Please refer to Financial Markets MCQ Questions Class 12 Business Studies below. These MCQ questions for Class 12 Business Studies with answers have been designed as per the latest NCERT, CBSE books, and syllabus issued for the current academic year. These objective questions for Financial Markets will help you to prepare for the exams and get more marks.
Financial Markets MCQ Questions Class 12 Business Studies
Please see solved MCQ Questions for Financial Markets in Class 12 Business Studies. All questions and answers have been prepared by expert faculty of standard 12 based on the latest examination guidelines.
MCQ Questions Class 12 Business Studies Financial Markets
Question. SEBI was established on ……..and it’s headquarter is situated at ………. .
(a) 12th April, 1988, Mumbai
(b) 12th April, 1990, Mumbai
(c) 12th May, 1988, Delhi
(d) 12th May, 1990, Delhi
Answer
A
Question. Charu is a Chartered Accountant in Prakash Ltd. During the course of meeting with directors, she came to know that as against the previous years, this year company is going to declare handsome dividend offer. It is observed that when such news becomes public then the share-market jumps up. Considering it, Charu purchased large number of company’s
shares before this news reached to public. Identify the type of malpractice used by Charu.
(a) Non-adherence of provisions
(b) Insider trading
(c) Price rigging
(d) Unofficial private placement
Answer
B
Question. Praveen has purchased treasury bills of face value of ₹ 1,00,000 at ₹ 96,000. At the time of maturity, he will get ₹ 1,00,000. How much interest is received by him?
(a) ₹ 10,000
(b) ₹ 4,000
(c) Nil
(d) None of these
Answer
B
Question. In which of the following aspects, money market is different from capital market?
(a) Participants
(b) Tenure of securities traded
(c) Liquidity of securities traded
(d) All of the above
Answer
D
Question. …….. is manipulating the market price of shares by increasing or decreasing their prices.
(a) Price rigging
(b) Insider trading
(c) Private placement
(d) Fluctuation
Answer
A
Question. Mr. X bought certain shares of Reliance Ltd. from Mr. Y and lodged them with the depository in form of a book entry. However, as per the register of members of Reliance Ltd., Mr. Y is still the owner of those shares. In such a situation, Mr. X would be known as
(a) Registered owner
(b) Holder of shares
(c) Beneficial owner
(d) None of these
Answer
C
Question. Which of the following is a depository formed for the purpose of ensuring free transferability of securities in India?
(a) NSDL
(b) RBI
(c) SEBI
(d) None of these
Answer
A
Question. For the following two statements, choose the correct option.
Statement I Wholesale debt market provides an efficient and transparent platform for trading in equity, preference, debentures, exchange traded funds as well as retail government securities.
Statement II Commercial paper is issued by large creditworthy companies to raise short-term funds at lower rates of interest.
Alternatives
(a) Statement I is correct and Statement II is wrong
(b) Statement II is correct and Statement I is wrong
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
B
Question. Which money market instrument is available for a minimum amount of ₹ 25,000?
(a) Treasury bill
(b) Commercial papers
(c) Call money
(d) Commercial bill
Answer
A
Question. ABC Ltd. issued prospectus for subscription of its shares for ₹ 500 crore in 2018. The issue was over subscribed by 20 times. The company issued shares to all the applicants on pro-rata basis. Later, SEBI inspected the prospectus and found some misleading statement about the management of the company in it. SEBI imposed a penalty of ₹ 5 crore and banned its three executive directors for dealing in securities market for 3 years. Which function is performed by SEBI in above case?
(a) Development function
(b) Regulatory function
(c) Protective function
(d) Controlling function
Answer
C
Question. In primary market, first time issue of shares to be publicly traded in stock markets is considered as
(a) traded offering
(b) public markets
(c) issuance offering
(d) initial public offering
Answer
D
Question. Under which of the following methods, securities are not issued directly to the public, but are offered through intermediaries like issuing houses or stock brokers?
(a) Offer through prospectus
(b) Offer for sale
(c) Private placement
(d) e-IPO
Answer
B
Question. For the following two statements, choose the correct option.
Statement I It is generally accepted that an exact degree of speculation is necessary to ensure liquidity and price discontinuity in the stock market.
Statement II Financial market facilitates easy purchase and sale of financial assets.
