This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 18 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 18 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. 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) Liability management. B) Liquidity management. C) Managing interest rate risk. D) Managing credit risk. Show Answer Correct Answer: B) Liquidity management. 2. 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. 3. Stocks that represent ownership shares in corporations A) Bond. B) Capital market. C) Equities. D) Futures contract. E) Financial system. Show Answer Correct Answer: C) Equities. 4. 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. 5. Which of the following is NOT a characteristic of the money market? A) Investment in real estate. B) Trading of foreign currencies. C) Issuance of corporate bonds. D) Trading of long-term securities. Show Answer Correct Answer: D) Trading of long-term securities. 6. 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. 7. Stocks or documents that represent a claim on the income and property of the borrower are known as A) Financial intermediaries. B) Financial assets. C) Mutual funds. D) 401(k) Plans. Show Answer Correct Answer: B) Financial assets. 8. 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. 9. 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. 10. What is the significance of risk pooling in insurance? A) Risk pooling only benefits high-risk individuals. B) Risk pooling increases the number of claims per policyholder. C) Risk pooling eliminates the need for insurance altogether. D) Risk pooling is significant because it spreads risk among many policyholders, reducing the financial impact of individual claims. Show Answer Correct Answer: D) Risk pooling is significant because it spreads risk among many policyholders, reducing the financial impact of individual claims. 11. What is the main advantage of holding liquid assets? A) They generate higher long-term returns. B) They can be quickly converted to cash with minimal loss of value. C) They are immune to inflation. D) They require no management or oversight. Show Answer Correct Answer: B) They can be quickly converted to cash with minimal loss of value. 12. 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. 13. 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. 14. ..... 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. 15. How do well-functioning financial markets contribute to economic growth? A) By reducing inflation. B) By providing access to capital. C) By increasing taxes. D) By controlling interest rates. Show Answer Correct Answer: B) By providing access to capital. 16. 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. 17. Which market deals with long-term securities? A) Money market. B) Capital market. C) Forex market. D) Commodity market. Show Answer Correct Answer: B) Capital market. 18. 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. 19. Capital market do not provide A) Short term Funds. B) Debenture Funds. C) Equity Funds. D) Long term Funds. Show Answer Correct Answer: A) Short term Funds. 20. SEBI was constituted on A) 12 April 1988. B) 30 January 1992. C) 21 February 1992. D) 04 April 1992. Show Answer Correct Answer: A) 12 April 1988. 21. High-risk bonds issued by new companies are often called ..... A) Junk Bonds. B) Savings Bonds. C) Municipal Bonds. D) James Bonds. Show Answer Correct Answer: A) Junk Bonds. 22. The holders of which instrument are members of the company and have voting rights? A) Commercial Paper. B) Treasury Bill. C) Debenture. D) Equity. E) Not Attempted. Show Answer Correct Answer: D) Equity. 23. The Bank Secrecy Act requires financial institutions to report suspicious cash transactions over what amount? A) $ 50, 000. B) $ 10, 000. C) $ 100, 000. D) $ 1 Million. Show Answer Correct Answer: B) $ 10, 000. 24. What are the main types of financial markets? A) Insurance Markets. B) Capital Markets, Money Markets, Derivatives Markets, Foreign Exchange Markets, Commodity Markets. C) Stock Markets. D) Real Estate Markets. Show Answer Correct Answer: B) Capital Markets, Money Markets, Derivatives Markets, Foreign Exchange Markets, Commodity Markets. 25. In the absence of inflation, what would the nominal risk-free rate equal? A) Real risk-free rate. B) Expected inflation. C) Zero. D) Market interest rate. Show Answer Correct Answer: A) Real risk-free rate. ← PreviousNext →Related 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 8Class 12 Business Studies Chapter 10 Financial Markets Quiz 9Class 12 Business Studies Chapter 10 Financial Markets Quiz 10 🏠 Back to Homepage 📘 Download PDF Books 📕 Premium PDF Books