This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 18 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 18 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the difference between debt markets and equity markets? A) Debt markets involve government securities, while equity markets involve corporate stocks. B) Debt markets involve short-term borrowing, while equity markets involve long-term borrowing. C) Debt markets involve fixed interest payments, while equity markets involve dividend payments. D) Debt markets involve foreign exchange, while equity markets involve commodities. Show Answer Correct Answer: C) Debt markets involve fixed interest payments, while equity markets involve dividend payments. 2. Households are more likely to borrow than to lend. True or false. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 3. What theory argues that stocks are always priced about right and bargains are hard to find because they are so closely watched by so many investors? A) Efficient Market Hypothesis. B) Theory of Demand. C) Theory of Bull Markets. D) Wall Street Hypothesis. Show Answer Correct Answer: A) Efficient Market Hypothesis. 4. What is the difference between money markets and capital markets? A) Money markets deal with equity financing, while capital markets deal with debt financing. B) Money markets deal with government securities, while capital markets deal with corporate stocks. C) Money markets deal with short-term borrowing, while capital markets deal with long-term borrowing. D) Money markets deal with foreign exchange, while capital markets deal with commodities. Show Answer Correct Answer: C) Money markets deal with short-term borrowing, while capital markets deal with long-term borrowing. 5. A stock that reinvests its earnings in the business instead of paying regular dividends is called A) An income stock. B) Common stock. C) A growth stock. D) Preferred stock. Show Answer Correct Answer: C) A growth stock. 6. When I purchase ..... , I own a portion of a firm and have the right to vote on issues important to the firm and to elect its directors. A) Notes. B) Bonds. C) Stock. D) Bills. Show Answer Correct Answer: C) Stock. 7. What preferential treatment do preferred stockholders get? A) Preferred stockholders receive higher interest rates than bondholders. B) Preferred stockholders have voting rights equal to common stockholders. C) Preferred stockholders receive priority in dividend payments and asset distribution. D) Preferred stockholders are guaranteed a fixed return regardless of company performance. Show Answer Correct Answer: C) Preferred stockholders receive priority in dividend payments and asset distribution. 8. What are the effects of globalization on financial markets? A) Globalization reduces market efficiency and capital flows. B) Globalization eliminates all financial risks and volatility. C) Globalization enhances market efficiency and capital flows but increases exposure to global risks and volatility. D) Globalization has no impact on financial markets. Show Answer Correct Answer: C) Globalization enhances market efficiency and capital flows but increases exposure to global risks and volatility. 9. Name two types of financial markets. A) Commodities market. B) Real estate market. C) Insurance market. D) Stock market, Bond market. Show Answer Correct Answer: D) Stock market, Bond market. 10. The main purpose of derivatives market is: A) Currency exchange. B) Risk management and speculation. C) Retail payments. D) Venture capital funding. Show Answer Correct Answer: B) Risk management and speculation. 11. The tenor of dated securities in India can be up to A) 40 years. B) 30 years. C) 50 years. D) 100 years. Show Answer Correct Answer: B) 30 years. 12. The main purpose of the money market is to raise ..... A) Long-term finance. B) Short-term finance. C) Medium term finance. D) None of the above. Show Answer Correct Answer: B) Short-term finance. 13. What term fits this definition:Currency plus bank current deposits from the private non-bank sector A) N1. B) M1. C) Financial innovation. D) M2. E) Central bank. Show Answer Correct Answer: B) M1. 14. The expected rate of return of the money market is ..... A) Very high. B) Less. C) Zero. D) None of the above. Show Answer Correct Answer: B) Less. 15. Badan Perlindungan Investor dan Penjamin Integritas dari Pasar Sekuritas di Amerika Serikat disebut dengan ..... A) Federal Reserve System. B) Commodity Futures Trading Commission (CFTC). C) Financial Industry Regulatory Authority (FINRA). D) Securities and Exchange Commission (SEC). Show Answer Correct Answer: D) Securities and Exchange Commission (SEC). 16. The commission charged by stock brokers for their services is called: A) Jobber's turn. B) Brokerage. C) Dividend. D) Interest. Show Answer Correct Answer: B) Brokerage. 17. What is the highest Australia's cash price has ever been (%) A) 14. B) 17.5. C) 23. D) 27.2. E) 19.8. Show Answer Correct Answer: B) 17.5. 18. What is a corporate bond? A) A corporate bond is a financial instrument used for personal savings. B) A corporate bond is a debt security issued by a corporation to raise capital. C) A corporate bond is a loan given to individuals by a corporation. D) A corporate bond is a type of stock issued by a company. Show Answer Correct Answer: B) A corporate bond is a debt security issued by a corporation to raise capital. 