This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 16 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 16 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. The following statements are true regarding commercial banks EXCEPT A) Are nonprofit organizations. B) The most dominant depository institution. C) Offer a wide variety of deposit accounts. D) Serve both the public and the private sector. Show Answer Correct Answer: A) Are nonprofit organizations. 2. What is the name of BSE index? A) Sensex. B) BSE 30. C) Nifty 50. D) BSE index. Show Answer Correct Answer: A) Sensex. 3. A marketplace where trading of securities including equities, bonds, currencies and derivatives occurs is a(n): A) Financial Market. B) Call Market. C) Foreign Exchange Market. D) Bear Market. Show Answer Correct Answer: A) Financial Market. 4. Choose the incorrect statement regarding causes for the poor repayment capacity of farmer A) Using credit for productive purposes. B) Poor management of limited farm resources. C) Rapid fluctuations in prices of agricultural commodities. D) Lack of adoption of improved technology. Show Answer Correct Answer: A) Using credit for productive purposes. 5. Dividends are paid by companies to its A) Debtors. B) Employees. C) Shareholders. D) None of the above. Show Answer Correct Answer: C) Shareholders. 6. Commercial transactions in the spot market are often completed electronically, with banks or other financial institutions serving as intermediaries. The exchange rate at the time determines the amount of funds necessary for the transaction. A) Spot Market Structure. B) Spot Market Remittance. C) Spot Market Infrastructure. D) Spot Market Decentralize. Show Answer Correct Answer: A) Spot Market Structure. 7. Financial institutions are also known as ..... A) Financial organisation. B) Financial system. C) Financial intermediaries. D) All of the above. Show Answer Correct Answer: C) Financial intermediaries. 8. Conditions that likely contributed to a credit crunch during the global financial crisis include A) Capital shortfalls caused in part by falling real estate prices. B) Regulated hikes in bank capital requirements. C) Falling interest rates that raised interest rate risk, causing banks to choose to hold more capital. D) Increases in reserve requirements. Show Answer Correct Answer: A) Capital shortfalls caused in part by falling real estate prices. 9. If the size of an asset increases on a balance sheet, then: A) Either a. or b. B) The size of something on the liability side must decrease. C) The size of another asset must decrease. D) Either a. or c. E) The size of something on the liability side must increase. Show Answer Correct Answer: D) Either a. or c. 10. The allocation function is performed by A) Financial market. B) Capital market. C) Money market. D) All of the above. Show Answer Correct Answer: D) All of the above. 11. The integration of Indian financial markets with global markets primarily facilitates: A) Isolated economic growth. B) Localized business expansion. C) Domestic-only investment. D) Cross-border capital flow. Show Answer Correct Answer: D) Cross-border capital flow. 12. Which ones of these is NOT a financial institution A) Lehman Brothers. B) Reserve Bank. C) Money3 Campbelltown. D) Johnson & Johnson. Show Answer Correct Answer: D) Johnson & Johnson. 13. Which institution primarily operates in the capital market? A) Discount House. B) Insurance companies. C) Hire-purchase companies. D) Commercial banks (for short-term focus). Show Answer Correct Answer: B) Insurance companies. 14. The index that shows how certain stocks have traded every business day since 1896 is called A) Dow Jones. B) NYSE. C) Nasdaq. D) S & P 500. Show Answer Correct Answer: A) Dow Jones. 15. Kapan New York Stock Exchange (NYSE) pertama kali mulai melakukan perdagangan? A) 1902. B) 1850. C) 1792. D) 1802. Show Answer Correct Answer: C) 1792. 16. What is the main function of a stock exchange? A) To allow governments to borrow money. B) To facilitate the trading of equity and debt securities. C) To provide insurance for traders. D) To provide a platform for commodity trading. Show Answer Correct Answer: B) To facilitate the trading of equity and debt securities. 17. The ability to express the value of goods and services in different amounts of a currency is money's function as ..... A) A medium of exchange. B) A unit of account. C) A store of value. D) None of the above. Show Answer Correct Answer: B) A unit of account. 18. Which of the following is not true of Demat account? A) One is not restricted to having account with only one DP. B) One does not need to keep any minimum balance of securities in a Demat account with a DP. C) One cannot open more than one account with the same DP. D) One can dematerialise and hold investments such as debt instruments, mutual fund units, government securities etc. in a single demat account. E) Not Attempted. Show Answer Correct Answer: C) One cannot open more than one account with the same DP. 19. A market for short term borrowing and lending, typically with maturities of one year or less. A) Debt Markets. B) Capital Markets. C) Money Market. D) All of the above. Show Answer Correct Answer: C) Money Market. 