This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 17 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 17 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which type of security is compared to a Treasury security to determine the default or credit risk premium? A) Stock security. B) Equity security. C) Security j. D) Bond security. Show Answer Correct Answer: C) Security j. 2. What is the term for provisions that can impact a security holder beneficially or adversely? A) Inflation. B) Time to maturity. C) Default risk. D) Special provisions. Show Answer Correct Answer: D) Special provisions. 3. What is the primary function of the stock market? A) To facilitate the trading of goods and services. B) To provide a platform for investment in companies. C) To enable the exchange of currencies. D) To regulate the money supply. Show Answer Correct Answer: B) To provide a platform for investment in companies. 4. A retail company changes its credit policy. Earlier it used to extend credit for 120 days, however now it extends it for 90 days. The most likely impact on the company's balance sheet will be: A) Trade receivables will increase. B) Trade payables will increase. C) Cash conversion cycle will decrease. D) Cash conversion cycle will increase. Show Answer Correct Answer: C) Cash conversion cycle will decrease. 5. Risk in the Money Market is ..... A) High. B) Market Risk. C) Low Credit and Market Risk. D) Medium Risk. Show Answer Correct Answer: C) Low Credit and Market Risk. 6. Jayant is holding a hundred shares of a company. He has been given a privileged offered to subscribe to a new issue of shares of the same company in the proportion of 2:1 to the number of shares already possessed by him. Identify the method of floatation being described in the above case. A) Offer for sale. B) Offer through prospectus. C) Private placement. D) Rights issue. Show Answer Correct Answer: D) Rights issue. 7. What does a liquidity risk premium compensate for? A) Difficulty in selling the security quickly. B) Low transaction costs. C) High market value. D) High interest rates. Show Answer Correct Answer: A) Difficulty in selling the security quickly. 8. Of the following, which would be the last choice for a bank facing a reserve deficiency? A) Call in loans. B) Borrow from the Fed. C) Sell securities. D) Borrow from other banks. Show Answer Correct Answer: A) Call in loans. 9. COMPUTATION:Sheila has P750, 000 bank deposit, which earns 10% yearly. Here comes Arnold who has a loan of P750, 000 with interest of 25% yearly. The bank earns how much on the spread? A) 187, 500. B) 125, 000. C) 75, 000. D) 112, 500. Show Answer Correct Answer: D) 112, 500. 10. Which loan type re-sets faster after an RBI repo rate cut? A) MCLR-linked loan. B) NBFC-linked loan. C) RLLR-linked loan. D) None of the above. Show Answer Correct Answer: C) RLLR-linked loan. 11. The practice of making high risk financial decisions in hopes of getting a big return is called A) Day trading. B) Speculation. C) Diversification. D) Junk bond. Show Answer Correct Answer: B) Speculation. 12. Which of the following would not be considered a real asset? A) A patent. B) A corporate bond. C) A factory. D) A machine. Show Answer Correct Answer: B) A corporate bond. 13. An accurate statement about government bonds would be that A) They are all insured by your local bank. B) They are generally held for 3 or 6 months. C) They are usually a low-risk investment. D) They entitle the holder to a share of ownership in the bank. Show Answer Correct Answer: C) They are usually a low-risk investment. 14. Which type of mutual fund offers units that can be bought or sold at any time? A) Index funds. B) Close-ended funds. C) Interval funds. D) Open-ended funds. Show Answer Correct Answer: D) Open-ended funds. 15. Aftermarket is another name of: A) The market. B) The securities market. C) The secondary market. D) The debt market. Show Answer Correct Answer: C) The secondary market. 16. SEBI has authority over: A) Insurance Companies. B) Listed Companies. C) Banking Institutions. D) None of the above. Show Answer Correct Answer: B) Listed Companies. 17. Perdagangan saham di pasar OTC terjadi melalui jaringan telekomunikasi. Salah satu keunggulan sistem ini dibandingkan dengan bursa tradisional adalah: A) Dapat memperdagangkan saham yang tidak terdaftar di bursa. B) Lebih sedikit saham yang diperdagangkan. C) Lebih banyak saham pemerintah yang diperdagangkan. D) Proses lebih lambat karena hanya tunai. Show Answer Correct Answer: A) Dapat memperdagangkan saham yang tidak terdaftar di bursa. 18. ..... is a market for converting the currency of one country into another country. A) The capital market. B) The foreign exchange market. C) The financial market. D) None of the above. Show Answer Correct Answer: B) The foreign exchange market. 19. Because checking accounts are ..... liquid for the depositor than savings accounts, they earn ..... interest rates. A) More; lower. B) More; higher. C) Less; higher. D) Less; lower. Show Answer Correct Answer: A) More; lower. 20. Federal funds are not sold by banks to other banks A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 21. What is the key difference between a stock market and a bond market? A) Stocks represent ownership in a company, while bonds are debt obligations. B) Stocks are short-term, and bonds are long-term. C) Stocks are traded in the money market, and bonds are traded in the capital market. D) Stocks are only traded by institutional investors, while bonds are traded by retail investors. Show Answer Correct Answer: A) Stocks represent ownership in a company, while bonds are debt obligations. 