This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 1 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 1 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. What is the difference between the primary market and the secondary market? A) The primary market deals with new securities issuance, while the secondary market involves trading existing securities. B) The primary market is for stocks, while the secondary market is for bonds. C) The primary market and secondary market are the same. D) The primary market involves trading existing securities, while the secondary market deals with new securities issuance. Show Answer Correct Answer: A) The primary market deals with new securities issuance, while the secondary market involves trading existing securities. 2. What is the primary purpose of insurance? A) To offer discounts on various services. B) To guarantee profits in business ventures. C) To promote investment opportunities for clients. D) To provide financial protection against potential losses or risks. Show Answer Correct Answer: D) To provide financial protection against potential losses or risks. 3. International Monetary Fund (IMF) berperan dalam: A) Mengurangi pengangguran di negara berkembang. B) Memberikan pinjaman jangka panjang tanpa syarat. C) Menstabilkan sistem keuangan global dan memberikan bantuan keuangan jangka pendek. D) Membantu pembangunan jalan dan jembatan di pedesaan. Show Answer Correct Answer: C) Menstabilkan sistem keuangan global dan memberikan bantuan keuangan jangka pendek. 4. What are two of the best known stock indices? A) NASDAQ Composite and FTSE 100. B) S&P 500 and Dow Jones Industrial Average. C) Russell 2000 and Nikkei 225. D) DAX and Hang Seng Index. Show Answer Correct Answer: B) S&P 500 and Dow Jones Industrial Average. 5. The Ticker Window in the NEAT system is used to: A) Display market news. B) Display trade information for selected securities in real time. C) Modify existing orders. D) Display the latest news related to stocks. Show Answer Correct Answer: B) Display trade information for selected securities in real time. 6. If the investor perceives higher risk (more uncertainty with respect to the future payment), she would demand A) Lower risk premium. B) No risk premium. C) Higher risk premium. D) None of the above. Show Answer Correct Answer: C) Higher risk premium. 7. Which financial market is known for trading in short-term debt securities? A) Capital market. B) Derivatives market. C) Money market. D) Foreign exchange market. Show Answer Correct Answer: C) Money market. 8. Classify each item:stock exchange A) Financial institutions. B) Financial market. C) Financial instrument. D) None of the above. Show Answer Correct Answer: A) Financial institutions. 9. The instrument traded in securities market is A) Currency. B) Crude. C) Precious Metal. D) Stock. Show Answer Correct Answer: D) Stock. 10. The future value of a Rs.12, 000 investment made today, which gives an annual rate of return of 10% per annum, after one year should be ..... A) Rs. 13, 100. B) Rs. 13, 200. C) Rs. 12, 200. D) Rs. 12, 500. E) Not Attempted. Show Answer Correct Answer: B) Rs. 13, 200. 11. To maintain financial stability a central bank may have to provide emergency funds, though at a price, to protect depositors and in extreme cases to prevent a systemic crisis in the financial system.What the term used to describe this? A) Lender of first resort. B) Lender of penultimate resort. C) Lender of last resort. D) Lender of past resort. Show Answer Correct Answer: C) Lender of last resort. 12. At 6% annual inflation rate, an item costing Rs. 100 today, would cost Rs ..... after two years. A) Rs. 124.30. B) Rs. 122.46. C) Rs. 224. D) Rs. 112.36. E) Not Attempted. Show Answer Correct Answer: D) Rs. 112.36. 13. Which of the following are the instruments of money market? A) Call money. B) Certificate of deposits. C) Trade bills. D) All of the above. Show Answer Correct Answer: D) All of the above. 14. What is a financial market? A) A financial market is a type of insurance policy. B) A financial market is a marketplace for trading financial assets. C) A financial market is a place for buying groceries. D) A financial market is a government agency that regulates banks. Show Answer Correct Answer: B) A financial market is a marketplace for trading financial assets. 15. What is the term for a financial instrument that derives its value from an underlying asset, such as a stock or commodity? A) Bond. B) Option. C) Mutual fund. D) Certificate of deposit. Show Answer Correct Answer: B) Option. 16. A corporation acquires new funds only when its securities are sold in the A) Primary market by an investment bank. B) Primary market by a stock exchange broker. C) Secondary market by a securities dealer. D) Secondary market by a commercial bank. Show Answer Correct Answer: A) Primary market by an investment bank. 17. Secondary reserves include A) Deposits at Federal Reserve Banks. B) Deposits at other large banks. C) Short-term U.S. government securities. D) State and local government securities. Show Answer Correct Answer: C) Short-term U.S. government securities. 18. Funds raised through commercial paper used to meet the floatation cost is known as A) Commercial financing. B) Paper financing. C) Bill of exchange. D) Bridge financing. Show Answer Correct Answer: D) Bridge financing. 19. What is the impact of currency exchange in financial markets? A) Currency exchange only affects local businesses. B) Currency exchange affects trade balances, investment flows, and asset valuations in financial markets. C) Currency exchange has no impact on international relations. D) Currency exchange is solely determined by government policies. Show Answer Correct Answer: B) Currency exchange affects trade balances, investment flows, and asset valuations in financial markets. 20. Which is true about investments and risk? A) Every investment carries some degree of risk. B) NOT Every investment carries some degree of risk. C) All the above. D) None of the above. Show Answer Correct Answer: A) Every investment carries some degree of risk. 21. ..... is a bond that pays both interest and principle through periodic payments A) Floating rate bond. B) Amortizing Bond. C) Zero Coupan Bond. D) Step Up Bond. Show Answer Correct Answer: B) Amortizing Bond. 22. Which market deals with previously issued securities? A) Primary market. B) Secondary market. C) Money market. D) Commodity market. Show Answer Correct Answer: B) Secondary market. 23. What is a significant challenge posed by technological disruption in financial markets? A) Reduction in consumer demand. B) Adaptation to new fintech solutions. C) Need for traditional banking methods. D) Increased regulatory compliance. Show Answer Correct Answer: B) Adaptation to new fintech solutions. 24. Which of the following takes advantage of the internal trading? A) All shareholders. B) All Debentureholders. C) People having secret information of the company. D) All the employees. Show Answer Correct Answer: C) People having secret information of the company. 25. As a general statement, the forward exchange rate of two currencies is determined based on: A) The relevant interest rates of these two currencies now. B) The GDP growth of the countries of these two currencies. C) Market supply and demand of these two currencies. D) None of the above. Show Answer Correct Answer: A) The relevant interest rates of these two currencies now. 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