430+ Financial Markets and Institutions Solved MCQs

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201.

Accommodation bills are also known as ..................... bills

A. kite bills
B. wind bills
C. supply bill
D. both a & b
Answer» D. both a & b
202.

Adhoc treasury bills are issued in favour of the ..................... only

A. Treasury
B. RBI
C. Commercial banks
D. State government
Answer» B. RBI
203.

..................... are short term deposits of specific maturity similar to fixed deposits.

A. commercial paper
B. Interbank participation certificate
C. Repo
D. Certificate of deposit
Answer» D. Certificate of deposit
204.

..................... is an unsecured short term promissory note issued by creditworthy companies?

A. commercial pape
B. interbank participation certificate
C. Repo
D. Certificate of deposit
Answer» A. commercial pape
205.

Discount and Finance House of India was set up in .....................

A. 1982
B. 1988
C. 1992
D. 1969
Answer» B. 1988
206.

Discount and Finance House of India was set up in pursuance of the recommendations of .....................Committee

A. Malegam
B. Malhotra
C. Vaghul
D. Narasimham
Answer» C. Vaghul
207.

..................... has been set up mainly to provide a secondary market in Govt. Securities

A. DHFI
B. OTCEI
C. STCI
D. NSDL
Answer» C. STCI
208.

Right shares are offered to.....................

A. Debenture holders
B. Existing shareholders
C. List 2 contributories
D. Liquidators
Answer» B. Existing shareholders
209.

..................... is the suitable method where small companies issue shares

A. public issue
B. placement
C. offer for sale
D. none of these
Answer» B. placement
210.

..................... is a process of admitting securities for trading on a recognised stock exchange.

A. Registration
B. filing
C. listing
D. admission
Answer» C. listing
211.

..................... is a preferential independent broker who deals in securities on his own behalf.

A. Jobber
B. sub broker
C. Remisiers
D. arbitragers
Answer» A. Jobber
212.

The facility to carry forward a transaction from one settlement period to another is known as ..................... transaction

A. Badla
B. arbitrage
C. cornering
D. trading inside
Answer» A. Badla
213.

The device adopted to make profit out of the differences in prices of a security in to different markets is called.....................

A. Cornering
B. prise rigging
C. arbitrage
D. margin trading
Answer» C. arbitrage
214.

The central depositary ..................... the security on behalf of the investors

A. Hold
B. transfer
C. both a & b above
D. none of these
Answer» C. both a & b above
215.

..................... of shares in the first step in the depository process

A. Registration
B. Listing
C. Rematting
D. immobilisation
Answer» D. immobilisation
216.

. ..................... is the link between the depository and the owner

A. Agent
B. Depository participant
C. Beneficiary
D. Broker
Answer» B. Depository participant
217.

..................... issues does not bring in any fresh capital

A. equity
B. preference
C. debenture
D. bonus
Answer» D. bonus
218.

Prospectus is not issued in

A. public issue
B. private placement
C. right issue
D. none the above
Answer» B. private placement
219.

An issuer need not file an offer document in case of

A. public issue
B. preferential allotment
C. right issue
D. bought out deal
Answer» B. preferential allotment
220.

An issuer can launch an IPO within.....................

A. 3 months
B. 6 months
C. 9 months
D. one year
Answer» B. 6 months
221.

An issue of a minimum size of Rs. ..................... crore is a mega issue

A. 50
B. 100
C. 150
D. 300
Answer» B. 100
222.

Financial institutions are also known as ........................

A. Financial organisation
B. Financial intermediaries
C. Financial system
D. Any of the above
Answer» B. Financial intermediaries
223.

........................ is the first development financial institution in India.

A. IDBI
B. ICICI
C. IFCI
D. RBI
Answer» C. IFCI
224.

Management Development Institute (MDI) was set up by ........................

A. IDBI
B. ICICI
C. IFCI
D. SEBI
Answer» C. IFCI
225.

IDBI was established in ........................

A. 1948
B. 1954
C. 1992
D. 1964
Answer» D. 1964
226.

........................ is an apex institution to coordinate, supplement and integrate the activities of all existing specialised financial institutions.

A. IFCI
B. IDBI
C. RBI
D. SEBI
Answer» B. IDBI
227.

Hedging through futures contracts

A. increases risk of loss if prices fall
B. eliminates profit maximization potential
C. is considered to be speculative in nature
D. all of the above
Answer» B. eliminates profit maximization potential
228.

In what city are the two largest commodities exchanges?

A. Chicago
B. New York
C. Kansas City
D. Minneapolis
Answer» A. Chicago
229.

The financial futures market has evolved over recent time because of

A. volatility and risk in the foreign exchange markets
B. volatility of interest rates
C. appeal to speculators due to low margin requirements
D. all of the above
Answer» D. all of the above
230.

