This quiz works best with JavaScript enabled. Home > Cbse > Class 12 > Commerce > Business Studies > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 9 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 9 (60 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Merchant banks concept in India introduced by A) SBI B) PNB C) Grindlays Bank D) City bank A) B. B) C. C) A. D) D. Show Answer Correct Answer: B) C. 2. What is the primary role of a financial regulator like the SEC (U.S. Securities and Exchange Commission)? A) To provide investment advice to individuals. B) To enforce securities laws and protect investors. C) To set interest rates for banks. D) To issue government bonds. Show Answer Correct Answer: B) To enforce securities laws and protect investors. 3. Mr Lim is a high risk tolerance. Which investment tool is suitable for Mr Lim? A) C Fixed deposit of bank. B) D Fixed income unit trust. C) B Debenture. D) A Shares. Show Answer Correct Answer: D) A Shares. 4. Which is not a function of the reserve bank A) Provide loans to property buyers. B) Advise the government on financial action. C) Control over currency and gold. D) Dictate the interest rates other banks offer. Show Answer Correct Answer: A) Provide loans to property buyers. 5. Primary assets are A) Bill. B) Bank deposit. C) Mutual fund. D) None of the above. Show Answer Correct Answer: A) Bill. 6. In India, the Central Government issues A) A. treasury bills. B) B. dated securities. C) Both a & b. D) Certificate of deposits. Show Answer Correct Answer: C) Both a & b. 7. What is a potential risk associated with speculative trading? A) Long-term stability. B) Market fluctuations. C) Low transaction fees. D) Guaranteed returns. Show Answer Correct Answer: B) Market fluctuations. 8. Alexander is analyzing the bond market and notices an inverted yield curve. What does this indicate about interest rates over time? A) Interest rates decrease over time. B) Interest rates increase over time. C) Interest rates remain constant. D) Interest rates fluctuate randomly. Show Answer Correct Answer: A) Interest rates decrease over time. 9. Money market instruments are: A) Short term papers. B) Long term papers. C) Equity instruments. D) Both a & b. Show Answer Correct Answer: A) Short term papers. 10. What does the capital market deal with? A) Short-term loans and savings accounts. B) Long-term debt and equity securities. C) Real estate and commodities. D) Foreign exchange and derivatives. Show Answer Correct Answer: B) Long-term debt and equity securities. 11. Which of the following is not true about ADR? A) ADRs may be used in public or private markets inside or outside US. B) ADR represents the foreign shares of the company held on deposit by a custodian bank in the company's home country. C) Not Attempted. D) ADRs do not eliminate the currency risk associated with an investment in a non-U.S. company. E) An ADR is a U.S. dollar denominated form of equity ownership in a non-U.S. company. Show Answer Correct Answer: A) ADRs may be used in public or private markets inside or outside US. 12. Consider the following statements:1.Sensex is based on 50 of the most important stocks available on the Bombay Stock Exchange(BSE). 2.For calculating the Sensex, all the Sensex stocks are assigned proportional weightage. 3.Sensex became operational in 1978-79 with the base value of 100. Which of the statements given above is/are correct? A) 2 only. B) 1 and 3. C) 2 and 3. D) None of the above. Show Answer Correct Answer: C) 2 and 3. 13. IRR is best used when? A) You invest in gold. B) A investment has a single inflow and outflow. C) You invest in a recurring deposit. D) There are multiple cash flows over time in an investment. Show Answer Correct Answer: D) There are multiple cash flows over time in an investment. 14. The secondary market provides funds directly to the issuing firm. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 15. What can herd instinct at scale create in financial markets? A) Asset bubbles or market crashes. B) Higher interest rates on bonds. C) Decreased volatility in stock prices. D) Stable and predictable market conditions. Show Answer Correct Answer: A) Asset bubbles or market crashes. 16. Which instrument among these have historically shown to give the highest returns when invested over long periods? A) Bank Deposit. B) Debentures. C) Fixed Deposit. D) Equity. E) Not Attempted. Show Answer Correct Answer: D) Equity. 17. The money market provides circulating capital for: A) Government long-term projects. B) Commerce and industry. C) Individual housing loans. D) International development aid. Show Answer Correct Answer: B) Commerce and industry. 18. The main dealer at the stock exchange who does not deal directly with the public is the: A) Jobber. B) Financial Advisor. C) Stock Broker. D) Merchant Bank. Show Answer Correct Answer: A) Jobber. 19. Which of the following cannot accept Demand Deposits? A) Local area Banks. B) Foreign Banks. C) NBFC. D) Commercial Banks. Show Answer Correct Answer: C) NBFC. 20. ..... a market in which financial capital is loaned and/or borrowed for at least one year A) Secondary market. B) Financial system. C) Capital market. D) Primary market. Show Answer Correct Answer: C) Capital market. 