Alternatives
(a) Statement I is correct and Statement II is wrong
(b) Statement II is correct and Statement I is wrong
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
B
Question. These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed the most. To give strength to the economy, SEBI is undertaking measures to develop the capital market. These markets help the savers and investors in directing the available fund into their most productive investment opportunity. Which function is being performed by the market in above case?
(a) Providing liquidity to financial assets
(b) Facilitating price discovery
(c) Reducing the cost of transactions
(d) Mobilisation of saving and channelising them into most productive uses
Answer
D
Question. Mr. A, an existing shareholder of a company is offered the ‘right’ to buy new shares in proportion to the number of shares, he already possess. This kind of issue is known as
(a) Offer through sale
(b) e-IPOs
(c) Private placement
(d) Right issue
Answer
D
Question. Sika Ltd., a reputed industrial machines manufacturer, need `20 crore as additional capital to expand the business. The finance manager, Mr. Narinder Singh, suggested that the shares may be sold to investing public through intermediaries, as the same will be less expensive. Name the method through which the company decided to raise additional capital.
(a) Private placement
(b) Offer for sale
(c) Offer through prospectus
(d) None of the above
Answer
B
Question. In case of an IPO, who coordinates with all the intermediaries connected with the issue?
(a) Issuing house
(b) Managing director
(c) Chief financial officer
(d) Lead manager
Answer
D
Question. It is issued by large creditworthy companies to raise short-term funds at lower rates of interest than the market rate. Which type of money market instrument it is?
(a) Call money
(b) Commercial paper
(c) Certificate of deposit
(d) Treasury-bill
Answer
B
Question. The ABC Ltd. wants to raise ₹ 500 crore to fulfill its expansion plans by issue of equity shares. Identify the market, ABC Ltd. will look for raising funds.
(a) Primary market
(b) Secondary market
(c) Both (a) and (b)
(d) None of these
Answer
A
Question. Funds raised through commercial paper are used to meet the flotation costs which is termed as ……. .
(a) Equity financing
(b) Bridge financing
(c) Debt financing
(d) None of the above
Answer
B
Assertion–Reasoning MCQs :
Question. Assertion (A) Depository holds securities in electronic form.
Reason (R)Depository is formed for the purpose of free transferability of securities with speed, accuracy and security.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
A
Question. Assertion (A) Financial market refers to the system consisting of financial institutions, financial instruments, regulatory bodies and organisations.
Reason (R) Shares, bonds and debentures are financial instruments.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
B
Question. Assertion (A) Private placement is the allotment of securities by a company to institutional investors and selected individuals.
Reason (R) Primary market is expensive, so companies prefer to choose private placement.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
A
Question. Assertion (A) Dematerialisation is the process by which physical form of securities are converted into electronic form.
Reason (R) SEBI’s main purpose is to keep a check on malpractices and to protect the interest of investors.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
B
Question. Assertion (A) Financial market reduces the cost of transactions.
Reason (R) Financial market helps in saving time effort and money of buyers by providing them valuable information.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
A
Question. Assertion (A) Primary market is also known as the new issues market.
Reason (R) Primary market deals with the securities already traded in market.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
C
Question. Assertion (A) Money market economises use of cash.
Reason (R) Money market deals with financial instruments that are close substitutes of money.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
A
Case Based MCQs :
Direction Read the following text and answer the question no. (i) to (vi) on the basis of the same.
Deepak, the CEO of a company, thinks of going with the most popular method of raising funds used by the public companies. He discussed, this option with his immediate subordinates. After discussion, he realises that since his company is a private company, he should think of some other options. Then he thought of issuing the securities through intermediaries like issuing houses or stock brokers. When his nephew comes to know about his decision, he decides to suggest his uncle another way. His nephew advices him to involve institutional investors which will help him raise funds more quickly and reduce many mandatory and non-mandatory expenses. After a lot of discussion, the option suggested by his nephew is
choosen as final.
Question. In which type of capital market, trading of only existing shares is done?
(a) Secondary market
(b) Primary market
(c) Call money market
(d) None of these
Answer
A
Question. In the above case, identify which method of flotation is not highlighted?
(a) Offer through prospectus
(b) Offer for sale
(c) Private placement
(d) Right issue
Answer
D
Question. Which method will be applicable in the primary market?
(a) Private placement
(b) Offer through prospectus
(c) Right issue
(d) e-IPO
Answer
B
Question. Identify the flotation of new issues in the primary market being discussed by the nephew.
