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INTRODUCTION TO THE SECURITIES MARKET

by academic cordinator1

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Question 1 of 25
1. Question
What is the primary function of financial markets in the economy?
- To maximize profits for businesses
- To allocate surplus funds to households
- To facilitate the transfer and allocation of financial resources
- To regulate the activities of banks and financial institutions
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Question 2 of 25
2. Question
What role do intermediaries like banks and mutual funds play in the financial markets?
- They provide surplus funds to users.
- They facilitate the transfer of funds.
- They regulate the financial markets.
- They invest in stocks and bonds.
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Question 3 of 25
3. Question
What is the significance of financial markets providing liquidity and exit options?
- To increase borrowing costs for users
- To discourage savers from lending
- To enable participants to review their funding decisions
- To limit access to funds for businesses
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Question 4 of 25
4. Question
Who are the users of funds in the financial markets?
- Only businesses
- Only governments
- Only households
- Businesses, governments, and households
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Question 5 of 25
5. Question
How do securities markets contribute to the economy’s savings and investments?
- By discouraging savings and investments
- By constraining savers and investors individually
- By maximizing individual abilities to save and invest
- By decoupling savings from investments and enhancing both
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Question 6 of 25
6. Question
What are the two main segments of the securities market?
- Primary market and secondary market
- Stock market and commodity market
- Forex market and derivatives market
- Equity market and bond market
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Question 7 of 25
7. Question
What is the primary function of the primary market?
- Providing liquidity to existing securities
- Trading and settlement of securities
- Raising capital from investors through new issues
- Facilitating trading between two investors
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Question 8 of 25
8. Question
In the secondary market, who is involved in the direct transaction?
- Issuers and investors
- Stockbrokers and investors
- Clearing corporations and issuers
- Merchant bankers and stock exchanges
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Question 9 of 25
9. Question
What is the primary function of the Over-The-Counter (OTC) market?
- Providing a platform for primary issuances
- Guaranteeing settlement of trades
- Informal negotiation and bilateral settlement
- Facilitating Initial Public Offers (IPOs)
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Question 10 of 25
10. Question
Which entity acts as a counterparty and guarantees settlement in the exchange-traded market?
- Clearing corporation
- Stockbroker
- Depository participant
- Issuer of securities
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Question 11 of 25
11. Question
What is the term used for raising capital in the primary market through the issuance of new shares to existing shareholders at a particular price?
- Initial Public Offer (IPO)
- Follow on Public Offer (FPO)
- Bonus issue/stock split
- None of these
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Question 12 of 25
12. Question
What are the key players in the primary market, as mentioned in the article?
- Stock exchanges and clearing corporations
- Stock brokers and individual investors
- Issuers, merchant bankers, and mutual funds
- Foreign Portfolio Investors (FPIs) and lawyers
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Question 13 of 25
13. Question
What are some examples of money market instruments?
- Stocks and bonds
- Real estate properties
- Negotiable certificates of deposit (CDs) and commercial papers
- Mutual funds and exchange-traded funds (ETFs)
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Question 14 of 25
14. Question
In the equity/cash markets, what do equity shareholders collectively represent?
- Creditors of the company
- Employees of the company
- Fractional ownership in the company
- Bondholders of the company
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Question 15 of 25
15. Question
What is the primary characteristic of non-convertible debentures (NCDs)?
- They can be converted into equity shares of the same company.
- They are secured by tangible assets.
- They are fully convertible into equity shares.
- They have a feature of conversion.
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Question 16 of 25
16. Question
What is the main difference between regular mutual funds and Exchange Traded Funds (ETFs)?
- ETFs are actively managed, while regular mutual funds are passively managed.
- ETFs try to outperform their corresponding index, while regular mutual funds replicate the index.
- ETFs are not traded on stock exchanges.
- Regular mutual funds trade like common stocks on stock exchanges.
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Question 17 of 25
17. Question
What is the primary function of Indian Depository Receipts (IDRs)?
- To facilitate trading of Indian stocks in foreign markets
- To enable Indian companies to raise capital in foreign currency
- To allow foreign companies to directly list on Indian stock exchanges
- To provide Indian investors access to foreign stocks
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Question 18 of 25
18. Question
What is a derivative in the financial market?
- A physical commodity like gold or silver
- A contract between two or more parties whose value is derived from an underlying asset
- An equity shares in a company
- A currency exchange rate
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Question 19 of 25
19. Question
Which of the following is NOT an example of an underlying asset for derivatives?
- Stocks
- Commodities
- Currencies
- Mutual funds
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Question 20 of 25
20. Question
What is the primary characteristic of a forward contract?
- It is traded on an exchange.
- It is a promise to deliver an asset in the future at a predetermined price.
- It is standardized and has a fixed expiration date.
- It is primarily used for currency trading.
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Question 21 of 25
21. Question
How do options differ from futures contracts?
- Options give the buyer the right to buy or sell an asset, while futures contracts require the buyer to buy or sell.
- Options are not standardized, while futures contracts are.
- Options have no expiration date, while futures contracts have a fixed expiration date.
- Options are always traded on an exchange, while futures contracts can be traded over-the-counter (OTC).
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Question 22 of 25
22. Question
Where are currency derivatives such as USD-INR futures traded in India?
- On the stock exchange
- In the commodity market
- In the interest rate market
- In the currency derivatives segment
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Question 23 of 25
23. Question
What is the primary method of settlement for currency derivatives in India?
- Physical delivery of currency
- Physical delivery of gold
- Cash settlement in Indian Rupees (INR)
- Electronic transfer of securities
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Question 24 of 25
24. Question
How are interest rate futures and options settled in India?
- Through physical delivery of government securities
- Through cash settlement in INR
- Through physical delivery of gold
- Through electronic transfer of stocks
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Question 25 of 25
25. Question
What is the purpose of commodity derivatives in the financial market?
- To facilitate trading of commodities such as gold, silver, and energy
- To encourage physical delivery of commodities
- To replace physical commodities with financial instruments
- To trade in foreign currencies
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