Important MCQs of Financial Markets chapter of Business Studies Class 12

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Looking for important MCQs of Financial Markets chapter of Business studies of class 12 with answers of CBSE, ISC, and other State Boards.

We have compiled a comprehensive list of very important multiple choice questions with answers of the Financial Markets chapter of BST class 12

Multiple Choice Questions of Financial Markets gchapter of Business Studies Class 12

Let’s Practice.

Primary and Secondary Markets:

a) Compete with each other
b) Complement each other
c) Function independently
d) Control each other

Ans – b)

Shah Ltd. requires ₹500 crores as additional capital to expand the business. The Finance Manager, Mr. Ankit Tiwari, suggested that the shares may be sold to investing public through intermediaries as the same will be less expensive. Identify the method through which the company decided to raise additional capital.

a) Private Placement
b) Rights Issue
c) Offer for sale
d) E-IPOs

Ans – c)

Which of the following is an objective of SEBI?

a) To regulate stock exchanges and the securities industry
b) To protect the rights and interests of investors
c) To prevent trading malpractices
d) To train intermediaries of securities market

Ans – a), b), c)

Which instrument of money market is generally used to inter-bank transactions?

a) Treasury Bill
b) Commercial Paper
c) Call Money
d) Commercial Bill

Ans – c)

_______ is issued to provide bridge financing:

a) Commercial Bill
b) Call Money
c) Commercial Paper
d) Treasury Bill

Ans – c)

Which method of new issue refers to the allotment of securities to institutional investors and selected individuals?

a) Right Issue
b) E-IPOs
c) Offer for sale
d) Private Placement

Ans – d)

The new issues market is also known as:

a) Capital Market
b) Money Market
c) Primary Market
d) Secondary Market

Ans – c)

Which money market instrument is used to finance credit sales of firms?

a) Commercial Bill
b) Commercial Paper
c) Certificate of Deposit
d) Call Money

Ans – a)

Treasury Bills are basically:

a) An instrument to borrow short-term funds
b) An instrument to borrow long term funds
c) An instrument of capital market
d) None of the above

Ans – a)

‘Prohibition of unfair trade practices like price ‘rigging’ relates to which function of SEBI?

a) Regulatory Function
b) Development Function
c) Protective Function
d) None of these

Ans – c)

_______ A market is a market for the creation and exchange of financial assets.

a) Money
b) Financial
c) Capital
d) Secondary

Ans – b)

Which market deals in the sale purchase of previously issued securities?

a) Money Market
b) Capital Market
c) Primary Market
d) Secondary Market

Ans – d)

Commercial Paper has a maturity period of:

a) 1 day to 15 days
b) 15 days to 45 days
c) 15 days to 1 year
d) 91 days to 365 days

Ans – c)

Only buying of securities takes place in:

a) Primary Market
b) Secondary Market
c) Both a) and b)
d) Capital market

Ans – a)

Sparsh wants to sell 2,000 shares out of 5,000 shares held by him, Which market should be approached?

a) Primary Market
b) Secondary Market
c) Either a) or b)
d) Money Market

Ans – b)

When a trade bill is accepted by a commercial bank, it is known as _ .

a) Commercial Paper
b) Certificate of Deposit
c) Commercial Bill
d) Call Money

Ans – c)

Which is the most popular method of raising funds by public companies in the primary market?

a) E-IPOs
b) Offer for Sale
c) Private Placement
d) Offer through the prospectus

Ans – d)

Treasury Bill is issued by:

a) Reserve Bank of India
b) Commercial Banks
c) Development Financial Institutions
d) Mutual Fund Companies

Ans – a)

Controlling Insider Trading is a _ Function of SEBI.

a) Development
b) Protective
c) Regulatory
d) None of these

Ans – b)

Two major segments of the Financial Market are:

a) Debt Market and Equity Market
b) Money Market and Secondary Market
c) Money Market and Capital Market
d) Money Market and Primary Market

Ans – c)

This method of the new issue gives the pre-emptive right to the existing shareholders over such securities. Which method of floatation is highlighted in the given statement?

a) Private Placement
b) Offer for sale
c) Rights Issue
d) E-IPOs

Ans – c)

Which money market instrument is also known as Zero Coupon Bond?

a) Call Money
b) Commercial Bill
c) Certificate of Deposit
d) Treasury Bill

Ans – d)

Which is the method of floatation in which a company sells the securities to some selected institutional investors and individuals?

a) Private Placement
b) Rights Issue
c) Offer through Prospectus
d) offer for sale

Ans – a)

In case of Rights Issue, shares are issued to:

a) Selected Institutional Investors
b) General Public
c) Existing shareholders
d) Intermediaries like issue houses

Ans – c)

For buying and selling of securities, it is compulsory to open:

a) Savings Account
b) Recurring Account
c) Current Account
d) Demat Account

Ans – d)

The term of the Commercial Paper can not be more than __ year.

a) One
b) Two
c) Three
d) Four

Ans – a)

Which of the following instruments are traded in a money market?

a) Call Money
b) Commercial Paper
c) Commercial Bill
d) All of these

Ans – d)

Star Ltd. needs Rupees Ten crores as additional capital to expand its business. Ankur Gupta, the Finance Manager, thought that the public issue may be expensive on account of various mandatory and non-mandatory expenses. So, it was decided to allot the securities to institutional investors. Identify the method through which the company decided to raise additional capital.

a) Rights issue
b) Private Placement
c) Offer for sale
d) E-IPOs

Ans – b)

Which of the following statement about Call Money is correct?

a) its maturity period varies from 1 day to 15 days
b) It is used to meet floatation cost
c) It is used to maintain the Cash Reserve Ratio
d) It is used for inter-bank transactions

Ans – a), c), d)

Raghav’s friend Raman works as a Chartered Accountant in Solutions Ltd. Raman, in a meeting with the Board of Directors of the company, came to know that the firm would soon be declaring a Bonus issue which would result in an increase in the price of shares. Considering this, Raman advised Raghav to purchase the shares of solutions Ltd., who acted on his advice and bought the shares before time. Which function of SEBI can control such malpractices?

a) Protective Functions
b) Regulatory Functions
c) Development Functions
d) All the above

Ans – a)

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Anurag Pathak

Anurag Pathak is an academic teacher. He has been teaching Accountancy and Economics for CBSE students for the last 18 years. In his guidance, thousands of students have secured good marks in their board exams and legacy is still going on. You can subscribe his youtube channel and can download the Android & ios app for free lectures.

Articles: 2015

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