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CBSE Questions for Class 12 Commerce Business Studies Financial Market Quiz 1 - MCQExams.com
CBSE
Class 12 Commerce Business Studies
Financial Market
Quiz 1
The relationship between the price of a share and the sensex is measurably _____________.
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Alfa
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Beta
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Book value
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Annuity
Explanation
The relationship between the price of a share and the sensex is measurably alfa. It helps to measure the performance of securities. It helps in bench marking fund portfolios and launching of index funds.
Hence, option (A) is the correct answer.
Capital market means _____________.
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Mutual Funds
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Money Market
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Securities Market
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Banking Business
Sale of securities after the trading hours of the stock exchange is known as _______________.
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Short selling
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Stop loss
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Kerb dealing
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Profit taking
Explanation
Sale of securities after the trading hours of the stock exchange is known as Kerb dealing. Kerb dealing or Kerb trading occurs outside of the general market operations, commonly through the use of computers or telephones after the official exchanges have closed.
Stock exchange deals with the _________________.
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Second-hand securities
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Issue of equity shares
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Issue of preference shares
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Issue of debentures
Explanation
Stock exchange deals with the second hand securities. Stock exchange works through a network of exchanges. Companies list their stock on an exchange in order to raise money to expand their business and investors purchase those shares.
Which of the following objectives states the key role of SEBI in economic development of the country?
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Prevention of trading malpractices
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Regulation of capital market
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Enforcement of corporate governance on companies
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Promoting and developing capital market
Explanation
Promoting and developing capital market - it is the following objective that states the key role of SEBI in economic development of the country. The development functions are performed by SEBI in order to promote and develop activities in stock exchange and increase the business in stock exchange.
The process by which allocation of funds is done is called ____.
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financial intermediation
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financial integration
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financial disinvestment
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financial leveraging
Explanation
The process by which allocation of funds is done is called financial intermediation. This process helps to channelize funds from the borrowers to lenders. Financial intermediation generally cause reduction in transaction cost. This process is mainly performed by the financial intermediaries, such as stockbroker, commercial bank, investment bank, etc.
_______ means the admission of securities of a company to trading on a stock exchange.
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Listing
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'Demat'ing
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'Remat'ing
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None of the above
Explanation
Listing means the admission of securities of a company to trading on a stock exchange. Listing helps to provide ready marketability and liquidity of a company's securities. It also helps to provide free negotiability to stocks and protect the shareholders and investors' interests.
The process of holding shares in electronic form is known as
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Speculation
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Demutualisation
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Dematerialisation
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None of the above
Explanation
The process of holding securities in an electronic form is called dematerialisation. For this, the investor has to open a demat account with an organisation called a depository. This is mainly done to eliminate problems associated with share certificates or debentures held i
n physical form.
Which of the following participants represent capital market?
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Stock exchanges
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Development banks
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Commercial banks
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All of the above
Explanation
The term capital market refers to facilities and institutional arrangements through which long-term funds, both debt and equity are raised and invested. It consists of development banks, commercial banks and stock
exchanges.
They can be issued to individuals, corporations and companies during periods of tight liquidity when the deposit growth of banks is slow but the demand for credit is high.
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Certificate of deposit
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Commercial bill
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Call money
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Commercial paper
Explanation
.Certificates of deposit (CD) are unsecured, negotiable, short-term instruments in bearer form. They can be issued to individuals, corporations and companies during periods of tight liquidity when the deposit growth of banks is slow but the demand for credit is high.
Which of the following are secondary market intermediaries for corporate securities in India?
I. Investors
II. Jobbers
III. Brokers and sub-brokers
IV. Portfolio consultants
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I, II and III only
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II, III and IV only
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II and III only
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III and IV only
In the call/notice money market, which of the following participants is allowed to trade?
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All Banks, Primary Dealers and Mutual Funds
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Insurance companies
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Only Commercial Banks
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All of the above
The powers of controller of capital issues of India is now shifted to _______.
