Question 1

_______ is a link between savers & borrowers, helps to establish a link between savers & investors
A)Marketing
B)Financial market
C)Money market
D)None of these

Accepted Answer

Financial markets serve as a link between savers and borrowers, facilitating the transfer of funds from those who want to save their money to those who wish to invest or borrow.

Question 2

__________ is the organisations, institutions that provide long term funds.
A)Capital market
B)Money market
C)Primary market
D)Secondary market

Accepted Answer

The capital market is the segment of the financial system that is responsible for mobilizing and channeling long-term funds. It includes both the primary market (where new securities are issued) and the secondary market (where existing securities are traded).

Question 3

When securities are allotted to institutional investors & some selected individuals is referred to as _________.
A)Initial public offer
B)Offer through prospectus
C)Private placement
D)Offer for sale

Accepted Answer

Private placement refers to the offering and selling of securities to a relatively small number of select investors as a way of raising capital. Unlike public offerings, which are available to the public at large, private placements are targeted at specific investors, such as institutional investors and high-net-worth individuals.

Question 4

Stock exchange is known as __________ market for securities.
A)Primary market
B)Secondary market
C)Capital market
D)None of the above

Accepted Answer

The stock exchange is known as the secondary market because it is where previously issued securities (stocks, bonds, and other financial instruments) are bought and sold among investors, as opposed to the primary market where securities are first issued directly from issuers to investors.

Question 5

_________ is a market for lending & borrowing of short term funds.
A)Money market
B)Primary market
C)Capital market
D)All of the above

Accepted Answer

The money market is specifically designed for the lending and borrowing of short-term funds, typically for periods of a year or less, making it the correct choice for this description.

Question 6

____________ is also called zero coupon bond.
A)Trade bills
B)Call money
C)Treasury bills
D)Commercial papers

Accepted Answer

Treasury bills are a type of government bond issued with no interest rate, meaning they are sold at a discount and mature at face value, effectively making them zero coupon bonds.

Question 7

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

Accepted Answer

The answer of Which of the following are the instruments...

Question 8

Which of the following statements is not true with regard to money market?
A)It involves low market risk.
B)It is situated at specific locations.
C)Deals in unsecured and short-term debt instruments.
D)The instruments traded are highly liquid.

Accepted Answer

The money market is not situated at specific locations; it is a decentralized network where short-term financial instruments are traded. This market operates through electronic systems and telephone-based communication rather than being located at a specific physical location.

Question 9

Which of the following statements is not true with regard to Treasury bills?
A)Are issued in the form of a promissory note.
B)They are highly liquid and have assured yield
C)They carry high risk of default.
D)They are available for a minimum amount of ?25,000 and in multiples thereof.

Accepted Answer

Treasury bills are considered one of the safest investments because they are backed by the government, hence they carry a very low risk of default, not a high risk.

Question 10

Which of the following statements is not true with regard to Commercial paper?
A)Is a long-term unsecured promissory note with a fixed maturity period.
B)It usually has a maturity period of 15 days to one year.
C)It is sold at a discount and redeemed at par.
D)Companies use this instrument for bridge financing.

Accepted Answer

Commercial paper is a short-term unsecured promissory note with a maturity period typically ranging from 15 days to one year, not a long-term financial instrument.

Question 11

Which of the following statements is not true with regard to Call money?
A)It is short-term finance repayable on demand.
B)Its maturity period ranges from one day to fifteen days.
C)There is a direct relationship between call rates and other short-term money market instruments.
D)It is used for inter-bank transactions.

Accepted Answer

Call money rates can fluctuate independently and are not directly related to other short-term money market instruments, which may have different influencing factors.

Question 12

Which of the following statements is not true with regard to capital market?
A)The funds are raised for a short period of time.
B)Both debt and equity funds can be raised.
C)It is classified into two types.
D)All of the above

Accepted Answer

Capital markets are designed for the long-term raising of funds, contrasting with money markets which provide short-term funds.

