This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 8 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 8 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. When you invest in a mutual fund, A) Your money is invested in a variety of insurance policies. B) Money that has been pooled from many investors is invested in a variety of stocks & bonds. C) You have easier access to your money than a savings account. D) You are guaranteed a fixed return on your investment. Show Answer Correct Answer: B) Money that has been pooled from many investors is invested in a variety of stocks & bonds. 2. Bankers' concerns regarding the optimal mix of excess reserves, secondary reserves, borrowings from the Fed, and borrowings from other banks to deal with deposit outflows is an example of A) Managing interest rate risk. B) Liquidity management. C) Managing credit risk. D) Liability management. Show Answer Correct Answer: B) Liquidity management. 3. Indian Financial System is a link between A) Borrowers and seekers of fund. B) Bank and agent. C) Businessman and RBI. D) Insurance and banking. Show Answer Correct Answer: A) Borrowers and seekers of fund. 4. Stocks that represent ownership shares in corporations A) Futures contract. B) Bond. C) Equities. D) Financial system. E) Capital market. Show Answer Correct Answer: C) Equities. 5. How do interest rates affect financial markets? A) Higher interest rates always lead to lower stock prices. B) Interest rates have no impact on consumer behavior. C) Interest rates affect financial markets by influencing borrowing costs, consumer spending, and investment, which in turn impact stock prices and economic growth. D) Interest rates only affect government bonds. Show Answer Correct Answer: C) Interest rates affect financial markets by influencing borrowing costs, consumer spending, and investment, which in turn impact stock prices and economic growth. 6. Which of the following is NOT a characteristic of the money market? A) Trading of foreign currencies. B) Investment in real estate. C) Issuance of corporate bonds. D) Trading of long-term securities. Show Answer Correct Answer: D) Trading of long-term securities. 7. Commercial bills market is a part of A) Organised money market. B) Unorganised money market. C) Stock market. D) Capital market. E) None of the above. Show Answer Correct Answer: A) Organised money market. 8. Stocks or documents that represent a claim on the income and property of the borrower are known as A) Mutual funds. B) 401(k) Plans. C) Financial assets. D) Financial intermediaries. Show Answer Correct Answer: C) Financial assets. 9. Financial intermediaries provide customers with liquidity services. Liquidity services A) Make it easier for customers to conduct transactions. B) Allow customers to have a cup of coffee while waiting in the lobby. C) Are a result of the asymmetric information problem. D) Are another term for asset transformation. Show Answer Correct Answer: A) Make it easier for customers to conduct transactions. 10. Are the buying and selling of stocks centralized activities? Why or why not? A) No, there are many stock markets around the world, and they are independent of one another. B) Yes, the New York Stock Exchange is the principal exchange for the nations of the world. C) All the above. D) None of the above. Show Answer Correct Answer: A) No, there are many stock markets around the world, and they are independent of one another. 11. What is the significance of risk pooling in insurance? A) Risk pooling is significant because it spreads risk among many policyholders, reducing the financial impact of individual claims. B) Risk pooling eliminates the need for insurance altogether. C) Risk pooling increases the number of claims per policyholder. D) Risk pooling only benefits high-risk individuals. Show Answer Correct Answer: A) Risk pooling is significant because it spreads risk among many policyholders, reducing the financial impact of individual claims. 12. What is the main advantage of holding liquid assets? A) They require no management or oversight. B) They are immune to inflation. C) They generate higher long-term returns. D) They can be quickly converted to cash with minimal loss of value. Show Answer Correct Answer: D) They can be quickly converted to cash with minimal loss of value. 13. A strong market with prices moving up for several months or years in a row is known as a A) Bull market. B) Bear market. C) All the above. D) None of the above. Show Answer Correct Answer: A) Bull market. 