While hedging through interest rate futures reduces or eliminates the risk of loss, it also

A. is illegal in some cases.
B. has not been accepted by most corporate financial managers.
C. eliminates the possibility of an abnormal gain.
D. none of the above.
Answer» C. eliminates the possibility of an abnormal gain.
231.

Margin requirements on commodities contracts

A. are much higher than those on common stock transactions.
B. vary over time and even among exchanges for a given commodity.
C. typically, are 2 to 10 percent of the value of the contract.
D. none of the above are true.
Answer» C. typically, are 2 to 10 percent of the value of the contract.
232.

Which of the following can be the underlying for a commodity derivative contract?

A. Interest Rate
B. Euro-Indian Rupee
C. Gold
D. NIFTY
Answer» C. Gold
233.

Daily mark to market settlement is done ------------

A. Till the date of contract expiry
B. As long as the contract makes a loss
C. On the last day of week
D. On the last trading day of the month
Answer» A. Till the date of contract expiry
234.

----------is the actual process of exchanging money and goods.

A. Transfer
B. Settlement
C. Netting
D. Clearing
Answer» B. Settlement
235.

-----------work at making profits by taking advantage of discrepancy between prices of the same product across different markets.

A. Arbitragers
B. Speculators
C. Exchange
D. Hedgers
Answer» A. Arbitragers
236.

Commodity exchanges enable producers and consumer to hedge their -----------given the uncertainty of the future.

A. seasonal risk
B. profit risk
C. production risk
D. price risk
Answer» D. price risk
237.

Which of the following is not true about the national level exchanges?

A. Offers online trading
B. Recognised on permanent basis
C. Offers single commodity for trading
D. Volumes higher than regional exchanges
Answer» C. Offers single commodity for trading
238.

----------- Exchanges provide real time, online, transparent and vibrant spot platform for commodities.

A. Electronic Spot
B. Regional
C. Futures
D. Stock
Answer» A. Electronic Spot
239.

----------can only trade through their account or on account of their clients and however clear their trade through PCMs/STCMs.

A. Trading cum Clearing Member
B. Trading Member
C. Commodity Participant
D. Associate Member
Answer» B. Trading Member
240.

The minimum net worth requirement for PCM on the NCDEX is-----------.

A. 50 Lakh
B. 500 Lakh
C. 5000 Lakh
D. 5 Lakh
Answer» C. 5000 Lakh
241.

Members of commodity market can opt to meet the security deposit requirement by way of -- ---------

A. Cash
B. Bank Guarantee
C. Fixed Deposit Receipts
D. All of the above
Answer» D. All of the above
242.

In the case of certain commodities like gold and silver, delivery is staggered over last ------ days of the contract.

A. Two
B. Three
C. Five
D. Thirteen
Answer» C. Five
243.

Unit of trading for Wheat at NCDEX is---------

A. 1 MT
B. 3 MT
C. 1 kg
D. 10 MT
Answer» D. 10 MT
244.

At present how many national commodity exchanges are operating in India?

A. 8
B. 7
C. 6
D. 10
Answer» C. 6
245.

Regulatory body of commodity market in India is-------------

A. FMC
B. NCX
C. ICE
D. ICRA
Answer» A. FMC
246.

Forward Market Commission (FMC) established in the year-----------

A. 1948
B. 1964
C. 1953
D. 1952
Answer» C. 1953
247.

FMC merged with SEBI in the year------------

A. 1994
B. 2008
C. 2015
D. 2016
Answer» C. 2015
248.

The year of establishment of National Multi- Commodity Exchange (NMCE) was---------

A. 2002
B. 2003
C. 2004
D. 2005
Answer» A. 2002
249.

The Headquarters of NMCE is -------------

A. New Delhi
B. Ahmedabad
C. Mumbai
D. Calcutta
Answer» B. Ahmedabad
250.

-----------is the world’s largest exchange in silver and gold

A. NMCE
B. MCX
C. ICEX
D. NCDEX
Answer» B. MCX
251.

---------------holds 86% market share of commodity exchange in India

A. NMCE
B. MCX
C. ICEX
D. NCDEX
Answer» B. MCX
252.

Headquarters of Multi Commodity Exchange in India (MCX) is ----------

A. New Delhi
B. Ahmedabad
C. Mumbai
D. Calcutta
Answer» C. Mumbai
253.

NCDEX stands for-------------------

A. National Commodity Development Exchange
B. National Commodity and Derivatives Exchange
C. Natural Commodity and Development Exchange
D. None of these
Answer» B. National Commodity and Derivatives Exchange
254.

In ------------ NSE and BSE launched trading in commodities.

