This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 5 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 5 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Which of the following share issue will bring fresh equity funds to the company. A) Right issue. B) Bonus share issue. C) Stock split. D) None of the above. Show Answer Correct Answer: A) Right issue. 2. Does a bear market mean the stock market is rising or going down? A) Rising. B) Going down. C) Cross dimensional static drift. D) Staying the same. Show Answer Correct Answer: B) Going down. 3. A DEFFERED INTEREST BOND PAYS ALL ITS COUPONS IN THE FIRST TWO YEARS OF ITS TENOR A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 4. Circuit breakers are triggered when index rises/fall by A) 10%, 12%, 15%. B) 10%, 12%, 20%. C) 10%, 15%, 20%. D) 5%, 10%, 15%. Show Answer Correct Answer: C) 10%, 15%, 20%. 5. In the parlance of economy/commerce, what is "gilt-edged" market? A) Gold and silver market. B) Industrial securities market. C) Market for safe (such as government) securities. D) Market for software technology/ service products. Show Answer Correct Answer: C) Market for safe (such as government) securities. 6. What is the amount of interest collected from a $ 5, 000 loan after three years with a simple interest rate of 6%? A) $ 900. B) $ 5, 500. C) $ 5, 900. D) $ 1, 104.08. Show Answer Correct Answer: A) $ 900. 7. By utilizing ..... , an investor can earn profits by buying bonds at a cut rate. A) Coupon rate. B) Discount from par. C) Daytrading. D) None of the above. Show Answer Correct Answer: B) Discount from par. 8. A bank is insolvent when A) Its assets increase in value. B) Its assets exceed its liabilities. C) Its liabilities exceed its assets. D) Its capital exceeds its liabilities. Show Answer Correct Answer: C) Its liabilities exceed its assets. 9. In general, banks would prefer to acquire funds quickly by ..... rather than ..... A) Reducing loans; selling securities. B) Reducing loans; borrowing from the Fed. C) Borrowing from the Fed; reducing loans. D) "calling in" loans; selling securities. Show Answer Correct Answer: C) Borrowing from the Fed; reducing loans. 10. Through correspondent banking, large banks provide services to small banks, including A) Debt reduction. B) Loan guarantees. C) Foreign exchange transactions. D) Issuing stock. Show Answer Correct Answer: C) Foreign exchange transactions. 11. From 1876 to 1913, exchange rates were dictated by the ..... Each currency was convertible into gold at a specified rate. Thus, the exchange rate between two currencies was determined by their relative convertibility rates per ounce of gold. Each country used gold to support its currency. A) Gold Regime. B) Gold Standard. C) Gold Equivalent. D) Gold Exhange Rate. Show Answer Correct Answer: B) Gold Standard. 12. What is the purpose of the stock market? A) To regulate financial transactions. B) To provide companies with a way to raise capital. C) To provide loans to individuals. D) To provide investors with an opportunity to earn profits. Show Answer Correct Answer: B) To provide companies with a way to raise capital. 13. Which is the first commercial bank in India to launch a mutual fund? A) SBI. B) Bank of India. C) HDFC. D) Canara Bank. Show Answer Correct Answer: A) SBI. 14. Money market deals in ..... securities. A) Short term. B) Long term. C) Mid Term. D) Both Short term and Long Term. Show Answer Correct Answer: A) Short term. 15. ..... is based on the uncertain event whose result determined by chance or accident A) Gambling. B) Market fluctuations. C) Dead cat bouncing. D) Speculation. Show Answer Correct Answer: A) Gambling. 16. Investors with risk-loving characteristics will purchase securities with higher expected returns, lesser risks, and more liquidity. Do you agree with this statement? A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 17. Why is Bank Nifty considered an important index? A) It helps decide RBI's interest rates. B) It reflects the health of India's banking sector. C) It is used for fixed deposit pricing. D) It shows the performance of gold prices. Show Answer Correct Answer: B) It reflects the health of India's banking sector. 18. Which statement is correct in context of mutual fund A) A passive fund has higher fund expenses compare to active fund expenses. B) Irrespective of the kind of fund, fund expenses remain constant across schemes of a fund house. C) A passive fund has lower fund expenses than active fund. D) An active fund has lower fund expenses than a passive fund. Show Answer Correct Answer: C) A passive fund has lower fund expenses than active fund. 19. Pihak yang menyediakan barang modal dalam perjanjian leasing disebut A) Kreditur. B) Debitur. C) Lessor. D) Lessee. Show Answer Correct Answer: C) Lessor. 20. The fact that investors cannot distinguish good from bad companies leads to: A) Moral hazard problem. B) Adverse selection problem. C) Too-big-to-fail problem. D) None of the above. Show Answer Correct Answer: B) Adverse selection problem. 