day
C) Pay-in day
D) Transaction day
Correct Answer: C) Pay-in day.
Note: Conversely, 'Pay-out day' is when the exchange delivers the shares or makes payment to the broker.
Note: Conversely, 'Pay-out day' is when the exchange delivers the shares or makes payment to the broker.
COMPETENCY BASED
60. In the Indian stock market, the settlement cycle was traditionally T+2. If an investor buys shares on Monday (and there are no holidays), when will the shares actually be credited to their Demat account?
A) Monday itself
B) Tuesday
C) Wednesday
D) Thursday
Correct Answer: C) Wednesday.
Analysis: T+2 means Trade Day (Monday) plus 2 working days. (Note: India is currently transitioning to a faster T+1 settlement cycle, but T+2 remains the classic textbook example).
Analysis: T+2 means Trade Day (Monday) plus 2 working days. (Note: India is currently transitioning to a faster T+1 settlement cycle, but T+2 remains the classic textbook example).
CBSE BOARD 2021
61. Which apex body acts as the watchdog of the Indian securities market to protect the interests of investors and regulate the stock exchanges?
A) Reserve Bank of India (RBI)
B) Ministry of Finance
C) Securities and Exchange Board of India (SEBI)
D) National Stock Exchange (NSE)
Correct Answer: C) Securities and Exchange Board of India (SEBI).
ASSERTION-REASON
62. Assertion (A): SEBI was established to check malpractices in the stock market.
Reason (R): Unofficial private placements, price rigging, and insider trading were eroding investor confidence in the capital market.
Reason (R): Unofficial private placements, price rigging, and insider trading were eroding investor confidence in the capital market.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
Correct Answer: A) Both (A) and (R) are true and (R) is the correct explanation.
HOTS QUESTION
63. SEBI performs three main categories of functions. Which of the following is a 'Protective Function'?
A) Registering brokers and sub-brokers
B) Controlling insider trading and prohibiting fraudulent practices
C) Conducting research and publishing information
D) Training of intermediaries of the securities market
Correct Answer: B) Controlling insider trading and prohibiting fraudulent practices.
Logic: Protective functions strictly deal with defending the investor from scams, fraud, and unfair manipulation.
Logic: Protective functions strictly deal with defending the investor from scams, fraud, and unfair manipulation.
CASE SCENARIO
64. A director of 'BlueChip Ltd.' knows that his company has suffered a massive, undisclosed loss. Before this news is made public, he secretly sells all his personal shares to avoid losing money. SEBI penalizes him for this act. What malpractice did he commit?
A) Price Rigging
B) Unofficial Premium
C) Insider Trading
D) Front Running
Correct Answer: C) Insider Trading.
Analysis: Insider trading occurs when someone with access to confidential, price-sensitive information uses it to make a personal profit before the public knows.
Analysis: Insider trading occurs when someone with access to confidential, price-sensitive information uses it to make a personal profit before the public knows.
CBSE BOARD 2024
65. The artificial manipulation of prices of securities by forming syndicates to inflate or depress prices is known as:
A) Price Rigging
B) Insider Trading
C) Dematerialization
D) Hedging
Correct Answer: A) Price Rigging.
Board Tip: Price rigging creates a false illusion of demand or supply, tricking innocent investors into buying or selling at unfair prices. SEBI strictly prohibits this.
Board Tip: Price rigging creates a false illusion of demand or supply, tricking innocent investors into buying or selling at unfair prices. SEBI strictly prohibits this.
CBSE SAMPLE PAPER
66. Which of the following falls under the 'Regulatory Functions' of SEBI?
A) Educating investors
B) Prohibiting price rigging
C) Registering and regulating the working of mutual funds
D) Promoting fair practices
Correct Answer: C) Registering and regulating the working of mutual funds.
Note: Regulatory functions involve creating the rules, registering market players, and conducting audits of stock exchanges.
Note: Regulatory functions involve creating the rules, registering market players, and conducting audits of stock exchanges.
COMPETENCY BASED
67. To make the financial markets more accessible and efficient, SEBI permits internet-based trading through registered stock brokers. This action falls under which category of SEBI's functions?
A) Regulatory Function
B) Protective Function
C) Developmental Function
D) Disciplinary Function
Correct Answer: C) Developmental Function.
Analysis: Actions taken to grow the market, introduce new technology, and train intermediaries are all developmental.
