This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 26 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 26 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the primary function of the foreign exchange market? A) To regulate international trade. B) To provide loans to businesses. C) To facilitate currency conversion. D) To issue new stocks. Show Answer Correct Answer: C) To facilitate currency conversion. 2. You are a financial advisor whose client wants stocks that pay regular dividends. You advise him to buy A) Preferred stock. B) Common stock. C) Income stock. D) Growth stock. Show Answer Correct Answer: C) Income stock. 3. When a corporation sells common stock to the general public for the first time is called? A) Secondary market. B) Preferred stock. C) Common stock. D) Initial public offering. Show Answer Correct Answer: D) Initial public offering. 4. In a ..... , many investors sell their stocks in anticipation of lower profits. A) Mutual fund. B) Capital gain. C) Bear market. D) None of the above. Show Answer Correct Answer: C) Bear market. 5. ..... is the process of stripping a currency unit of its status as a legal tender A) Monetization. B) Currency war. C) Inflation. D) Demonetization. Show Answer Correct Answer: D) Demonetization. 6. Savings is defined as ..... A) Deferring or postponing any expenditure to a future date. B) Using the saved money with the aim of making it grow. C) All the above. D) None of the above. Show Answer Correct Answer: A) Deferring or postponing any expenditure to a future date. 7. ..... and ..... allow a financial intermediary to offer safe liquid liabilities such as deposits while investing the depositors' money in riskier illiquid assets. A) Primary markets; foreign exchange Markets. B) Price risk; collateral. C) Monitoring; diversification. D) Diversification; high equity returns. E) Free riders; regulations. Show Answer Correct Answer: C) Monitoring; diversification. 8. What is a mutual fund? A) A mutual fund is a government bond that guarantees returns. B) A mutual fund is a loan given to businesses for expansion. C) A mutual fund is an investment vehicle that pools money from multiple investors to buy a diversified portfolio of securities. D) A mutual fund is a type of bank account for saving money. Show Answer Correct Answer: C) A mutual fund is an investment vehicle that pools money from multiple investors to buy a diversified portfolio of securities. 9. As interest rates go down, bond prices go ..... A) It depends. B) Down. C) Up. D) Stay the same. Show Answer Correct Answer: C) Up. 10. Which of the following financial organizations specializes in buying installment contracts from merchants who sell on credit? A) An insurance company. B) A credit union. C) A finance company. D) A bank. Show Answer Correct Answer: C) A finance company. 11. Equity shares have mostly ..... all other forms of investments in the long term. A) Not Attempted. B) Outperformed. C) Given negative returns when compared to. D) Underperformed. E) Remained neutral when compared to. Show Answer Correct Answer: B) Outperformed. 12. Who issues treasury bills( T-bills) in Malaysia? A) Commercial Banks. B) Malaysian Government. C) BNM. D) Investment Banks. Show Answer Correct Answer: B) Malaysian Government. 13. Regulator of Secondary market is A) PFRDA. B) SEBI. C) IRDAI. D) RBI. Show Answer Correct Answer: B) SEBI. 14. The Inquiry Window provides: A) Real-time trade prices. B) Detailed market data and analysis on selected securities. C) A platform for placing orders. D) Only price information. Show Answer Correct Answer: B) Detailed market data and analysis on selected securities. 15. In a private placement, the securities are offered and sold to a limited number of investors. A) TRUE. B) FALSE. C) All the above. D) None of the above. Show Answer Correct Answer: A) TRUE. 16. An investor who are seeking greater market uncertainty and market fluctuations, and they often pursue short-term, growth investments in anticipation of a higher investment return. A) Bears and pigs. B) Bulls and chicken. C) Risk-neutral. D) None of the above. Show Answer Correct Answer: A) Bears and pigs. 17. What is currency hedging? A) Converting currencies for trade. B) Buying currencies for speculation. C) Insuring against losses from exchange rate changes. D) Investing in foreign stocks. Show Answer Correct Answer: C) Insuring against losses from exchange rate changes. 18. A forward exchange occurs when two parties agree to exchange currency and execute the deal at some specific date in the future. A) Past. B) Present. C) Future. D) None of the above. Show Answer Correct Answer: C) Future. 19. The term of the Treasury Bill cannot be more than ..... year. A) Two. B) Five. C) One. D) Ten. Show Answer Correct Answer: C) One. 20. A person who invests in mutual funds is choosing an investment that A) Has the lowest risk and the lowest returns. B) Has the highest risks and the highest returns. C) Has the highest risks and the lowest returns. D) Has a balance of low risk/low return and high risk/high return option. Show Answer Correct Answer: D) Has a balance of low risk/low return and high risk/high return option. 21. Which of the following is a development bank? A) NABARD. B) SIDBI. C) IFCI. D) All of the above. Show Answer Correct Answer: D) All of the above. 