This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 22 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 22 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. GST applicable on ULIP charges ( In percentage terms ) A) 18. B) 4.5. C) 2.25. D) No GST on charges. Show Answer Correct Answer: A) 18. 2. 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. 3. 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. 4. Bank loans from the Federal Reserve are called ..... and represent a ..... of funds. A) Discount loans; use. B) Discount loans; source. C) Fed funds; use. D) Fed funds; source. Show Answer Correct Answer: B) Discount loans; source. 5. Which of the following is not considered digital money? A) NEFT B) Bitcoin C) UPI D) Physical cheque A) A. B) B. C) C. D) D. Show Answer Correct Answer: D) D. 6. 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. 7. The General Valuation Model states that the value of an asset equals: A) Its market price. B) Its accounting value. C) The sum of discounted future cash flows. D) Its replacement cost. Show Answer Correct Answer: C) The sum of discounted future cash flows. 8. 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) The same. C) More. D) Less. E) Not Attempted. Show Answer Correct Answer: C) More. 9. 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) Adverse selection. C) Moral hazard. D) Lemon lenders. Show Answer Correct Answer: B) Adverse selection. 10. 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. 11. 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. 12. Which financial market is associated with the trading of currency pairs? A) Foreign Exchange Market. B) Commodity Market. C) Real Estate Market. D) Stock Market. Show Answer Correct Answer: A) Foreign Exchange Market. 13. 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. 14. Which of the following is NOT a way businesses can raise funds? A) Borrow. B) Issue bonds. C) Sell new shares of ownership. D) Develop public goods. Show Answer Correct Answer: D) Develop public goods. 15. The type of market in which securities with less than one-year maturity is traded, is classified as: A) Money Market. B) Capital Market. C) Transaction Market. D) Global Market. Show Answer Correct Answer: A) Money Market. 16. 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. 17. 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. 18. What is the primary function of financial markets? A) Speculation only. B) Channel savings to investments. C) Printing currency. D) Tax collection. Show Answer Correct Answer: B) Channel savings to investments. 19. 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. 20. The equation for the quantity theory of money is: A) M + V = P + T. B) MV = PT. C) M/V = P/T. D) MP = VT. Show Answer Correct Answer: B) MV = PT. 21. Business firms are more likely to borrow than to lend. True or false. A) True. B) False. C) All the above. D) None of the above. Show Answer Correct Answer: A) True. 22. Type of markets where the exchange is made with an agreement to buy or sell a particular commodity or security at a predetermined price at a specified time in the future. A) Commodity market. B) Derivatives market. C) Spot market. D) Futures market. Show Answer Correct Answer: D) Futures market. 23. The bid/ask spread for small retail transactions is commonly in the range of ..... percent. A) 3 to 7. B) .01 to .03. C) 10 to 15. D) .5 to 1. Show Answer Correct Answer: A) 3 to 7. 24. How do stock exchanges facilitate price discovery? A) Stock exchanges limit trading hours to reduce volatility. B) Price discovery is solely based on historical data analysis. C) Stock exchanges operate without any regulatory oversight. D) Stock exchanges facilitate price discovery through real-time trading, transparency, and access to market information. Show Answer Correct Answer: D) Stock exchanges facilitate price discovery through real-time trading, transparency, and access to market information. 25. Equity financing involves the activities of A) Issuing share and payment of dividends to shareholder. B) Purchasing of fixed assets. C) Purchasing of current assets. D) Borrowing money from any banks. Show Answer Correct Answer: A) Issuing share and payment of dividends to shareholder. ← 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