Analysis: Actions taken to grow the market, introduce new technology, and train intermediaries are all developmental.
CBSE BOARD 2023
68. When was SEBI given statutory status by an Act of Parliament?
A) 1988
B) 1990
C) 1992
D) 2001
Correct Answer: C) 1992.
Note: SEBI was originally established in 1988 as an administrative body, but it received its legal, statutory powers to enforce rules in 1992.
Note: SEBI was originally established in 1988 as an administrative body, but it received its legal, statutory powers to enforce rules in 1992.
ASSERTION-REASON
69. Assertion (A): A stock exchange ensures safety of transactions for investors.
Reason (R): Membership of a stock exchange is well-regulated, and brokers have to follow strict rules defined by SEBI.
Reason (R): Membership of a stock exchange is well-regulated, and brokers have to follow strict rules defined by SEBI.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
Correct Answer: A) Both (A) and (R) are true and (R) is the correct explanation.
HOTS QUESTION
70. The two main depositories functioning in India are:
A) SBI and SEBI
B) NSDL and CDSL
C) BSE and NSE
D) UTI and LIC
Correct Answer: B) NSDL and CDSL.
Board Tip: National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) hold securities in electronic form, just like a bank holds money.
Board Tip: National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) hold securities in electronic form, just like a bank holds money.
CASE SCENARIO
71. An investor notices that a company's management is publishing misleading information in their prospectus to artificially inflate the price of their upcoming IPO. To which regulatory body should the investor complain?
A) The Reserve Bank of India (RBI)
B) The Supreme Court
C) Securities and Exchange Board of India (SEBI)
D) National Stock Exchange (NSE)
Correct Answer: C) Securities and Exchange Board of India (SEBI).
Analysis: Protecting investors from misleading prospectuses falls strictly under the protective functions of SEBI.
Analysis: Protecting investors from misleading prospectuses falls strictly under the protective functions of SEBI.
CBSE BOARD 2021
72. Which of the following correctly describes the flow of the trading procedure?
A) Place Order -> Select Broker -> Execution -> Settlement -> Contract Note
B) Select Broker -> Open Demat A/c -> Place Order -> Execute Order -> Issue Contract Note -> Settlement
C) Open Demat A/c -> Place Order -> Select Broker -> Settlement -> Contract Note
D) Execute Order -> Select Broker -> Open Demat A/c -> Settlement
Correct Answer: B) Select Broker -> Open Demat A/c -> Place Order -> Execute Order -> Issue Contract Note -> Settlement.
HOTS QUESTION
73. When a computer system matches a "buy order" with a corresponding "sell order" at the best available price on the stock exchange, a __________ is generated to inform the broker.
A) Unique Order Code
B) Contract Note
C) Trade Execution Slip
D) Settlement Notice
Correct Answer: C) Trade Execution Slip.
Logic: First, a Unique Order Code is given when placing the order. When the trade actually happens, an Execution Slip is generated. Later, a formal Contract Note is issued.
Logic: First, a Unique Order Code is given when placing the order. When the trade actually happens, an Execution Slip is generated. Later, a formal Contract Note is issued.
CBSE BOARD 2024
74. What is the primary advantage of having a Dematerialized (Demat) account?
A) It guarantees an increase in share prices
B) It eliminates the danger of loss, theft, or forgery of physical paper certificates
C) It allows companies to avoid paying dividends
D) It prevents the government from taxing the investor
Correct Answer: B) It eliminates the danger of loss, theft, or forgery of physical paper certificates.
FINAL MASTER QUESTION
75. Match the SEBI Function with its correct category:
(i) Conducting audits of stock exchanges
(ii) Promoting fair practices and code of conduct
(iii) Prohibiting fraudulent trade practices like price rigging
With:
(a) Protective Function
(b) Regulatory Function
(c) Developmental Function
(i) Conducting audits of stock exchanges
(ii) Promoting fair practices and code of conduct
(iii) Prohibiting fraudulent trade practices like price rigging
With:
(a) Protective Function
(b) Regulatory Function
(c) Developmental Function
A) (i)-(b), (ii)-(c), (iii)-(a)
B) (i)-(a), (ii)-(b), (iii)-(c)
C) (i)-(c), (ii)-(a), (iii)-(b)
D) (i)-(b), (ii)-(a), (iii)-(c)
Correct Answer: A) (i)-(b), (ii)-(c), (iii)-(a).
Final Analysis: This matching effectively categorizes the core responsibilities of SEBI that are frequently tested in board exams.
