This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 6 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 6 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the main difference between Treasury bonds, Treasury notes, and Treasury bills? A) The minimum purchase requirement. B) The interest rate. C) The method of sale. D) The amount of time for maturity. Show Answer Correct Answer: D) The amount of time for maturity. 2. The use of income today that allows for greater production in the future. A) Savings. B) Investment. C) Risk. D) Secondary market. Show Answer Correct Answer: A) Savings. 3. What two investments are at opposite ends of the risk spectrum? A) Treasury notes and futures. B) Savings bonds and Treasury notes. C) Equities and futures. D) CDs and EE savings bonds. Show Answer Correct Answer: A) Treasury notes and futures. 4. When stock prices increase steadily as investors anticipate their ability to earn a profit A) Bull Market. B) Bear Market. C) All the above. D) None of the above. Show Answer Correct Answer: A) Bull Market. 5. Money market Institutions are ..... A) Investment Houses. B) Mortgage Banks. C) Reserve Bank of India. D) Commercial Banks and Discount Houses. Show Answer Correct Answer: D) Commercial Banks and Discount Houses. 6. What is a common strategy used by options traders? A) Avoiding market trends. B) Buying call options. C) Holding assets for years. D) Buying stocks for long-term growth. Show Answer Correct Answer: B) Buying call options. 7. Which of the following is a cash asset? A) Post office certificate. B) Deposits created out of loans. C) Bond. D) Share. Show Answer Correct Answer: B) Deposits created out of loans. 8. Derivatives increase leverage A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 9. ) If you expect that the price of a stock will decline, which of the following are you most likely do?. A) Buy a put option on the stock. B) Buy a call option on the stock. C) Write a put option on the stock. D) Buy the stock on margin. Show Answer Correct Answer: A) Buy a put option on the stock. 10. Which of the following is a liability on a retail bank's balance sheet? A) Bills. B) Investments. C) Cash. D) Deposits. Show Answer Correct Answer: D) Deposits. 11. Liquidity in financial terms is A) A feature of money only. B) To lower the rate of return for an asset. C) The ease with which an asset can be sold at a published market price. D) The best measure of risk of a financial asset. Show Answer Correct Answer: C) The ease with which an asset can be sold at a published market price. 12. Since 1998 the DMO has issued gilts on behalf of the Treasury and in 2000 it took over responsibility for issuing Treasury bills (T-bills) and thus managing the government's short-term cash needs.Who is the DMO? A) Department of Management and OMOs. B) Debt Management Office. C) Debt and Money Supply Office. D) Department of Money and Overheads. Show Answer Correct Answer: B) Debt Management Office. 13. Funds that collect and invest income until payments are made to eligible (retired) people are known as A) Bear markets. B) Bull markets. C) Pension funds. D) Mutual funds. Show Answer Correct Answer: C) Pension funds. 14. The government agency responsible for regulating the stock market? A) Federal Reserve Board. B) Federal Trade Commission. C) Interstate Commerce Commission. D) Securities and Exchange Commission. Show Answer Correct Answer: D) Securities and Exchange Commission. 15. The Second-Tier Securities Market aims to encourage ..... to access stock market resources. A) Large multinational corporations. B) Small and medium-scale enterprises. C) Government agencies only. D) Foreign investors exclusively. Show Answer Correct Answer: B) Small and medium-scale enterprises. 16. Which best describes an investor's primary goal? A) To earn a profit. B) To lose a profit. C) All the above. D) None of the above. Show Answer Correct Answer: A) To earn a profit. 17. Which of these is NOT a role of RBI? A) Regulating stock markets. B) Managing forex reserves. C) Controlling inflation. D) Regulating stock markets. Show Answer Correct Answer: A) Regulating stock markets. 18. Dividends are paid A) From profits during the year. B) Past 3 years profits. C) From general reserve. D) None of the above. Show Answer Correct Answer: A) From profits during the year. 19. How do households help fuel economic growth by saving money? A) Providing $ to banks to lend to businesses. B) Spending their savings. C) Using their savings for an emergency. D) Giving their savings to friends and family. Show Answer Correct Answer: A) Providing $ to banks to lend to businesses. 20. A rise in "Sensex" means A) A rise in prices of shares of all companies registered with the Bombay Stock Exchange. B) An overall rise in prices of shares of all companies registered with the National Stock Exchange. C) An overall rise in prices of shares of group of companies registered with the Bombay Stock Exchange. D) A rise in prices of shares of all companies belonging to a group of companies registered with the Bombay Stock Exchange. Show Answer Correct Answer: C) An overall rise in prices of shares of group of companies registered with the Bombay Stock Exchange. 