ECONOMICS Time: Two Hours Core 10 – Economics of Financial Markets (EC5B10U) Maximum Weight: 18
Part A (Objective type questions) Answer all questions. Weight 1 each for a bunch of four questions Choose the correct alphabet only: I. 1 Markets in which funds are transferred from those who have excess funds available to those who have a shortage of available funds are called: a Commodity markets c Derivative exchange markets 2 e The exchange rate g Stock exchange index 15 Capital market in India is regulated by: a RBI c IRDA 16 a Marketability c Transferability II 5 a f 6 Bonds Bank deposit b SEBI d SBI b Profitability d Liquidity e Mutual fund units g Insurance policy i Capital market b Fund-available markets d Financial markets f The interest rate

The price of one country’s currency in terms of another’s is called: h Export price

The characteristics of an asset which allows for the easy and quick conversion into cash:

Which of the following can be considered as a primary security?

The Market which provide short term debt financing and investment: h Money market j Stock market T-Bill k Commodity market a Commercial Paper c Bills of Exchange b IPO d Underwriting f 1988


The money market instrument which finance the short term requirements of the Government of India: b b Certificate of Deposit


A company issues common stock or shares to the public for the first time is known as: a Rights issue c Preferential issue III 9 e 1985 g 1991

The Discount and Finance House of India (DFHI) was set up in: h 1992 Turn Over

What do you understand by derivative instruments? (3 × 2 = 6) 19 20 The commercial papers issued usually by: a Government c Corporates IV 13 The financial institution. Discuss briefly about the role of DFHI. by banks or other institutions in various markets on 24 terms ranging from overnight and up to seven days notice or longer is known as: a Bill of exchange c Call money b Cheque d Treasury Bills b RBI d Commercial bank 26 27 28 29 Answer any three questions. not exceeding 150 words each Each question carries a weight of 2 What do you understand by financial systems? What are their functions? 25 What are financial securities? What are its major characteristics? Discuss on the rural money market in India Briefly explain the primary market and secondary market. Discuss about the major instruments and main participants What is NBFIs? Give an account of some of the important non-banking businesses in India with examples. not exceeding 50 words each Each question carries a weight of 1 The institution which pools the savings of relatively small investors and then converted into a welldiversified portfolio of sound investment: a Pension fund c Venture capital fund b Mutual fund d Provident fund 16 This term refers to the ability of the financial intermediaries to convert contracts with a given set of characteristics into contracts with very different features: a Liquidity c Credit creation b Transmutation effect d Credit multiplier 17 18 19 20 21 22 23 Distinguish between money market and capital market. (1 × 4 = 4) (4 × 1 = 4) Part B (Short Answer questions) Write short notes on any four questions. What do you mean by financial system? Define financial intermediaries Distinguish between life insurance and general insurance What is a venture capital fund? What are gilt edged securities? Distinguish between debenture and bond.10 The market which provide instruments for the management of financial risk: i Insurance market j Derivative market k Forex market l Money market Short-term money is lent with or without security. (4 × 1 = 4) Part C (Short Essays) . which is set up as an apex Development Bank with a mandate for facilitating credit flow for the promotion and development of rural economic activities: a RRB c RBI 14 a RRB c RBI 15 b NABARD d SEBI b NABARD d SEBI The regulatory authority to monitor and control the money market: Part C (Short Essays) Answer any one question. Discuss about the recent trends in Indian financial system. not exceeding 450 words each Each question carries a weight of 4 30 31 32 Explain money market.

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