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Financial Market Question Bank

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Financial Market Question Bank

MCQs based on CBSE Question Papers

Question:

From the following, identify the one which is not a function of stock exchange:

  1. Providing liquidity and marketability to existing securities
  2. Spreading of equity cult
  3. Ensuring safety of transactions
  4. *Ensuring that there is no scope for speculation

Question:

In the __________ a securities account can be opened, all shares can be deposited in it. These can be withdrawn/sold at any time and instruction to deliver or receive shares on behalf of the investor can be given.

  1. Primary market
  2. Stock exchange
  3. Bank
  4. *Depository

MCQs from CBSE Question Papers

Question:

________ serves as an intermediary between the investor and the depository who is authorised to maintain the accounts of dematerialised shares.

  1. *Depository Participant
  2. National Securities Depository Limited
  3. Central Depository Services Limited
  4. Stock Exchange

Question:

Read the following statements: Assertion (A) and Reason (R).

Assertion: Holding shares in demat form is very convenient as it is just like a bank account.

Reason: Securities and Exchange Board of India (SEBI) has made it mandatory for the settlement procedures to take place in demat form.

Choose the correct alternative from the following:

  1. Assertion is false and Reason is true.
  2. Both Assertion and Reason are false.
  3. *Both Assertion and Reason are true, but Reason is not the correct explanation of Assertion.
  4. Both Assertion and Reason are true and Reason is the correct explanation of Assertion.

Question:

The market where existing securities are traded is known as:

  1. Both Primary and Secondary Market
  2. Primary Market
  3. *Secondary Market
  4. Money Market

Question:

Simran, a first-time investor, was excited yet nervous about investing in the stock market as she felt it was risky. She sought guidance from her friend, Raman, who was an experienced investor. Raman assured Simran that it is safe to invest in the stock market as the membership of stock exchange is regulated by Securities and Exchange Board of India (SEBI). She also told Simran that SEBI performs various functions to protect the rights and interests of investors.

Which of the following functions mentioned by Raman is not a protective function of SEBI?

  1. Prohibition of fraudulent and unfair trade practices like making misleading statements, manipulations, price rigging, etc.
  2. *Conducting research and publishing information useful to all market participants.
  3. Controlling insider trading and imposing penalties for such practices.
  4. Promotion of fair practices and code of conduct in the securities market.

Question:

The market for short-term funds which deals in monetary assets whose period of maturity is up to one year, is known as :

  1. Both capital and money market
  2. Primary market
  3. Secondary market
  4. *Money market

Question:

The market for creation and exchange of financial assets is known as:

  1. *Financial market
  2. Secondary market
  3. Primary market
  4. Money market

Question:

The market for short-term funds which deals in monetary assets whose period of maturity is up to one year, is known as :

  1. Both capital and money market
  2. Primary market
  3. Secondary market
  4. *Money market

Question:

The market for creation and exchange of financial assets is known as :

  1. *Financial market
  2. Secondary market
  3. Primary market
  4. Money market

Question

‘Tangy Beverages Ltd.’ was known for its popular tangy fruit drinks. It had recently introduced a new range of fruit drinks that became an instant hit among consumers and led to a significant increase in the company’s profits. As a result, the Board of Directors wanted to declare a higher dividend for the year. The Chief Finance Officer suggested that they should evaluate the impact of dividend on the share price of previous years before taking a decision. An analysis was done, which showed how the company’s share price had risen in previous years whenever the dividend was increased. On the other hand, even a small decrease in dividend had led to a noticeable dip in the share price. Which of the following factors affecting dividend decision was suggested by the Chief Finance Officer to the Board of Directors in the above case?

  1. Access to capital market
  2. *Stock market reaction
  3. Shareholders preference
  4. Cash flow position

Question

The purpose of opening a Demat Account with a Depository Participant (DP) is:

  1. *For holding and transferring securities in the Demat form
  2. For entering into an agreement with broker
  3. For making payment to stock exchange for any purchase of securities
  4. For enabling cash transactions in the securities market

Question

Read the following statements: Assertion (A) and Reason (R).

Assertion (A): The investing public gets a safe and fair deal on the stock market.

Reason (R): The membership of stock exchange is well regulated and its dealings are well defined according to the existing legal framework.

Choose the correct alternative from the following:

  1. *Both Assertion (A) and Reason (R) are correct and Reason (R) is the correct explanation of Assertion (A).
  2. Both Assertion (A) and Reason (R) are correct, but Reason (R) is not the correct explanation of Assertion (A).
  3. Both Assertion (A) and Reason (R) are incorrect.
  4. Assertion (A) is correct, but Reason (R) is incorrect.

Question

In the 'Primary Market' prices of securities are determined by:

  1. *Management of the company
  2. Demand and supply of the security
  3. Employees of the company
  4. Only demand for the security

Question

Statement-I: Capital market instruments are safer than money market instruments both with respect to returns and principal repayment.

Statement-II: The capital market deals in medium and long-term securities such as equity shares and debentures etc.

Choose the correct option from the following:

  1. Statement I is true and Statement II is false.
  2. *Statement I is false and Statement II is true.
  3. Both Statement I and Statement II are true.
  4. Both Statement I and Statement II are false.

Question

Alka Motors is one of the leading automobile companies in India. Due to growing demand for electric vehicles, Alka Motors planned to expand its business and for this, it wanted to raise funds. The finance manager suggested that it should raise funds through equity as the market was bullish. As per the suggestion of finance manager, the company decided to raise ₹3,500 crore from equity for its expansion plan for electric vehicles. The factor that the finance manager took into consideration to raise funds through equity was:

  1. Cash flow position
  2. Flexibility
  3. Cost of debt
  4. *Stock-market conditions

Question

‘Stock Exchange is playing a vital role in ensuring wider share ownership by regulating new issues, better trading practices and taking effective steps in educating the public about investments.'

The above lines highlight which function of stock exchange from the following?

  1. Providing Scope for Speculation
  2. *Spreading of Equity Cult
  3. Safety of Transactions
  4. Contributes to Economic Growth

Question

Read the following statements-Assertion (A) and Reason (R):

Assertion (A) : Money market instruments have a higher degree of liquidity as compared to capital market securities.

Reason (R) : Money market instruments are traded on the stock exchanges.

Choose the correct alternative from the alternatives given below:

  1. Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
  2. Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A).
  3. *Assertion (A) is true and Reason (R) is false.
  4. Assertion (A) is false and Reason (R) is true.

Question

‘Certain provisions of the Companies Act place restrictions on payouts as dividend. Such provisions must be adhered to while declaring the dividend.’ The factor affecting dividend decision discussed above is:

  1. Access to capital market
  2. Contractual constraints
  3. *Legal constraints
  4. Stock market reaction

MCQs to Revise Business Studies Class 12

Financial Market – Meaning and Types

Financial Market Keywords and Brief Notes

Pages: 1 2 3 4