SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Subject: Capital Market

Sample Questions:
Section I: Subjective Questions

1. Explain the concept of Green-shoe-Option (GSO) in an IPO.

2. Explain Debt-oriented Scheme offered by mutual funds.

3. What do you mean by letter of offer?

4. What do you mean by book building?

5. Explain the characteristics of venture capital.

6. Give the list of laws related with Buy Back of shares.

7. Write a note on financial engineering tools.

8. Write a short note on Asset Management Company (AMC).

Section II: Objective Questions

Multiple Choice Single Response

1. The AMC is formed by

1] the board of directors

2] group of trustees

3] the board of trustees

4] the office of public trustee

2. The government is now moving towards demutilisation of all the

1] companies

2] brokerage houses

3] stock exchanges

4] public sector companies

 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Capital Market

3. The DP will open investors' account in the system and give an account number
which is

1] Account ID

2] Beneficiary Owner Identification Number (BO ID)

3] Discount Purchase Identification Number (DP ID)

4] Constant Owner Identification Number (CBO ID)

4. Trades on the WDM segment are settled on the basis of

1] netting

2] multilateral netting

3] segmentation

4] trade for trade

5. The WTO regulations on patents and copyrights became effective from

1] February-05

2] March-05

3] December-05

4] January-05

6. In the flowchart of rating process the foremost activity is

1] mandate

2] surveillance

3] meeting

4] acceptance

7. Financial Engineers who actually try to find loopholes in the existing legal system
that can be exploited

to create an innovative product are called

1] Outlaws

2] Idea generators

3] Valuers
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Capital Market

4] Deal Makers

8. In case the issue is undersubscribed, the underwriters will pick up the shares and if
the project is good enough, then in future can sell the shares not only to get their
money back, but also can make a

1] huge profit as well

2] lump sum gain

3] small amount of profit

4] decent profit as well

9. Limited companies are allowed to buy back their own shares from the shareholders
from

1] Mar-08

2] Oct-08

3] Mar-98

4] Oct-98

10. The investor should be aware of interest rate risk while making the investments in
the

1] fixed-income securities

2] diverse income securities

3] current income securities

4] variable income securities

Multiple Choice Multiple Response

11. Bank owned mutual funds are jointly regulated by

1] RBI
2] MOF
3] Public Trustee Office
4] SEBI
12. The contents of lease agreement are

1] time clause

2] rental clause

3] ownership clause
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Capital Market

4] period clause

13. The procedure to pledge electronic securities is

1] the investor (pledgor) as well as the lender (pledgee) must have depository
accounts

2] the pledgee has to confirm the request through his/her DP

3] only the lender (pledgee) must have depository account

4] only the investor (pledgor) must have depository account

14. Bank owned mutual funds are jointly regulated by

1] RBI

2] MOF

3] Public Trustee Office

4] SEBI

15. Advantages of Portfolio Management for individuals are

1] Capital markets over a long period have always given a better return than any
other investment

2] The investment in stock markets by individuals is a complicated business hence

it is better handled by

a professional

3] It helps individuals to understand their business

4] It helps individuals to understand the business of the rivals

16. The different types of Portfolio Management are

1] The discretionary portfolio management service

2] The non-discretionary portfolio management service

3] The direct portfolio management service

4] The indirect portfolio management service

17. The price at which the buyer can exercise his option is called the

1] exercise price
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Capital Market

2] strike price

3] option price

4] futures price

18. SEBI may ask for any information from

1] banker

2] lead manager

3] intermediary

4] market participant

Fill in the Blanks

19. Maturity period for CDs is upto _________ months.

1] 3-4 months

2] 3-5 months

3] 3-9 months

4] 3-12 months

20. The intrinsic value of the option is the _________ to the holder on immediate
exercise of the option.

1] loss

2] gain

3] value

4] profit

21. The minimum net worth stipulated by SEBI for a depository is Rs._________ .

1] 50 Crore

2] 55 Crore

3] 100 Crore

4] 1000 Crore

22. The relative importance of safety of principal has bearing on the degree of the risk
a/an _________ is willing to take.
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Capital Market

1] investor

2] retailer

3] purchaser

4] order taker

23. The Public Announcement is made to ensure that the shareholders of the target
company are aware of an _________ opportunity available to them.

1] new

2] existing

3] exit

4] early

24. Existing listed companies can price their issues _________ .

1] publicly

2] privately

3] openly

4] freely

25. Credit rating is widely/more popularly used for _________ .

1] debt instruments

2] shares

3] fixed deposits

4] PCDs

26. A strangle is similar to _________ .

1] vertical spread

2] horizontal spread

3] time spread

4] straddle

27. Buy back will make sense in the bear market and not in the bull market as the cost
of buy back will be _________ in the bear markets.
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Capital Market

1] least

2] excessive

3] high

4] restive

28. Buy-back of equity shares in any financial year should not exceed _________ of the
total paid-up equity share capital in that financial year.

1] 25%

2] 10%

3] 90%

4] 51%

State True or False

29. Many investors are known to apply for IPOs especially during a bull run.

30. The Technical Officer will verify the original documents and counter check all the
furnished information

31. Mortgage backed securitisation is new in India, but is gaining acceptance very
rapidly.

32. It is only now that India has adequate facilities for electronic delivery of shares.

33. Liquidity needs are same among investors.

34. Direct investing puts a person at great risk.

35. Private money or savings play a vital role in financing many big projects.

36. HLL had evaluated only one option to deal with the issue of surplus cash

37. Repo is also known as ready forward agreement.

38. VCFs must be registered with SEBI

Match the Following

39. 1] Code of Conduct for Portfolio 1] The client's money should be

Manager deployed as soon as possible
2] Financial engineering 2] R&D in the finance field
3] Deal Makers 3] Marketers
4] Idea generators 4] People who actually design a
financial product
 SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)
Subject: Capital Market

5] Mechanical Engineering

6] Investors

40. 1] Sustainability of funds from 1] financial risk analysis

operations
2] Raw material sourcing 2] operating advantages of company
3] Project implementation record 3] management evaluation
4] Industry structure 4] business analysis

5] simple risk analysis

6] regulatory environment

41. 1] Venture Capital 1] start-up capital

2] Acquisition Finance 2] funds to finance acquisition of
another company
3] Kanwal Rekhi 3] founder of Excelan
4] Vinod Dham 4] father of the Pentium chip

5] father of the Intel chip

6] The International US Entrepreneurs

42. 1] Funding tie up 1] project risk

2] Contingent liabilities 2] financial risk analysis
3] Crisis management 3] management evaluation
4] Pricing flexibility 4] market position of company

5] regulatory and competitive

environment
6] market share