20. Which of these is a money market instrument? A) Preference shares. B) Equity shares. C) Debentures. D) Treasury Bills. Show Answer Correct Answer: D) Treasury Bills. 21. Large-denomination CDs are ..... , so that like a bond they can be resold in a ..... market before they mature. A) Negotiable; secondary. B) Negotiable; primary. C) Nonnegotiable; secondary. D) Nonnegotiable; primary. Show Answer Correct Answer: A) Negotiable; secondary. 22. What is the primary purpose of the Order/Trade Window? A) To input buy/sell orders. B) To display market news. C) To modify or cancel existing orders. D) To analyze price movements. Show Answer Correct Answer: A) To input buy/sell orders. 23. Compared to money market securities, capital market securities have A) More liquidity. B) Less risk. C) Lower yields. D) Longer maturity. Show Answer Correct Answer: D) Longer maturity. 24. Debt investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. A) Stock. B) Bond. C) Net Worth. D) None of the above. Show Answer Correct Answer: B) Bond. 25. What is the relationship between bond prices and interest rates? A) Direct. B) Inverse. C) No relationship. D) Random. Show Answer Correct Answer: B) Inverse. 26. All of the following are low-risk investments EXCEPT A) Treasury bonds. B) Municipal bonds. C) Junk (high-yield) bonds. D) Savings bonds. Show Answer Correct Answer: C) Junk (high-yield) bonds. 27. Which part of the financial system handles short-term funds? A) Insurance market. B) Money market. C) Capital market. D) Forex market. Show Answer Correct Answer: B) Money market. 28. NRE accounts are best suited for? A) Income earned in India. B) Tracking NRI expenses. C) Managing foreign income and repatriation. D) None of the above. Show Answer Correct Answer: C) Managing foreign income and repatriation. 29. With reference to the capital markets of India, pick the incorrect statement from the following: A) Capital Markets provide funds for projects in backward areas. B) Capital markets make possible to generate foreign capital. C) The existence of a stock exchange enables companies to raise permanent capital. D) Intermediaries include various entities such as MCX-SX, BSE, NSE, other regional stock exchanges. Show Answer Correct Answer: D) Intermediaries include various entities such as MCX-SX, BSE, NSE, other regional stock exchanges. 30. Which of the following is NOT a function of financial intermediaries? A) Providing financial advice. B) Eliminating investment risk entirely. C) Liquidity transformation. D) Risk reduction. Show Answer Correct Answer: B) Eliminating investment risk entirely. 31. Long-term bonds are ..... than short-term bonds. A) Subject to more uncertainty. B) Less sensitive to interest rate changes. C) Less risky. D) More liquid. Show Answer Correct Answer: A) Subject to more uncertainty. 32. Which of the following statements about the characteristics of debt and equity are true? A) They can both be long-term financial instruments. B) They both involve a claim on the issuer's income. C) They both enable a corporation to raise funds. D) All three choices provided. Show Answer Correct Answer: D) All three choices provided. 33. If a trader buys a stock expecting it to rise over a few days, which type of trader are they likely to be? A) Swing trader. B) Options trader. C) Day trader. D) Position trader. Show Answer Correct Answer: A) Swing trader. 34. Money Market is Regulated by which body A) NSE. B) SEBI. C) RBI. D) IRDA. Show Answer Correct Answer: C) RBI. 35. Which of the following is purchased at half the face value? A) Tax-exempt bond. B) Savings bond. C) Mutual fund. D) Treasury note. Show Answer Correct Answer: B) Savings bond. 36. Clearing houses in trading systems are responsible for: A) Ensuring settlement of trades. B) Determining IPO prices. C) Printing money. D) Issuing shares. Show Answer Correct Answer: A) Ensuring settlement of trades. 37. In the balance sheet of a company, amounts due to the suppliers of goods and services brought on credit, will reflect under the head ..... A) Loans and Advances. B) Current Liabilities and Provisions. C) Miscellaneous expenditure. D) Contingent Liabilities. E) Not Attempted. Show Answer Correct Answer: B) Current Liabilities and Provisions. 38. Which is an example of a commodity market product? A) Credit default swaps. B) Currency forwards. C) Crude oil futures. D) Mutual fund units. Show Answer Correct Answer: C) Crude oil futures. 39. ..... represents an ownership in the business or a company. A) Equity. B) Debt. C) All the above. D) None of the above. Show Answer Correct Answer: A) Equity. 40. Investment that can be converted to cash at short notice is called A) Liquid investment. B) Volatile investment. C) Speculative investment. D) None of the above. Show Answer Correct Answer: A) Liquid investment. 