CBSE Class 12 Business Studies Financial Markets MCQs Set E

Question. Which of the following is the method of collecting capital?
(a) Public Issue
(b) Offer for Sale
(c) Private Placement
(d) All of the options

Answer : D

Question. Financial market ________ financial assets.
(a) Creates
(b) Exchange
(c) Creates and Exchange
(d) None of the options

Answer : C

Question. Sensex is dependent on ________ companies.
(a) 30
(b) 50
(c) 100
(d) 500

Answer : A

Question. Money market deals in ________ securities.
(a) Short-term
(b) Long-term
(c) Short-term and long-term
(d) Mid-term

Answer : A

Question. Which is the major part of financial system?
(a) Financial market
(b) Financial institutions
(c) Financial securities
(d) All of the options

Answer : D

Question. ________ is a part of money market.
(a) Commercial Bill
(b) Equity share
(c) Preference share
(d) Debentures

Answer : A

Question. Secondary market deals with the ________ of existing securities.
(a) Purchase
(b) Sale
(c) Purchase-sale
(d) Stock

Answer : C

Question. Which of the following is included in the financial assets?
(a) Shares
(b) Debentures
(c) Treasury bill
(d) All of the options

Answer : D

Question. Which of the following is the supply side of finance?
(a) Financial Institutions
(b) Insurance Companies
(c) Financial Institutions and Insurance Companies
(d) Industry

Answer : C

Question. The Index of NSE is called ________ .
(a) INDEX
(b) NIFTY
(c) SENSEX
(d) LISTING

Answer : B

Question. It is necessary for an investor to obtain Certificate of Deposits for ™ ________ lakh.
(a) 5
(b) 10
(c) 25
(d) 50

Answer : C

Question. Educating the investor is the ________ function of SEBI.
(a) Protective
(b) Regulatory
(c) Both the above
(d) Developmental

Answer : A

Question. Call money or call loans are ________ .
(a) Fixed
(b) Liquid
(c) Costly
(d) Cheap

Answer : B

Question. Which of the following takes advantage of the internal trading?
(a) All shareholders
(b) All Debentureholders
(c) People having secret information of the company
(d) All the employees

Answer : C

Question. ________ is a part of capital market.
(a) Call Money
(b) Primary Market
(c) Secondary Market
(d) Primary and Secondary Market

Answer : D

Question. Which of the following performs the functions of giving imputes to saving and transfer them to more productive uses?
(a) Wholesale Market
(b) Retail Market
(c) Financial Market
(d) Financial Institutions

Answer : C

Question. Which of the following falls in the Category of Zero Coupon Bond?
(a) Treasury Bill
(b) Commercial Paper
(c) Certificate of Deposit
(d) Commercial Bill

Answer : A

Question. Primary market is associated with ________ issues.
(a) Old
(b) New
(c) Old and New
(d) Very Old

Answer : B

Question. The term of the Treasury Bill cannot be more than ________ year.
(a) One
(b) Two
(c) Five
(d) Ten

Answer : A

Question. 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.
Answer: b

Question. 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 \( Rs 25,000 \) and in multiples thereof.
Answer: c

Question. 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.
Answer: a

Question. 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.
Answer: c

Question. 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.
Answer: a

Question. 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.
Answer: a

Question. Which of the following statements is not true with regard to stock exchange?
(a) It provides a platform for buying and selling of new securities.
(b) It curbs the marketability of the securities.
(c) By providing a ready market, it extends liquidity to the securities.
(d) It provides a platform for buying and selling of old securities.
Answer: b

Question. Which of the following is not a protective function of stock exchange?
(a) Prohibition of fraudulent and unfair trade practices.
(b) Controlling insider trading.
(c) Regulation of takeover bids by companies.
(d) Promotion of fair practices and code of conduct in securities market.
Answer: c

Question. Raj Enterprises wishes to invest \( Rs 1,10,000 \) in treasury bills. What is the maximum number of treasury bills it can buy with this fund?
(a) 6
(b) 7
(c) 4
(d) 2
Answer: c

Question. Which of the following statements is true with regard to financial markets?
(a) They link the households which save funds and business firms which invest these funds.
(b) They work as an intermediary between the savers and the investors by mobilising funds between them.
(c) They allocate funds available for investment into their most productive investment opportunity.
(d) All of the above
Answer: d

Question. The allocated function is performed by
(a) Financial market
(b) Capital market
(c) Money market
(d) All of the above
Answer: d

Question. It is a market for short-term funds which deals in monetary assets whose period of maturity is up to one year.
(a) Primary market
(b) Secondary market
(c) Capital market
(d) Money market
Answer: d

Question. It is an instrument of short-term borrowing by the Government of India maturing in less than one year.
(a) Commercial bill
(b) Treasury bill
(c) Call money
(d) None of the above
Answer: b

Question. Who issues a treasury bill?
(a) Any nationalised bank
(b) Any private sector bank
(c) Reserve Bank of India
(d) All of the above
Answer: c

Question. Suppose an investor purchases a \( 91 \) days Treasury bill with a face value of \( Rs 2,00,000 \) for \( Rs 1,92,000 \). By holding the bill until the maturity date, the investor receives \( Rs 2,00,000 \). What is the amount of interest received by him?
(a) \( Rs 8,000 \)
(b) \( Rs 80,000 \)
(c) \( Rs 3,92,000 \)
(d) \( Rs 2,00,000 \)
Answer: a

