MCQ on Financial Markets PDF

Multiple choice questions of Subject Business Studies Class 12th MCQ Questions with Answers | MCQ on Financial Markets PDF ( MCQ on Financial Markets PDF ) for Entrances (Entrance Exam) Conducted by different Central and State Universities are given below.

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MCQ on Financial Markets pdf | Money Market MCQ pdf

1. Under which of the following methods, securities are not issued directly to the public, but are offered through intermediaries like issuing houses or stock brokers?

(a) Offer through prospectus

(b) Offer for sale

(c) Private placement

(d) e-IPO

Ans. (b)

2. The ABC Ltd. wants to raise ? 500 crore to fulfill its expansion plans by issue of equity shares. Identify the market, ABC Ltd. will look for raising funds.

(b) Secondary market

(a) Primary market

(c) Both (a) and (b)

(d) None of these

Ans. (a)

3. In which of the following aspects, money market is different from capital market?

(a) Participants

(b) Tenure of securities traded

(c) Liquidity of securities traded

(d) All of the above

Ans. (d)

4. In case of an IPO, who coordinates with all the intermediaries connected with the issue?

(a) Issuing house

(c) Chief financial officer

(b) Managing director

(d) Lead manager

Ans. (d) 

5. For the following two statements, choose the correct option.

Statement I It is generally accepted that an exact degree of speculation is necessary to ensure liquidity and price discontinuity in the stock market.

Statement II Financial market facilitates easy purchase and sale of financial assets. Alternatives

(a) Statement is correct and Statement II is wrong

(b) Statement I is correct and Statement is wrong

(c) Both the statements are correct

(d) Both the statements are incorrect

Ans. (b)

6. Which money market instrument is available for minimum amount of 25,000?

(a) Treasury bill

(c) Call money 

(b) Commercial papers

(d) Commercial bill

Ans. (a)

7. SEBI was established on …and it’s headquarter is situated at.. .

(a) 12th April, 1988, Mumbai

(b) 12th April, 1990, Mumbai

(e) 12th May, 1988, Delhi

(d) 12th May, 1990, Delhi

Ans. (a)

8. Mr. X bought certain shares of Reliance Ltd. from Mr. Y and lodged them with the depository in form of a book entry, However, as per the register of members of Reliance Ltd. , Mr. Y is still the owner of those shares. In such a situation, Mr. X would be known as

(a) Registered owner

(c) Beneficial owner

(b) Holder of shares

(d) None of these

Ans. (c)

9. In primary market, first time issue of shares to be publicly traded in stock markets is considered as

(a) traded offering

(c) issuance offering 

(b) public markets

(d) initial public offering

Ans. (d)

10. Funds raised through commercial paper are used to meet the location costs which is termed as ..

(a) Equity financing

(b) Bridge financing

(c) Debt financing

(d) None of the above

Ans. (b)

Multiple Choice Questions on Financial Markets and Institutions pdf

11. Mr. A, an existing shareholder of a company is offered the ‘right’ to buy new shares in proportion to the number of shares, he already possess. This kind of issue is known as

(a) Offer through sale

(e) Private placement  

(b) e-IPOS

(d) Right issue

Ans. (d)

12. Praveen has purchased treasury bills of face value of 1,00,000 at 96,000. At the time of maturity, he will get ? 1,00,000. How much interest is received by him?

(a) rs. 10,000

(c) Nil 

(b) rs. 4000

(d) None of these

Ans. (b)

13. . is manipulating the market price of shares by increasing or decreasing their prices.

(a) Price rigging

(b) Insider trading

(e) Private placement

(d) Fluctuation

Ans. (a)

14. Sika Ltd., a reputed industrial machines manufacturer, need 720 crore as additional capital to expand the business. The finance manager, Mr. Narinder Singh, suggested that the shares may be sold to investing public through intermediaries, as the same will be less expensive. Name the method through which the company decided to raise additional capital.

(a) Private placement

(b) Offer for sale

(c) Offer through prospectus

(d) None of the above

Ans. (b)

15. Which of the following is a depository formed for the purpose of ensuring free transferability of securities in India?

(a) NSDL

(b) RBI

(c) SEBI

(d) None of these

Ans. (a)

16. For the following two statements, choose the correct option.

Statement I Wholesale debt market provides an efficient and transparent platform for trading in equity, preference, debentures, exchange traded funds as well as retail government securities.

Statement II Commercial paper is issued by large creditworthy companies to raise short-term funds at lower rates of interest. Alternatives

(a) Statement I is correct and Statement II is wrong

(b) Statement II is correct and Statement I is wrong

(c) Both the statements are correct

(d) Both the statements are incorrect

Ans. (b)

17. These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed most. To give strength to the economy. SEBI is undertaking measures to develop the capital market. These markets help the savers and investors directing the available fund into their most productive investment opportunity. Which function is being performed by the market in above case?

(a) Providing liquidity to financial assets

(b) Facilitating price discovery

(c) Reducing cost of transactions

(d) Mobilisationi of saving and channelising them into most productive uses

Ans. (d)

18. It is issued by large creditworthy companies to raise short-term funds at lower rates of interest than the market rate. Which type of money market instrument it is?

(a) Call money

(b) Commercial paper

(c) Certificate of deposit

(d) Treasury-bill

Ans. (b)

19. Charu is a Chartered Accountant in Prakash Ltd. During the course of meeting with directors, she came to know that as against the previous years, this year company is going to declare handsome dividend offer. It is observed that when such news becomes public then the share-market jumps up. Considering it, Charu purchased large number of company’s shares before this news reached to public. Identify the type of malpractice used by Charu.

(a) Non-adherence of provisions

(b) Insider trading

(c) Price rigging

(d) Unofficial private placement

Ans. (b)

21. ABC Ltd. issued prospectus for subscription of its shares for 500 crore in 2018. The issue was over subscribed by 20 times. The company issued shares to all the applicants on pro-rata basis. Later, SEBI inspected the prospectus and found some misleading statement about the management of the company in it. SEBI imposed a penalty of 5 crore and banned its three executive directors for dealing in securities market for 3 years. Which function is performed by SEBI in above case?

(a) Development function

(b) Regulatory function

(c) Protective function  

(d) Controlling function

Ans. (c)

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