21. The rate of return on a corporate, municipal, or government bond is its ..... A) Compensation rate. B) Coupon rate. C) Interest rate. D) Par value. Show Answer Correct Answer: B) Coupon rate. 22. The quantity theory suggests a direct relationship between the money supply and: A) The value of money. B) The interest rate. C) The price level. D) The volume of goods. Show Answer Correct Answer: C) The price level. 23. Certificates of deposits (CDs) are a common investment because they: A) Are issued and insured by commercial banks. B) Require only a small investment and have various maturity rates. C) Are issued and insured by the U.S. government. D) Require only a small investment and pay high interest rates at maturity. Show Answer Correct Answer: B) Require only a small investment and have various maturity rates. 24. A private placement allows a firm to raise funds from a limited number of investors without a public offering. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 25. What is defined as the desire of people to hold money to satisfy short-term purchases? A) Share market. B) Transaction demand. C) Asset demand. D) Cash rate. Show Answer Correct Answer: B) Transaction demand. 26. They can be issued to individuals, corporations and companies during periods of tight liquidity when the deposit growth of banks is slow but the demand for credit is high. A) Commercial papers. B) Call money. C) Commercial bill. D) Certificate of deposit. Show Answer Correct Answer: D) Certificate of deposit. 27. What is defined as the degree to which an asset can be converted into cash? A) Liquidity. B) Swap rate. C) Credit. D) Debt. Show Answer Correct Answer: A) Liquidity. 28. Which of the following institutions promotes industrial finance in India? A) LIC. B) SEBI. C) RBI. D) IFCI. Show Answer Correct Answer: D) IFCI. 29. Which of the following organization is the regulator of mutual funds in India A) AMFI. B) CRISIL. C) RBI. D) SEBI. Show Answer Correct Answer: D) SEBI. 30. Which one of the following has members rather than customers? A) Commercial bank. B) Insurance companies. C) Building societies. D) Central bank. Show Answer Correct Answer: C) Building societies. 31. The spot exchange rate is the rate at which a foreign exchange dealer converts one currency into another currency on a ..... A) Year. B) Week. C) Day. D) None of the above. Show Answer Correct Answer: C) Day. 32. Types of Speculators A) Bull. B) Stag. C) Lame Duck. D) Bear. E) All of the above. Show Answer Correct Answer: E) All of the above. 33. Money paid to you by a financial institution when you deposit funds there. (How do you make money from bonds/cd's/savings accounts?) A) Allowance. B) Income. C) Interest. D) Tips. Show Answer Correct Answer: C) Interest. 34. Stock Exchange works as a mechanism for valuation of securities through the forces ofdemand and supply. Identify the related function of performed by the stock exchanges. A) Providing liquidity and marketability to existing securities. B) Safety of transaction. C) Pricing of security. D) Spreading of equity cult. Show Answer Correct Answer: C) Pricing of security. 35. What are dividends? A) Dividends are shares of stock distributed to employees. B) Dividends are loans given to shareholders by the company. C) Dividends are taxes imposed on corporate earnings. D) Dividends are payments made to shareholders from a company's profits. Show Answer Correct Answer: D) Dividends are payments made to shareholders from a company's profits. 36. An alternative method for estimating a stock price is to multiply the firm's earnings per share times the industry price earnings ratio. However, this ratio cannot be adjusted up or down to reflect specific characteristics of the firm. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 37. The Index of NSE is called ..... A) INDEX. B) LISTING. C) NIFTY. D) SENSEX. Show Answer Correct Answer: C) NIFTY. 38. The short term financial market is called the A) The money market. B) Forex market. C) The wholesale market. D) The stock market. Show Answer Correct Answer: A) The money market. 39. In the equation MV = PT, 'V' stands for: A) Variable costs. B) Velocity of circulation of money. C) Value of money. D) Volume of trade. Show Answer Correct Answer: B) Velocity of circulation of money. 40. What is the primary goal of speculators in financial markets? A) Reducing market volatility. B) Making a profit. C) Long-term stability. D) Increasing asset value. Show Answer Correct Answer: B) Making a profit. 41. What are the main components of the Indian financial system? A) Banking systems, insurance companies, stock exchanges, investment funds. B) Economic policies, trade agreements, foreign investments, tax regulations. C) Consumer behavior, market trends, inflation rates, employment statistics. D) Financial institutions, financial markets, financial instruments, regulatory bodies. Show Answer Correct Answer: D) Financial institutions, financial markets, financial instruments, regulatory bodies. 