This quiz works best with JavaScript enabled. Home > Class 12 > Class 12 Business Studies Chapter 10 Financial Markets – Quiz 45 🏠 Homepage 📘 Download PDF Books 📕 Premium PDF Books Class 12 Business Studies Chapter 10 Financial Markets Quiz 45 (25 MCQs) Quiz Instructions Select an option to see the correct answer instantly. 1. Name one type of financial market. A) Stock market. B) Real estate market. C) Bond market. D) Commodities market. Show Answer Correct Answer: A) Stock market. 2. Financial contracts whose values are derived from the values of underlying assets is called A) Money market securities. B) Derivative securities. C) Capital market securities. D) Speculating securities. Show Answer Correct Answer: B) Derivative securities. 3. Which of the following best defines a financial market? A) A physical place where banks meet daily. B) A mechanism for trading financial assets and liabilities. C) A government-controlled investment centre. D) A market only for company shares. Show Answer Correct Answer: B) A mechanism for trading financial assets and liabilities. 4. If the 'liquidity coverage ratio' increases from 10% to 20%, what will happen to the maximum amount of loans a bank can give out? A) Rises. B) Falls. C) All the above. D) None of the above. Show Answer Correct Answer: B) Falls. 5. If a bank has $ 200, 000 of checkable deposits, a required reserve ratio of 20 percent, and it holds $ 80, 000 in reserves, then the maximum deposit outflow it can sustain without altering its balance sheet is A) $ 50, 000. B) $ 40, 000. C) $ 30, 000. D) $ 25, 000. Show Answer Correct Answer: A) $ 50, 000. 6. Which of the following has voting rights in a company? A) Equity shareholders. B) Creditors. C) Debenture holders. D) Preference shareholders. E) Not Attempted. Show Answer Correct Answer: A) Equity shareholders. 7. PK Enterprises Limited has sold an entire lot of 5, 00, 000 equity shares @ ₹ 9 each to Prosperous Bank Private Limited. The bank, in turn, will offer the shares to the general public for subscription @ ₹ 11 per share. Identify the method of floatation being described in the given lines. A) Private placement. B) Offer through prospectus. C) Offer for sale. D) Rights issue. Show Answer Correct Answer: C) Offer for sale. 8. What function do stock exchanges serve in the economy? A) Stock exchanges primarily serve as banks for storing money. B) Stock exchanges function as insurance companies for investors. C) Stock exchanges serve as platforms for trading securities, enabling capital formation, liquidity, and price discovery in the economy. D) Stock exchanges are mainly used for issuing government bonds only. Show Answer Correct Answer: C) Stock exchanges serve as platforms for trading securities, enabling capital formation, liquidity, and price discovery in the economy. 9. Which is an example of a fintech innovation in India? A) Cash-based banking. B) UPI digital payment system. C) Cheque clearing. D) Post office deposits. Show Answer Correct Answer: B) UPI digital payment system. 10. A ..... generally declines less during a recession and shows less growth during an expansion than other stocks. A) Junk bond. B) Cyclical stock. C) Defensive stock. D) Income stock. Show Answer Correct Answer: C) Defensive stock. 11. When it comes to investments in general, the higher the ..... the higher the potential reward. A) Security. B) Cost. C) Risk. D) Damage. Show Answer Correct Answer: C) Risk. 12. All things held equal, what happens to the stock market, if the Central bank raises interest rates? A) The market price of stocks increases. B) The market price of stocks decreases. C) There is no change in the market price of stocks. D) Market price of stocks goes up, then falls down. Show Answer Correct Answer: B) The market price of stocks decreases. 13. In a primary issue of shares to the public, the issuing company has to offer a minimum of ..... shares to the public A) 25 %. B) 50 %. C) 15 %. D) 10 %. Show Answer Correct Answer: A) 25 %. 14. Which short-term (up to one year) instrument is issued by government as a means of financing it's cash requirements? A) ADRs. B) Treasury bills. C) Equity. D) GDRs. E) Not Attempted. Show Answer Correct Answer: B) Treasury bills. 15. Which of the following is NOT listed as a financial institution operating in the money market? A) Central Bank. B) Acceptance House. C) Insurance Companies. D) Discount houses. Show Answer Correct Answer: C) Insurance Companies. 16. What is the relationship between risk and return? A) Inverse. B) Direct. C) Multiple. D) Opposite. Show Answer Correct Answer: B) Direct. 17. What is a significant function of investment banks? A) Offering payment services. B) Providing risk management solutions. C) Assisting in capital raising. D) Accepting deposits from the public. Show Answer Correct Answer: C) Assisting in capital raising. 18. Which of the following institutions is responsible for stability of the Australian financial system? A) ASIC. B) APRA. C) RBA. D) ASX. Show Answer Correct Answer: C) RBA. 19. Which of the following is the central bank in the UK? A) Barclays. B) The Bank of Scotland. C) The Bank of England. D) HSBC. Show Answer Correct Answer: C) The Bank of England. 20. Banks that suffered significant losses in the 1980s made the mistake of A) Holding too many liquid assets. B) Minimizing default risk. C) Failing to diversify their loan portfolio. D) Holding only safe securities. Show Answer Correct Answer: C) Failing to diversify their loan portfolio. 21. The nominal interest rate is composed of: A) Real risk-free rate + all relevant risk premiums. B) Only the inflation premium. C) Default-risk premium + real return. D) Liquidity premium only. Show Answer Correct Answer: A) Real risk-free rate + all relevant risk premiums. 22. Underwriting is a guarantee for marketability of ..... A) Bonds. B) Debentures. C) Shares. D) None of these. Show Answer Correct Answer: C) Shares. 23. Which type of foreign investment is typically more volatile? A) FDI. B) Government investments. C) FII. D) Domestic investments. Show Answer Correct Answer: C) FII. 24. Which of the following would a bank NOT hold as insurance against the highest cost of deposit outflow-bank failure? A) Excess reserves. B) Secondary reserves. C) Bank capital. D) Mortgages. Show Answer Correct Answer: D) Mortgages. 25. How does the Dow Jones Industrial Average reveal trends in the stock market? A) It tracks the performance of all stocks in the market. B) It measures the average price of 30 significant stocks to indicate market trends. C) It predicts future stock prices. D) It only shows the performance of technology stocks. Show Answer Correct Answer: B) It measures the average price of 30 significant stocks to indicate market trends. ← 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