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CBSE Questions for Class 12 Commerce Business Studies Financial Market Quiz 6 - MCQExams.com
CBSE
Class 12 Commerce Business Studies
Financial Market
Quiz 6
Which of the following is the basic function of stock exchange?
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Pricing of Securities
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Safety of Transaction
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Contributes to Economic Growth
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Providing Liquidity and Marketability to Existing Securities.
Explanation
Basic function of stock exchange are providing Liquidity and Marketability to existing securities. Stock exchange can be defined as an association, organization or body of individuals whether incorporated or not established for the purpose of assisting, regulating and controlling of business in buying, selling and dealing in securities.
A company which desires to list its securities in a stock exchange, should offer at least _____ percent of its issued capital for public subscription.
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sixty
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fourty
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fifty
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thirty
Explanation
A company which desires to list its securities in a stock exchange, should offer at least 60 percent of its issued capital for public subscription. Certain rules and regulations are to be followed by the company which desires to list its securities in a stock exchange. The company should abide by all the terms and conditions mentioned by the stock exchange in order to list its securities.
The strategic objective of Bombay stock exchange are __________.
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To promote, develop and maintain a well-regulated market for dealings in securities.
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To safeguard the interest of members and the investing public having dealings on the exchange.
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To promote industrial development in the country through efficient resource mobilization by way of investment in corporate securities.
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All of the above
Explanation
BSE stands for Bombay Stock Exchange. BSE provides a host of services to capital market participants including risk management, clearing and settlement. It can be defined as a free-float market weighted stock exchange platform. The strategic objective of Bombay stock exchanges are:
a) To promote, develop and maintain a well-regulated market for dealings in securities.
b) To safeguard the interest of members and the investing public having dealings on the exchange.
c) To promote industrial development in the country through efficient resource mobilization by way of investment in corporate securities.
BSE provides a host of services to capital market participants including ________.
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risk management
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clearing
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settlement
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all of the above
Explanation
BSE provides a host of services to capital market participants including:
a) risk management
b) clearing
c) settlement
BSE helps to promote industrial development in the country through efficient resource mobilization by way of investment in corporate securities. It helps to maintain well regulated markets on securities.
BSE also has a platform for trading in equities of small-and-medium enterprises (SME).
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True
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False
Explanation
BSE also has a platform for trading in equities of small-and-medium enterprises (SME)- this is a true statement. SME Exchange functions within the BSE stock exchange. SME exchange can be defined as a trading platform for Small and Medium Enterprises.
Which of the following is/are true about NSE?
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The transactions and orders are entered only through code numbers.
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There is no need for any stock exchange floor to transact.
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It has its access throughout the country.
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All of the above
Explanation
Following are true about NSE:
a) The transactions and orders are entered only through code numbers.
b) There is no need for any stock exchange floor to transact.
c) It has its access throughout the country.
Meeting international benchmarks and standards is one of the objectives of NSE. NSE ensures equal access for investors all over the country with the help of appropriate communication network. The NSEI was established by financial institutions, insurance companies and banks. NSE is managed by professionals, who do not directly or indirectly trade on the exchange.In NSE, the trading rights are with the trading members who offer their services to the investorsNSE launched the capital market segment in November 1994. NSE launched the futures and options segment in June 2000 for various derivative instruments.
The fully automated screen based trading system that it runs is called _______.
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National Exchange for Automated Trading
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State Exchange for Automated Trading
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District Exchange for Automated Trading
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None of the above
Explanation
The fully automated screen based trading system that it runs is called National Exchange for Automated Trading. It is the first exchange in the world to use satellite communication technology for trading. It is a state of the art client server based application.
NSE employs a _______ mechanism where each trading day is considered as a trading period.
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trading settlement
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rolling settlement
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settlement
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none of the above
Explanation
NSE employs a rolling settlement mechanism where each trading day is considered as a trading period. Meeting international benchmarks and standards is one of the objectives of NSE. NSE ensures equal access for investors all over the country with the help of appropriate communication network. The NSEI was established by financial institutions, insurance companies and banks. NSE is managed by professionals, who do not directly or indirectly trade on the exchange.
NSE provides trading across sectors viz ______.
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Equities
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Derivatives
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Debt
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All of the above
Explanation
NSE provids trading across sectors viz, equities, derivatives and debt. Meeting international benchmarks and standards is one of the objectives of NSE. NSE ensures equal access for investors all over the country with the help of appropriate communication network.
The NSEI was established by financial institutions, insurance companies and banks. NSE is managed by professionals, who do not directly or indirectly trade on the exchange.In NSE, the trading rights are with the trading members who offer their services to the investors.
NSE launched the capital market segment in November 1994. NSE launched the futures and options segment in June 2000 for various derivative instruments.
The International Securities Consultancy (ISC) of Hong Kong has helped in setting up of the NSE.
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True
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False
Explanation
The International Securities Consultancy(ISC) of Hong Kong has helped in setting up of the NSE. Meeting international benchmarks and standards is one of the objectives of NSE. NSE ensures equal access for investors all over the country with the help of appropriate communication network. The NSEI was established by financial institutions, insurance companies and banks. NSE is managed by professionals, who do not directly or indirectly trade on the exchange.
The settlement cycle at NSE has been reduced from T+3 to T+2.
