This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 7 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 7 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. A country is said to have "twin deficit", if it has: A) Current account deficit and shortage of FX reserves. B) Current account deficit and budget expenditure is more than budget revenue. C) Current account deficit and deficit in the social insurance system. D) Current account deficit and deficit of electricity. Show Answer Correct Answer: B) Current account deficit and budget expenditure is more than budget revenue. 2. The company made a bonus issue of 1 for 4. You held a total of 5, 000 shares of the company before the bonus issue was made. After the bonus issue, what the total number of shares owned by you. A) 1, 000 shares. B) 1, 250 shares. C) 6, 000 shares. D) 6, 250 shares. Show Answer Correct Answer: D) 6, 250 shares. 3. Which organizations was not created under Bretton Woods era? A) The International Bank for Reconstruction and Development (World Bank). B) The International Monetary Fund (IMF). C) United Nation (UN). D) None of the above. Show Answer Correct Answer: C) United Nation (UN). 4. Venture capitalists typically seek a return on investment within a few months A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 5. The capital market is divided into: A) Domestic and international markets. B) Primary market and secondary market. C) Debt market and equity market. D) Spot market and futures market. Show Answer Correct Answer: B) Primary market and secondary market. 6. In the absence of regulation, banks would probably hold A) Too much capital, reducing the efficiency of the payments system. B) Too much capital, making it more difficult to obtain loans. C) Too much capital, reducing the profitability of banks. D) Too little capital. Show Answer Correct Answer: D) Too little capital. 7. Which of these is a feature of Foreign Direct Investment (FDI)? A) Direct control over business operations. B) Minimal regulatory oversight. C) Short-term capital flow. D) High liquidity. Show Answer Correct Answer: A) Direct control over business operations. 8. Banks provide which of the following A) Debit cards. B) Loans. C) Check writing services. D) All of the above. Show Answer Correct Answer: D) All of the above. 9. How are savings and investment related? A) Savings and investment are unrelated; savings is for emergencies, while investment is for profit. B) Savings provide the funds that are used for investment. C) Investment is a form of savings that earns interest. D) Savings and investment are the same thing. Show Answer Correct Answer: B) Savings provide the funds that are used for investment. 10. Which type of money must be legally accepted for payment of debts? A) Commodity money. B) Plastic money. C) Token money. D) Legal tender. Show Answer Correct Answer: D) Legal tender. 11. Keuntungan utama menggunakan leasing bagi pelaku usaha adalah A) Barang modal langsung menjadi milik pelaku usaha tanpa pembayaran. B) Tidak adanya risiko kehilangan barang. C) Angsuran yang dilakukan tidak memerlukan perjanjian hukum. D) Tidak perlu mengeluarkan modal besar di awal untuk membeli barang. Show Answer Correct Answer: D) Tidak perlu mengeluarkan modal besar di awal untuk membeli barang. 12. What is behavioral finance? A) A method for predicting stock prices based on historical data. B) A strategy for maximizing profits through high-risk investments. C) A theory that suggests markets are always efficient and rational. D) Behavioral finance is a field that combines psychology and finance to understand how emotional and cognitive factors influence investors' decisions. Show Answer Correct Answer: D) Behavioral finance is a field that combines psychology and finance to understand how emotional and cognitive factors influence investors' decisions. 13. What is one of the key benefits of financial intermediation? A) Increased regulatory oversight. B) Higher interest rates for savers. C) Efficient allocation of capital. D) Reduced consumer protection. Show Answer Correct Answer: C) Efficient allocation of capital. 14. What is a money market mutual fund? A) Any single financial asset with a maturity of one year or less. B) Any investment fund made up of a variety of financial assets. C) A financial asset that allows investors to own a variety of short-term financial asset. D) A form of time deposit with a maturity date ranging from 6 months to 5 years. Show Answer Correct Answer: C) A financial asset that allows investors to own a variety of short-term financial asset. 15. Melindungi mata uang dari spekulan adalah tujuan dari ..... A) Pasar modal. B) Pembatasan mata uang. C) Keuntungan investor. D) Pasar valuta asing. Show Answer Correct Answer: B) Pembatasan mata uang. 16. Neither income gap analysis nor duration gap analysis are useful tools for telling a financial institution manager the institution's degree of exposure to interest-rate risk. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 17. Which of the Following correctly describes the Securities and Exchange Commission? A) A governmental agency hat regulates federal spending. B) A private commission that exchanges money. C) A federal agency that maintains fair and efficient markets. D) An Interest group that lobbies for regulations in economics. Show Answer Correct Answer: C) A federal agency that maintains fair and efficient markets. 18. A ..... is defined as an investment report to potential investors. A) Portfolio. B) Prospectus. C) Pension fund. D) None of the above. Show Answer Correct Answer: B) Prospectus. 