22. Money market instrument issued by the RBI on behalf of Central Govt is A) Commercial paper. B) Treasury bill. C) Call money. D) Commercial bill. Show Answer Correct Answer: B) Treasury bill. 23. Assume that M/s ABC Limited, a retail company is trading at a Price to sales multiple of 4. After a few quarters a news report appear in a leading financial paper- "M/s ABC Limited gets re-rated." The most likely meaning of the headline is: A) The profit of the company has increased. B) The Price to sales multiple of the company exceeds 4. C) The losses that the company was making has decreased. D) The footfall in company's store has increased. Show Answer Correct Answer: B) The Price to sales multiple of the company exceeds 4. 24. What does an ETF stand for? A) Equity Trust Fund. B) Efficient Trade Fund. C) Exchange-Traded Fund. D) Equity Transfer Fund. Show Answer Correct Answer: C) Exchange-Traded Fund. 25. How do financial institutions impact the economy? A) Financial institutions only manage personal savings and do not influence the economy. B) They primarily focus on consumer loans without affecting investments. C) Financial institutions impact the economy by facilitating capital flow, supporting investment, managing risks, and promoting economic growth. D) Financial institutions hinder economic growth by restricting capital access. Show Answer Correct Answer: C) Financial institutions impact the economy by facilitating capital flow, supporting investment, managing risks, and promoting economic growth. 26. Which of the following best describes a money market? A) A market for long-term equity and debt instruments. B) A market for short-term debt instruments, typically with low risk. C) A market for buying and selling currencies. D) A market for complex financial contracts like options and futures. Show Answer Correct Answer: B) A market for short-term debt instruments, typically with low risk. 27. The equity market is ..... A) A financial market where the trading of debt instruments takes place. B) A financial market in which shares are issued and traded, either through exchanges or over-the-counter markets. C) A financial market where buyers and sellers of securities(or their agents or brokers) meet in one central location to conduct trades. D) Is a financial market in which long-term debt and equity instruments are traded. Show Answer Correct Answer: B) A financial market in which shares are issued and traded, either through exchanges or over-the-counter markets. 28. Which of the following is NOT a financial institution listed as operating in the capital market? A) Mortgage banks. B) Insurance companies. C) Discount Houses. D) Development banks. Show Answer Correct Answer: C) Discount Houses. 29. Mr Fang is the preference shareholder of Da Ming Bhd.Which of the following descriptions regarding Mr Fang is true? A) B Mr Fang enjoys a fixed dividend. B) D Mr Fang will be the last to receive share capital if the company goes into liquidation. C) A Mr Fang is a creditor of the company. D) C Mr Fang can participate in the election of directors. Show Answer Correct Answer: A) B Mr Fang enjoys a fixed dividend. 30. What does the word speculation/buying on margin mean? A) Investing in a type of stock that the buyer knows little about. B) Making small, low-risk investments with surplus money. C) Making high-risk investments with borrowed money. D) Investing low-risk stocks with illegal money. Show Answer Correct Answer: C) Making high-risk investments with borrowed money. 31. What was the primary characteristic of the Malaysian financial system pre-independence? A) Adoption of digital technologies. B) Dominated by foreign institutions. C) Rapid expansion of domestic banks. D) Focus on financial inclusion. Show Answer Correct Answer: B) Dominated by foreign institutions. 32. What does CAGR help calculate? A) Compounding interest monthly. B) Average annual growth rate over time. C) Tax savings on mutual funds. D) Lump sum value of SIPs. Show Answer Correct Answer: B) Average annual growth rate over time. 33. What account is a good idea if you are in a lower tax bracket than you will be at retirement? A) Traditional IRA. B) Roth IRA. C) All the above. D) None of the above. Show Answer Correct Answer: B) Roth IRA. 34. Define Financial Intermediaries A) The market for existing government securities. B) An organisation that lends money to households and firms but has taken it from other other households or firms. C) The lending of money to another party, involves temporary loan. D) Development of new financial products and methods. Show Answer Correct Answer: B) An organisation that lends money to households and firms but has taken it from other other households or firms. 35. In which type of financial markets are fresh shares issued and sold? A) Primary market. B) Money market. C) Capital market. D) Secondary market. Show Answer Correct Answer: A) Primary market. 36. Siapa yang biasanya menulis polis asuransi untuk mendukung penerbitan obligasi? A) Investor individu. B) Bank kecil. C) Pemerintah daerah. D) Perusahaan asuransi besar dan terkenal. Show Answer Correct Answer: D) Perusahaan asuransi besar dan terkenal. 