21. How does the stock market work? A) The stock market is a government-run system for distributing food supplies. B) The stock market is a venue for trading physical goods like cars and electronics. C) The stock market is a place where people buy and sell real estate properties. D) The stock market is a platform for trading shares of publicly listed companies, where prices are determined by supply and demand. Show Answer Correct Answer: D) The stock market is a platform for trading shares of publicly listed companies, where prices are determined by supply and demand. 22. What is the name of the amount that the issuer of a bond promises to pay the buyer at maturity? A) Coupon rate. B) Yield. C) Bond value. D) Par value. Show Answer Correct Answer: D) Par value. 23. A bank failure occurs whenever A) A bank cannot satisfy its obligations to pay its depositors and other creditors. B) A bank suffers a large deposit outflow. C) A bank has to call in a large volume of loans. D) A bank refuses to make new loans. Show Answer Correct Answer: A) A bank cannot satisfy its obligations to pay its depositors and other creditors. 24. In which of the following structures are the most trade made? A) NYSE. B) Nasdaq. C) Chicago Board of Trade. D) OTC market. Show Answer Correct Answer: A) NYSE. 25. The most common type of bank accounts A) CD's and DDA's. B) Mutual Funds. C) Money market accounts. D) Savings & Checking accounts. Show Answer Correct Answer: D) Savings & Checking accounts. 26. NSE Stands for ..... A) National Savings Exchange. B) National Secure Exchange. C) National Stock Exchange. D) National Service Exchange. Show Answer Correct Answer: C) National Stock Exchange. 27. Which of the following is not a Leverage/Capital structure ratios? A) Current Ratio. B) Interest Coverage. C) Debt-Equity. D) Debt-Asset. E) Not Attempted. Show Answer Correct Answer: A) Current Ratio. 28. It is the total market value of all outstanding shares of company. A) Capital Market. B) Mega-cap. C) Market Capitalization. D) Large-cap. Show Answer Correct Answer: C) Market Capitalization. 29. When Jane Brown writes a $ 100 check to her nephew and he cashes the check, Ms. Brown's bank ..... assets of $ 100 and ..... liabilities of $ 100. A) Gains; gains. B) Gains; loses. C) Loses; gains. D) Loses; loses. Show Answer Correct Answer: D) Loses; loses. 30. For a Bond with Call Option, effective maturity could be less than Original maturity A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 31. Which of the following will increase transaction demand for money? A) Lower income. B) Higher income. C) Lower money supply. D) Higher speculative demand. Show Answer Correct Answer: B) Higher income. 32. The market can be halted once both the Sensex and Nifty hit the Circuit Breaker together A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: B) False. 33. Insurance coverage is related to A) Principle of productive purpose. B) Principle of phased disbursement. C) Principle of proper utilization. D) Principle of protection. Show Answer Correct Answer: D) Principle of protection. 34. What is the present value of investment today in order to generate an annuity of $ 1, 000 per year in 4 years, with the first payment due today, at an interest rate of 12%? A) $ 3, 401.83. B) $ 3, 037.35. C) $ 3, 401.83. D) $ 4, 604.78. Show Answer Correct Answer: A) $ 3, 401.83. 35. Bitcoin may not be considered good money because it is not A) Commonly accepted. B) Difficult to forge. C) Portable. D) Limited in supply. Show Answer Correct Answer: A) Commonly accepted. 36. Financial market ..... financial assets. A) Creates. B) Exchange. C) Creates and Exchange. D) None of the above. Show Answer Correct Answer: C) Creates and Exchange. 37. What is the role of banks in the economy? A) Banks only serve wealthy individuals and large corporations. B) Banks facilitate financial transactions, provide loans, accept deposits, and contribute to economic stability. C) Banks are responsible for setting government policies and regulations. D) Banks primarily focus on real estate investments and property management. Show Answer Correct Answer: B) Banks facilitate financial transactions, provide loans, accept deposits, and contribute to economic stability. 38. The secondary market is dominated by: A) Merchant banks. B) The stock exchange. C) Acceptance houses. D) Finance companies. Show Answer Correct Answer: B) The stock exchange. 39. Which can be traded in a commodities market? A) Oil. B) Cars. C) All the above. D) None of the above. Show Answer Correct Answer: A) Oil. 40. Liquidity can best be described as ..... A) Long term assets. B) The speed and ease with which an asset can be converted to cash without losing value. C) Any asset with value. D) Cash, bank deposits and shares. Show Answer Correct Answer: B) The speed and ease with which an asset can be converted to cash without losing value. 41. GST applicable on ULIP charges ( In percentage terms ) A) 18. B) 2.25. C) 4.5. D) No GST on charges. Show Answer Correct Answer: A) 18. 