19. In recent years the interest paid on checkable and nontransaction deposits has accounted for around ..... of total bank operating expenses, while the costs involved in servicing accounts have been approximately ..... of operating expenses. A) 5 percent; 85 percent. B) 55 percent; 4 percent. C) 45 percent; 55 percent. D) 50 percent; 30 percent. Show Answer Correct Answer: A) 5 percent; 85 percent. 20. Which of the following can be described as involving direct finance? A) A pension fund manager buy commercial paper from the issuing corporation. B) People buy shares in a mutual fund. C) A corporation's stock is traded in an OTC market. D) A pension fund manager buy commercial paper in the secondary market. Show Answer Correct Answer: A) A pension fund manager buy commercial paper from the issuing corporation. 21. How do regulatory bodies affect financial markets? A) Regulatory bodies increase market volatility and uncertainty. B) Regulatory bodies ensure transparency, fairness, and stability in financial markets. C) Regulatory bodies eliminate all risks in financial markets. D) Regulatory bodies focus solely on maximizing profits for investors. Show Answer Correct Answer: B) Regulatory bodies ensure transparency, fairness, and stability in financial markets. 22. State Governments issue only bonds or dated securities these are called A) The State Development Loans (SDLs). B) The state government dated securities. C) The state government funding loans. D) The state government borrowings. Show Answer Correct Answer: A) The State Development Loans (SDLs). 23. Which of the following role is NOT belonged to financial market? A) Distribute at a large scale to the growth of national GDP. B) Tool for macroeconomic stabilization and risk reduction. C) Improve the efficiency of using financial resources. D) Risk sharing and dispersion. Show Answer Correct Answer: A) Distribute at a large scale to the growth of national GDP. 24. If you can make abnormal profits (after costs and risks) by investing in stocks using fundamental analysis, it means that the market is ..... A) Semi-strong form inefficient. B) Weak form efficient. C) Semi-strong form efficient. D) Weak form inefficient. Show Answer Correct Answer: A) Semi-strong form inefficient. 25. Which of these is an organized market? A) Street vendors. B) Stock exchange. C) Informal lending. D) Friends lending money. Show Answer Correct Answer: B) Stock exchange. 26. What is a key characteristic of speculative transactions? A) Guaranteed profits. B) Avoidance of risk. C) Focus on long-term investments. D) Reliance on market fluctuations. Show Answer Correct Answer: D) Reliance on market fluctuations. 27. Some of the key elements in the financial markets are A) Lenders and borrowers. B) Financial Intermediaries. C) Financial instruments. D) All of the mentioned options. Show Answer Correct Answer: D) All of the mentioned options. 28. Below are all types of return except: A) Possible return. B) Required return. C) Actual return. D) Expected return. Show Answer Correct Answer: A) Possible return. 29. Shares are the share in a company's profit? A) Yes. B) No. C) All the above. D) None of the above. Show Answer Correct Answer: A) Yes. 30. This is the approved capital which an organization gives to the investors. A) Issued Share Capital. B) Subscribed Share Capital. C) Authorized Share Capital. D) Paid Up Capital. Show Answer Correct Answer: A) Issued Share Capital. 31. What type of market is the stock exchange? A) Money Market. B) Capital Market. C) Derivatives Market. D) Bond Market. Show Answer Correct Answer: B) Capital Market. 32. If the RBA bought CGS in the cash market what effect would this have on the supply of cash and the cash rate? A) A decrease in the supply of cash and a rise in the cash rate. B) An increase in the supply of cash and a fall in the cash rate. C) An increase in the supply of cash and a rise in the cash rate. D) A decrease in the supply of cash and a fall in the cash rate. Show Answer Correct Answer: B) An increase in the supply of cash and a fall in the cash rate. 33. As a result of a bonus share issue of a company, A) Reserves will be capitalized. B) Number of shares will not increase. C) Share price will increase in the market. D) New equity capital will be mobilized. Show Answer Correct Answer: A) Reserves will be capitalized. 34. What does "FINRA" stand for? A) Federal Insurance Regulatory Advisory. B) Financial Industry Regulatory Authority. C) Federal Institute for Religious Authority. D) None of the Answers are Correct. Show Answer Correct Answer: B) Financial Industry Regulatory Authority. 35. Which of the following would NOT directly cause the price of a stock to change? A) A shiny new corporate office building in sunny Florida. B) Supply and Demand. C) Company earnings. D) How investors feel about the company. Show Answer Correct Answer: A) A shiny new corporate office building in sunny Florida. 36. Which of the following is a function of the financial system? A) Mobilization of savings. B) Allocation of resources. C) Facilitating payments. D) All of the above. Show Answer Correct Answer: D) All of the above. 37. They invest a large proportion of pension fund contributions in the stock market. A) Savings Bank. B) Securities Firms. C) Pension Funds. D) Insurance Companies. Show Answer Correct Answer: C) Pension Funds. 38. Systematic risk in equities represented by A) Beta. B) Gamma. C) Delta. D) Alfa. Show Answer Correct Answer: A) Beta. 39. A futures contract differs from an option because a futures contract: A) Has no expiry date. B) Gives the right but not obligation. C) Creates an obligation for both buyer and seller. D) Is only used for speculation. Show Answer Correct Answer: C) Creates an obligation for both buyer and seller. 