This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 11 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 11 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following is the supply side of finance? A) Financial Institutions. B) Insurance Companies. C) Financial Institutions and Insurance Companies. D) Industry. Show Answer Correct Answer: C) Financial Institutions and Insurance Companies. 2. Which of the following can be described as involving indirect finance? A) A corporation takes out loans from a bank. B) A corporation buys commercial paper in a secondary market. C) People buy shares in a mutual fund. D) All three choices provided. Show Answer Correct Answer: D) All three choices provided. 3. For a given return on assets, the lower is bank capital A) The lower the possibility of bank failure. B) The lower is the credit risk for the owners of the bank. C) The higher is the return for the owners of the bank. D) The lower is the return for the owners of the bank. Show Answer Correct Answer: C) The higher is the return for the owners of the bank. 4. In a business scenario, a company decides to reduce its financial risks by distributing the cost/consequences among several shareholders. What is this method called? A) Risk Sharing. B) Bond Market. C) Equity Sharing. D) Liquidity. Show Answer Correct Answer: A) Risk Sharing. 5. What role do financial markets play in the global economy? A) They play a crucial role in the global economy. B) They have a minor influence on the global economy. C) They are only relevant to specific industries. D) They have no impact on the global economy. Show Answer Correct Answer: A) They play a crucial role in the global economy. 6. How many banks are part of the Bank Nifty index? A) 10. B) 30. C) 12. D) 50. Show Answer Correct Answer: C) 12. 7. What is the money an investor receives above & beyond the money initially invested called? A) Liquidity. B) Retrograde. C) Return. D) Savings. Show Answer Correct Answer: C) Return. 8. Type of bonds that pay coupon interest are classified as A) Payment bonds. B) Interest bonds. C) Coupon bond. D) Forward bond. Show Answer Correct Answer: C) Coupon bond. 9. The types of assets being traded, identified as 'Hard' and 'soft' are representative of ..... market A) Derivative. B) Commodity. C) Share. D) None of the listed options. Show Answer Correct Answer: B) Commodity. 10. The short term financial instruments traded in money market is commonly called A) Call Money. B) Certificate of deposits. C) Commercial paper. D) Trade bills. Show Answer Correct Answer: C) Commercial paper. 11. WHEN NOMINAL INTEREST RATE IS ADJUSTED FOR INFLATION WE GET A) REAL INTEREST RATE. B) COUPON INTERST RATE. C) All the above. D) None of the above. Show Answer Correct Answer: A) REAL INTEREST RATE. 12. Which of the following would NOT be a way to increase the return on equity? A) Buy back bank stock. B) Pay higher dividends. C) Acquire new funds by selling negotiable CDs and increase assets with them. D) Sell more bank stock. Show Answer Correct Answer: D) Sell more bank stock. 13. Imagine you are a stock trader. You are trading in a market where you can place your orders at any time when the market is open. Buyers and sellers continuously place their orders and these orders are matched on a continuous basis. What type of market are you trading in? A) Continuous Market. B) Financial Market. C) Bond Market. D) Call Market. Show Answer Correct Answer: A) Continuous Market. 14. How do financial markets support business expansion? A) Financial markets only benefit large corporations. B) Financial markets support business expansion by providing access to capital for investment in growth initiatives. C) Financial markets reduce the need for business planning. D) Financial markets primarily focus on consumer spending. Show Answer Correct Answer: B) Financial markets support business expansion by providing access to capital for investment in growth initiatives. 15. The primary market is dominated by: A) Merchant banks. B) The Central Bank. C) Discount houses. D) Commercial banks. Show Answer Correct Answer: A) Merchant banks. 16. Benchmark index of India A) Nifty. B) Nikkei 225. C) S&P 500. D) Dow Jones. Show Answer Correct Answer: A) Nifty. 17. A Treasury Bill is basically: A) An instrument to borrow short-term funds. B) An instrument to borrow long-term funds. C) An instrument of capital market. D) None of the above. Show Answer Correct Answer: A) An instrument to borrow short-term funds. 18. What has contributed to the growth of financial services in India? A) Economic liberalization and technological advancements. B) Increased government regulation and market restrictions. C) Rise of traditional banking and cash transactions. D) Decline in consumer demand and investment. Show Answer Correct Answer: A) Economic liberalization and technological advancements. 19. Sensex consists of ..... companies A) 10. B) 30. C) 50. D) 100. Show Answer Correct Answer: B) 30. 20. The Jamaica meeting revised the IMF's Articles of Agreement include ..... A) Gold was declared as a reserve asset. B) Fixed rates were declared acceptable. C) Floating rates were declared acceptable. D) None of the above. Show Answer Correct Answer: C) Floating rates were declared acceptable. 