19. The capital market is primarily concerned with: A) Long-term investment. B) Short-term funds. C) Speculative trading. D) Currency exchange. Show Answer Correct Answer: A) Long-term investment. 20. Finance companies raise funds in the money market by selling A) Negotiable certificates of deposits. B) Eurodollars. C) Commercial paper. D) Federal funds. Show Answer Correct Answer: C) Commercial paper. 21. Which of the following IS NOT a function of FINANCIAL MANAGEMENT? A) Determines the company's current share price. B) Maximizes shareholders' wealth. C) Acquire assets for operations. D) Raise capital to purchase assets. Show Answer Correct Answer: A) Determines the company's current share price. 22. Money supply in a country is controlled by: A) Commercial banks. B) Households. C) The stock exchange. D) The central bank. Show Answer Correct Answer: D) The central bank. 23. Insurance company A) Financial institution. B) Financial market. C) Financial instrument. D) None of the above. Show Answer Correct Answer: A) Financial institution. 24. Which of the following is included in M3 but NOT in M2? A) Savings in commercial banks. B) Fixed deposits in commercial banks. C) Checkable deposits. D) Savings in other financial institutions. Show Answer Correct Answer: D) Savings in other financial institutions. 25. How has the rise of cryptocurrencies impacted speculation? A) Created new opportunities for profit. B) Limited access to trading platforms. C) Made speculation less risky. D) Decreased trading opportunities. Show Answer Correct Answer: A) Created new opportunities for profit. 26. The market for short term financial assets/ instruments, that are close substitutes of money, is called: A) Money Market. B) Financial Market. C) Capital Market. D) Forex Market. Show Answer Correct Answer: A) Money Market. 27. Financial market facilities business firms A) To recruit workers. B) To make more sales. C) To rise funds. D) To minimize funds requirement. Show Answer Correct Answer: C) To rise funds. 28. What type of financial market is primarily used for short-term borrowing and lending, typically with instruments like Treasury bills? A) Capital market. B) Derivatives Market. C) Money market. D) Foreign exchange market. Show Answer Correct Answer: C) Money market. 29. Which of the following best describes the unit of account function of money? A) It is used to compare the value of goods and services. B) It is used to facilitate international trade. C) It is used to store wealth for the future. D) It is used to pay taxes to the government. Show Answer Correct Answer: A) It is used to compare the value of goods and services. 30. How much do you feel bored in the class? A) Very much. B) Not at all. C) 10-30%. D) More than 50%. Show Answer Correct Answer: B) Not at all. 31. What is the index of 30 representative stocks used to monitor changes in the overall stock market A) Dow Jones Industrial Averages. B) Bear Market. C) New York Stock Exchange. D) Euronext. Show Answer Correct Answer: A) Dow Jones Industrial Averages. 32. Trustworthiness of the borrower falls under ..... A) Principle of protection. B) Principle of payment. C) Principle of productivity. D) Principle of personality. Show Answer Correct Answer: D) Principle of personality. 33. Ram Enterprise wishes to invest ₹ 1, 10, 000 in treasury bills. What is the maximum number of treasury bills it can buy with this fund? A) 4. B) 7. C) 6. D) 2. Show Answer Correct Answer: A) 4. 34. Which of the following is a characteristic of municipal bonds? A) They are issued by corporations. B) They have a higher risk of default. C) They often provide tax-exempt interest. D) They are always taxable. Show Answer Correct Answer: C) They often provide tax-exempt interest. 35. Which of these financial institutions operates primarily in the money market? A) Commercial Bank. B) Stock Exchange. C) Development Bank. D) Mortgage Bank. Show Answer Correct Answer: A) Commercial Bank. 36. What is the function of the stock exchange? A) To issue new securities. B) To regulate government policies. C) To provide a platform for buying and selling of securities. D) To control inflation rates. Show Answer Correct Answer: C) To provide a platform for buying and selling of securities. 37. The feature that allows the issuing firms to retire the bonds before the maturity by paying a prescribed price is called A) Callability (call option). B) Putability (put option). C) Convertibiliy. D) Redemption. Show Answer Correct Answer: A) Callability (call option). 38. The goals of bank asset management include A) Maximizing risk. B) Minimizing liquidity. C) Lending at high interest rates regardless of risk. D) Purchasing securities with high returns and low risk. Show Answer Correct Answer: D) Purchasing securities with high returns and low risk. 39. An inefficient market means that stock prices adjust quickly to new public information. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 40. How could the RBA tighten the stance of monetary policy to reduce inflation? A) Use OMO to purchase second hand government securities to reduce IRs. B) Use OMO to purchase second hand government securities to increase IRs. C) Use OMO to sell new government securities to increase IRs. D) Use OMO to sell second hand government securities to reduce IRs. Show Answer Correct Answer: C) Use OMO to sell new government securities to increase IRs. 41. Competition between financial institutions depends on the following criteria EXCEPT A) Interest rate. B) Growth. C) Profitability. D) Degree of risk. Show Answer Correct Answer: A) Interest rate. 42. ..... are short-term loans in which Treasury bills serve as collateral. A) Repurchase agreements. B) Negotiable certificates of deposit. C) U.S. government agency securities. D) Federal funds. Show Answer Correct Answer: A) Repurchase agreements. 43. What is the major focus of Savings and Loan associations? A) Accepting deposits and using them to make mortgage loans. B) Offering checking accounts with high interest rates. C) Providing personal loans without collateral. D) Investing in stocks and bonds. Show Answer Correct Answer: A) Accepting deposits and using them to make mortgage loans. 44. A corporation needing funds sells securities to investors in the secondary market. A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: B) FALSE. 45. In primary markets, property of shares which made it easy to sell newly issued security is considered as A) Large funds. B) Increased liquidity. C) Money Flow. D) Decreased liquidity. Show Answer Correct Answer: B) Increased liquidity. 46. Which type of financial asset is typically traded in money markets? A) Real estate properties. B) Long-term government bonds. C) Stocks with a maturity of more than five years. D) Financial assets with a maturity of a year or less. Show Answer Correct Answer: D) Financial assets with a maturity of a year or less. 47. What characteristic of money allows individuals to save wealth for future use? A) Medium of Exchange. B) Unit of Account. C) Store of Value. D) Standard of Deferred Payment. Show Answer Correct Answer: C) Store of Value. 48. What does the Ticker Window primarily show? A) Latest trades and price movements. B) Real-time trade prices for selected securities. C) Historical data on stock prices. D) Trading volumes for all securities. Show Answer Correct Answer: B) Real-time trade prices for selected securities. 49. Financial derivatives exclude A) FORWARDS. B) SWAPS. C) SHARES. D) FUTURES. Show Answer Correct Answer: C) SHARES. 50. Name one type of financial market. A) Bond market. B) Commodities market. C) Real estate market. D) Stock market. Show Answer Correct Answer: D) Stock market. 51. Financial contracts whose values are derived from the values of underlying assets is called A) Money market securities. B) Derivative securities. C) Capital market securities. D) Speculating securities. Show Answer Correct Answer: B) Derivative securities. 52. Which of the following best defines a financial market? A) A physical place where banks meet daily. B) A mechanism for trading financial assets and liabilities. C) A government-controlled investment centre. D) A market only for company shares. Show Answer Correct Answer: B) A mechanism for trading financial assets and liabilities. 53. If the 'liquidity coverage ratio' increases from 10% to 20%, what will happen to the maximum amount of loans a bank can give out? A) Rises. B) Falls. C) All the above. D) None of the above. Show Answer Correct Answer: B) Falls. 54. If a bank has $ 200, 000 of checkable deposits, a required reserve ratio of 20 percent, and it holds $ 80, 000 in reserves, then the maximum deposit outflow it can sustain without altering its balance sheet is A) $ 50, 000. B) $ 25, 000. C) $ 40, 000. D) $ 30, 000. Show Answer Correct Answer: A) $ 50, 000. 55. Which of the following has voting rights in a company? A) Creditors. B) Not Attempted. C) Equity shareholders. D) Debenture holders. E) Preference shareholders. Show Answer Correct Answer: C) Equity shareholders. 56. PK Enterprises Limited has sold an entire lot of 5, 00, 000 equity shares @ ₹ 9 each to Prosperous Bank Private Limited. The bank, in turn, will offer the shares to the general public for subscription @ ₹ 11 per share. Identify the method of floatation being described in the given lines. A) Rights issue. B) Offer for sale. C) Private placement. D) Offer through prospectus. Show Answer Correct Answer: B) Offer for sale. 57. What function do stock exchanges serve in the economy? A) Stock exchanges primarily serve as banks for storing money. B) Stock exchanges function as insurance companies for investors. C) Stock exchanges serve as platforms for trading securities, enabling capital formation, liquidity, and price discovery in the economy. D) Stock exchanges are mainly used for issuing government bonds only. Show Answer Correct Answer: C) Stock exchanges serve as platforms for trading securities, enabling capital formation, liquidity, and price discovery in the economy. 58. Which is an example of a fintech innovation in India? A) UPI digital payment system. B) Cheque clearing. C) Post office deposits. D) Cash-based banking. Show Answer Correct Answer: A) UPI digital payment system. 59. A ..... generally declines less during a recession and shows less growth during an expansion than other stocks. A) Junk bond. B) Cyclical stock. C) Defensive stock. D) Income stock. Show Answer Correct Answer: C) Defensive stock. 60. When it comes to investments in general, the higher the ..... the higher the potential reward. A) Cost. B) Risk. C) Security. D) Damage. Show Answer Correct Answer: B) Risk. ← 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