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ministry of finance
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SEBI
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AMFI
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ministry of corporate affairs
OTCEI was started on the lines of ___________.
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NASAQ
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NASDAQ
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NSE
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NYSE
Explanation
OTCEI (Over the Counter Exchange of India) was incorporated in the year 1990 on the lines of National Association of Securities Dealers Automated Quotations (NASDAQ) which is the OTC in USA. OTCEI is a fully computerized and transparent stock exchange.
The settlement cycle in NSE is ___________.
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$$T + 1$$
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$$T+2$$
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$$T+3$$
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$$T+5$$
Explanation
A Settlement Cycle refers to a calendar according to which all purchase and sale transactions done on T Day are settled on a T+2 basis i.e. on the 2nd working day, at NSE.
Clearing and settlement operations of NSE are carried out by __________.
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NSDL
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SBI
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CDSL
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NSCCL
Explanation
The clearing and settlement operations of NSE are carried out by NSCCL. NSCCL (National Securities Clearing Corporation Ltd.) was incorporated in August, 1995 and it commenced its clearing operations for NSE in April, 1996.
A partner of a trading or non trading firm signs a Negotiable instrument liability incurs in ______.
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the name of the firm.
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in the name of partner.
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both a & b.
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none of the above.
Explanation
A partner of a trading or non trading firm signs a Negotiable instrument, liability incurs in the name of the firm. When a maker or holder of the negotiable instrument signs a document, it should be signed in the name of the firm. As one partner is acting on behalf of all other partners in business.
Everything mentioned below is required to make the endorsement complete, EXCEPT ________.
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The holder signs on the face or back of the instrument.
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The instrument is delivered to the endorsee.
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It is sighed and delivered with intention of vesting of the endorsee with the rights of the holder.
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It is sighed and delivered with the intention of vesting the endorsee with the duties of the holder.
Explanation
Everything mentioned below is required to make the endorsement complete except it is signed and delivered with intention of vesting the endorsee with the duties of the holder. Endorsement can be defined as an act of a person who is holder of a negotiable instrument in signing his or her name on the back of the instrument, thereby transferring title or ownership.
According to Negotiable Instrument Act $$1881$$, which of the following is not the type of promissory note?
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A promise to pay a certain sum of money to a person.
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A promise to pay a certain sum of money to the order.
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A promise to pay the bearer.
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A promise to pay a certain sum of money at some time.
Explanation
According to Negotiable Instrument Act, 1881, a promise to pay the bearer is not the type of promissory note s promissory note can be defined as a written document which states the promise to pay the sum of money to a specified person.
A cheque is dishonored by______.
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non payment only.
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partial payment.
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both a & b.
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none of the above.
Explanation
A cheque is dishonored by both non payment as well as partial payment. A cheque gets dishonored when the bank fails to pay the mentioned amount to payee. When the cheque deposited by anybody for collection or presented for payment gets refused by the bank, it is known as dishonor of cheque.
An endorsement is said to be a Partial endorsement, if it satisfies which of the following conditions?
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If the endorser sings his name only
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If the endorser adds a direction to pay the amount mentioned in the instrument to the order of a specified person
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If the endorser restricts or excludes the right to further negotiate the instrument
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If the endorser purports to transfer to the endorsee only a part of the amount payable
Explanation
An endorsement is said to be a Partial endorsement, if the endorser purports to transfer to the endorsee only a part of the amount payable. In simple terms, endorsement which allows transferring to the endorsee a part of the amount payable is known as partial endorsement.
Promissory is invariably _______.
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In writing.
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Definite.
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Unconditional.
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All the above.
Explanation
Promissory is invariably in writing, definite and unconditional. A promissory can be defined as an instrument in writing containing an unconditional undertaking, signed by the maker, to pay a certain sum of money to or to the order of a certain person, or to the bearer of the instruments.
According to traditional approach the average cost of capital ________________________________.
