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This set of Financial Markets Multiple Choice Questions & Answers (MCQs) focuses on Financial Markets Set 1
Q1 | Which of the following is true?
- the initial public issues are made in primary market whereas all subsequent issuesare made in the secondary markets.
- primary markets are legal whereas secondary markets are not.
- primary markets deal in shares whereas secondary markets are meant fordebentures.
- corporates raise resources directly from the investors through the primary market,whereas in the secondary markets, investors buy and sell securities from one another.
Q2 | Which short-term (up to one year) instrument is issued by government as a means offinancing it’s cash requirements?
- adrs
- treasury bills
- equity
- gdrs
Q3 | The benchmark stock market index of India is --------------
- s&p 500
- nikkei 225
- dow jones
- the nse nifty 50
Q4 | Which of the following is TRUE about Primary Markets?
- primary market is the place where public can buy and sell securities from oneanother.
- primary markets refer to the mobilization of funds from the public by corporatesthrough the issue of shares / debentures.
- primary markets are places where only short-term instruments are traded.
- primary markets are markets where commodities are sold.
Q5 | Money market mutual funds can invest in ------------.
- treasury bills
- certificate of deposits
- commercial paper
- all of the above
Q6 | The holders of which instrument are members of the company and have voting rights?
- commercial paper
- treasury bill
- debenture
- equity
Q7 | How can an investor acquire equity shares?
- secondary market only
- through the primary market or secondary market
- money market
- primary market only
Q8 | Which of the following is not true about ADR?
- an adr is a u.s. dollar denominated form of equity ownership in a non-u.s. company.
- adrs may be used in public or private markets inside or outside us.
- adrs do not eliminate the currency risk associated with an investment in a nonu.s. company.
- adr represents the foreign shares of the company held on deposit by a custodian bank in the company\s home country. ad
Q9 | --------------- is the process by which physical certificates of an investor are convertedto an equivalent number of securities in electronic form.
- materialisation
- rematerialisation
- conversion
- dematerializations
Q10 | Which of the following is not true of Demat account?
- one is not restricted to having account with only one dp.
- one does not need to keep any minimum balance of securities in a demat accountwith a dp.
- one cannot open more than one account with the same dp.
- one can dematerialise and hold investments such as debt instruments, mutualfund units, government securities etc. in a single demat account.
Q11 | Which of the following is not true about Exchange Traded Funds (ETF)?
- an etf is like a bank deposit.
- an etf represents a basket of stocks that reflect an index such as the nifty.
- an etf\s price changes throughout the day, fluctuating with supply and demand.
- by owning an etf, you get the diversification of an index fund plus the flexibilityof a stock.
Q12 | Buying and selling of shares can be done through a --------------
- depository
- bank
- stock exchange
- finance company
Q13 | In the balance sheet of a company, amounts due to the suppliers of goods and services brought on credit, will reflect under the head -----------------.
- loans and advances
- current liabilities and provisions
- miscellaneous expenditure school of distance education financial markets page 4
- contingent liabilities
Q14 | Equity shares have mostly ----------------- all other forms of investments in the longterm.
- remained neutral when compared to
- outperformed
- underperformed
- given negative returns when compared to
Q15 | Which of the following problems have been eliminated by Depositories?
- reduction in the share transfer time to the buyer.
- risk of stolen, fake, forged shares.
- stamp duty on transfer of shares in dematerialized form.
- all of the above
Q16 | Which is/are the ways by which companies can raise foreign currency resources?
- american depository share
- global depository receipts
- euro issues
- all of the above
Q17 | Which of the following has voting rights in a company?
- equity shareholders
- creditors
- debenture holders
- preference shareholders
Q18 | What is an Index?
- a basket of shares
- an indicator of market movement.
- an indicator of the economic conditions of the country.
- all of the above
Q19 | Listing of securities means -----------------.
- admission of securities of an issuer to trading privileges without a formal agreement with the stock exchange
- admission of securities of an issuer to trading privileges on a stock exchange through a formal agreement school of distance education financial markets page 5
- admission of securities of an issuer to clearing privileges on a stock exchange without a formal agreement
- admission of securities of an issuer to clearing privileges on a stock exchange
Q20 | Nifty index is used in ----------------.
- derivatives
- index funds
- exchange traded funds (etfs)
- all of the above
Q21 | Which instrument among these have historically shown to give the highest returnswhen invested over long periods?
- debentures
- bank deposit
- equity
- fixed deposit
Q22 | Which of the following is true about mutual fund?
- mutual funds are risk-free investments.
- mutual funds assure fixed returns.
- in mutual funds the target investors are the high-net-worth investors.
- none of the above.
Q23 | T+2 settlement cycle in a stock exchange means, the trade is settled ------------ daysafter the trade
- 1 day
- same day as the trade
- 2 days
- 3 days
Q24 | As Who are the participants in the Securities Market?
- investor
- intermediaries, such as merchant bankers, brokers etc.
- issuers, i.e., companies who issue shares
- all of the above
Q25 | The safer the debt instrument, the ----------------- is the rate of interest.
- lower school of distance education
- higher
- safety of debt instrument will not have any impact on the interest rate
- none of the above