Financial Market MCQ Questions with Answers

Question 1 : The financial market for securities with maturities of less than one year is known as

a) Derivatives market
b) Cash market
c) Money market
d) Rupee market

Answer : c

Question 2 : India’s financial system can be mainly divided into

a) two categories
b) three categories
c) four categories
d) five categories

Answer : a

Question 3 : Which one of the following is a specialised sub market of the money market?

a) Collateral loan market
b) Discount market
c) Bond market
d) Acceptance market

Answer : c

Question 4 : India has highly volatile part of organised money market

a) Government Securities Market
b) Trade Bill Market
c) Soliciting Money Market
d) Deposit Certificate Market

Answer : c

Question 5 : Which one of the following is correct about the Commercial Papers (CPs) in Indian money market?

a) It is issued by Indian Commercial Bank
b) It is issued by the companies with a net worth more than Rs5 crore
c) It is issued by the Central Government
d) All of the above

Answer : b

Question 6 : The market in which loans of money can be obtained is called

a) Reserve market
b) Institutional market
c) Money market
d) Exchange market

Answer : c

Question 7 : Which of the following statement is correct about daily volumes in the call money market?

a) These volumes are usually lower than the volumes in the repo market
b) These volumes are comparable with volumes in the ICD and CP markets
c) They register the largest transaction value after government securities
d) Call money markets record the highest daily transaction value amongst all segments of debt markets

Answer : d

Question 8 : Nifty Junior is related with which one of the following markets of the Indian economy?

a) Indian money market
b) Indian commodity market
c) Indian currency market
d) Indian equity market

Answer : a

Question 9 : In the context of Indian economy, ‘Open Market Operations’ refers to

a) borrowing by scheduled banks from the RBI
b) lending by commercial banks to industry and trade
c) purchase and sale of government securities by the RBI
d) None of the above

Answer : c

Question 10 : Purchase or sale of government securities by the Central Bank from the general public in the bond market, in a bid to increase or decrease the money supply in the economy is referred to as

a) Open Market Operations
b) Rationing of Credit
c) Variable Reserve Ratio
d) Clear Money Policy

Answer : a

Question 11 : Open Market Operations, one of the measures taken by RBI in order to control credit expansion in the economy, means

a) sale or purchase of government securities
b) issuance of different types of bonds
c) auction of gold
d) to make available direct finance to borrowers

Answer : d

Question 12 : Consider the following statements

I. Money market refers to the market for short-term requirement and deployment of funds
II. Coupon rate is specified interest rate on a fixed maturity security, fixed at the time of issue
III. Call money is money lent for one day.

Which of the following statements given above is/are correct?

a) I and II only
b) II and III only
c) I and III only
d) All of these

Answer : d

Question 13 : Which of the following statements are true and T-Bills?

I. 14 days T-bill is auctioned on every Friday every week
II. 91 days T-bill is auctioned on every Friday every week
III. 182 days T-bill and 364 T-bill are auctioned on every alternate Wednesday
IV. 182 days T-bill and 364 days T-bill are auctioned on a fortnight basis

Which of the following statements given above is/are correct?

a) I, II and III
b) I and IV
c) II and III
d) I, II and IV

Answer : b

Question 14 : Capital market means

a) Share market
b) Cash market
c) Commodities market
d) All of the above

Answer : a

Question 15 : A market for relatively long term financial instrument is known as

a) Secondary market
b) Primary market
c) Capital market
d) All of these

Answer : c

Question 16 : As compared to capital markets, money markets

a) have smaller fluctuations in price
b) trade debit instruments with shorter terms
c) are usually more widely traded
d) All of the above

Answer : d

Question 17 : The acronym SRO, being used in the capital market for various market participants, stands for which one of the followings?

a) Self Regulatory Organisations
b) Small Revenue Operators
c) Securities Roll-back Operators
d) Securities Regulatory Organisations

Answer : a

Question 18 : Consider the following statements about the Indian Capital Market

I. Primary Market in India is mainly dealt with the new issues and debentures
II. Primary Market in India is supervised by the Insurance Regulatory Development Authority

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

Answer : a

Question 19 : Consider the following statements

I. Capital amount surplus of a country means the money is flowing into the country
II. Capital account deficit of a nation suggests that the nation is increasing its claims on foreign assets

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

Answer : a

Question 20 : Consider the following statements

I. A scheme for attracting portfolio from Foreign Institutional Investors (FIIs) in India was launched in 1992
II. A scheme to raise ADR/GDR/FCCBS issues from the international capital markets in India was initiated during 1992-1993

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

Answer : c

Question 21 : The capital market has witnessed major reforms in the 1990s. Which of the following are the major reforms of capital market?

I. Set-up of the Investors Education and Protection Fund in 2001 under the purview of SEBI
II. The Insurance Regulatory and Development Authority was set up in 2000
III. The Multi-Commodity Exchange is set up
IV. Credit rating agencies were set up

Which of the following statements given above is/are correct?

a) I, II and IV
b) II and IV
c) I and III
d) I, II, III and IV

Answer : d

Question 22 : Which of the following is true about the distinction between money market and capital market?