22. Explain the concept of Beta in systematic risk. A) Beta measures a company's total market value. B) Beta measures systematic risk by indicating a stock's volatility relative to the market. C) Beta indicates a stock's price trend over time. D) Beta reflects the overall profitability of a stock. Show Answer Correct Answer: B) Beta measures systematic risk by indicating a stock's volatility relative to the market. 23. Investor will not get benefit of compounding in A) Dividend reinvestment option. B) Growth option. C) Dividend payout option. D) All of the above. Show Answer Correct Answer: C) Dividend payout option. 24. Bank capital is equal to ..... minus ..... A) Total liabilities; total borrowings. B) Total assets; total reserves. C) Total assets; total liabilities. D) Total liabilities; total assets. Show Answer Correct Answer: C) Total assets; total liabilities. 25. Select correct statement from below A) ETFs are active fund. B) ETFs are passive fund. C) ETFs invest in equity only. D) ETFs not traded on stock exchange. Show Answer Correct Answer: B) ETFs are passive fund. 26. What is a stock exchange? A) A stock exchange is a place for buying and selling real estate. B) A stock exchange is a marketplace for buying and selling stocks. C) A stock exchange is a type of bank. D) A stock exchange is a government agency. Show Answer Correct Answer: B) A stock exchange is a marketplace for buying and selling stocks. 27. The interest rate paid on a bond A) Coupon rate. B) Capital gain. C) Bond premium. D) Par Value. Show Answer Correct Answer: A) Coupon rate. 28. The 2 major stock exchanges in NYC A) London Stock Exchange & Nasdaq. B) New York Stock Exchange & Nasdaq. C) The USA Exchange & the S&P 500. D) Nasdaq & Chicago Board of Trade. Show Answer Correct Answer: B) New York Stock Exchange & Nasdaq. 29. The main link between financial system and economic development is: A) Encouraging imports. B) Increasing taxes. C) Promoting subsidies. D) Mobilizing savings for investment. Show Answer Correct Answer: D) Mobilizing savings for investment. 30. The proportion of debt in the overall capital is also called ..... A) Capital Structure. B) Financial Leverage. C) Cost of funds. D) Trading On equity. Show Answer Correct Answer: B) Financial Leverage. 31. Suku bunga rendah (biaya pinjaman) memicu pertumbuhan di ..... A) Pasar modal internasional. B) Pasar modal nasional. C) Pasar obligasi internasional. D) Pasar ekuitas internasional. Show Answer Correct Answer: C) Pasar obligasi internasional. 32. What is the Short-Term Capital Gains (STCG) tax on listed equity shares after Budget 2024? A) 10%. B) 12.5%. C) 20%. D) 15%. Show Answer Correct Answer: C) 20%. 33. Additional measures of bank performance include A) ROA and ROE. B) ROA, ROE and the NIM (net interest margin). C) ROE and the NIM. D) None of the above. Show Answer Correct Answer: B) ROA, ROE and the NIM (net interest margin). 34. Presently TB are issued of the following maturity: A) 91 day. B) 182 day. C) 364 day. D) All the above. Show Answer Correct Answer: D) All the above. 35. What is a potential danger of herd mentality in markets? A) It leads to a decrease in market volatility. B) Prices can skyrocket due to irrational exuberance. C) Investors may become too cautious. D) Markets become too predictable. Show Answer Correct Answer: B) Prices can skyrocket due to irrational exuberance. 36. Which of the following is the most suitable option for an investor with low risk appetite? A) Fixed Deposits. B) Equities. C) Not Attempted. D) Junk Bonds. E) Derivatives. Show Answer Correct Answer: A) Fixed Deposits. 37. ..... is a part of capital market. A) Call Money. B) Primary Market. C) Secondary Market. D) Primary and Secondary Market. Show Answer Correct Answer: D) Primary and Secondary Market. 38. What is the role of the money market in the economy? A) The money market provides liquidity, facilitates short-term borrowing and lending, and helps manage interest rates in the economy. B) The money market regulates long-term investments and capital gains. C) The money market is primarily focused on real estate transactions and mortgages. D) The money market serves as a platform for trading stocks and bonds. Show Answer Correct Answer: A) The money market provides liquidity, facilitates short-term borrowing and lending, and helps manage interest rates in the economy. 39. Why would a government be a borrower in the financial markets? A) To buy a house. B) To fund a budget surplus. C) To fund a budget deficit. D) To increase taxes. Show Answer Correct Answer: C) To fund a budget deficit. 40. Nifty index is used in ..... A) Derivatives. B) Index Funds. C) Exchange Traded Funds (ETFs). D) All of the above. E) Not Attempted. Show Answer Correct Answer: D) All of the above. 41. What is the role of a broker in financial markets? A) A broker is responsible for managing a company's finances. B) A broker only provides investment advice to clients. C) The role of a broker in financial markets is to facilitate transactions between buyers and sellers. D) A broker acts as a financial advisor without executing trades. Show Answer Correct Answer: C) The role of a broker in financial markets is to facilitate transactions between buyers and sellers. 