Financial Markets And Institutions Set 16 MCQs

Q1 | _______ is a link between savers & borrowers, helps to establish a link between savers &investors

Marketing

Financial market

Money market

None of these

Q2 | Which of the following is the function of financial market?

Mobilization of savings

Price fixation

Provide liquidity to financial assets

All of the above

Q3 | __________ is the organisations, institutions that provide long term funds.

Capital market

Money market

Primary market

Secondary market

Q4 | When securities are allotted to institutional investors & some selected individuals isreferred to as _________.

Initial public offer

Offer through prospectus

Private placement

Offer for sale

Q5 | Stock exchange is known as __________ market for securities.

Primary market

Secondary market

Capital market

None of the above

Q6 | _________ is a market for lending & borrowing of short term funds.

Money market

Primary market

Capital market

All of the above

Q7 | ____________ is also called zero coupon bond.

Trade bills

Call money

Treasury bills

Commercial papers

Q8 | Which of the following are the instruments of money market?

Call money

Certificate of deposits

Trade bills

All of the above

Q9 | The short term financial instruments traded in money market is commonly called

Call money

Certificate of deposits

Trade bills

Commercial Paper

Q10 | Which of the following statements is not true with regard to money market?

It involves low market risk.

It is situated at specific locations.

Deals in unsecured and short-term debt instruments.

The instruments traded are highly liquid.

Q11 | Which of the following statements is not true with regard to Treasury bills?

Are issued in the form of a promissory note.

They are highly liquid and have assured yield

They carry high risk of default.

They are available for a minimum amount of ₹25,000 and in multiples thereof.

Q12 | Which of the following statements is not true with regard to Commercial paper?

Is a long-term unsecured promissory note with a fixed maturity period.

It usually has a maturity period of 15 days to one year.

It is sold at a discount and redeemed at par.

Companies use this instrument for bridge financing.

Q13 | Which of the following statements is not true with regard to Call money?

It is short-term finance repayable on demand.

Its maturity period ranges from one day to fifteen days.

There is a direct relationship between call rates and other short-term money market instruments.

It is used for inter-bank transactions.

Q14 | Which of the following statements is not true with regard to capital market?

The funds are raised for a short period of time.

Both debt and equity funds can be raised.

It is classified into two types.

All of the above

Q15 | Which of the following statements is not true with regard to primary market?

Is also known as the old issues market.

It facilitates the transfer of investible funds from savers to entrepreneurs.

It deals with new securities being issued for the first time.

It facilitates the transfer of investible funds from savers to entrepreneurs.

Q16 | Which of the following statements is not true with regard to stock exchange?

It provides a platform for buying and selling of new securities.

It curbs the marketability of the securities.

By providing a ready market, it extends liquidity to the securities.

It provides a platform for buying and selling of old securities.`

Q17 | Which of the following is not a protective function of stock exchange?

Prohibition of fraudulent and unfair trade practices.

Controlling insider trading.

Regulation of takeover bids by companies.

Promotion of fair practices and code of conduct in securities market.

Q18 | Raj Enterprises wishes to invest ₹1,10,000 in treasury bills. What is the maximumnumber of treasury bills it can buy with this fund?

6

7

4

2

Q19 | Which of the following statements is true with regard to financial markets?

They link the households which save funds and business firms which invest these funds.

They work as an intermediary between the savers and the investors by mobilising funds between them.

They allocate funds available for investment into their most productive investment opportunity.

All of the above

Q20 | The allocated function is performed by

Financial market

Capital market

Money market

All of the above

Q21 | It is a market for short-term funds which deals in monetary assets whose period ofmaturity is up to one year.

Primary market

Secondary market

Capital market

Money market

Q22 | It is an instrument of short-term borrowing by the Government of India maturing in lessthan one year.

Commercial bill

Treasury bill

Call money

None of the above

Q23 | Who issues a treasury bill?

Any nationalised bank

Any private sector bank

Reserve Bank of India

All of the above

Q24 | Suppose an investor purchases a 91 days Treasury bill with a face value of ₹2,00,000 for ₹1,92,000. By holding the bill until the maturity date, the investor receives ₹2,00,000. What is the amount of interest received by him?

₹8,000

₹80,000

₹3,92,000

₹2,00,000

Q25 | It is used as an alternative to bank borrowing for large and creditworthy companies,

Commercial bill

Commercial papers

Call money

None of the above