(a) Private placement
(b) Offer for sale
(c) Right issue
(d) Offer through prospectus
Answer
A
Question. In which type of capital market only buying of securities is possible as securities can’t be sold here?
(a) Money market
(b) Capital market
(c) Financial market
(d) Primary market
Answer
D
Question. Which type of capital market doesn’t have fixed geographical location?
(a) Primary market
(b) Secondary market
(c) Both (a) and (b)
(d) None of these
Answer
A
Direction Read the following text and answer the question no. (i) to (vi) on the basis of the same.
ISQAA Solar Limited is searching options to raise ₹ 20,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned
financial consultancy firm, Dhan Laxmi Pvt. Ltd. for suggesting options for the same. Dhan Laxmi Pvt. Ltd. suggested a list of options to the board of directors. It was decided that for the immediate requirement of ₹ 1,500 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company ₹ 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of investing subscription from the public by making a direct appeal to investors to raise capital.
It was further decided to raise capital to the tune of ₹ 6,000 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise ₹ 8,000 crores through the online system of the stock exchange by entering into an agreement with the exchange.
Question. “It was decided that for immediate ……… according to the terms and conditions of the company.” Identify the method of flotation of new issues in the primary market being iscussed above, which the company has decided to use.
(a) Offer for sale
(b) Right issue
(c) Offer through prospectus
(d) e-IPOs
Answer
B
Question. Identify the method of flotation of new issues in the primary market, not taken up by Isqaa Solar Ltd.
(a) Offer for sale
(b) Right issue
(c) E-IPO
(d) Offer through prospectus
Answer
D
Question. “ ₹ 4,500 crores would be raised …….. investors to raise capital.” Identify the method of flotation of new issues in the primary market being discussed above, which the company has decided to use.
(a) Offer for sale
(b) Private placement
(c) Right issue
(d) Offer through prospectus
Answer
B
Question. Which market instrument(s) is/are discussed in the given case?
(a) Capital market
(b) Money market
(c) Both (a) and
(b) (d)None of these
Answer
A
Question. Identify the reason which has made the firm raise funds from the institutional investors.
(a) It helps to raise funds quickly
(b) It is not expensive
(c) Both (a) and (b)
(d) None of the above
Answer
C
Question. How much money was raised by company through E-IPOs?
(a) ₹ 8,000 crores
(b) ₹ 4,500 crores
(c) ₹ 20,000 crores
(d) ₹ 6,000 crores
Answer
A
Direction Read the following text and answer the question no. (i) to (vi) on the basis of the same.
Deepa’s grandfather was unwell. He called Deepa and gave her a box containing cash and certain papers which were crumbled. He saw them carefully and found that these were share
certificates. Deepa now wants to know the process through which she can trade in these shares. She also learnt about the trading procedure and got to know about SEBI as well.
She told her friend Rekha, “SEBI regularly inspects the various elements of trading and also conducts the broker’s enquiries. SEBI also promotes fair trade practices for investor protection. It also controls insider trading and impose penalties in case of such malpractices.” She also told her friend about many instruments such as commercial papers or bills which are not traded on stock exchanges.
Question. Which function is highlighted in the lines, ‘‘SEBI regularly inspects ………. enquiries”?
(a) Protective
(b) Developmental
(c) Regulatory
(d) None of these
Answer
C
Question. What is the full form of SEBI?
(a) Securities and Earning Board of India
(b) Securities and Exchange Board of India
(c) Safety and Exchange Board of India
(d) Safety and Earning Board of India
Answer
B
Question. Which process would have been done by Deepa to facilitate trading?
(a) Demutualisation
(b) Remutualisation
(c) Dematerialisation
(d) Rematerialisation
Answer
C
Question. Which function is highlighted in the lines, ‘‘SEBI also promotes ………. malpractices”?
(a) Protective
(b) Developmental
(c) Regulatory
(d) None of these
Answer
A
Question. Which market instruments are discussed in the lines, “She also told her friend …….. on stock exchanges”?
(a) Stock market
(b) Capital market
(c) Money market
(d) Both (b) and (c)
Answer
C
Question. Which of the following function is not performed in above case by SEBI?
(a) Protective
(b)Developmental
(c) Regulatory
(d) None of these
Question. SEBI was established on ……..and it’s headquarter is situated at ………. .