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Remains constant up to a degree of leverage and rise sharply thereafter with even increase in leverage
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Rises constantly with increase in leverage
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Decreases up to a certain point, remains unchanged for moderate increase in leverage and rises beyond a certain point
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Decreases at an increasing rate with increase in leverage
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Increase up to certain point remains constant for moderate decrease in leverage and decreases beyond a certain point.
Explanation
According to the traditional approach the average cost of capital K$$_0$$ as a consequence of a behaviour of K$$_e$$ and K$$_d$$, decreases up to a certain point remains more or less unchanged for moderate increases in leverage thereafter and rises beyond a certain point.
According to Negotiable Act, $$1881$$, which of the following refer to an instrument in writing (not being a banknote or a currency note) containing unconditional undertaking, signed by the maker to pay or demand or at a fixed or determinable future time or the bearer of the instrument?
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Promissory note
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Bill of exchange
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Cheque
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Bearer debentures
Explanation
According to Negotiable Act, 1881, Bill of Exchange refer to an instrument in writing (not being a banknote or a currency note) containing an unconditional undertaking, signed by the maker to pay or demand or at a fixed or determinable future time or the bearer of the instrument. A bill of exchange can be defined as a written order to a person requiring them to make a specified payment to the payee.
For an endorsement to be called as Restrictive endorsement, it should satisfy the following conditions _______.
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If the endorser signs his name only.
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If the endorser signs a direction to pay the amount mentioned in the instrument to or to the order of a specified person.
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If the endorser restricts or excludes the right to further negotiate the instrument.
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If the endorser purports to transfer to the endorsee only a part of the amount payable.
Explanation
For an endorsement to be called as Restrictive endorsement, it should satisfy the following condition- if the endorser restricts or excludes the right to further negotiate the instrument. The result of a restrictive endorsement is that a financial instrument is no longer a negotiable instrument that can be passed from the stated payee to a third party.
When a company makes first issue of shares to the general public it is called
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ADR
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GDR
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CD
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IPO
Explanation
An initial public offering is when a private company or corporation raises investment capital by offering its stock to the public for the first time.
Every business undertaking is engaged in the production and/ or distribution of ________ in exchange of money.
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Goods
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Services
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Money
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Goods or services
Explanation
Every business undertaking is engaged in the production and/ or distribution of goods or services in exchange for money. The essential characteristic of business undertaking involves the production or distribution of goods and services in order to satisfy human wants and needs in exchange for money or profit.
Hence, option (D) is the correct answer.
The money deposit made by the buyer to the seller of real estate during negotiation stage is known as ________________.
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Earnest Money Deposit
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Fixed Deposit
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Current Deposit
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None of the above
Explanation
The money deposit made by the buyer to the seller of real estate during the negotiation stage is known as Earnest Money Deposit. An earnest money deposit can be referred to as a specific form of security deposit made in some major transaction. It is done by the applicant to show his willingness to complete the transaction.
Hence, option (A) is the correct answer.
An entry strategy in which a firm maintains its production facilities within its home country and transfers its products for sale in foreign markets is known as _________.
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Exporting
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Licensing
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Franchising
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International management
Explanation
An entry strategy in which a firm maintains its production facilities within its home country and transfers its products for sale in foreign markets is known as exporting. Exporting can be defined as the act or process of sending goods and services to a foreign country for sale. Exporting helps to upgrade the rate of economic growth.
Money market funds were a financial innovation partly inspired to circumvent ________.
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Regulation Q, which is no longer in existence
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Regulation M
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Regulation D
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Regulation B, which is still in existence
Explanation
Money market funds were a financial innovation partly inspired to circumvent regulation Q, which is no longer in existence. The money market is a market for short-term funds which deals in monetary assets whose period of maturity is up to one year. Generally money market is the source of finance for working capital. Transactions of money market include lending and borrowing of cash for a short period of time and also sale and purchase of securities having one year time.
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Practice Class 12 Commerce Business Studies Quiz Questions and Answers
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