Question 13

Which of the following statements is not true with regard to primary market?
A)Is also known as the old issues market.
B)It facilitates the transfer of investible funds from savers to entrepreneurs
C)It deals with new securities being issued for the first time.
D)It facilitates the transfer of investible funds from savers to entrepreneurs.

Accepted Answer

The primary market is known as the new issues market, not the old issues market. It deals with the issuance of new securities for the first time, facilitating the transfer of investible funds from savers to entrepreneurs.

Question 14

Which of the following statements is not true with regard to stock exchange?
A)It provides a platform for buying and selling of new securities.
B)It curbs the marketability of the securities.
C)By providing a ready market, it extends liquidity to the securities.
D)It provides a platform for buying and selling of old securities.`

Accepted Answer

Stock exchanges enhance the marketability of securities by providing a platform for their buying and selling, thereby increasing liquidity and not curbing it.

Question 15

Which of the following is not a protective function of stock exchange?
A)Prohibition of fraudulent and unfair trade practices.
B)Controlling insider trading.
C)Regulation of takeover bids by companies.
D)Promotion of fair practices and code of conduct in securities market.

Accepted Answer

Regulation of takeover bids by companies is not a protective function of stock exchanges; it is typically managed by regulatory bodies like the Securities and Exchange Commission (SEC) or equivalent in various countries.

Question 16

Raj Enterprises wishes to invest ?1,10,000 in treasury bills. What is the maximum number of treasury bills it can buy with this fund?
A)6
B)7
C)4
D)2

Accepted Answer

The answer of Raj Enterprises wishes to invest ?1,10,000 in...

Question 17

Which of the following statements is true with regard to financial markets?
A)They link the households which save funds and business firms which invest these funds.
B)They work as an intermediary between the savers and the investors by mobilising funds between them.
C)They allocate funds available for investment into their most productive investment opportunity.
D)All of the above

Accepted Answer

All of the statements are true regarding financial markets. They serve as intermediaries between savers and borrowers, mobilize funds, and allocate them to the most productive investment opportunities.

Question 18

The allocated function is performed by
A)Financial market
B)Capital market
C)Money market
D)All of the above

Accepted Answer

The allocated function, which involves distributing resources to various parts of the economy, is performed by all segments of the financial system, including financial markets, capital markets, and money markets. Each plays a role in allocating capital and resources efficiently across the economy.

Question 19

It is a market for short-term funds which deals in monetary assets whose period of maturity is up to one year.
A)Primary market
B)Secondary market
C)Capital market
D)Money market

Accepted Answer

The answer of It is a market for short-term funds...

Question 20

It is an instrument of short-term borrowing by the Government of India maturing in less than one year.
A)Commercial bill
B)Treasury bill
C)Call money
D)None of the above

Accepted Answer

The answer of It is an instrument of short-term borrowing...

Quiz 11: Understanding the Link Between Savers, Borrowers, and Investors: Exploring Financial Markets and Stock Exchange Functions

_______ is a link between savers & borrowers, helps to establish a link between savers & investors

__________ is the organisations, institutions that provide long term funds.

When securities are allotted to institutional investors & some selected individuals is referred to as _________.

Stock exchange is known as __________ market for securities.

_________ is a market for lending & borrowing of short term funds.

____________ is also called zero coupon bond.

Which of the following are the instruments of money market?

Which of the following statements is not true with regard to money market?

Which of the following statements is not true with regard to Treasury bills?

Which of the following statements is not true with regard to Commercial paper?

Which of the following statements is not true with regard to Call money?

Which of the following statements is not true with regard to capital market?

Which of the following statements is not true with regard to primary market?

Which of the following statements is not true with regard to stock exchange?

Which of the following is not a protective function of stock exchange?

Raj Enterprises wishes to invest ?1,10,000 in treasury bills. What is the maximum number of treasury bills it can buy with this fund?

Which of the following statements is true with regard to financial markets?

The allocated function is performed by

It is a market for short-term funds which deals in monetary assets whose period of maturity is up to one year.

It is an instrument of short-term borrowing by the Government of India maturing in less than one year.