21. It allows the shareholders to convert their shares into a stated number of ordinary shares on a certain date. A) Convertible. B) Cumulative. C) Callable. D) Puttable. Show Answer Correct Answer: A) Convertible. 22. Primary markets are used to: A) Conduct inter-bank lending. B) Issue securities for the first time. C) Hedge currency risks. D) Trade existing shares. Show Answer Correct Answer: B) Issue securities for the first time. 23. Which category asset class holder have voting rights in a company A) Debt instrument holder. B) A & B. C) Preference Share Holder. D) Equity Share Holder. Show Answer Correct Answer: D) Equity Share Holder. 24. Banks hold capital because A) Higher capital increases the return on equity. B) They are required to by regulatory authorities. C) It increases the likelihood of bankruptcy. D) Higher capital increases the returns to the owners. Show Answer Correct Answer: B) They are required to by regulatory authorities. 25. When a stock pays an income that is based off the company's profits this is called A) A discount from par. B) A derivative. C) An option. D) A dividend. Show Answer Correct Answer: D) A dividend. 26. Which of the following is a type of security traded in money markets? A) Corporate bonds. B) Stocks. C) Treasury bills. D) Real estate. Show Answer Correct Answer: C) Treasury bills. 27. Which of the following can not be described as involving disintermediation? A) Nitin parks his funds in a FD with a bank. B) A corporation takes out loans from a bank. C) A corporation buys a short-term security issued by another corporation. D) Both A and B of the above. Show Answer Correct Answer: D) Both A and B of the above. 28. The most commonly used multiple to value banks: A) Price to Sales. B) Price to Book. C) Price to Earnings. D) EV to EBITDA. Show Answer Correct Answer: B) Price to Book. 29. A strategy of holding different kinds of investments to minimize risk A) Secondary market. B) Risk. C) Portfolio diversification. D) Primary market. E) Savings. Show Answer Correct Answer: C) Portfolio diversification. 30. Marine insurance provides protection mainly against: A) Illness and hospitalization. B) Loss or damage during transit over sea. C) Loss of income due to unemployment. D) Life risks due to accidents. Show Answer Correct Answer: B) Loss or damage during transit over sea. 31. What are stock dividends? A) Additional shares of a company's stock given to shareholders at no cost. B) Physical certificates representing ownership in a company. C) A tax imposed on stock transactions. D) A type of bond issued by a company to raise capital. Show Answer Correct Answer: A) Additional shares of a company's stock given to shareholders at no cost. 32. Buying stock in order to sell it quickly in an effort to have your money grow faster than the general level of stock prices is known as A) Short-term investing. B) Early phase of development. C) Diversification. D) Long-term investing. Show Answer Correct Answer: A) Short-term investing. 33. Apa yang dimaksud dengan bond indenture dalam obligasi korporasi? A) Surat perjanjian antara pemegang saham. B) Dokumen perpajakan tahunan. C) Sertifikat kepemilikan perusahaan. D) Kontrak yang menyatakan hak dan kewajiban pemberi pinjaman dan peminjam. Show Answer Correct Answer: D) Kontrak yang menyatakan hak dan kewajiban pemberi pinjaman dan peminjam. 34. When one party to a transaction has incentives to engage in activities detrimental to the other party, there exists a problem of A) Pre-contractual opportunism. B) Split incentives. C) Moral hazard. D) None of the above. Show Answer Correct Answer: C) Moral hazard. 35. Which of the following derivatives is classified as a contingent claim? A) Futures contracts. B) Interest rate swaps. C) Credit default swaps. D) None of the above. Show Answer Correct Answer: C) Credit default swaps. 36. The Securities and Exchange Commission is responsible for ..... A) Bank and Credit Union oversight. B) The free market economy and the money supply. C) National Defense and the budget. D) Regulating security markets and protecting investors. Show Answer Correct Answer: D) Regulating security markets and protecting investors. 37. Which financial instrument represents ownership in a corporation? A) Stocks. B) Certificate of deposit. C) Commodities. D) Treasury bond. Show Answer Correct Answer: A) Stocks. 38. Which component of NEAT allows traders to view the latest market updates and corporate actions? A) Ticker Window. B) Inquiry Window. C) Message Window. D) Snap Quote. Show Answer Correct Answer: A) Ticker Window. 39. What is the significance of stocks in financial markets? A) Stocks guarantee a fixed return on investment. B) Stocks are significant as they provide capital for companies, investment opportunities for individuals, and contribute to market liquidity and price discovery. C) Stocks are only for large corporations. D) Stocks are primarily used for personal loans. Show Answer Correct Answer: B) Stocks are significant as they provide capital for companies, investment opportunities for individuals, and contribute to market liquidity and price discovery. 