14. What are the two key functions of a central bank? A) 1.To maintain financial stability2.To maintain macroeconomic stability. B) 1.To maintain financial stability2.To maintain microeconomic stability. C) 1.To maintain global stability2.To maintain macroeconomic stability. D) 1.To meet all objectives of the country2.To maintain macroeconomic stability. Show Answer Correct Answer: A) 1.To maintain financial stability2.To maintain macroeconomic stability. 15. ..... is a short-term unsecured promissory note issued by reputed business organizations at a price lower than its face value and redeemable at par. A) Treasury bill. B) Commercial paper. C) Certificate of deposit. D) Promissory Note. Show Answer Correct Answer: B) Commercial paper. 16. How do well-functioning financial markets contribute to economic growth? A) By controlling interest rates. B) By increasing taxes. C) By providing access to capital. D) By reducing inflation. Show Answer Correct Answer: C) By providing access to capital. 17. Common stockholders are also known as residual claimants. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 18. Which market deals with long-term securities? A) Forex market. B) Money market. C) Capital market. D) Commodity market. Show Answer Correct Answer: C) Capital market. 19. What does the term negative externality refer to in economics? A) Social costs associated with private production. B) Private costs associated with public production. C) Diseconomies of scale in production. D) Non-price competition between firms in an industry. Show Answer Correct Answer: A) Social costs associated with private production. 20. Capital market do not provide A) Short term Funds. B) Long term Funds. C) Equity Funds. D) Debenture Funds. Show Answer Correct Answer: A) Short term Funds. 21. SEBI was constituted on A) 04 April 1992. B) 21 February 1992. C) 30 January 1992. D) 12 April 1988. Show Answer Correct Answer: D) 12 April 1988. 22. High-risk bonds issued by new companies are often called ..... A) James Bonds. B) Junk Bonds. C) Municipal Bonds. D) Savings Bonds. Show Answer Correct Answer: B) Junk Bonds. 23. The holders of which instrument are members of the company and have voting rights? A) Debenture. B) Commercial Paper. C) Equity. D) Treasury Bill. E) Not Attempted. Show Answer Correct Answer: C) Equity. 24. The Bank Secrecy Act requires financial institutions to report suspicious cash transactions over what amount? A) $ 10, 000. B) $ 100, 000. C) $ 1 Million. D) $ 50, 000. Show Answer Correct Answer: A) $ 10, 000. 25. What are the main types of financial markets? A) Real Estate Markets. B) Stock Markets. C) Capital Markets, Money Markets, Derivatives Markets, Foreign Exchange Markets, Commodity Markets. D) Insurance Markets. Show Answer Correct Answer: C) Capital Markets, Money Markets, Derivatives Markets, Foreign Exchange Markets, Commodity Markets. 26. In the absence of inflation, what would the nominal risk-free rate equal? A) Zero. B) Real risk-free rate. C) Market interest rate. D) Expected inflation. Show Answer Correct Answer: B) Real risk-free rate. 27. A company that accepts deposits, makes loans, pays interest to depositors, and pays dividends to its owners. A) Commercial banks. B) Savings & Loan Association. C) Savings institution. D) Pension fund. Show Answer Correct Answer: A) Commercial banks. 28. What is a real risk-free rate? A) The rate a risky security would pay if inflation were expected. B) The rate a risk-free security would pay if inflation were high. C) The rate a risky security would pay if no inflation were expected. D) The rate a risk-free security would pay if no inflation were expected. Show Answer Correct Answer: D) The rate a risk-free security would pay if no inflation were expected. 29. Which is the best synonym for the bonds that are used to raise corporate capital? A) Stocks. B) Payments. C) Loans. D) Taxes. Show Answer Correct Answer: C) Loans. 30. Apa yang dimaksud dengan "share of stock" dalam sebuah perusahaan? A) Representasi kepemilikan dalam perusahaan. B) Surat utang perusahaan. C) Hak untuk mengelola perusahaan. D) Pinjaman dari bank. Show Answer Correct Answer: A) Representasi kepemilikan dalam perusahaan. 