37. Which type of trader focuses on short-term price movements within a single trading day? A) Day traders. B) Options traders. C) Swing traders. D) Position traders. Show Answer Correct Answer: A) Day traders. 38. This is also known as a financial instrument. A) Interest. B) Security. C) Bond. D) Debt. Show Answer Correct Answer: B) Security. 39. The monopsonistic labor market for nurses that would be found in a smaller city with two hospitals would lead to A) Lower starting salaries. B) Higher starting salaries. C) More employment opportunities. D) Greater demand for nursing services. Show Answer Correct Answer: A) Lower starting salaries. 40. How is a credit union different from a bank? A) Credit unions are non-profit institutions, while banks are profit-making firms. B) Credit unions are profit-making firms, while banks are non-profit institutions. C) Credit unions offer only credit cards, while banks offer savings accounts and loans. D) Credit unions charge compound interest, while banks charge simple interest. Show Answer Correct Answer: A) Credit unions are non-profit institutions, while banks are profit-making firms. 41. Defined contribution retirement account that is taken out of your paycheck before you pay any taxes on this income. (You do not pay taxes for the money you put into this account. INSTEAD you will have to pay taxes when you take the money out of the account) A) Roth IRA. B) Pension. C) 401K. D) IRA. Show Answer Correct Answer: C) 401K. 42. Financial instruments can be broadly classified into ..... and ..... instruments. A) Money, Capital. B) Debt, Equity. C) All the above. D) None of the above. Show Answer Correct Answer: B) Debt, Equity. 43. Which of the following best describes the relationship between Australian and global financial markets? A) Interdependent. B) Mutually exclusive. C) Separate. D) Synchronised. Show Answer Correct Answer: A) Interdependent. 44. Anything that sets the standard of value of goods and services acceptable to all parties involved in a transaction is called? A) The medium of exchange. B) Money. C) The medium of economy. D) The medium of change. Show Answer Correct Answer: A) The medium of exchange. 45. Which is the market where finance is provided against the guarantee of a reputed person in the financial circle A) Debt market. B) Financial Mortgages Market. C) Financial Guarantees market. D) Commodity market. Show Answer Correct Answer: C) Financial Guarantees market. 46. A formal request to an insurance company asking for a payment when the policyholder has an accident, illness or injury A) Employee benefits. B) Emergency savings. C) Coverage. D) Claim. Show Answer Correct Answer: D) Claim. 47. What is the primary function of merchant banking? A) Portfolio management. B) Underwriting and advisory. C) Marketing. D) Loan disbursement. Show Answer Correct Answer: B) Underwriting and advisory. 48. Which best describes token money? A) Higher metal value than face value. B) Used only for foreign exchange. C) Metallic value lower than face value. D) A form of commodity money. Show Answer Correct Answer: C) Metallic value lower than face value. 49. Nifty is the index of ..... A) OTCEI. B) CSE. C) NSE. D) BSE. Show Answer Correct Answer: C) NSE. 50. Seasoned equity offerings occur in the secondary market. A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: B) FALSE. 51. Choose the only option below that is a stock exchange and the name of a stock index. A) S&P 500. B) NYSE. C) Dow Jones Industrial Average. D) NASDAQ. Show Answer Correct Answer: D) NASDAQ. 52. Benchmark Index for Blue Chip Fund is A) Nifty. B) Sensex. C) BSE 100. D) Large Cap Stocks. Show Answer Correct Answer: C) BSE 100. 53. When the NSEI was established A) 1998. B) 1997. C) 1990. D) 1992. Show Answer Correct Answer: D) 1992. 54. After the GST reform, India now effectively operates with: A) 3 slabs-5%, 18%, and 40%. B) 4 slabs-5%, 12%, 18%, 28%. C) Single flat rate. D) 6 slabs by category. Show Answer Correct Answer: A) 3 slabs-5%, 18%, and 40%. 55. The Union Cabinet approved the new GST rationalisation plan. Its main objective is to: A) Eliminate GST completely. B) Simplify tax slabs and improve compliance. C) Introduce more exemptions for corporates. D) Replace GST with VAT. Show Answer Correct Answer: B) Simplify tax slabs and improve compliance. 56. What is the function of the capital market? A) Providing long-term capital. B) Providing short-term loans. C) Monetary control. D) Short-term investments. Show Answer Correct Answer: A) Providing long-term capital. 57. What does the term 'premium' refer to in insurance? A) The amount paid for insurance coverage. B) The process of filing a claim. C) The total value of an insurance policy. D) The duration of insurance coverage. Show Answer Correct Answer: A) The amount paid for insurance coverage. 58. Which Indian stock exchange is oldest? A) MCX. B) Calcutta Stock Exchange. C) NSE. D) BSE. Show Answer Correct Answer: D) BSE. 59. Which of the following best describes systemic risk? A) Risk of a breakdown in the entire financial system. B) Risk of low consumer confidence. C) Risk of high interest rates. D) Risk associated with individual investments. Show Answer Correct Answer: A) Risk of a breakdown in the entire financial system. 60. The difference between the price the corporation gets and the public offering price is called the broker-dealer spread. A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: B) FALSE. ← 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