(a) 12th April, 1988, Mumbai
(b) 12th April, 1990, Mumbai
(c) 12th May, 1988, Delhi
(d) 12th May, 1990, Delhi
Answer
A
Question. Charu is a Chartered Accountant in Prakash Ltd. During the course of meeting with directors, she came to know that as against the previous years, this year company is going to declare handsome dividend offer. It is observed that when such news becomes public then the share-market jumps up. Considering it, Charu purchased large number of company’s
shares before this news reached to public. Identify the type of malpractice used by Charu.
(a) Non-adherence of provisions
(b) Insider trading
(c) Price rigging
(d) Unofficial private placement
Answer
B
Question. Praveen has purchased treasury bills of face value of ₹ 1,00,000 at ₹ 96,000. At the time of maturity, he will get ₹ 1,00,000. How much interest is received by him?
(a) ₹ 10,000
(b) ₹ 4,000
(c) Nil
(d) None of these
Answer
B
Question. In which of the following aspects, money market is different from capital market?
(a) Participants
(b) Tenure of securities traded
(c) Liquidity of securities traded
(d) All of the above
Answer
D
Question. …….. is manipulating the market price of shares by increasing or decreasing their prices.
(a) Price rigging
(b) Insider trading
(c) Private placement
(d) Fluctuation
Answer
A
Question. Mr. X bought certain shares of Reliance Ltd. from Mr. Y and lodged them with the depository in form of a book entry. However, as per the register of members of Reliance Ltd., Mr. Y is still the owner of those shares. In such a situation, Mr. X would be known as
(a) Registered owner
(b) Holder of shares
(c) Beneficial owner
(d) None of these
Answer
C
Question. Which of the following is a depository formed for the purpose of ensuring free transferability of securities in India?
(a) NSDL
(b) RBI
(c) SEBI
(d) None of these
Answer
A
Question. For the following two statements, choose the correct option.
Statement I Wholesale debt market provides an efficient and transparent platform for trading in equity, preference, debentures, exchange traded funds as well as retail government securities.
Statement II Commercial paper is issued by large creditworthy companies to raise short-term funds at lower rates of interest.
Alternatives
(a) Statement I is correct and Statement II is wrong
(b) Statement II is correct and Statement I is wrong
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
B
Question. Which money market instrument is available for a minimum amount of ₹ 25,000?
(a) Treasury bill
(b) Commercial papers
(c) Call money
(d) Commercial bill
Answer
A
Question. ABC Ltd. issued prospectus for subscription of its shares for ₹ 500 crore in 2018. The issue was over subscribed by 20 times. The company issued shares to all the applicants on pro-rata basis. Later, SEBI inspected the prospectus and found some misleading statement about the management of the company in it. SEBI imposed a penalty of ₹ 5 crore and banned its three executive directors for dealing in securities market for 3 years. Which function is performed by SEBI in above case?
(a) Development function
(b) Regulatory function
(c) Protective function
(d) Controlling function
Answer
C
Question. In primary market, first time issue of shares to be publicly traded in stock markets is considered as
(a) traded offering
(b) public markets
(c) issuance offering
(d) initial public offering
Answer
D
Question. Under which of the following methods, securities are not issued directly to the public, but are offered through intermediaries like issuing houses or stock brokers?
(a) Offer through prospectus
(b) Offer for sale
(c) Private placement
(d) e-IPO
Answer
B
Question. For the following two statements, choose the correct option.
Statement I It is generally accepted that an exact degree of speculation is necessary to ensure liquidity and price discontinuity in the stock market.
Statement II Financial market facilitates easy purchase and sale of financial assets.
Alternatives
(a) Statement I is correct and Statement II is wrong
(b) Statement II is correct and Statement I is wrong
(c) Both the statements are correct
(d) Both the statements are incorrect
Answer
B
Question. These days, the development of a country is also judged by its system of transferring finance from the sector where it is in surplus to the sector where it is needed the most. To give strength to the economy, SEBI is undertaking measures to develop the capital market. These markets help the savers and investors in directing the available fund into their most productive investment opportunity. Which function is being performed by the market in above case?
