Multiple Choice Questions and Answers (MCQ) on Financial Market for Civil Services Examinations
Question 1 : In the parlance of economy/commerce, what is “gilt-edged” market?
a) Gold and silver market
b) Industrial securities market
c) Market for safe (such as government) securities
d) Market for software technology/ service products
Answer : c
Question 2 : Is there any difference between currency forwards and futures markets?
a) No, both deal with future delivery of foreign exchange
b) No, both markets can be availed of through the internet
c) Yes, only a limited number of currencies are traded in the futures market and that also in standardized amounts.
d) No, if one agrees on the date of delivery and brokerage, it is immaterial which of the markets one is talking of
Answer : c
Question 3 : In India, mergers and acquisition of firms are regulated by
a) National Manufacturing Competitiveness Council
b) Competition Commission of India
c) Security and Exchange Board of India
d) Department of Industrial Policy and Promotion
Answer : b
Question 4 : A rise in “Sensex” means
a) A rise in prices of shares of all companies registered with the Bombay Stock Exchange
b) An overall rise in prices of shares of all companies registered with the National Stock Exchange
c) An overall rise in prices of shares of group of companies registered with the Bombay Stock Exchange
d) A rise in prices of shares of all companies belonging to a group of companies registered with the Bombay Stock Exchange
Answer : c
Question 5 : Which one of the following statements is not correct?
a) The National Association of Securities Dealers Automated Quotations, known as NASDAQ, is an American stock exchange.
b) Nikkei is the stock market of index for the Tokyo Stock Exchange
c) S&P CNX Nifty is the index of 50 large companies on the Bombay Stock Exchange
d) Hang Seng Indexes record daily changes of the largest companies of the Hong Kong Stock Market
Answer : c
Question 6 : Debenture holders of a company are its
a) Owners
b) Creditors
c) Debtors
d) Directors
Answer : b
Question 7 : Consider the following statements:
- Sensex is based on 50 of the most important stocks available on the Bombay Stock Exchange(BSE)
- For calculating the Sensex, all the Sensex stocks are assigned proportional weightage
- Sensex became operational in 1978-79 with the base value of 100
Which of the statements given above is/are correct?
a) 2 only
b) 1 and 3
c) 2 and 3
d) None of the above
Answer : c
Question 8 : Which of the following statements is/are correct?
- Nifty is based on 50 companies in India
- Nifty is governed and regulated by the Reserve Bank of India
- Nifty deals with futures and options
Select the correct answer using the codes given below:
a) 1 only
b) 2 only
c) 3 only
d) 1 and 3
Answer : d
Question 9 : Consider the following statements about India INX:
- India INX is India’s first international exchange
- It will work for 22 hours in a day, working from sunrise to sunset, i.e. starting when Japan exchanges begin and close when the US markets end
- India INX is a wholly owned subsidiary of the Bombay Stock Exchange (NSE)
Which of the statements given above is/are correct?
a) 1 and 3 only
b) 1, 2 and 3
c) 2 and 3 only
d) 1 only
Answer : b
Question 10 : Which of the following are the core objectives of the Financial Stability and Development Council (FSDC):
- Acts as an apex level forum to strengthen and institutionalize the mechanism for maintaining financial stability
- Enhance inter-regulatory coordination and promoting financial sector development in the country
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer : c
Question 11 : Consider the following points of differences between a share and a debenture
- While share capital is the credit into the company, debenture is an ownership capital
- While dividend is paid on shares, interest is paid on debentures
Which of the statements given above is/are correct?
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 nor 2
Answer : b
Question 12 : Which of the statements given below is/are correct regarding “bear market”?
- It refers to fall in the value of investments
- Investors rush to buy stocks instead of selling
- Unemployment levels may rise
Select the correct answer using the codes given below:
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
Answer : c
Question 13 : With reference to green bonds in India, consider the following statements:
- Green bond is a debt instrument issued for renewable as well as non-renewable energy projects
- Both public and private sector banks can issue such bonds
- It is a low-risk bond as repayment is tied to the issuer rather than success of the project
Which of the statements given above is/are correct?
a) 1 and 2 only
b) 2 and 3 only
c) 3 only
d) None
Answer : b
Question 14 : With reference to money markets, consider the following statements:
- Call money refers to borrowing/lending of funds on overnight basis.
- Notice money refers to borrowing/lending of funds for a period exceeding 14 days
Which of the statements given above is/are correct
a) 1 only
b) 2 only
c) Both 1 and 2
d) Neither 1 and 2
Answer : a
Question 15 : Consider the following statements relating to credit rating agencies
- The three largest credit rating agencies rate India’s sovereign debt at the highest investment grade
- CRISIL is the largest credit rating agency in India but is not among the largest three in the world
- The three largest credit rating agencies in the world are Moody’s, Standard & Poor’s and Fitch
Select the correct answer using the codes given below:
a) 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2, and 3
Answer : b
Question 16 : Consider the following differences between private and public limited companies:
- In a private limited company there is restriction on the number of members, whereas no such restriction is applicable on a public limited company
- A private limited company can be listed on a stock exchange, whereas a public limited company is always listed on a stock exchange
- A private limited company cannot issue debentures, whereas a public limited company can issue debentures
Select the correct answer using the codes given below:
a) 1 only
b) 2 and 3 only
c) 1 and 3 only
d) 1 , 2, and 3
Answer : a
Question 17 : With reference to financial sector regulators, consider the following statements:
- PFRDA deals with pension funds, which are not invested in stock exchanges
- Commodity markets are subject to jurisdiction of SEBI
- NBFCs are also subject to jurisdiction of SEBI
Select the correct answer using the codes given below:
a) 2 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
Answer : a
Question 18 : What is the difference between primary and secondary markets?
- Primary markets help in capital formation, while secondary capital provides liquidity to the investor
- Initial public offerings are undertaken in both primary and secondary markets
- Stock exchanges are an example of secondary markets
Select the correct answer using the codes given below:
a) 3 only
b) 2 and 3 only
c) 1 and 3 only
d) 1, 2 and 3
Answer : c
Question 19 : Why a retail investor is recommended to invest through a mutual fund in a stock exchange?
- Mutual funds invest funds in a diversified portfolio of securities, thus reducing the risk of the investor
- Mutual funds are managed by financial experts
- Mutual funds promise high returns to the investors of the fund
Select the correct answer using the codes given below:
a) 3 only
b) 2 and 3 only
c) 1 and 2 only
d) 1, 2 and 3
Answer : c
Question 20 : Why venture capital is considered risky in nature?
- The business plan in which venture capitalists invest is usually non-conventional in nature
- Venture capitalists contribute towards a debt of the product
- Venture capitalists contribute money for a long time period
Select the correct answer using the codes given below:
a) 3 only
b) 1 and 3 only
c) 1 and 2 only
d) 1, 2, and 3
Answer : b