Financial Markets Test

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Financial Markets Test - 25

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Weekly Quiz Competition

Question 1
1 / -0

Section $$131$$ of the Negotiable Instruments Act extends protection to the __________.

A
collecting banker

B
paying banker

C
advising banker

D
confirming banker

Solution

Under this Section, a collecting bank has protection only if the collecting bank, in good faith and without negligence, receives payment of the customer by a cheque, i.e. if there is negligence in receiving of a cheque on behalf of the customer, the collecting bank would be liable for negligence.

Question 2

1 / -0

Match the various stock exchanges in List-I with the years of their establishment in List-II as follows and suggest the correct code:

List-I	List-II
(a) National Stock Exchange (NSE)	(i) $$1875$$
(b) MCX Stock Exchange (MCX-SX)	(ii) $$1992$$
(c) Bombay Stock Exchange (BSE)	(iii) $$1998$$
(d) Interconnected Stock Exchange of India (ISEI)	(iv) $$2008$$

$$(a) - (ii), (b) - (iv), (c) - (i), (d) - (iii)$$

$$(a) - (ii), (b) - (iii), (c) - (iv), (d) - (i)$$

$$(a) - (i), (b) - (iii), (c) - (ii), (d) - (iv)$$

$$(a) - (iii), (b) - (ii), (c) - (iv), (d) - (i)$$

Solution

National Stock Exchange (NSE), a leading stock exchange of India, was established in 1992.
The Metropolitan Stock Exchange of India (MSE) (formerly known as MCX Stock Exchange Limited) was recognized by the Securities and Exchange Board of India (SEBI) on 16 September 2008 and is valid till 15 September 2018.
Bombay Stock Exchange (BSE) was established in the year 1875.
Inter-connected Stock Exchange of India Limited (ISE) is a national-level stock exchange, providing trading, clearing, settlement, risk management and surveillance support to its Trading Members. ISE is incorporated as a company limited by guarantee in January - 1998.

Question 3
1 / -0

Money market arranges for ____________ and capital market provides for ____________ funds.

A
long-term, short-term

B
long-term, short to medium-term

C
short-term, medium to long-term

D
medium-term, short to long-term

Solution

The financial market is a platform where investors deal in financial instruments. Money market and capital market are part of the financial market.
In the money market, extremely liquid financial instruments are traded, i.e. monetary instruments of short expiry are dealt with.
On the the other hand, the capital market is for medium to long term finance.
Question 4
1 / -0

Choose the incorrect statement about securities.

A
In order to use dematerialising facilities one has to open a demat account.

B
Change from electronic format to physical form is called re-materialisation.

C
Once you dematerialise your securities you cannot rematerialise.

D
Change from physical form to electronic format is called dematerialisation.

Solution

Dematerialisation is the process of converting physical shares into electronic format however, reconversion to physical form or rematerialisation is also possible.
Question 5
1 / -0

_________ is a measurement of relationship between stock price of any particular stock and the movement of whole market.

A
Call Option

B
Bids and Offer

C
Beta

D
Break - even Point

Solution

Consider A.
Call Option: As we know that, A call option is a contract between a buyer and a seller to purchase a certain stock at a certain price up until a defined expiration date.

Consider B.
Bid and Offers: It refers to a way price quotation that indicates the best potential price at which a security can be sold and bought at a given point in time.

Consider C.
Beta: In finance, the beta is a measure of stock's volatility in relation to the overall market. i.e., Beta is a measure of how an individual asset moves when the overall stock market increases or decreases.

Consider D.
Break even point: The break-even point is the point at which total cost and total revenue are equal.

So from the above discussion we can say that, Beta is a measurement of relationship between stock price of any particular stock and the movement of whole market.

$$\therefore $$ Option C. Beta Is correct answer.
Question 6
1 / -0

Accrual bonds are also known as _____________.

A
Zero Coupon Bonds

B
Fixed interest Bonds

C
Flat Rate Bonds

D
Low Interest Bonds

Solution

A zero-coupon bond, also known as an "accrual bond," is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.
Question 7
1 / -0

__________ is the allotment of securities by a company to institutional investors and some selected individuals.

A
Offer for Sale

B
Private Placement

C
Rights Issue

D
E-IPOs

Solution

Private placement is the allotment of securities by a company to institutional investors and some selected individuals. It helps the company to raise funds for capital more quickly than through a public issue. This method is chosen by the companies that cannot afford to raise capital through a public issue.
Question 8
1 / -0

The essential function of a _________ market is to facilitate the transfer of investible funds from savers to entrepreneurs or to expand existing ones through the issue of securities for the first time.

A
secondary

B
capital

C
primary

D
money
Solution
- The primary market is also known as the new issues market. It deals with new securities being issued for the first time.
- The essential function of a primary market is to facilitate the transfer of investible funds from savers to entrepreneurs seeking to establish new enterprises or to expand existing ones through the issue of securities for the first time.
- The investors in this market are banks, financial institutions, insurance companies, mutual funds and individuals.
Question 9
1 / -0

__________ is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.

A
E-IPOs

B
Offer for Sale

C
Private Placement

D
Rights Issue

Solution

A rights issue is one of the ways by which a listed company raises additional capital for its operations. Difference between rights issue and other share issues is that under rights issue, shares are allotted to the existing shareholders in proportion of their existing shareholding.
Hence rights issue is a privilege given to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company.
Question 10
1 / -0

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

A
The instruments traded are highly liquid.

B
Deals in unsecured and short-term debt instruments.

C
It is situated at specific locations.

D
It involves low market risk.

Solution

The money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year. It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. It has no physical locations.

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Financial Markets Test - 25

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Financial Markets Test - 25

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Question 1

collecting banker

paying banker

advising banker

confirming banker

Solution

Question 2

$$(a) - (ii), (b) - (iv), (c) - (i), (d) - (iii)$$

$$(a) - (ii), (b) - (iii), (c) - (iv), (d) - (i)$$

$$(a) - (i), (b) - (iii), (c) - (ii), (d) - (iv)$$

$$(a) - (iii), (b) - (ii), (c) - (iv), (d) - (i)$$

Solution

Question 3

long-term, short-term

long-term, short to medium-term

short-term, medium to long-term

medium-term, short to long-term

Solution

Question 4

In order to use dematerialising facilities one has to open a demat account.

Change from electronic format to physical form is called re-materialisation.

Once you dematerialise your securities you cannot rematerialise.

Change from physical form to electronic format is called dematerialisation.

Solution

Question 5

Call Option

Bids and Offer

Beta

Break - even Point

Solution

Question 6

Zero Coupon Bonds

Fixed interest Bonds

Flat Rate Bonds

Low Interest Bonds

Solution

Question 7

Offer for Sale

Private Placement

Rights Issue

E-IPOs

Solution

Question 8

secondary

capital

primary

money

Solution

Question 9

E-IPOs

Offer for Sale

Private Placement

Rights Issue

Solution

Question 10

The instruments traded are highly liquid.

Deals in unsecured and short-term debt instruments.

It is situated at specific locations.

It involves low market risk.

Solution

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