21. What is the role of financial intermediaries? A) To manage government funds. B) To facilitate the borrowing and lending process between savers and borrowers. C) To regulate inflation. D) To create new financial products. Show Answer Correct Answer: B) To facilitate the borrowing and lending process between savers and borrowers. 22. When a trade bill is accepted by a commercial bank, it is known as a ..... A) Commercial Bill. B) Call money. C) None of these. D) Certificate of deposit. Show Answer Correct Answer: A) Commercial Bill. 23. Which type of financial organization is a nonprofit service cooperative? A) Credit union. B) Commercial bank. C) Insurance company. D) Mutual fund. Show Answer Correct Answer: A) Credit union. 24. The depository institutions include? A) Mutual funds. B) Saving banks. C) Commercial banks and thrifts. D) Credit unions. Show Answer Correct Answer: C) Commercial banks and thrifts. 25. ..... is the difference between a higher selling price and a lower selling price, resulting in a financial gain for the seller. A) Yield. B) Capital loss. C) Capital gain. D) None of the above. Show Answer Correct Answer: C) Capital gain. 26. ..... is short term finance repayable on demand with a maturity period of 1 day to 15 days A) Call Money. B) Equity Shares. C) T-bills. D) Commercial Bill. Show Answer Correct Answer: A) Call Money. 27. In which market are government securities primarily traded? A) Capital market. B) Money market. C) Foreign exchange market. D) Commodity market. Show Answer Correct Answer: B) Money market. 28. Types of market for intermediate or long-term debt and corporate stocks. A) Futures markets. B) Stock markets. C) Capital markets. D) Derivatives markets. Show Answer Correct Answer: C) Capital markets. 29. What is the goal of impact investing? A) To minimize investment risks. B) To focus solely on short-term gains. C) To maximize financial returns only. D) To generate positive social and environmental impact. Show Answer Correct Answer: D) To generate positive social and environmental impact. 30. In the equation MV = PT, 'P' stands for: A) Purchasing power. B) Production level. C) Price level. D) Profit margin. Show Answer Correct Answer: C) Price level. 31. Which of the following is NOT a component of the financial system? A) Commercial Banks. B) Insurance Providers. C) Investment Banks. D) Retail Stores. Show Answer Correct Answer: D) Retail Stores. 32. What does "ask" mean? A) The highest price currently offered to buy a stock. B) The average price of a stock over the last month. C) The lowest price currently offered to sell a stock. D) The price at which a stock was last traded. Show Answer Correct Answer: C) The lowest price currently offered to sell a stock. 33. If a bank pays 3% interest on savings, how much interest will it change for loans? A) Less than 3%. B) 3%. C) More than 3%. D) The discount rate. Show Answer Correct Answer: C) More than 3%. 34. Mobilization of savings for short-term investment is a key role of the: A) Capital market. B) Stock exchange. C) Foreign exchange market. D) Money market. Show Answer Correct Answer: D) Money market. 35. Finance functions are ..... A) Planning of funds. B) Raising of funds. C) Allocation of Resource. D) All the above. Show Answer Correct Answer: D) All the above. 36. What factor/s affect the interest rate? A) Government borrowings. B) Supply of money. C) Inflation rate. D) All of the above. E) Not Attempted. Show Answer Correct Answer: D) All of the above. 37. Represents ownership in the corporation A) Coupon. B) Interest. C) Value. D) Stock or share. Show Answer Correct Answer: D) Stock or share. 38. You plan to borrow $ 2, 000 now and repay it in 5 equal annual installments at the end of each year. If the annual interest rate is 11%, how much will your annual payments be? A) $ 401.84. B) $ 400.00. C) $ 541.14. D) $ 444.00. Show Answer Correct Answer: C) $ 541.14. 39. What is the major function of APRA? A) Conduct MP. B) Regulation of the share market. C) Protection of consumers in the financial system. D) The prudential supervision of banks. Show Answer Correct Answer: D) The prudential supervision of banks. 40. What is the full form of NEFT? A) National Electronic Fund Transaction. B) National Electronic Funds Transfer. C) National Efficient Funds Transfer. D) National Efficient Fund Transaction. Show Answer Correct Answer: B) National Electronic Funds Transfer. 41. An money market instruments issued on behalf of Central Government. A) Call Money. B) Treasury Bill. C) Commercial Paper. D) Commercial Bill. Show Answer Correct Answer: B) Treasury Bill. 42. Banks hold excess and secondary reserves to A) Provide for unexpected deposit outflows. B) Achieve higher earnings than they can with loans. C) Reduce the interest-rate risk problem. D) Satisfy margin requirements. Show Answer Correct Answer: A) Provide for unexpected deposit outflows. 43. Market where financial assets are resold A) Secondary market. B) Money market. C) Primary market. D) Tertiary market. Show Answer Correct Answer: A) Secondary market. 