A. 2016
B. 2017
C. 2018
D. 2015
Answer» C. 2018
255.

The oldest Commodity market in India is---------

A. NMCE
B. MCX
C. ICEX
D. NCDEX
Answer» A. NMCE
256.

In the year 2018 NMCE merged with -----------

A. UCX
B. MCX
C. ICEX
D. NCDEX
Answer» C. ICEX
257.

ACE Derivatives Exchange Ltd is the commodity exchange developed in---------

A. America
B. Australia
C. Afghanistan
D. None of these
Answer» D. None of these
258.

Which of the following statements is false?

A. A bond issuer must pay periodic interest.
B. Bond prices remain fixed over time.
C. Bonds carry no corporate ownership privileges.
D. A bond is a financial contract.
Answer» B. Bond prices remain fixed over time.
259.

Which of the following statements is true?

A. Low inflation is expected to have a negative effect on bond prices.
B. Generally speaking, bonds are riskier than common stocks.
C. Bonds are usually less liquid than stocks.
D. A bondholder repays principal when the bond matures.
Answer» C. Bonds are usually less liquid than stocks.
260.

Most bonds:

A. are money market securities.
B. give bondholders a voice in the affairs of the corporation.
C. are interest-bearing obligations of governments or corporations.
D. are floating-rate securities.
Answer» C. are interest-bearing obligations of governments or corporations.
261.

Which of the following is not an advantage of investing in bonds?

A. Bonds have unlimited profit potential.
B. Bond investments are relatively safe from large losses.
C. Bonds are good sources of current income.
D. Bondholders receive their payments before shareholders can be compensated.
Answer» A. Bonds have unlimited profit potential.
262.

Which of the following is a capital market security?

A. Treasury bills.
B. Federal funds.
C. Federal agency bonds.
D. Eurodollars.
Answer» C. Federal agency bonds.
263.

Which of the following is a money market security?

A. Repurchase agreements.
B. Municipal bonds.
C. Mortgages.
D. U.S. Treasury notes.
Answer» A. Repurchase agreements.
264.

Corporations borrow for the short term by issuing:

A. corporate bills.
B. corporate bonds.
C. commercial paper.
D. bankers’ acceptances.
Answer» C. commercial paper.
265.

What is used to quote the rates on Eurodollar deposits?

A. Discount rate.
B. Federal funds rate.
C. Repo rate.
D. LIBOR.
Answer» D. LIBOR.
266.

Which of the following provides income that is fully exempt from taxation for the individual investor?

A. Municipal bonds.
B. Preferred stocks.
C. Treasury notes.
D. Treasury bills.
Answer» A. Municipal bonds.
267.

Which of the following is a residual claim on a firm’s assets?

A. Preferred stock.
B. Common stock.
C. Preference shares.
D. Participating preferred stock.
Answer» B. Common stock.
268.

Which of the following occurs four trading days before the date of record?

A. Distribution date.
B. Payment date.
C. Declaration date.
D. Ex-dividend date.
Answer» D. Ex-dividend date.
269.

Which of the following types of assets is least risky?

A. Short-term corporate bonds
B. Long-term corporate bonds.
C. Stocks.
D. Options and futures.
Answer» A. Short-term corporate bonds
270.

Which of the following types of assets offers the highest expected return?

A. Stocks.
B. Long-term government bonds.
C. Options and futures.
D. Long-term corporate bonds.
Answer» A. Stocks.
271.

Which of the following types of financial assets represents a creditor relationship with an entity?

A. Stocks.
B. Options.
C. Futures.
D. Bonds.
Answer» D. Bonds.
272.

Which of the following sequences lists financial assets from least risky to most risky?

A. Stocks, bonds, derivatives.
B. Bonds, derivatives, stocks.
C. Derivatives, bonds, stocks.
D. Bonds, stocks, derivatives.
Answer» D. Bonds, stocks, derivatives.
273.

Which of the following sequences lists financial assets from lowest expected return to highest expected return?

A. Bonds, stocks, derivatives.
B. Bonds, derivatives, stocks.
C. Stocks, bonds, derivatives.
D. Derivatives, stocks, bonds.
Answer» A. Bonds, stocks, derivatives.
274.

Which of the following types of assets represents ownership interest in a corporation?

A. Bonds
B. Stocks.
C. Futures.
D. Options.
Answer» B. Stocks.
275.

Financial assets are also called:

A. securities.
B. real assets.
C. tangible assets.
D. physical assets.
Answer» A. securities.
276.

If people are willing to lend at 7% when inflation is 2% and continue to lend the same amounts when inflation is 4% and interest rates have risen to 8%, they are assumed to be subject to:

A. Extrapolative expectations
B. Risk aversion
C. Asymmetric information
D. Money illusion
Answer» D. Money illusion
277.