(a) Providing liquidity to financial assets
(b) Facilitating price discovery
(c) Reducing the cost of transactions
(d) Mobilisation of saving and channelising them into most productive uses
Answer
D
Question. Mr. A, an existing shareholder of a company is offered the ‘right’ to buy new shares in proportion to the number of shares, he already possess. This kind of issue is known as
(a) Offer through sale
(b) e-IPOs
(c) Private placement
(d) Right issue
Answer
D
Question. Sika Ltd., a reputed industrial machines manufacturer, need `20 crore as additional capital to expand the business. The finance manager, Mr. Narinder Singh, suggested that the shares may be sold to investing public through intermediaries, as the same will be less expensive. Name the method through which the company decided to raise additional capital.
(a) Private placement
(b) Offer for sale
(c) Offer through prospectus
(d) None of the above
Answer
B
Question. In case of an IPO, who coordinates with all the intermediaries connected with the issue?
(a) Issuing house
(b) Managing director
(c) Chief financial officer
(d) Lead manager
Answer
D
Question. It is issued by large creditworthy companies to raise short-term funds at lower rates of interest than the market rate. Which type of money market instrument it is?
(a) Call money
(b) Commercial paper
(c) Certificate of deposit
(d) Treasury-bill
Answer
B
Question. The ABC Ltd. wants to raise ₹ 500 crore to fulfill its expansion plans by issue of equity shares. Identify the market, ABC Ltd. will look for raising funds.
(a) Primary market
(b) Secondary market
(c) Both (a) and (b)
(d) None of these
Answer
A
Question. Funds raised through commercial paper are used to meet the flotation costs which is termed as ……. .
(a) Equity financing
(b) Bridge financing
(c) Debt financing
(d) None of the above
Answer
B
Assertion–Reasoning MCQs :
Question. Assertion (A) Depository holds securities in electronic form.
Reason (R)Depository is formed for the purpose of free transferability of securities with speed, accuracy and security.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
A
Question. Assertion (A) Financial market refers to the system consisting of financial institutions, financial instruments, regulatory bodies and organisations.
Reason (R) Shares, bonds and debentures are financial instruments.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
B
Question. Assertion (A) Private placement is the allotment of securities by a company to institutional investors and selected individuals.
Reason (R) Primary market is expensive, so companies prefer to choose private placement.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
A
Question. Assertion (A) Dematerialisation is the process by which physical form of securities are converted into electronic form.
Reason (R) SEBI’s main purpose is to keep a check on malpractices and to protect the interest of investors.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
B
Question. Assertion (A) Financial market reduces the cost of transactions.
Reason (R) Financial market helps in saving time effort and money of buyers by providing them valuable information.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
A
Question. Assertion (A) Primary market is also known as the new issues market.
Reason (R) Primary market deals with the securities already traded in market.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
C
Question. Assertion (A) Money market economises use of cash.
Reason (R) Money market deals with financial instruments that are close substitutes of money.
(a) Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A)
(b) Both Assertion (A) and Reason (R) are true, but Reason (R) is not the correct explanation of Assertion (A)
(c) Assertion (A) is true, but Reason (R) is false
(d) Assertion (A) is false, but Reason (R) is true
Answer
A
Case Based MCQs :
Direction Read the following text and answer the question no. (i) to (vi) on the basis of the same.
Deepak, the CEO of a company, thinks of going with the most popular method of raising funds used by the public companies. He discussed, this option with his immediate subordinates. After discussion, he realises that since his company is a private company, he should think of some other options. Then he thought of issuing the securities through intermediaries like issuing houses or stock brokers. When his nephew comes to know about his decision, he decides to suggest his uncle another way. His nephew advices him to involve institutional investors which will help him raise funds more quickly and reduce many mandatory and non-mandatory expenses. After a lot of discussion, the option suggested by his nephew is
choosen as final.
Question. In which type of capital market, trading of only existing shares is done?
(a) Secondary market
(b) Primary market
(c) Call money market
(d) None of these
Answer
A
Question. In the above case, identify which method of flotation is not highlighted?
(a) Offer through prospectus
(b) Offer for sale
(c) Private placement
(d) Right issue
Answer
D
Question. Which method will be applicable in the primary market?
(a) Private placement
(b) Offer through prospectus
(c) Right issue
(d) e-IPO
Answer
B
Question. Identify the flotation of new issues in the primary market being discussed by the nephew.
(a) Private placement
(b) Offer for sale
(c) Right issue
(d) Offer through prospectus
Answer
A
Question. In which type of capital market only buying of securities is possible as securities can’t be sold here?