31. The value of a currency in terms of another is not known directly is called as ..... A) Cross rate. B) Forward rate. C) Currency swape. D) None of the above. Show Answer Correct Answer: A) Cross rate. 32. Why is liquidity important for investors? A) It reduces taxes. B) It ensures easy entry & exit. C) It increases inflation. D) It sets accounting standards. Show Answer Correct Answer: B) It ensures easy entry & exit. 33. When a $ 10 check written on the First National Bank of Chicago is deposited in an account at Citibank, then A) The liabilities of the First National Bank increase by $ 10. B) The reserves of the First National Bank increase by $ 10. C) The liabilities of Citibank increase by $ 10. D) The assets of Citibank fall by $ 10. Show Answer Correct Answer: C) The liabilities of Citibank increase by $ 10. 34. Protecting the public against ..... is a function of the stock exchange. A) Deflation. B) Inflation. C) High taxation. D) Fraud. Show Answer Correct Answer: D) Fraud. 35. Which bubble is a prime example of the effects of herd instinct? A) The cryptocurrency boom of the 2010s. B) The gold rush of the 19th century. C) The real estate bubble of the early 2000s. D) The dotcom bubble of the late 1990s and early 2000s. Show Answer Correct Answer: D) The dotcom bubble of the late 1990s and early 2000s. 36. Which component allows the user to quickly access various functions using functional buttons? A) Inquiry Window. B) Tool Bar. C) Snap Quote. D) Market Watch Window. Show Answer Correct Answer: B) Tool Bar. 37. What is investment analysis and its importance? A) Investment analysis is a process that guarantees profits in all market conditions. B) Investment analysis is crucial for making informed investment decisions, optimizing portfolio performance, and minimizing financial risks. C) Investment analysis is only for large corporations and not individuals. D) Investment analysis focuses solely on historical data without future projections. Show Answer Correct Answer: B) Investment analysis is crucial for making informed investment decisions, optimizing portfolio performance, and minimizing financial risks. 38. Bank capital has both benefits and costs for the bank owners. Higher bank capital ..... the likelihood of bankruptcy, but higher bank capital ..... the return on equity for a given return on assets. A) Reduces; reduces. B) Increases; reduces. C) Increases; increases. D) Reduces; increases. Show Answer Correct Answer: A) Reduces; reduces. 39. Real wages would decline if the A) Prices of goods and services rose more rapidly than nominal-wage rates. B) Prices of goods and services rose less rapidly than nominal-wage rates. C) Prices of goods and services and wages rates both increase. D) Prices of goods and services and wage rates both decrease. Show Answer Correct Answer: A) Prices of goods and services rose more rapidly than nominal-wage rates. 40. The money market where securities are issued by governments to obtain funds for the short term is classified as? A) Money market instruments. B) Counter instruments. C) Capital market instruments. D) Counter instruments. Show Answer Correct Answer: A) Money market instruments. 41. Which of the following is not capital market instruments? A) Mortgage. B) Commercial paper. C) Stocks. D) Corporate bonds. Show Answer Correct Answer: B) Commercial paper. 42. What does equity represent in a company? A) Ownership in the company. B) A type of bond. C) A loan to the company. D) A government grant. Show Answer Correct Answer: A) Ownership in the company. 43. Which of the following is TRUE about Primary Markets? A) Primary Market is the place where public can buy and sell securities from one another. B) Primary Markets refer to the mobilization of funds from the public by corporates through the issue of shares / debentures. C) Primary Markets are places where only short term instruments are traded. D) Primary Markets are markets where commodities are sold. E) Not Attempted. Show Answer Correct Answer: B) Primary Markets refer to the mobilization of funds from the public by corporates through the issue of shares / debentures. 44. A company operates in a sector characterized with high operating leverage. Which statement describes the sector most appropriately: A) Revenue will increase much faster than expenses. B) Profit will increase much faster than expenses. C) A large part of increase in revenue will translate into increase in profit. D) None of the above. Show Answer Correct Answer: C) A large part of increase in revenue will translate into increase in profit. 