I. Money market deals with long term funds and capital market deals with short-term funds
II. Money market deals in securities like treasury bills, commercial papers etc and capital market deals with securities like shares, debentures etc.
III. Money market participants are commercial banks, NBFs and capital market participants are stock brokers, individual investors etc.
IV. Money market is regulated by SEBI and capital market is regarded by RBI

a) I, III and IV
b) II and III
c) I and IV
d) All of these

Answer : b

Question 23 : The SEBI was given statutory status in 1992 on the recommendation of

a) the Chakraborty Commission
b) the Chelliah Committee
c) the Tendualkar Committee
d) the Narasimham Committee

Answer : d

Question 24 : To prevent recurrence of scams in Indian Capital Market, the government has assigned regulatory powers to

a) RBI
b) SBI
c) SEBI
d) ICICI

Answer : c

Question 25 : The basic regulatory authority for mutual funds and stock markets lies with the

a) Government of India
b) Reserve Bank of India
c) SEBI
d) Stock Exchanges

Answer : c

Question 26 : SEBI regulations require that there should be atleast ….. trustees (or directors in the trustee company) in a mutual fund

a) 7
b) 5
c) 6
d) 4

Answer : d

Question 27 : Match ‘SEBI’ with the appropriate item among the following

a) Regulation of money market
b) Regulation capital market
c) Regulation of commodity market
d) All of the above

Answer : b

Question 28 : India’s market regulator SEBI is on course to relax investment norms for sovereign wealth funds, the investment vehicles which are directly controlled by the government of a country. The main reason behind this move is

a) the desire of the Government of India to attract more foreign investment
b) pressure by foreign governments on India to execute specific mutual agreements on financial services
c) SEBI’s desire to create a more level playing field for foreign investors
d) RBIs relevant directive to SEBI

Answer : a

Question 29 : Under the member constituent agreement, trading members are required to make the clients aware of which of the following?

I. Trading segment in which the trading member is admitted
II. SEBI registration number
III. Basic risks involved in trading on the exchange

Which of the following statements given above is/are correct?

a) II and III only
b) I and II only
c) I and III only
d) All of these

Answer : d

Question 30 : Consider the following statements

I. Regulation of the insider trading in the Indian secondary capital market is under the provision of SEBI
II. SEBI has been empowered to file complaints in the court and to notify its regulation without prior approval of the government

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

Answer : c

Question 31 : Consider the following statements about the Indian Capital Market

I. The Security Exchange Board of India (SEBI) was set up in the Seventh Five Year Plan
II. The Capital issue (Control Act 1947 was repealed and replaced by the SEBI)

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

Answer : c

Question 32 : Consider the following statements

I. Foreign institutional investors have been allowed to invest in mutual funds
II. The main objective of SEBI is to protect the investor
III. Private placement is the route through which promoters’ contribution is mobilised by a public company
IV. RBI lays down the guidelines governing the capital market operation

Which of the following statements given above is/are correct?

a) I, II and III
b) II, III and IV
c) Both I and II
d) I, III and IV

Answer : b

Question 33 : Consider the following statements

I. SEBI (Intermediaries) Regulations, 2008 are not applicable for foreign venture capital investor
II. The securities market has two segments viz primary and secondary

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

Answer : c

Question 34 : Consider the following statements

I. All trading members are required to pay turnover fees to SEBI
II. Compliance of SEBI rules is required by the constituents of a trading member

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

Answer : c

Question 35 : The Mutual Fund Scheme of India was introduced by

a) Government of India
b) RBI
c) Unit Trust of India
d) SBI

Answer : c

Question 36 : In a mutual fund, the trust acts through …….., who are appointed by the sponsor

a) lawyers
b) investors
c) trustees
d) auditors

Answer : c

Question 37 : Mutual funds need to calculate NAV for each calendar ……… for their liquid fund schemes and plans

a) day
b) week
c) month
d) year

Answer : a

Question 38 : Which option gives the holder the right, but not the obligation to buy an asset by a certain date for a certain price?

a) Put
b) ITM
c) OTM
d) Call

Answer : d

Question 39 : Consider the following statements

I. Mutual funds are not allowed to participate in the derivatives market in Indian Capital Market
II. Mutual funds are permitted to invest in ADRs, GDRs and foreign securities

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

Answer : c

Question 40 : Consider the following statements

I. For anybody to start a mutual fund, relevant experience in financial services is mandatory
II. Mutual funds in India follow a three tier structure

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

Answer : c

Question 41 : Consider the following statements

I. UTI is established by an Act of Parliament in 1964. So, UTI does not come under SEBI regulations for mutual funds.
II. Mutual fund organisations can invest their mobilised funds abroad

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both I and II
d) Neither I nor II

Answer : d

Question 42 : Consider the following statements regarding mutual funds

I. Mutual funds can participate in options trading and carrying forward transactions in securities
II. Mutual funds can invest in transferable securities in the money and capital markets

Which of the following statements given above is/are correct?

a) Only I
b) Only II
c) Both and II
d) Neither I nor II

Answer : b

Question 43 : Coming soon

a)
b)
c)
d)

Answer :

Question 44 : The business in stock markets and offer securities markets is regulated by

a) Securities and Exchange Board of India
b) State and Exchange Bank of India
c) Stock and Exchange Bank of India
d) Stock Trade and Exchange Bank of India

Answer : c

Question 45 : In which of the following exchange, ‘Currency Futures; trading was first started?

a) BSE
b) NSE
c) MCX-SX
d) All of the above

Answer : b

Question 46 : Who can nominate members of the governing body of a recognised stock exchange?

a) The SEBI
b) The State Government
c) The SAT
d) None of the above

Answer : a

Question 47 : The well-established and well-organised market where the sale- purchase of different securities takes place according to certain laws, is known as

a) production exchange
b) stock exchange
c) commodity exchange
d) None of the above

Answer : b

Question 48 : An option which gives the holder, the right to sell a stock at a specified price at some time in the future is called a

a) naked option
b) call option
c) out of the money option
d) put option

Answer : d

Question 49 : Recognised stock exchange means a stock exchange which is for the time being recognised by

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