42. If Interest rates goes down A) Bond prices goes up. B) Bond prices goes down. C) Bond prices remain same. D) None of the above. Show Answer Correct Answer: A) Bond prices goes up. 43. ..... maintain a larger amount of assets in aggregate than the other types of non-depository institutions A) Mutual funds. B) Finance companies. C) Securities firms. D) Life insurance companies. Show Answer Correct Answer: A) Mutual funds. 44. Assume you have $ 1, 000 and plan to travel from the United States to the United Kingdom. Assume further that the bank's bid rate for the British pound is $ 1.52 and its ask rate is $ 1.60. Before leaving on your trip, you go to this bank to exchange dollars for pounds. How much of $ 1, 000 will be converted into pounds? A) 825 pounds. B) 725 pounds. C) 625 pounds. D) 925 pounds. Show Answer Correct Answer: C) 625 pounds. 45. The government controls can affect the exchange rates, except from the following statements A) Imposing foreign exchange barriers. B) Imposing foreign trade barriers. C) Intervening (buying and selling currencies) in the foreign exchange markets. D) Affecting micro variables such as inflation, interest rates, and income levels. Show Answer Correct Answer: D) Affecting micro variables such as inflation, interest rates, and income levels. 46. A key function of the capital market is the provision of: A) Capital for permanent long-term investments. B) Emergency funds for individuals. C) Short-term working capital. D) Liquidity for daily transactions. Show Answer Correct Answer: A) Capital for permanent long-term investments. 47. Distribusi dari modal suatu perusahaan diantara hutang dengan ekuitas disebut dengan ..... A) Equity Structure. B) Financial Structure. C) Capital Structure. D) Debt Structure. Show Answer Correct Answer: C) Capital Structure. 48. A forward exchange rate is a rate relating to A) Past interest rate. B) Currency exchange rate. C) Future interest rate. D) Spot interest rate. Show Answer Correct Answer: B) Currency exchange rate. 49. The difference between Treasury bonds and Treasury bills is that A) Bonds have the longest maturity, and bills have the shortest. B) Bills have the longest maturity, and bonds have the shortest. C) Bonds is another name for treasury notes, while bills are different. D) Bills is another name for treasury notes, while bonds are different. Show Answer Correct Answer: A) Bonds have the longest maturity, and bills have the shortest. 50. The financial system of a country consists of: A) Financial institutions. B) Financial markets. C) Financial instruments. D) All of the above. Show Answer Correct Answer: D) All of the above. 51. T+2 settlement cycle in a stock exchange means, the trade is settled ..... days after the trade. A) Same day as the trade. B) 1 day. C) 3 days. D) 2 days. E) Not Attempted. Show Answer Correct Answer: D) 2 days. 52. Constructed to match or track the stocks of a market measure, such as the S&P 500, Dow, or Nasdaq. It also offers a good degree of diversification. A) Hedge Fund. B) Index Fund. C) All the above. D) None of the above. Show Answer Correct Answer: B) Index Fund. 53. Which of the following has NOT resulted from more active liability management on the part of banks? A) An increased proportion of bank assets held in loans. B) Increased use of negotiable CDs to raise funds. C) Increased bank holdings of cash items. D) Aggressive targeting of goals for asset growth by banks. Show Answer Correct Answer: C) Increased bank holdings of cash items. 54. LPG policy in India was initiated by Prime Minister ..... A) Indira Gandhi. B) Rajiv Ggandhi. C) Manmohan Singh. D) P. V. Narasimha Rao. Show Answer Correct Answer: D) P. V. Narasimha Rao. 55. What is the primary focus of the term structure of interest rates? A) Analysis of stock prices. B) Evaluation of inflation rates. C) Comparison of market yields. D) Study of currency values. Show Answer Correct Answer: C) Comparison of market yields. 56. Which type of bond is issued by a state or local government to finance public projects? A) Treasury bond. B) Corporate bond. C) Savings bond. D) Municipal bond. Show Answer Correct Answer: D) Municipal bond. 57. What are the SEBI guidelines related to financial markets? A) SEBI guidelines ensure transparency, protect investors, regulate market intermediaries, and set disclosure norms for listed companies. B) SEBI guidelines eliminate the need for financial disclosures by companies. C) SEBI guidelines promote unregulated trading practices and insider trading. D) SEBI guidelines focus solely on tax regulations for individuals. Show Answer Correct Answer: A) SEBI guidelines ensure transparency, protect investors, regulate market intermediaries, and set disclosure norms for listed companies. 58. Which of the following is a type of primary financial market? A) Stock Market. B) Bond Market. C) Money Market. D) All of the above. Show Answer Correct Answer: D) All of the above. 59. What is the date that a bond comes due called? A) Coupon date. B) Maturity date. C) Redemption date. D) Issuance date. Show Answer Correct Answer: B) Maturity date. 60. Which of the following is NOT a function of the Snap Quote window? A) Provide quick access to information without navigating through the Market Watch. B) Display a list of securities of interest. C) Display detailed data on a single security. D) Show real-time trading volumes. Show Answer Correct Answer: B) Display a list of securities of interest. ← 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