42. A bank with insufficient reserves can increase its reserves by A) Lending federal funds. B) Calling in loans. C) Buying short-term Treasury securities. D) Buying municipal bonds. Show Answer Correct Answer: B) Calling in loans. 43. Which type of insurance is specifically designed to cover damages to vehicles? A) Home insurance. B) Travel insurance. C) Life insurance. D) Car insurance. Show Answer Correct Answer: D) Car insurance. 44. What is the relationship between savers and borrowers in financial markets? A) Savers borrow funds from the market, while borrowers save those funds. B) Savers and borrowers have no interaction in financial markets. C) Savers supply funds to the market, and borrowers demand those funds, creating a cycle of lending and borrowing. D) Savers demand funds, and borrowers supply those funds. Show Answer Correct Answer: C) Savers supply funds to the market, and borrowers demand those funds, creating a cycle of lending and borrowing. 45. Institutions such as banks that collect funds from savers that can be loaned to borrowers are known as A) Credit Unions. B) Dividends. C) Financial assets. D) Financial intermediaries. Show Answer Correct Answer: D) Financial intermediaries. 46. Which of the following is a NOT possible advantage of direct financing? A) Reduce cost of the financial intermediary involved. B) Matching amounts of funds to be borrowed with those to be lent. C) The amount of mobilized capital is large. D) The amount of mobilized capital is limited. Show Answer Correct Answer: D) The amount of mobilized capital is limited. 47. Type of stock which is owned by few people, usually the companies' managers and not actively traded. A) Family-owned stock. B) Treasury-held stock. C) Publicly-held stock. D) Closely held stock. Show Answer Correct Answer: D) Closely held stock. 48. The Apex Body who controls the Capital Market of our country is A) RBI. B) SBI. C) SEBI. D) None of the above. Show Answer Correct Answer: C) SEBI. 49. Why do people invest in the stock market? A) To avoid financial risks and losses. B) To collect dividends and avoid taxes. C) To grow wealth and earn returns on investment. D) To support local businesses and communities. Show Answer Correct Answer: C) To grow wealth and earn returns on investment. 50. Which type of trader holds assets for weeks to months based on fundamental analysis? A) Day trader. B) Position trader. C) Options trader. D) Swing trader. Show Answer Correct Answer: B) Position trader. 51. High interest rates encourage businesses to invest more ..... A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 52. FINRA is a Government Organization that oversees the SEC A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 53. Which of the following is a feature of junk bonds? A) Low risk and low return. B) High risk and high return. C) Government-backed. D) Always pay dividends. Show Answer Correct Answer: B) High risk and high return. 54. What may cause government bond yields (interest rates on debt) to rise? A) A corruption crackdown. B) Government spending restraint. C) Lower inflation. D) Higher inflation. Show Answer Correct Answer: D) Higher inflation. 55. Weak-form market efficiency implies that: A) All private information is reflected in prices. B) Past price movements cannot be used to earn abnormal returns. C) Fundamental analysis is always profitable. D) Insider trading is allowed. Show Answer Correct Answer: B) Past price movements cannot be used to earn abnormal returns. 56. How do bonds function within financial markets? A) Bonds are primarily used for stock trading. B) Bonds function as debt instruments that provide fixed income to investors and financing to issuers. C) Bonds are a type of equity investment. D) Bonds only provide variable returns based on market performance. Show Answer Correct Answer: B) Bonds function as debt instruments that provide fixed income to investors and financing to issuers. 57. Which of the following is an example of a money market instrument? A) Equity shares. B) Treasury bills. C) Corporate bonds. D) Mutual funds. Show Answer Correct Answer: B) Treasury bills. 58. If M=100, V=5, and T=250, what is P according to the quantity theory of money? A) 10. B) 2. C) 1. D) 5. Show Answer Correct Answer: B) 2. 59. Money market mutual funds can invest in ..... A) Treasury bills. B) Certificate of deposits. C) Commercial paper. D) All of the above. E) Not Attempted. Show Answer Correct Answer: D) All of the above. 60. What type of information can be displayed in the Market Watch Window? A) Stock prices and trading volumes for the selected securities. B) Detailed company profiles. C) General market news. D) Historical trading data. Show Answer Correct Answer: A) Stock prices and trading volumes for the selected securities. ← 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 6Class 12 Business Studies Chapter 10 Financial Markets Quiz 7Class 12 Business Studies Chapter 10 Financial Markets Quiz 8Class 12 Business Studies Chapter 10 Financial Markets Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books