(a) Money market
(b) Capital market
(c) Financial market
(d) Primary market
Answer
D
Question. Which type of capital market doesn’t have fixed geographical location?
(a) Primary market
(b) Secondary market
(c) Both (a) and (b)
(d) None of these
Answer
A
Direction Read the following text and answer the question no. (i) to (vi) on the basis of the same.
ISQAA Solar Limited is searching options to raise ₹ 20,000 crores from the primary market for diversification and modernisation of existing projects. It hired the services of a renowned
financial consultancy firm, Dhan Laxmi Pvt. Ltd. for suggesting options for the same. Dhan Laxmi Pvt. Ltd. suggested a list of options to the board of directors. It was decided that for the immediate requirement of ₹ 1,500 crores, the company will give a privilege to existing shareholders to subscribe to a new issue of shares according to the terms and conditions of the company ₹ 4,500 crores would be raised by allotment of securities to a consortium of financial institutions, instead of investing subscription from the public by making a direct appeal to investors to raise capital.
It was further decided to raise capital to the tune of ₹ 6,000 crores through an issuing house. All these options were accepted by the Board of Directors. The Board further decided to raise ₹ 8,000 crores through the online system of the stock exchange by entering into an agreement with the exchange.
Question. “It was decided that for immediate ……… according to the terms and conditions of the company.” Identify the method of flotation of new issues in the primary market being iscussed above, which the company has decided to use.
(a) Offer for sale
(b) Right issue
(c) Offer through prospectus
(d) e-IPOs
Answer
B
Question. Identify the method of flotation of new issues in the primary market, not taken up by Isqaa Solar Ltd.
(a) Offer for sale
(b) Right issue
(c) E-IPO
(d) Offer through prospectus
Answer
D
Question. “ ₹ 4,500 crores would be raised …….. investors to raise capital.” Identify the method of flotation of new issues in the primary market being discussed above, which the company has decided to use.
(a) Offer for sale
(b) Private placement
(c) Right issue
(d) Offer through prospectus
Answer
B
Question. Which market instrument(s) is/are discussed in the given case?
(a) Capital market
(b) Money market
(c) Both (a) and
(b) (d)None of these
Answer
A
Question. Identify the reason which has made the firm raise funds from the institutional investors.
(a) It helps to raise funds quickly
(b) It is not expensive
(c) Both (a) and (b)
(d) None of the above
Answer
C
Question. How much money was raised by company through E-IPOs?
(a) ₹ 8,000 crores
(b) ₹ 4,500 crores
(c) ₹ 20,000 crores
(d) ₹ 6,000 crores
Answer
A
Direction Read the following text and answer the question no. (i) to (vi) on the basis of the same.
Deepa’s grandfather was unwell. He called Deepa and gave her a box containing cash and certain papers which were crumbled. He saw them carefully and found that these were share
certificates. Deepa now wants to know the process through which she can trade in these shares. She also learnt about the trading procedure and got to know about SEBI as well.
She told her friend Rekha, “SEBI regularly inspects the various elements of trading and also conducts the broker’s enquiries. SEBI also promotes fair trade practices for investor protection. It also controls insider trading and impose penalties in case of such malpractices.” She also told her friend about many instruments such as commercial papers or bills which are not traded on stock exchanges.
Question. Which function is highlighted in the lines, ‘‘SEBI regularly inspects ………. enquiries”?
(a) Protective
(b) Developmental
(c) Regulatory
(d) None of these
Answer
C
Question. What is the full form of SEBI?
(a) Securities and Earning Board of India
(b) Securities and Exchange Board of India
(c) Safety and Exchange Board of India
(d) Safety and Earning Board of India
Answer
B
Question. Which process would have been done by Deepa to facilitate trading?
(a) Demutualisation
(b) Remutualisation
(c) Dematerialisation
(d) Rematerialisation
Answer
C
Question. Which function is highlighted in the lines, ‘‘SEBI also promotes ………. malpractices”?
(a) Protective
(b) Developmental
(c) Regulatory
(d) None of these
Answer
A
Question. Which market instruments are discussed in the lines, “She also told her friend …….. on stock exchanges”?
(a) Stock market
(b) Capital market
(c) Money market
(d) Both (b) and (c)
Answer
C
Question. Which of the following function is not performed in above case by SEBI?
(a) Protective
(b)Developmental
(c) Regulatory
(d) None of these
Answer
B