Final Analysis: This matching effectively categorizes the core responsibilities of SEBI that are frequently tested in board exams.
CBSE BOARD 2024
76. Which of the following is NOT an objective of the Securities and Exchange Board of India (SEBI)?
A) To protect the rights and interests of investors
B) To prevent trading malpractices
C) To guarantee high returns on equity investments
D) To regulate and develop a code of conduct for intermediaries
Correct Answer: C) To guarantee high returns on equity investments.
Board Tip: SEBI ensures a fair and transparent market, but it cannot and does not guarantee profits or returns for investors.
Board Tip: SEBI ensures a fair and transparent market, but it cannot and does not guarantee profits or returns for investors.
HOTS QUESTION
77. The term 'Dematerialization' refers to:
A) The process of issuing physical share certificates to investors
B) Canceling the physical share certificates and keeping them in an electronic/digital form
C) The process of selling shares back to the company
D) Liquidating a company's fixed assets
Correct Answer: B) Canceling the physical share certificates and keeping them in an electronic/digital form.
COMPETENCY BASED
78. An investor places an order with a broker to buy 100 shares of Tata Motors. The broker routes this order through their computer terminal to the stock exchange's main computer. If a match is found, the trade is executed. What is this electronic mechanism called?
A) Over-The-Counter Trading
B) Screen-based Trading
C) Physical Auction
D) Private Placement
Correct Answer: B) Screen-based Trading.
Analysis: Indian stock exchanges operate on a fully automated, screen-based electronic trading system, completely eliminating the old physical "open outcry" trading rings.
Analysis: Indian stock exchanges operate on a fully automated, screen-based electronic trading system, completely eliminating the old physical "open outcry" trading rings.
CBSE BOARD 2023
79. Which function of a Stock Exchange allows investors to continually evaluate the worth of their holdings based on market demand and supply?
A) Economic Barometer
B) Pricing of Securities
C) Safety of Transaction
D) Mobilization of Savings
Correct Answer: B) Pricing of Securities.
Note: The stock market acts as a price discovery mechanism where the continuous interaction of buyers and sellers establishes the current market value of a security.
Note: The stock market acts as a price discovery mechanism where the continuous interaction of buyers and sellers establishes the current market value of a security.
ASSERTION-REASON
80. Assertion (A): Commercial Paper is an expensive source of finance compared to bank loans.
Reason (R): It is a secured instrument and requires companies to pledge their fixed assets as collateral.
Reason (R): It is a secured instrument and requires companies to pledge their fixed assets as collateral.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) Both (A) and (R) are false.
Correct Answer: D) Both (A) and (R) are false.
Logic: Commercial Paper is usually *cheaper* than bank loans and is strictly an *unsecured* instrument (no collateral is pledged).
Logic: Commercial Paper is usually *cheaper* than bank loans and is strictly an *unsecured* instrument (no collateral is pledged).
HOTS QUESTION
81. "It bridges the gap between savers and borrowers." This function is performed by:
A) Only Financial Markets
B) Only Commercial Banks
C) Both Banks and Financial Markets
D) The Ministry of Finance
Correct Answer: C) Both Banks and Financial Markets.
Board Tip: They are competing intermediaries. Savers can deposit money in banks (which lend to businesses) or buy securities in financial markets (which fund businesses directly).
Board Tip: They are competing intermediaries. Savers can deposit money in banks (which lend to businesses) or buy securities in financial markets (which fund businesses directly).
CASE SCENARIO
82. 'Sunrise Steel' needs to import heavy machinery worth ₹500 crores. The payment needs to be made over the next 5 years. In which market should the company raise this capital?
A) Call Money Market
B) Money Market
C) Capital Market
D) Treasury Bill Market
Correct Answer: C) Capital Market.
Analysis: The requirement is for long-term funds (Fixed Capital) to be paid over 5 years. Therefore, the Capital Market is the only appropriate source.
Analysis: The requirement is for long-term funds (Fixed Capital) to be paid over 5 years. Therefore, the Capital Market is the only appropriate source.
CBSE BOARD 2022
83. Which of the following statements about Treasury Bills is INCORRECT?
A) They are issued by the RBI on behalf of the Central Government.
B) They are highly risky instruments.
C) They are available for a minimum amount of ₹25,000.
D) They are issued at a discount and redeemed at par.
Correct Answer: B) They are highly risky instruments.