40. What is it called when the stock market rises for a period of time? A) Stock market. B) Bull market. C) Bear market. D) Growth market. Show Answer Correct Answer: B) Bull market. 41. Government Securities are issued by agencies such as ..... A) Central Government. B) State Government. C) Semi Government Authorities. D) All of the above. Show Answer Correct Answer: D) All of the above. 42. In a competitive resource market, the firm employing a resource such as labor is A) Price maker. B) Wage taker. C) Revenue taker. D) Cost maker. Show Answer Correct Answer: B) Wage taker. 43. The demand for a resource is derived from the A) Demand for the products it helps produce. B) Price of the resource. C) Supply of the resource. D) Income of the firm selling the resource. Show Answer Correct Answer: A) Demand for the products it helps produce. 44. Which of these is NOT part of the Bank of England? A) FCA. B) PRA. C) FPC. D) None of the above. Show Answer Correct Answer: A) FCA. 45. John's review on JKH share in the Colombo stock exchange is LKR 182. Its EPS is LKR 16.25. The last 10 years average PER comes to 15 times. He decides to purchase the particular share due to its low PER. His investment strategy can be recognized as A) Growth investing. B) Contrarian investing. C) Momentum investing. D) Value investing. Show Answer Correct Answer: D) Value investing. 46. What will be the future value of Rs.12, 000 invested today with an annual rate of return of 20% per annum after one year? A) Rs. 14, 500. B) Rs. 14, 000. C) Not Attempted. D) Rs. 14, 400. E) Rs, 14, 250. Show Answer Correct Answer: D) Rs. 14, 400. 47. A market where fixed income instruments, such as bonds, certificate of deposits, debentures and government securities are traded. A) Equity Market. B) Debt Market. C) Both of the above. D) None of the above. Show Answer Correct Answer: B) Debt Market. 48. A major player in the money market is the ..... A) Commercial Bank. B) Reserve Bank of India. C) Central Bank. D) State Bank of India. Show Answer Correct Answer: A) Commercial Bank. 49. A market for existing or second hand securities is A) Secondary Market. B) Primary Market. C) Both the above. D) None. Show Answer Correct Answer: A) Secondary Market. 50. A market that gives companies a way to raise needed capital and gives investors an opportunity for gain by allowing those companies' stock shares to be traded A) Debt Market. B) Equity Market. C) Over-the-counter Market. D) Auction Market. Show Answer Correct Answer: B) Equity Market. 51. Which one is a characteristic of secondary markets? A) Shares are issued for the first time. B) Trading among investors. C) Only private placements allowed. D) Only bonds are traded. Show Answer Correct Answer: B) Trading among investors. 52. What is an order telling a broker to buy or sell a specific security at the best currently available price? A) Market order. B) Limit order. C) None of the answers. D) Both market and limit order. Show Answer Correct Answer: A) Market order. 53. Which of the following is NOT a type of financial security? A) Futures contracts. B) Real estate. C) Bonds. D) Stocks. Show Answer Correct Answer: B) Real estate. 54. Jaringan Pasar OTC Terbesar di Amerika adalah ..... A) NASDAQ. B) OTC Markets Group. C) CBOE. D) NYSE. Show Answer Correct Answer: A) NASDAQ. 55. Which of the following is NOT a symbol used in stock summaries? A) 52 Weeks. B) DIV. C) % CHG. D) 100s. Show Answer Correct Answer: C) % CHG. 56. What is the difference between a bull market and a bear market? A) A bull market indicates rising prices, while a bear market indicates falling prices. B) A bull market indicates falling prices, while a bear market indicates rising prices. C) A bull market is characterized by high volatility, while a bear market is stable. D) Both bull and bear markets indicate stable prices. Show Answer Correct Answer: A) A bull market indicates rising prices, while a bear market indicates falling prices. 57. How does monetary policy impact consumer spending? A) By controlling inflation directly. B) By adjusting interest rates. C) By increasing taxes. D) By regulating stock prices. Show Answer Correct Answer: B) By adjusting interest rates. 58. What did the Banking Act of 1933 (Glass-Steagall Act) establish? A) It established the SEC to regulate stock markets. B) It created the Federal Reserve System. C) It abolished all bank regulations. D) It established the FDIC, which ensures depositors when a bank fails. Show Answer Correct Answer: D) It established the FDIC, which ensures depositors when a bank fails. 59. In financial markets, the period of maturity less than one year of financial instrument is classified as ..... A) Capital term. B) Short-term. C) Intermediate term. D) Long-term. Show Answer Correct Answer: B) Short-term. 60. People who own stocks are guaranteed a return on the money they have invested in stocks. 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 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