41. What is not a function of a Central Bank? A) Act as a banker to the central government. B) Advise and assist the central government on financial and monetary ideas. C) Have control over the issue of currency and the nation' reserve of gold. D) Supervise other bank activity and regulate bank investment/spening. E) Implement officially determine monetary policy of reguating the monetary and banking system. Show Answer Correct Answer: D) Supervise other bank activity and regulate bank investment/spening. 42. Tools to reduce the moral hazard problem in debt contracts include A) Collateral and net worth. B) Monitoring and enforcement of restrictive covenants, and financial intermediaries. C) Collateral and net worth, monitoring and enforcement of restrictive covenants, and financial intermediaries. D) None of the above. Show Answer Correct Answer: C) Collateral and net worth, monitoring and enforcement of restrictive covenants, and financial intermediaries. 43. What is the word for the full amount of a loan MINUS the interest? A) Capital. B) Principal. C) Investment. D) Interest. Show Answer Correct Answer: B) Principal. 44. In a(n) ..... market, dealers in different locations buy and sell securities to anyone who comes to them and is willing to accept their prices. A) Barter. B) Over-the-counter. C) Exchange. D) Common. Show Answer Correct Answer: B) Over-the-counter. 45. .Dematerialization is the process of holding securities in A) Paper mode. B) Electronic mode. C) Physical form. D) Wallet. Show Answer Correct Answer: B) Electronic mode. 46. If banks do not have sufficient liquidity of what are they at risk? A) Insolvency. B) Bankruptcy. C) All the above. D) None of the above. Show Answer Correct Answer: A) Insolvency. 47. What does it mean to invest money? A) To invest money means to spend it all immediately. B) To invest money means to allocate funds to generate a return. C) Investing money is the same as saving it in a bank account. D) To invest money means to give it away for free. Show Answer Correct Answer: B) To invest money means to allocate funds to generate a return. 48. Securities Fraud, also known as Stock or Investment Fraud, involves: A) "Ponzi" or "Pump and Dump" Schemes targeted at investors. B) Insider Trading. C) Misrepresenting information investors use to make decisions. D) All Options are Correct. Show Answer Correct Answer: D) All Options are Correct. 49. Which of the following factors can influence foreign exchange rates? A) Interest rates. B) Economic indicators. C) Political stability. D) All of the above. Show Answer Correct Answer: D) All of the above. 50. Statutory body governing the capital market A) IDBI. B) Commercial Banks. C) RBI. D) SEBI. Show Answer Correct Answer: D) SEBI. 51. Because ..... are less liquid for the depositor than ..... , they earn higher interest rates. A) Money market deposit accounts; time deposits. B) Savings accounts; time deposits. C) Savings accounts; checkable deposits. D) Checkable deposits; savings accounts. Show Answer Correct Answer: C) Savings accounts; checkable deposits. 52. ..... is a part of money market. A) Preference share. B) Commercial Bill. C) Equity share. D) Debentures. Show Answer Correct Answer: B) Commercial Bill. 53. What is the highest FD rate in India? A) 8.5%. B) 7.5%. C) 9.1%. D) 8.2%. Show Answer Correct Answer: B) 7.5%. 54. What is interest? A) Interest is the cost of borrowing or the return on savings. B) Interest is a fee paid to a bank for account maintenance. C) Interest is the amount of money saved in a bank account. D) Interest is a type of investment strategy. Show Answer Correct Answer: A) Interest is the cost of borrowing or the return on savings. 55. The primary market is also called A) Over the counter market. B) IPo. C) Stock exchange. D) New issue market. Show Answer Correct Answer: D) New issue market. 56. They are the investors who do not consider the risks involved in the investment and are focused only on the expected returns. A) Bears and pigs. B) Bulls and chicken. C) Risk-neutral. D) None of the above. Show Answer Correct Answer: C) Risk-neutral. 57. A capital market is ideal when: A) Financial institutions are sufficiently developed. B) Finance is available at a reasonable cost. C) Capital is most productively allocated. D) All of these. Show Answer Correct Answer: D) All of these. 58. Which of the following is NOT a type of mutual fund scheme? A) Hybrid funds. B) Equity funds. C) Debt funds. D) Commodity funds. Show Answer Correct Answer: D) Commodity funds. 59. Jack has a sum of money and is looking for a low-risk investment. Which of the following investment is suitable for Jack? A) B Ordinary shares. B) A Real estate. C) C Preference shares. D) D Government bond. Show Answer Correct Answer: D) D Government bond. 60. A monopsonist pays a wage rate that is A) Less than the marginal revenue product of labor. B) Greater than the marginal revenue product of labor. C) Equal to the firm's marginal labor cost. D) Equal to the marginal revenue product of labor. Show Answer Correct Answer: A) Less than the marginal revenue product of labor. ← 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