40. Two toy companies decide to merge because they believe they will be able to develop more ideas for new toys and produce and sell them faster, at lower costs. A) Horizontal. B) Vertical. C) Conglomerate. D) None of the above. Show Answer Correct Answer: A) Horizontal. 41. How do economic indicators influence financial markets? A) Financial markets are solely influenced by political events. B) Economic indicators only affect consumer behavior, not financial markets. C) Economic indicators influence financial markets by affecting investor confidence and central bank policies. D) Economic indicators have no impact on financial markets. Show Answer Correct Answer: C) Economic indicators influence financial markets by affecting investor confidence and central bank policies. 42. Which of the following derivatives provide payoffs that are non-linearly related to the payoffs of the underlying? A) Options. B) Forwards. C) Interest-rate swaps. D) None of the above. Show Answer Correct Answer: A) Options. 43. Which market deals with short-term debt instruments? A) Secondary market. B) Money market. C) Futures market. D) Capital market. Show Answer Correct Answer: B) Money market. 44. Liquidity in financial markets refers to: A) Availability of cash reserves in RBI vaults. B) Increase in stock prices. C) Availability of foreign exchange. D) Ease of converting assets to cash. Show Answer Correct Answer: D) Ease of converting assets to cash. 45. Which of the following is the only correct example of equity? A) A share of stock. B) A treasury bill. C) A treasury bond. D) A long-term certificate of deposit. Show Answer Correct Answer: A) A share of stock. 46. The amount of assets per dollar of equity capital is called the A) Equity multiplier. B) Asset multiplier. C) Equity ratio. D) Asset ratio. Show Answer Correct Answer: D) Asset ratio. 47. It is a legal documents which certify the ownership. A) Bond Certificate. B) Stock Certificates. C) Record Book. D) Treasury Bill. Show Answer Correct Answer: B) Stock Certificates. 48. . It is a method by which banks borrow from each other to be able to maintain the cash reserve ratio. A) Commercial bill. B) Commercial papers. C) Call money. D) None of the above. Show Answer Correct Answer: C) Call money. 49. The ability to produce value and then acquire goods and services at a later date is money's function as ..... A) A medium of exchange. B) A unit of account. C) A store of value. D) None of the above. Show Answer Correct Answer: C) A store of value. 50. Central banks support financial institutions and governments bailouts failing firms, which leads to ..... A) Laziness. B) Moral practices. C) Moral hazard. D) Dukes of Hazzard. Show Answer Correct Answer: C) Moral hazard. 51. Which of the following characteristics differentiates junk bonds from investment-grade bonds? A) Junk bonds typically have higher liquidity. B) Junk bonds are issued by governments only. C) Junk bonds have a higher probability of default. D) Junk bonds offer guaranteed returns. Show Answer Correct Answer: C) Junk bonds have a higher probability of default. 52. The most liquid of the money market securities are A) Repurchase agreements. B) Treasury bills. C) Banker's acceptances. D) Commercial paper. Show Answer Correct Answer: B) Treasury bills. 53. Which term refers to the possibility of an investor losing some or all of an investment? A) Risk. B) Probability. C) All the above. D) None of the above. Show Answer Correct Answer: A) Risk. 54. Banks' asset portfolios include state and local government securities because A) They help to attract business from these government entities. B) Banks consider them helpful in attracting accounts of Federal employees. C) The Federal Reserve requires member banks to buy securities from state and local governments located within their respective Federal Reserve districts. D) There is no default-risk with state and local government securities. Show Answer Correct Answer: A) They help to attract business from these government entities. 55. What role do primary markets play in the financial system? A) They deal exclusively with the trading of commodities. B) They facilitate the initial sale of stocks and bonds to the public. C) They are the only markets where futures are traded. D) They provide short-term loans to corporations. Show Answer Correct Answer: B) They facilitate the initial sale of stocks and bonds to the public. 56. Debenture holders of a company are its A) Owners. B) Debtors. C) Directors. D) Creditors. Show Answer Correct Answer: D) Creditors. 57. Which regulator oversees pension funds in India? A) SEBI. B) RBI. C) IRDAI. D) PFRDA. Show Answer Correct Answer: D) PFRDA. 58. What is the name of the fee paid for an insurance policy? A) Pension. B) Interest. C) Contribution. D) Premium. Show Answer Correct Answer: D) Premium. 59. A deposit outflow results in equal reductions in A) Loans and reserves. B) Assets and liabilities. C) Reserves and capital. D) Assets and capital. Show Answer Correct Answer: B) Assets and liabilities. 60. Why is an active secondary market important? A) It increases company profits. B) It provides liquidity to investors. C) It eliminates risk. D) It reduces taxation. Show Answer Correct Answer: B) It provides liquidity to investors. ← 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 8Class 12 Business Studies Chapter 10 Financial Markets Quiz 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books