The reason that finding the present value of a future sum of money requires us to discount it, is that:

A. Inflation will reduce its purchasing power
B. We can’t be certain of receiving it
C. We don’t know when we shall receive it
D. Waiting deprives us of its use
Answer» D. Waiting deprives us of its use
278.

If interest rates rise, the present value of any future earnings is bound to:

A. Fall
B. Rise
C. Suffer from inflation
D. Increase in risk
Answer» A. Fall
279.

In the loanable fund’s theory of interest determination, an increase in the productivity of capital equipment should lead to:

A. A reduction in the amount of saving
B. More employment
C. Higher interest rates
D. Higher prices
Answer» C. Higher interest rates
280.

If savers decide to save more, ceteris paribus, the loanable funds theory predicts:

A. A reduction in investment and interest rates
B. An increase in investment and interest rates
C. Higher economic growth
D. A reduction in interest rates and more investment
Answer» D. A reduction in interest rates and more investment
281.

According to the Fisher hypothesis, the nominal rate of interest consists of:

A. A stable real rate plus a variable risk premium
B. A real rate plus a liquidity premium plus a risk premium
C. A stable real rate plus a variable inflation premium
D. An inflation premium plus a liquidity premium
Answer» C. A stable real rate plus a variable inflation premium
282.

According to the liquidity preference theory of interest, an increase in uncertainty, other things being equal, will:

A. Decrease output and employment
B. Increase risk aversion
C. Reduce the demand for money
D. Raise interest rates
Answer» D. Raise interest rates
283.

The ability of central banks to influence short-term interest rates rests upon:

A. Government policy
B. Their role as lenders of last resort
C. Their supervisory role
D. Sales of government bonds
Answer» B. Their role as lenders of last resort
284.

A central bank which sets the short-term rate of interest must:

A. Buy treasury bills
B. Meet the resulting demand for reserves
C. Sell government bonds
D. Change the reserve ratios
Answer» B. Meet the resulting demand for reserves
285.

According to --------- theory of interest, the rate of Interest is the price of credit which is determined by the demand and supply for loanable funds.

A. Loanable Fund theory
B. Productivity theory
C. Abstinence theory
D. None of these
Answer» A. Loanable Fund theory
286.

According to ------- theory interest arises on account of the productivity of capital.

A. Loanable Fund theory
B. Productivity theory
C. Abstinence theory
D. Classical theory
Answer» B. Productivity theory
287.

The Time- Preference Theory of Interest was expounded by-----------

A. John Rae
B. Alfred Marshall
C. JM Keynes
D. JB Clark
Answer» A. John Rae
288.

----------- defined Interest as “an index of the community’s preference for a dollar of present over a dollar of future income.”

A. Fisher
B. Alfred Marshall
C. JM Keynes
D. JB Clark
Answer» A. Fisher
289.

According to ---------- theory, Interest is the reward for the productive use of the capital which is equal to the marginal productivity of physical capital.

A. Loanable Fund theory
B. Productivity theory
C. Abstinence theory
D. Classical theory
Answer» D. Classical theory
290.

Loanable Fund theory is also known as-----------

A. Classical theory
B. Neo-classical theory
C. Demand and Supply theory
D. Productivity theory
Answer» B. Neo-classical theory
291.

Neo- Classical theory of interest was expounded by------------

A. Prof. Fisher
B. Alfred Marshall
C. Knot Wicksel
D. JB Clark
Answer» C. Knot Wicksel
292.

According to Keynes, Interest is purely a ‘monetary phenomenon’.

A. Fisher
B. Alfred Marshall
C. JM Keynes
D. JB Clark
Answer» C. JM Keynes
293.

Who propounded liquidity preference theory of interest?

A. Prof.Fisher
B. Alfred Marshall
C. JM Keynes
D. JB Clark
Answer» C. JM Keynes
294.

----------- is called as “Real Theory of Interest”

A. Classical theory
B. Neo-classical theory
C. Demand and Supply theory
D. Productivity theory
Answer» A. Classical theory
295.

Technical consultancy Organisations were set up by........................

A. IFCI
B. IDBI
C. RBI
D. SEBI
Answer» B. IDBI
296.

ICICI was set up in ........................

A. 1955
B. 1964
C. 1989
D. 1935
Answer» A. 1955
297.

........................ assists mainly to industrial undertakings in the private sector

A. IFCI
B. IDBI
C. ICICI
D. SEBI
Answer» C. ICICI
298.

LIC was established in........................

A. 1956
B. 1964
C. 1989
D. gcv1935
Answer» A. 1956
299.

UTI was set up in the year ........................

A. 1956
B. 1964
C. 1969
D. 1948
Answer» B. 1964
300.

................known as Brettonwood twins

A. IDBI and IFCI
B. IDBI and UTI
C. IBRD and IMF
D. RBI and SEBI
Answer» C. IBRD and IMF
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