Chapter

FINANCIAL MARKET(MCQs)

Q.1 Match the various terms of financial market column 1 with their respective statements in
column 2

Column 1 Column 2
A Financial market i. Also known as STX
B Primary Market ii; Market for creation and exchange of
financial assets.
C Secondary Market iii. Also known as New Issue Market

A) ii, iii i

B) i, iii , ii is a number assigned to each transaction by the Stock Exchange and is printed on the
contract note

C) iii, ii , i

D) I, ii, iii

Q2 ______________ is the number assigned to each transaction by the Stock Exchange and is
printed on the contract note

A) client code number B) unique order code

C) Permanent account number. D) Depository participant number.

Q3. Which of the following statements is incorrect?

A) providing liquidity to securities in one of the functions of Stock Exchange.

B) Process of holding shares in electronic form is known as dematerialisation.
C) Securities Exchange Board of India performs the regulatory function of controlling insider
trading and imposing penalties for such practices.
D) Capital Market consists of commercial banks, developmental banks and stock exchanges.

Q4. Arrange the steps involved in trading procedure at the Stock Exchange in correct sequence.

i. Settlement of order.
ii. Opening of Demat account.
iii. Placing of order.
iv. Execution of order.

A) ii, iv, iii, I B) ii, I, iii, ii C) iii, ii, iv, I D) ii, iii, iv, i

Q5. Which of the following statement is false for financial market?

A) Financial market facilitates difficulty in the purchase and sale of financial assets.
B) Financial market provides valuable information about securities being traded in the market.
C) They provide liquidity to financial assets.
D) None of the above.
Q6. For the following 2 statements, choose the correct option.

Statement I. The objective of SEBI is to prevent trading malpractices.

Statement ii. Sebi regulates and develops a code of conduct and fair practices for intermediaries.

A) Statement 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 wrong.

Q7. RAJNI. Automobiles have decided to give a special privilege to the existing shareholders to
subscribe to the new issue of shares where they will give. Shares according to the proportion of
shares held by them. The company always gives special treatment to loyal stakeholders. Last year.
The company was dealing through the capital market where both the buying and selling of securities
were taking place. The owner of the company is a man of ethical business. He recently wrote an
article about the watchdog of stock market. The article gained a lot of popularity and now is a part of
curriculum of MBA students.

Which method of flotation was used by Rajni automobiles?

A) right issue B) private placement. C) offer for sale. D) E-IPO

Q7. Which of the following statement is false regarding financial market?

A) Financial markets facilitate difficulty in purchase and sale of financial assets

B) Financial markets provide valuable information about securities being traded in the market.
C) They provide liquidity to financial assets.
D) None of these.

Q8. A Company issued shares in primary market. Some investors complaint that the shares
purchased by them were not transferred to their Demat account. Investors. Shareholders also found
that no annual meeting was called by the company. Now, where should the shareholders go to save
their interest?

A) RBI B) IRDA C) SIDBI D) SEBI

Q9. For the following 2 statements choose the correct option.

Statement 1- money market is a market where low risk, unsecured and short term debt instruments
that are highly liquid or traded.

Statement 2. Money market has no physical location.

A) statement one is correct and statement 2 is wrong

B) statement to is correct and statement one is wrong.

C) both the statements are correct.

D) both the statements are wrong.

Q10 Aman hairs 55 shares of Vani Limited. He wanted to sell 30 shares. So he went for a specific
market. To sell the shares. Through online portal. He went. For which of the following markets?

A) money market B) secondary market C) primary market. D) None of these.

Q11. One of the functions of Securities and Exchange Board of India is promotion of Fair practices
and code of conduct in securities market. Identify the category to which of these functions belongs.

A) protective function B) regulatory function C) developmental function. D)None of these.

Q12. Which of the following function is not a protective function performed by Securities and
Exchange Board of India?

A) Prohibition of fraudulent and unfair trade practices.

B) Conducting research and publishing information useful to all market participants.
C) Undertaking steps for investor protection.
D) Promoting fair practices and code of conduct in securities market.

Q13. It has been made compulsory to settle all trades within how many days of the trade date on a
rolling settlement basis.

A) One B) Two C) Three D) Four

Q14. Zakira Limited wants to invest in Treasury bills issued by RBI. What will be the minimum
amount to be invested in treasury bills?

a) 25,000. B) 20,000. C) 50,000. D) 100000

Q15. It is a link between savers and investors, which mobilize savings from the household to the
business firms. Identify the concept stated in the above line.

A) financial management. B) financial market.

C) savings. D) expense.

Q16. 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.

Q17. ………….. Is used as an alternative to bank borrowings for large and creditworthy companies.
A) commercial bill. B) commercial paper.

C) call Money. D) none of the above.

Q18. Rajesh is the CEO of a leading petrochemical company recently the company issued share
capital to cover some expenses however in order to meet the floating cost of issuing shares the
company decided to conduct bridge financing. Therefore. It decided to issue a money market tool.
The CEO’s decision wisely met the companies requirements. Three months later, the company
decided to issue new shares in the primary market, again according to the floating method it
involves. It decided to adopt the method mainly adopted by listed companies and attract the masses
by directly contacting the public. Again, success comes from the. Companies approach and the
realization of its goals. However, when the company tried the same type again three months later,
the company had encountered many problems. The problem is to determine a key aspect related to
the security of a new release. If the same process is carried out in the secondary market, the
company will not care too much about the key aspect..

What key aspect the company would not have cared about the secondary market?

A) pricing of securities. B) regulation from the government.

C) safety of investors money. D) none of these.

Q20. Ramesh is the CEO of a company and thinks of going with the most popular method of raising
funds used by the public companies. He discussed this opinion with his immediate subordinates.
After discussion he realizes that since his companies are private company, he should think of some
other options. Then they think of issuing the securities. Through intermediaries like issuing house or
stockbrokers. When his nephew comes to know about his decision, he decided to suggest his uncle
another way. He advises him to involve institutional investors which will help him raise funds more
quickly and reduce many mandatory and non mandatory expenses. After a lot of discussion, the
option suggested by his nephews chosen as final.

In the above case, identify the various methods of flotation highlighted.

A) offer through prospectus, offer for sale and private placement.

B) offer through prospectus, offer for sale and right issue.

C) offer through prospectus, E IPO and right issue.

D) offer for sale, right issue and ESOP.