Logic: Treasury bills are considered the safest of all investments because they are backed by the Government of India (zero default risk).
Logic: Treasury bills are considered the safest of all investments because they are backed by the Government of India (zero default risk).
COMPETENCY BASED
84. A mutual fund manager wants to invest in highly liquid, short-term debt instruments to park surplus cash for 30 days safely. Which market will the manager operate in?
A) Primary Equity Market
B) Secondary Equity Market
C) Money Market
D) Commodity Market
Correct Answer: C) Money Market.
Analysis: Short-term duration (less than a year), high liquidity, and safety are the defining characteristics of the Money Market.
Analysis: Short-term duration (less than a year), high liquidity, and safety are the defining characteristics of the Money Market.
CBSE BOARD 2021
85. The headquarters of the Securities and Exchange Board of India (SEBI) is located in:
A) New Delhi
B) Mumbai
C) Kolkata
D) Chennai
Correct Answer: B) Mumbai.
HOTS QUESTION
86. If a company wants to raise funds without diluting the control of existing shareholders to the general public, and without incurring the massive costs of an IPO, the best method of floatation is:
A) Offer through Prospectus
B) Offer for Sale
C) Private Placement
D) Right Issue (If existing shareholders don't have funds, then Private Placement)
Correct Answer: C) Private Placement.
Note: By allotting shares strictly to institutional investors (like LIC or UTI), the company avoids massive public disclosure costs and wide dilution of voting power.
Note: By allotting shares strictly to institutional investors (like LIC or UTI), the company avoids massive public disclosure costs and wide dilution of voting power.
ASSERTION-REASON
87. Assertion (A): Secondary market indirectly promotes capital formation.
Reason (R): The secondary market does not provide fresh capital to the companies, but its existence provides liquidity to securities, which encourages investors to buy new shares in the primary market.
Reason (R): The secondary market does not provide fresh capital to the companies, but its existence provides liquidity to securities, which encourages investors to buy new shares in the primary market.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
Correct Answer: A) Both (A) and (R) are true and (R) is the correct explanation.
CBSE BOARD 2024
88. SEBI conducts inspections and inquiries of stock exchanges to ensure they are operating correctly. This falls under which function of SEBI?
A) Protective Function
B) Developmental Function
C) Regulatory Function
D) Controlling Function
Correct Answer: C) Regulatory Function.
Board Tip: Regulating the business in stock exchanges and conducting audits/inspections are core regulatory duties of SEBI.
Board Tip: Regulating the business in stock exchanges and conducting audits/inspections are core regulatory duties of SEBI.
CASE SCENARIO
89. To raise short-term funds, a bank issues a completely unsecured, negotiable instrument in bearer form to an individual. The instrument is issued at a discount. This is a:
A) Treasury Bill
B) Certificate of Deposit (CD)
C) Commercial Paper
D) Promissory Note
Correct Answer: B) Certificate of Deposit (CD).
Analysis: CDs are issued exclusively by commercial banks and development financial institutions during tight liquidity periods.
Analysis: CDs are issued exclusively by commercial banks and development financial institutions during tight liquidity periods.
HOTS QUESTION
90. Under the settlement process of the Stock Exchange, the settlement cycle in India has been primarily updated to:
A) T+5
B) T+3
C) T+1 / T+2
D) T+10
Correct Answer: C) T+1 / T+2.
Logic: Historically T+2, India is actively transitioning to a T+1 settlement cycle to increase market efficiency.
Logic: Historically T+2, India is actively transitioning to a T+1 settlement cycle to increase market efficiency.
CBSE SAMPLE PAPER
91. Which of the following is NOT an intermediary in the stock market?
A) Stock Brokers
B) Depository Participants (DPs)
C) The Ministry of Commerce
D) Merchant Bankers
Correct Answer: C) The Ministry of Commerce.
COMPETENCY BASED
92. 'Company A' is a highly reputed company with excellent creditworthiness. It needs ₹10 crores for 6 months to finance its working capital. It decides to issue a short-term, unsecured promissory note. This is a:
A) Call Money transaction
B) Commercial Bill
C) Commercial Paper
D) Treasury Bill
Correct Answer: C) Commercial Paper.
Analysis: Commercial papers are specifically issued by large, creditworthy corporate houses to raise short-term funds at rates generally lower than market rates.
Analysis: Commercial papers are specifically issued by large, creditworthy corporate houses to raise short-term funds at rates generally lower than market rates.