Question. It is used as an alternative to bank borrowing for large and creditworthy companies,
(a) Commercial bill
(b) Commercial papers
(c) Call money
(d) None of the above
Answer: b

Question. It is a method by which banks borrow from each other to be able to maintain the cash reserve ratio.
(a) Commercial bill
(b) Commercial papers
(c) Call money
(d) None of the above
Answer: c

Question. A rise in call money rates makes other sources of finance such as commercial paper and certificates of deposit
(a) Expensive in comparison with banks who raise funds from these sources.
(b) Cheaper in comparison with banks who raise funds from these sources.
(c) Creates no effect on other sources.
(d) None of the above
Answer: b

Question. It is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms.
(a) Commercial bill
(b) Commercial papers
(c) Call money
(d) None of the above
Answer: a

Question. The capital market consists of
(a) Development banks
(b) Commercial banks
(c) Stock exchanges
(d) All of the above
Answer: d

Question. A company can raise capital through the primary market in the form of
(a) Equity shares
(b) Preference shares
(c) Debentures
(d) All of the above
Answer: d

Question. They can be issued to individuals, corporations and companies during periods of tight liquidity when the deposit growth of banks is slow but the demand for credit is high.
(a) Commercial papers
(b) Call money
(c) Commercial bill
(d) Certificate of deposit
Answer: d

Question. Which of the following participants represent capital market?
(a) Development banks
(b) Commercial banks
(c) Stock exchanges
(d) All of the above
Answer: d

Question. Under this method of floatation in primary market, a subscription is invited from general public to invest in the securities of a company through the issue of advertisement.
(a) Private placement
(b) Offer through prospectus
(c) Offer for sale
(d) All of the above
Answer: b

Question. PK Enterprises Limited has sold an entire lot of \( 5,00,000 \) equity shares @ \( Rs 9 \) each to Prosperous Bank Private Limited. The bank intum will offer the shares to general public for subscription @ \( Rs 11 \) per share. Identify the method of floatation being described in the given lines.
(a) Private placement
(b) Offer through prospectus
(c) Offer for sale
(d) Rights issue
Answer: c

Question. Jaykant is holding hundred shares of a company. He has been given a privilege offer to subscribe to a new issue of shares of the same company in proportion of \( 2:1 \) to the number of shares already possessed by him. Identify the method of floatation being described in the above case.
(a) Offer through prospectus
(b) Offer for sale
(c) Rights issue
(d) Private placement
Answer: c

Question. Stock Exchange works as a mechanism for valuation of securities through the forces of demand and supply. Identify the related function of performed by the stock exchanges.
(a) Providing liquidity and marketability to existing securities.
(b) Safety of transaction.
(c) Pricing of security.
(d) Spreading of equity cult.
Answer: c

Question. Stock exchanges provide an opportunity to the investors to disinvest and invest. Identify the related function of the stock exchange.
(a) Providing scope for speculation.
(b) Providing liquidity and marketability to existing securities.
(c) Pricing of security.
(d) Spreading of equity cult.
Answer: b

Question. The process of holding shares in electronic form is known as
(a) Demutualisation
(b) Dematerialisation
(c) Speculation
(d) None of the above
Answer: b

Question. One of the common irregularities noted by the Securities and Exchange Board of India during the inspection of a stock exchange was that it was dealing with unregistered sub-brokers. Identify the related function of Securities and Exchange Board of India
(a) Regulatory function
(b) Protective function
(c) Developmental function
(d) None of the above
Answer: a

Question. It acts like a bank and keeps securities in electronic form on behalf of the investor,
(a) Depository Participant
(b) Depository
(c) Stock exchange
(d) None of the above
Answer: b

Question. It serves as an intermediary between the investor and the depository who is authorised to maintain the accounts of dematerialised shares.
(a) Depository Participant
(b) Depository
(c) Stock exchange
(d) None of the above
Answer: a

Question. It is a number assigned to each transaction by the stock exchange and is printed on the contract note.
(a) PAN number
(b) Unique Order Code
(c) Contract Note
(d) None of the above
Answer: b

Question. Identify the correct sequence of steps to be followed in the trading procedure at Stock Exchange
(a) Opening a trading account and Demat account, Placing an order, Settlement of order, Execution of order
(b) Settlement of order, Opening a trading account and Demat account, Placing an order, Execution of order
(c) Opening a trading account and Demat account, Placing an order, Execution of order, Settlement of order
(d) Placing an order, Opening a trading account and Demat account, Execution of order, Settlement of order
Answer: c

Question. The mandatory detail that an investor has to provide to the broker at the time of opening a demat account is
(a) Date of birth and address
(b) PAN number
(c) Residential status (Indian/NRI)
(d) Bank account details.
Answer: b

Question. It is a legally enforceable document which is issued by a stock broker within \( 24 \) hours of the execution of a trade order.
(a) PAN number
(b) Unique Order Code
(c) Contract Note
(d) None of the above
Answer: c

Question. On this day, the exchange will deliver the share or make payment to the other broker,
(a) Pay-in day
(b) Pay-out day
(c) Transaction day
(d) None of the above
Answer: b

Question. When is a trade confirmation slip issued to the investor?
(a) On placing an order
(b) On execution of the order
(c) On settlement of the order
(d) None of the above
Answer: b

Question. After the trade has been executed, the broker issues a Contract Note to the investor within
(a) \( 52 \) hours
(b) \( 24 \) hours
(c) \( 48 \) hours
(d) \( 12 \) hours
Answer: b