FINANCIAL

MARKET
1. Which of the following statements is/are correct Select the correct answer using the code given
about Participatory Notes? below:

(A) 3, 4, 5
1. It is a derivative instrument issued in for- (B) 1, 3, 4, 5
eign jurisdictions, by a registered Foreign (C) 1, 2, 4, 5
Institutional Investor (FII).
(D) 1, 2, 3, 4, 5
3. With reference to Open Market Operations
(OMOs), consider the following statements:

2. SEBI controls Participatory Notes.

1. They are used to regulate the money supply

Select the correct answer using the codes given in the economy.
below:

(A) 1 only/ 2. Only the government securities can be used

(B) 2 only/ as an Open Market Operation tool by the Re-
serve Bank of India.
(C) Both 1 and 2/
(D) Neither 1 nor 2/
2. Which of the following are the legal instruments
designed to raise the fund in the organized money
3. They are carried out by the Reserve Bank of
market sector in India?
India through commercial banks.

1. Certificate of deposits/
Which of the statements given above are correct?
2. Hundis/
3. Money market mutual funds (A) 1, 2
(B) 2, 3
4. Treasury bills/ (C) 1, 3
5. Commercial papers/ (D) 1, 2, 3

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4. Wall street collapse led to ___________ P-

Which of the statements given above is/are cor-

(A) World War II/ rect?
(B) Recession/
(C) U.S. Attack on Iraq/ (A) 1 only/
(D) Great Depression/ (B) 2 only/
5. Money market is a market for (C) Both 1 and 2/
(D) Neither 1 nor 2/
(A) Short term fund/ 8. With reference to Initial Public Offering (IPO),
(B) Long term fund/ consider the following statements:

(C) Negotiable instruments/ (IPO)

(D) Sale of shares/

1. It is the offering of a stock of a company for
6. Which of the following financial instruments can
the first time in the secondary capital mar-
be classified as securities?
ket.

1. Bonds/
2. Foreign Institutional Investors are not per-
2. Shares/
mitted to invest in IPOs in India through
3. Fixed Deposits/ stock exchanges.
Select the correct answer using the code given
below. IPO
Which of the statements given above is/are cor-
(A) 1 and 2 only/ rect?
(B) 2 and 3 only/
(C) 3 only/ (A) 1 only/
(D) 1, 2 and 3/ (B) 2 only/
7. With reference to Participatory notes or P-notes (C) Both 1 and 2/
in in the Indian context, consider the following (D) Neither 1 nor 2/
statements:
9. Which of these is teh regulatory body for the capi-
P- tal markets in India?

1. It is a derivate instrument issued in Idnia

(A) National Bank for Agriculture and Rural De-
by a listed company against underlying In-
velopment (NABARD)/
dian security.

(B) Securities and Exchange Board of India

(SEBI)/
(C) Insurance Regulatory and Development Au-
2. The investors in P-Notes derive the economic
thority (IRDA)/
benefits of investing in security without ac-
tually owning it.

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 (D) Reserve Bank of India (RBI)/

10. How many companies are a part of Sensex (Stock 1. Commercial Papers/
Exchange Sensitive Index)? 2. Mutual Funds/
Sensex 3. Treasury Bills/
4. Cash Managment Bills/
(A) 20 Which of the above statement is true
(B) 30
(C) 50 (A) 1, 2, 3
(D) 100 (B) 2, 3, 4
11. Which of the following statements is incorrect (C) 1, 3, 4
about the Securities Exchange Board of India
(D) All of the above/
(SEBI)?
15. The spot exchange rate is the exchange rate be-
tween two currencies for______.

(A) It is a statutory body./

(B) It was given statutory powers by an ordi-
(A) For future delivery/
nance in 1992./
(B) For delivery at a particular spot in future x

(C) It is a non-statutory body./

(C) For immediate delivery/

(D) None of the above/ (D) None of the above/

12. Which of the following might be a reason for a 16. Which of these markets allows trading of securi-
stock market to lose value suddenly? ties with less than one year of maturity?

(A) A terrorist attack/ (A) Global market/

(B) The bankruptcy of a big company/ (B) Money market/

(C) Capital market/
(C) Fear of a global recession/ (D) Transaction market /
(D) All of the above/ 17. Which of the following statements about the Se-
13. Which of the following factor is responsible for curities and Exchange Board of India is correct?
fluctuations in the Sensex?
Sensex
(A) One of the objectives of setting up SEBI was
(A) Monetary Policy/ to protect the interests of investors./SEBI

(B) Fiscal Policy/

(C) Political Instability/
(B) SEBI was established under the Securities
(D) All of the above/
(Contract and Regulation) Act, 1956./SEBI
14. Which of the following is/are a component of
organised Indian money market?

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 (C) SEBI was formed from among the Directors (C) All of the above/
of stock exchanges in India./SEBI (D) None of these/
20. The Securities and Exchange Board of India (SEBI)
(D) SEBI issued various rules and regulations to is not responsible for______.
help bring monetary gains for investors. SEBI ____
SEBI
(A) Ensuring fair practices by companies/
18. Consider the following statements regarding the
certificate of deposit. (B) Investor protection/
(C) Improving the earnings of shareholders
1. It is used by banks and issued to the deposi-
tors for a specified period ranging less than (D) Promoting efficient services by brokers
one year./
21. Which term is apt to describe the payout made
to shareholders representing their share in the
2. They are negotiable and tradable in the company's profits?
money market./

3. Financial Institutions are allowed to issue

Cash of Deposite for the maturity periods (A) Dividend/
up to 1 year only./ (B) Coupon/
(C) Interest/
(D) None of the above/
Which of these statements are correct?
22. Which of the following is a function of the Secu-
rities and Exchange Board of India?
(A) 1 and 2 /
(B) 2 and 3 /
(C) 1 and 3 / (A) Promote fair practices and prohibit fraudu-
(D) All of the above/ lent activities related to securities trading.

19. Which of the following types of treasury bills are

issued in India?
(B) Check price rigging of securities.

1. 14-day Treasury Bills/ (C) Prohibit insider trading by barring compa-

nies from buying their shares in the second-
2. 184-day Treasury Bills/
ary market./
3. 365-day Treasury Bills/
Select the correct answer using the code given
below. (D) All of the above/
23. The markets where securities instruments are
(A) 1 and 2/ traded directly between buyer and seller are
(B) 2 and 3/ known as_____.

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 (A) Secondary markets/
(B) Primary markets/ Which of the above statement is true?
(C) Tertiary markets/
(D) None of the above/ (A) Only 1/
24. Participatory Notes (PNs) are associated with (B) Only 2/
which one of the following? (C) Both 1 and 2/
(PNs) (D) Neither 1 nor 2/
26. Consider the following statements regarding the
(A) Consolidated Fund of India/
Call Money Market:
(B) Foreign Institutional Investors/

1. This is basically an inter-bank money mar-

(C) United Nations Development Programme
ket where funds are borrowed and lent for
one day./
(D) Kyoto Protocol/
25. Consider the following statements regarding the 2. Collateral Security is required to borrow from
financial market- this market./

1. Money market and capital market are the Which of the above statement is true?
two segments of the financial market of an
economy./
(A) Only 1/
(B) Only 2/
2. The long-term financial market is called
money market while the short time finan- (C) Both 1 and 2/
cial market is called capital market. (D) Neither 1 nor 2 /

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