CBSE BOARD 2023
93. "It provides a mechanism for pricing of securities." Which function of the financial market is highlighted here?
A) Mobilization of savings
B) Facilitating Price Discovery
C) Providing liquidity
D) Reducing transaction costs
Correct Answer: B) Facilitating Price Discovery.
ASSERTION-REASON
94. Assertion (A): Money market instruments are considered safer than capital market instruments.
Reason (R): Money market instruments have a short maturity period and are issued by financially sound institutions like the RBI, large banks, and highly rated corporations.
Reason (R): Money market instruments have a short maturity period and are issued by financially sound institutions like the RBI, large banks, and highly rated corporations.
A) Both (A) and (R) are true and (R) is the correct explanation.
B) Both (A) and (R) are true but (R) is NOT the explanation.
C) (A) is true, but (R) is false.
D) (A) is false, but (R) is true.
Correct Answer: A) Both (A) and (R) are true and (R) is the correct explanation.
HOTS QUESTION
95. If a company issues an 'Offer for Sale', the securities are technically sold to the public by:
A) The company itself
B) Intermediaries (like issuing houses/brokers) at a higher price
C) The SEBI
D) The existing shareholders
Correct Answer: B) Intermediaries (like issuing houses/brokers) at a higher price.
Logic: The company offloads the entire chunk of shares to brokers at a fixed price, and the brokers take the risk of selling them to the public at a markup.
Logic: The company offloads the entire chunk of shares to brokers at a fixed price, and the brokers take the risk of selling them to the public at a markup.
CBSE BOARD 2021
96. SEBI prohibits insider trading because:
A) It increases the profits of the company
B) It is unfair to the general investors who do not have access to that secret information
C) It reduces the tax collection of the government
D) It forces the stock exchange to close down
Correct Answer: B) It is unfair to the general investors who do not have access to that secret information.
CASE SCENARIO
97. An agricultural equipment company issues 'Rights Shares'. Who is legally entitled to buy these shares first?
A) The employees of the company
B) The general public
C) The existing equity shareholders of the company
D) The government
Correct Answer: C) The existing equity shareholders of the company.
Analysis: This right prevents the dilution of the current owners' voting power.
Analysis: This right prevents the dilution of the current owners' voting power.
CBSE BOARD 2024
98. The central system where all dematerialized shares are held electronically is called a:
A) Stock Exchange
B) Depository
C) Commercial Bank
D) Clearing House
Correct Answer: B) Depository.
Board Tip: In India, NSDL and CDSL are the two main depositories holding the digital records of shares.
Board Tip: In India, NSDL and CDSL are the two main depositories holding the digital records of shares.
HOTS QUESTION
99. Which of the following best defines "Bridge Financing"?
A) Raising long-term debt to pay off equity shareholders
B) Issuing short-term Commercial Paper to cover the flotation costs of a long-term capital issue
C) Taking a loan from the RBI to maintain CRR
D) Selling Treasury bills to the public
Correct Answer: B) Issuing short-term Commercial Paper to cover the flotation costs of a long-term capital issue.
FINAL MASTER QUESTION
100. Match the Market with its primary instruments:
(i) Money Market
(ii) Primary Capital Market
(iii) Secondary Capital Market
With:
(a) Initial Public Offerings (IPOs) and Rights Issues
(b) Existing Equity Shares and Debentures
(c) Treasury Bills and Commercial Paper
(i) Money Market
(ii) Primary Capital Market
(iii) Secondary Capital Market
With:
(a) Initial Public Offerings (IPOs) and Rights Issues
(b) Existing Equity Shares and Debentures
(c) Treasury Bills and Commercial Paper
A) (i)-(b), (ii)-(c), (iii)-(a)
B) (i)-(c), (ii)-(a), (iii)-(b)
C) (i)-(a), (ii)-(b), (iii)-(c)
D) (i)-(c), (ii)-(b), (iii)-(a)
Correct Answer: B) (i)-(c), (ii)-(a), (iii)-(b).
Final Analysis: This matching is the ultimate test of understanding the core function and instruments of the three main financial markets.
Final Analysis: This matching is the ultimate test of understanding the core function and instruments of the three main financial markets.
📈
Chapter 10 Mastered!
Brilliant! You have successfully completed all 100 MCQs for Financial Markets.
A strong grasp of Money Market instruments and SEBI guidelines is your ultimate advantage!
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