IRM Quiz-I

1. The regulatory body for the securities market in India is __________.

a. RBI
b. SEBI
c. IRDA
d. Stock Exchanges
(Ans: B)

2. A stock market index _________.

a. Shows trends in the market
b. Provides weights to shares
c. Show the volume of trade in the market
d. All of the above
(Ans: A)

3. __________ is the market where the existing securities of companies are traded.
a. Primary market
b. Secondary market
c. Money market
d. None of these
(Ans: B)

4. Capital market is a market for _________ .

a. Long term capital
b. Short term capital
c. Working capital
d. Fixed capital
(Ans: A)

5. Equity shares are the __________ shares of a limited company.

a. Voting
b. Ordinary
c. Limited
d. Unlimited
(Ans: B)
6. A debenture is a _________ instrument issued by the company with a promise to pay interest
and repay the principal on maturity.
a. Credit
b. Debt
c. Cash
d. Negotiable
(Ans: B)

7. ___________ provides a means to demand extra equity shares from the company to meet
the surplus allocation during the public issue.
a. IPO
b. FPO
c. Greenshoe option
d. None of these
(Ans: C)

8. A bonus issue is the issue of shares to ________ out of the free reserves of the company.
a. Existing shareholders
b. New shareholders
c. Both A and B
d. None of these
(Ans: A)

9. QIP stands for ‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐‐.

a. Qualified Institutional Placement
b. Qualified Institutional Players
c. Qualified Information for Participants
d. All of these
(Ans: A)

10. Public issue means IPO and _________.

a. ESOP
b. Rights issue
c. Bonus issue
d. FPO
(Ans: D)
11. FPO and IPO can be either a fresh issue or_________.
a. Secondary Offer
b. Primary Offer
c. Both A and B
d. None of these
(Ans: A)

12. Public issue involves ____________ .

a. Intermediaries
b. Exchange
c. Underwriter
d. All the above
(Ans: D)

13. Which of the following is not a credit rating agency?

a. CRISIL
b. ICRA
c. NIKKEI
d. CARE
(Ans: C)

14. The USD-denominated bonds issued in the US Markets are termed _____
a. Yankee bonds
b. Euro rupee bonds
c. Masala bonds
d. Samurai bonds
(Ans: A)

15. There is no difference between the book value and the face value of a share.
a. True
b. False
(Ans: B)

16. The Reserve Bank of India regulates both the Capital and Money Market in India.
a. True
b. False
(Ans: B)
17. Repo Rate is always higher compared to Reverse Repo Rate.
a. True
b. False
(Ans: A)

18. According to the Efficient Market Hypothesis (EMH), asset prices reflect the true intrinsic
value.
a. True
b. False
(Ans: A)

19. According to __________ form of Efficiency current price is a reflection of past prices.
a. Weak-form Efficiency
b. Semi-strong form Efficiency
c. Strong-form Efficiency
d. NOTA
(Ans: A)

20. As per _________ theory, stock prices do not move in a predictable pattern.
a. Efficient Market Hypothesis Theory
b. Semi-strong form Efficiency
c. Strong-form Efficiency
d. Random Walk Theory
(Ans: D)

21. According to __________ form of Efficiency, prices reflects all available information, public
as well as private.
a. Weak-form Efficiency
b. Semi-strong form Efficiency
c. Strong-form Efficiency
d. NOTA
(Ans: C)

22. Which of the following portfolios has the least risk?

a. A portfolio of 10-year Corporate Bond
b. A portfolio of T-bills
c. A portfolio of Blue-Chip Stocks.
d. A portfolio of Sovereign Gold Bond issued by RBI
(Ans: B)
23. Which of the followings are not financial intermediaries?
a. Insurance companies
b. Mutual funds
c. Banking regulators
d. Venture capital funds
(Ans: C)

24. Which voting system is most friendly towards minority shareholders?

a. Majority voting
b. Cumulative voting
c. Straight voting
d. Dual-class share voting
(Ans: B)

25. Different classes of stocks are usually issued to _______

a. Maintain ownership control by holding the class of stock with greater voting rights
b. Pay fewer dividends to different classes of stock.
c. Expropriate minority shareholders
d. NOTA
(Ans: A)

26. Venture capitalists provide start-up companies

a. All the money they will need upfront.
b. Enough money at each stage so that they can reach the next major checkpoint.
c. Assistance in managing the initial public offering
d. NOTA
(Ans: B)

27. There is no option with the pre-IPO investors to liquidate their funds invested in a company.
a. True
b. False
(Ans: B)

28. For Qualified Institutional Placements (QIPs), issuance cost is substantially low.
a. True
b. False
(Ans: A)
29. There is no need to pass a special resolution in the Board Meeting for Preferential Allotment.
a. True
b. False
(Ans: B)

30. Generally, the underwriter bears the risk of under-subscription during the public issue.
a. True
b. False
(Ans: A)

31. A pricing mechanism for new issues based on the assessment of market demand is known as
__________.
a. Book building
b. Greenshoe option
c. Fixed price issue
d. NOTA
(Ans: A)

32. An offer document in case of a public issue is --------------.

a. Prospectus
b. Offer for Sale
c. Letter of offer
d. NOTA
(Ans: A)

33. In the case of Anand Chemicals, which has issued common and DVR shares,
a. Both have the same cash-flow rights and the same control rights.
b. Both have the same control rights but different cash-flow rights.
c. Both have the same cash-flow rights but different control rights.
d. Both have different cash-flow rights and different control rights.
(Ans: C)

34. Generally, underwriters provide the following services to the issuing firm:
a. Provide advice only.
b. Provide advice and buy some or all the new issue.
c. Provide advice and resell the issue to the public.
d. Provide advice, buy some or all the new issue, and resell the issue to the public.
(Ans: D)
35. Underwriters are typically compensated for helping a firm issue new security in the form of a
________.
a. Commission.
b. Set fee.
c. Spread.
d. None.
(Ans: C)