44. Which of the following is regulatory body for stock market? A) IRDA. B) SBI. C) SEBI. D) RBI. Show Answer Correct Answer: C) SEBI. 45. Financial markets have the basic function of A) Assuring that the swings in the business cycle are less pronounced. B) Assuring that governments need never resort to printing money. C) Bringing together people to lend funds & people who want to borrow funds. D) Assuring a stable interest rate. Show Answer Correct Answer: C) Bringing together people to lend funds & people who want to borrow funds. 46. In the budget of 2020, Finance minister mentioned the plan of releasing the Initial Public offer of A) NTPC. B) LIC of India. C) IRCTC. D) Shipping corporation of India. Show Answer Correct Answer: B) LIC of India. 47. Treasury bills are also known as: A) Low-Interest Bonds. B) Fixed interest Bonds. C) Flat Rate Bonds. D) Zero-Coupon Bonds. Show Answer Correct Answer: D) Zero-Coupon Bonds. 48. Which of the following is NOT a source of borrowings for a bank? A) Federal funds. B) Discount loans. C) Transaction deposits. D) Eurodollars. Show Answer Correct Answer: C) Transaction deposits. 49. Which component of retirement benefits is fully tax-free for both government and private employees (if conditions are met)? A) PPF maturity. B) Leave encashment. C) Gratuity above ₹ 20 lakh. D) None of the above. Show Answer Correct Answer: A) PPF maturity. 50. Which of the following is not a part of capital market? A) RBI. B) Stock Exchange. C) Bank. D) Financial Institutions. Show Answer Correct Answer: A) RBI. 51. Which of the following performs the functions of giving imputes to saving andtransfer them to more productive uses? A) Wholesale Market. B) Financial Institutions. C) Financial Market. D) Retail Market. Show Answer Correct Answer: C) Financial Market. 52. What are the risks associated with investing in financial markets? A) Market risk, credit risk, liquidity risk, interest rate risk, geopolitical risk. B) Inflation risk. C) Regulatory risk. D) Operational risk. Show Answer Correct Answer: A) Market risk, credit risk, liquidity risk, interest rate risk, geopolitical risk. 53. What are CBAs and what are their main functions A) Central borrowing authorities and theyprovide finance for public corporations. B) Central Banking Authorities and they borrow funds. C) Canterlink Banking Authorities and they provide finance for public corporations. D) Centerlink Banking Authorities and they borrow funds. Show Answer Correct Answer: A) Central borrowing authorities and theyprovide finance for public corporations. 54. Farm records are important for the following purposes EXCEPT A) Interest rate determination. B) Decision making. C) Evaluation of performance. D) Insurance purposes. Show Answer Correct Answer: A) Interest rate determination. 55. How do risk and return relate to equity and bond valuation? A) Risk and return are directly related in both equity and bond valuation. B) Risk and return are inversely related in both equity and bond valuation. C) Risk and return are inversely related in bond valuation and directly related in equity valuation. D) Risk and return have no impact on equity valuation but affect bond valuation. Show Answer Correct Answer: C) Risk and return are inversely related in bond valuation and directly related in equity valuation. 56. Holding all else constant, when a bank receives the funds for a deposited check A) Cash items in the process of collection fall by the amount of the check. B) Bank assets increase by the amount of the check. C) Bank liabilities decrease by the amount of the check. D) Bank reserves increase by the amount of required reserves. Show Answer Correct Answer: A) Cash items in the process of collection fall by the amount of the check. 57. A market in which only the original issuer can sell or repurchase a financial asset A) Savings. B) Risk. C) Portfolio diversification. D) Secondary market. E) Primary market. Show Answer Correct Answer: E) Primary market. 58. Why are stockbrokers not taxed under LTCG for client transactions? A) They operate from outside India. B) They don't own the capital assets. C) Brokers get exemptions from CBDT. D) They pay STT on all trades. Show Answer Correct Answer: B) They don't own the capital assets. 59. What happens to the price of long-term bonds when interest rates fall? A) It decreases. B) It increases. C) It remains constant. D) No impact. Show Answer Correct Answer: B) It increases. 60. Full form of e-IPOs A) Electronic Initial Public Offer. B) Electronic Initial Private Offer. C) Electronic internet Public Offer. D) Electronic Initial Prospectus Offer. Show Answer Correct Answer: A) Electronic Initial Public Offer. ← PreviousNext →Related QuizzesCommerce QuizzesClass 12 QuizzesClass 12 Business Studies Chapter 10 Financial Markets Quiz 1Class 12 Business Studies Chapter 10 Financial Markets Quiz 2Class 12 Business Studies Chapter 10 Financial Markets Quiz 3Class 12 Business Studies Chapter 10 Financial Markets Quiz 4Class 12 Business Studies Chapter 10 Financial Markets Quiz 5Class 12 Business Studies Chapter 10 Financial Markets Quiz 6Class 12 Business Studies Chapter 10 Financial Markets Quiz 7Class 12 Business Studies Chapter 10 Financial Markets Quiz 8 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books