Financial Markets Test

Result

Financial Markets Test - 13

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Weekly Quiz Competition

Question 1
1 / -0

At present only two depositories are registered with SEBI _____.

A
NSDL and HDFC

B
NSDL and CDSL

C
NSDL and ABSL

D
NEFT and TDS

Solution

One is the National Securities Depository Limited (NSDL) and the other is the Central Depository Service (India) Limited (CDSL). Every Depository Participant (DP) needs to be registered under this Depository before it begins its operation or trade in the market.
Question 2
1 / -0

Under Private Placement Company sells securities to some selected institutions. From the following identify such institution.

A
LIC

B
GIC

C
UTI

D
All of these

Solution

A private placement is the sale of securities to a relatively small number of selected investors as a way of raising capital. Investors involved in private placements are usually large banks, mutual fund companies and insurance companies.
Question 3
1 / -0

What is the meaning of right issue?

A
Company offers new shares to its existing shareholders

B
Securities are not issued to existing shareholders at all

C
Company sells the securities to some selected institutions

D
None of these

Solution

A rights issue is a dividend of subscription rights to buy additional securities in a company made to the company's existing security holders. When the rights are for equity securities, such as shares, in a public company, it is a non-dilutive pro rata way to raise capital.
Question 4
1 / -0

Which of the following is a method of floatation?

A
Offer for sale

B
Offer through prospectus

C
Private Placement

D
All of these

Solution

There are various methods of floating new issues in the primary market:
(i) Offer Through Prospectus: This involves inviting subscription from the public through issue of prospectus.
(ii) Offer for Sale: Under this method securities are not issued directly to the public but offered for sale through intermediaries like issuing houses or stock brokers.
(iii) Private Placement: Private placement is the allotment of securities by a company to institutional investors and some selected individuals.
(iv) Rights Issue: This is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.
(v) e-IPOs: A company proposing to issue capital to the public through the online system of the stock exchange has to enter into an agreement with the stock exchange.
Question 5
1 / -0

What is meant by Demat Account?

A
Demand Depository Account

B
Depository Participant Account

C
Development Market Account

D
Dematerialisation of of Securities

Solution

In India, shares and securities are held electronically in a dematerialized (Demat) account, instead of the investor taking physical possession of certificates. A Demat account is opened by the investor while registering with an investment broker (or sub-broker).
Question 6
1 / -0

Deep financial market is ________________________.

A
The market which attracts funds in large volume

B
The market that attracts funds from all types of investors.

C
The underdevelopment market due to government regulations

D
The market that provides opportunities for sufficient orders at suitable interest rates below and above the market price.

E
The market that has easy effective interlinkages between its various parts and sub-parts.

Solution

`Deep market is one where there are always sufficient orders for buying and selling at fine quotations, both below and above the market price, and where there are good opportunities for swap deals.
Question 7
1 / -0

Only institutional investors can participate in __________.

A
Foreign market

B
Loan market

C
Capital market

D
Money market

Solution

Only institutional investors can participate in money market. The money market consists of financial institutions and dealers in money or credit who wish to either borrow or lend. Participants borrow and lend for short periods, typically up to twelve months.
Hence, option (D) is the correct answer.
Question 8
1 / -0

Money market deals in _____________________.

A
Short term Securities

B
Medium term securities

C
Long term Securities

D
None of these

Solution

The money market is where financial instruments with high liquidity and very short maturities are traded. It is used by participants as a means for borrowing and lending in the short term, with maturities that usually range from overnight to just under a year.
Question 9
1 / -0

A capital market is ideal when:

A
Financial institutions are sufficiently developed

B
Capital is most productively allocated

C
Finance is available at reasonable cost

D
All of these

Solution

An ideal capital market is defined by a set of five assumptions.
1: Capital markets are friction-less.
2: All market participants share homogenous expectation, valuerelevant information is costlessly available to all market participants.
3: All market participants are atomistic. No single market participant can affect the market price of a security via trades.
4: The firms investment program is fixed and known.
5: The firms financing is fixed. Once chosen, the firms capital structure is fixed.
Question 10
1 / -0

The long-term investment of a firm involves __________________.

A
Irreversible investments

B
Investments which benefit the firm for number of years

C
All of the above

D
None of the above

Solution

Long-term decisions involve setting up of the firm, expansion, diversification modernization and other similar capital expenditure decisions requiring huge investment made by raising long-term sources, the benefits of which can be seen only in the long term. Because of the huge investments involved these decisions are irreversible.

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Re-Attempt Weekly Quiz Competition

Financial Markets Test - 13

Result

Financial Markets Test - 13

Score

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Rank

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SHARING IS CARING

Question 1

NSDL and HDFC

NSDL and CDSL

NSDL and ABSL

NEFT and TDS

Solution

Question 2

LIC

GIC

UTI

All of these

Solution

Question 3

Company offers new shares to its existing shareholders

Securities are not issued to existing shareholders at all

Company sells the securities to some selected institutions

None of these

Solution

Question 4

Offer for sale

Offer through prospectus

Private Placement

All of these

Solution

Question 5

Demand Depository Account

Depository Participant Account

Development Market Account

Dematerialisation of of Securities

Solution

Question 6

The market which attracts funds in large volume

The market that attracts funds from all types of investors.

The underdevelopment market due to government regulations

The market that provides opportunities for sufficient orders at suitable interest rates below and above the market price.

The market that has easy effective interlinkages between its various parts and sub-parts.

Solution

Question 7

Foreign market

Loan market

Capital market

Money market

Solution

Question 8

Short term Securities

Medium term securities

Long term Securities

None of these

Solution

Question 9

Financial institutions are sufficiently developed

Capital is most productively allocated

Finance is available at reasonable cost

All of these

Solution

Question 10

Irreversible investments

Investments which benefit the firm for number of years

All of the above

None of the above

Solution

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