45. How can people avoid herd instinct according to the text? A) By doing their own research and making their own decisions. B) By waiting for others to make the first move. C) By following the most popular trends on social media. D) By investing only in government bonds. Show Answer Correct Answer: A) By doing their own research and making their own decisions. 46. Which of these windows is used to track the real-time exe A) Message Window. B) Order/Trade Window. C) Snap Quote. D) Ticker Window. Show Answer Correct Answer: D) Ticker Window. 47. Stock price where it will be sold if all investors had information. A) Option price. B) Equilibrium price. C) Intrinsic price. D) Market price. Show Answer Correct Answer: C) Intrinsic price. 48. Capital market consist of A) Industrial securities market. B) Government securities market. C) Long term loan market. D) All of the above. Show Answer Correct Answer: D) All of the above. 49. Perbedaan durasi maturitas dari bonds dan notes adalah bahwa notes memiliki maturitas original selama ..... A) Kurang dari satu tahun. B) Lebih dari satu tahun tetapi kurang dari sepuluh tahun. C) Sepuluh sampai tiga puluh tahun. D) Kurang dari tiga puluh tahun. Show Answer Correct Answer: B) Lebih dari satu tahun tetapi kurang dari sepuluh tahun. 50. A corporation seeking to sell new equity securities to the public for the first time in order to raise cash for capital investment would most likely A) Place an ad in the Wall Street Journal soliciting retail suppliers of funds. B) Issue bonds with the assistance of a dealer. C) Conduct a private placement to a large number of potential buyers. D) Conduct an IPO with the assistance of an investment banker. Show Answer Correct Answer: D) Conduct an IPO with the assistance of an investment banker. 51. What is a futures contract? A) A type of stock. B) A bond that pays interest for a short term. C) An agreement to lend money. D) A contract to buy or sell an asset at a predetermined price in the future. Show Answer Correct Answer: D) A contract to buy or sell an asset at a predetermined price in the future. 52. Purification of investment income received means that certain proportion of the dividend, which corresponds to the proportion of interest earned by the company, must be given to charity. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 53. In a direct transfer, funds typically flow from: A) Public investors to government agencies. B) Venture capitalists to new business ventures. C) Mutual funds to corporations. D) Investment banks to savers. Show Answer Correct Answer: B) Venture capitalists to new business ventures. 54. A $ 5 million deposit outflow from a bank has the immediate effect of A) Reducing deposits and reserves by $ 5 million. B) Reducing deposits and loans by $ 5 million. C) Reducing deposits and securities by $ 5 million. D) Reducing deposits and capital by $ 5 million. Show Answer Correct Answer: A) Reducing deposits and reserves by $ 5 million. 55. An asset is ..... A) Something that is owed. B) Something that is kept. C) Something that is owned. D) Something that is transferred. Show Answer Correct Answer: C) Something that is owned. 56. What is the primary benefit of having health insurance? A) To offer discounts on gym memberships. B) To provide financial protection against high medical expenses. C) To cover the cost of luxury treatments. D) To guarantee a specific income during illness. Show Answer Correct Answer: B) To provide financial protection against high medical expenses. 57. A ..... is an option to sell shares of stock at a specified time in the future. A) Call option. B) Put option. C) Bull market. D) None of the above. Show Answer Correct Answer: B) Put option. 58. Islam banking and finance system offers more ethical and efficient alternative tothe interest-based conventional financial system. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 59. Where can a trader modify their buy/sell orders in the NEAT system? A) Order/Trade Window. B) Inquiry Window. C) Message Window. D) Market Watch Window. Show Answer Correct Answer: A) Order/Trade Window. 60. Which of the following is not a function of money? A) Medium of exchange. B) Limited in supply. C) Unit of account. D) Store of value. Show Answer Correct Answer: B) Limited in supply. ← 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 9 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books