42. How do people earn money by investing in stocks? A) By receiving interest payments from the company. B) By selling stocks at a higher price than they paid and receiving dividends. C) By keeping the stocks for a long time without selling. D) By borrowing money against their stock holdings. Show Answer Correct Answer: B) By selling stocks at a higher price than they paid and receiving dividends. 43. What is an order to a broker to buy a specific stock only if its price is below a certain level, or to sell a specific stock only if its price is above a certain level? A) Limit order. B) Market order. C) None of the answers. D) Both limit and market order. Show Answer Correct Answer: A) Limit order. 44. Bank loans from the Federal Reserve are called ..... and represent a ..... of funds. A) Discount loans; source. B) Fed funds; use. C) Discount loans; use. D) Fed funds; source. Show Answer Correct Answer: A) Discount loans; source. 45. Which of the following is not considered digital money? A) NEFT B) Bitcoin C) UPI D) Physical cheque A) B. B) D. C) C. D) A. Show Answer Correct Answer: B) D. 46. Why do investors need to determine their investment objective before they invest? A) To ensure they invest in the most popular stocks. B) To align their investments with their financial goals and risk tolerance. C) To avoid paying taxes on their investments. D) To guarantee a profit from their investments. Show Answer Correct Answer: B) To align their investments with their financial goals and risk tolerance. 47. The General Valuation Model states that the value of an asset equals: A) Its accounting value. B) The sum of discounted future cash flows. C) Its market price. D) Its replacement cost. Show Answer Correct Answer: B) The sum of discounted future cash flows. 48. The value of Rs.10, 000 received today is ..... than the value of Rs. 10, 000 received after one year. A) Can't say. B) Less. C) The same. D) Not Attempted. E) More. Show Answer Correct Answer: E) More. 49. If borrowers with the most risky investment projects seek bank loans in higher proportion to those borrowers with the safest investment projects, banks are said to face the problem of A) Adverse credit risk. B) Lemon lenders. C) Moral hazard. D) Adverse selection. Show Answer Correct Answer: D) Adverse selection. 50. Transaction demand is defined as? A) Desire of people to hold money to satisfy short-term purchases, arising from function of money as a medium of exchange. B) Retirement and superannuation funds. C) Desire to purchase finacial assests. D) Prices of assests, such as shares, gold, land and houses. Show Answer Correct Answer: A) Desire of people to hold money to satisfy short-term purchases, arising from function of money as a medium of exchange. 51. A stock is a(n) ..... in a company or fund. A) Ownership. B) Debt. C) All the above. D) None of the above. Show Answer Correct Answer: A) Ownership. 52. Which financial market is associated with the trading of currency pairs? A) Stock Market. B) Foreign Exchange Market. C) Real Estate Market. D) Commodity Market. Show Answer Correct Answer: B) Foreign Exchange Market. 53. If a bond's coupon is fixed at 2.25% and market interest rates are around 5.0%, we can expect the price of the bond to be: A) Above par value. B) Below par value. C) Market interest rates do not affect the price of fixed rate bonds. D) Exactly at par value. Show Answer Correct Answer: B) Below par value. 54. Which of the following is NOT a way businesses can raise funds? A) Sell new shares of ownership. B) Develop public goods. C) Issue bonds. D) Borrow. Show Answer Correct Answer: B) Develop public goods. 55. The type of market in which securities with less than one-year maturity is traded, is classified as: A) Capital Market. B) Money Market. C) Global Market. D) Transaction Market. Show Answer Correct Answer: B) Money Market. 56. How are interest rates and bond prices related? A) They are directly proportional; as interest rates rise, bond prices rise. B) They are inversely related; as interest rates rise, bond prices fall. C) They are unrelated; bond prices are fixed. D) They both increase and decrease together. Show Answer Correct Answer: B) They are inversely related; as interest rates rise, bond prices fall. 57. The stock exchange market deals with the buying and selling of: A) Short-term financial assets. B) Long-term financial assets (securities) like stock and shares. C) Physical commodities. D) Foreign currencies. Show Answer Correct Answer: B) Long-term financial assets (securities) like stock and shares. 58. What is the primary function of financial markets? A) Speculation only. B) Channel savings to investments. C) Tax collection. D) Printing currency. Show Answer Correct Answer: B) Channel savings to investments. 59. Why does the U.S. government issue securities? A) To pay the salaries of elected officials. B) To pay for wars and defense. C) To pay for public works. D) To pay the interest on the national debt. Show Answer Correct Answer: C) To pay for public works. 60. The equation for the quantity theory of money is: A) M + V = P + T. B) MP = VT. C) MV = PT. D) M/V = P/T. Show Answer Correct Answer: C) MV = PT. ← 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