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True
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False
Explanation
The settlement cycle at NSE has been reduced from T+3 to T+2- this is a true statement.
Meeting international benchmarks and standards is one of the objectives of NSE. NSE ensures equal access for investors all over the country with the help of appropriate communication network. The NSEI was established by financial institutions, insurance companies and banks. NSE is managed by professionals, who do not directly or indirectly trade on the exchange.
Identify the function(s) of NSE from the following.
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Providing a fair, efficient and transparent securities market to investors using electronic trading systems
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Enabling shorter settlement cycles and book entry settlements systems
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Meeting the current international standards of securities markets
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All of the above
Explanation
Functions of NSE are:
a) Providing a fair, efficient and transparent securities market to investors using electronic trading systems
b) Enabling shorter settlement cycles and book entry settlements systems
c) Meeting the current international standards of securities markets
Meeting international benchmarks and standards is one of the objectives of NSE. NSE ensures equal access for investors all over the country with the help of appropriate communication network. The NSEI was established by financial institutions, insurance companies and banks. NSE is managed by professionals, who do not directly or indirectly trade on the exchange.
Which of the following is/are the development function(s) of SEBI?
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Registration of brokers and sub-brokers.
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Registration of collective investment schemes and Mutual Funds.
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Investor education.
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Training of intermediaries
Explanation
The development functions are performed by SEBI in order to promote and develop activities in stock exchange and increase the business in stock exchange. Following are the development functions of SEBI:
a) Investor education
b) Training of intermediaries.
Example of insider trading could be _______.
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Calling for information form, undertaking inspection, conducting inquiries and audits of the stock exchange.
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Some people manipulating the prices of securities for inflation or depressing the market price of securities.
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Managers or Directors of a company may know that company will issue Bonus shares to its shareholders at a particular time and they purchase shares from market to make a profit with bonus issue.
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All of the above
Explanation
Example of insider trading could be- Managers or Directors of a company may know that company will issue Bonus shares to its shareholders at a particular time and they purchase shares from market to make a profit with bonus issue.
Insider trading can be defined as an illegal trade practice in stock exchange. Insider trading is the trading of a public company's stock or other securities by individuals with access to information which are confidential.
SEBI has stopped the practice of making a preferential allotment of shares unrelated to market prices.
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True
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False
Explanation
SEBI has stopped the practice of making a preferential allotment of shares unrelated to market prices- this is a true statement. It is done in order to protect the interests of the investors. SEBI regulates the business in stock exchange. It helps to provide the safety of the investment.
The SEBI was given a statutory status in the year _______.
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1990
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1991
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1992
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1993
Explanation
The SEBI was given a statutory status in the year 1992. It was set up to regulate the functions of securities market. SEBI is a body corporate having a separate legal existence and perpetual succession. SEBI promotes orderly and healthy development in the stock exchange market.
To be listed on NSEI, the minimum capital requirements for a company.
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Rs. $$5$$ crores
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Rs. $$3$$ crores
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Rs. $$6$$ crores
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Rs. $$1$$ crores
Explanation
To be listed on NSEI, the minimum capital requirements for a company is Rs. 3 crores.
NSE commenced futures trading in the year.
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$$1999$$
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$$2000$$
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$$2001$$
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$$2002$$
Explanation
The National Stock Exchange of India Limited (NSE) commenced trading in derivatives with the launch of index futures on June 12, 2000.
National Stock Exchange of India was recognised as stock exchange in the year.
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$$1992$$
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$$1993$$
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$$1994$$
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$$1995$$
Explanation
1993
The National Stock Exchange of India Limited is the leading stock exchange of India, located in Mumbai. The NSE was established in 1992 It was recognized as a stock exchange by SEBI in April 1993.
Treasury Bills are basically.
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An instrument to borrow short term funds
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An instrument to borrow long term funds
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An instrument of capital market
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None of the above
Explanation
Treasury Bills are an instrument to borrow short term funds.
Treasury Bills are short term (up to one year) borrowing instruments of the Government of India which enable investors to park their short term surplus funds while reducing their market risk. They are auctioned by Reserve Bank of India at regular intervals and issued at a discount to face value.
Primary and Secondary markets.
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Compete with each other
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Complement each other
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Function independently
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Control each other
Explanation
Primary and secondary markets complement each other. ... Secondary market deals in the purchase and sale of the existing securities. That is, once the securities are issued in primary market, they are then traded in the secondary market. It is in this sense that both the markets complement each other.
REPO is?
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Repurchase agreement
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Reliance Petroleum
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Read and Process
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None of the above
Explanation
A repurchase agreement, or repo for short, is a type of short-term loan much used in the money markets, whereby the seller of a security agrees to buy it back at a specified price and time. The seller pays an interest rate, called the repo rate, when buying back the securities.
Total number of Stock exchange in India are.
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$$20$$
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$$21$$
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$$22$$
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$$23$$
Explanation
There are a total of 23 stock exchanges in India, with the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) being the largest.
State, with reasons, whether the following statements are True or False
The financial market contributes towards the nation's economic growth and development.
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True
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False
Explanation
The financial market contributes towards the nation's economic growth and development. This statement is True.
Reasons :
(a) The place where people and institutions borrow money are brought together with those having surplus funds, is called a Financial Market.
(b) The financial market contributes to national growth by facilitating continuous flow of surplus fund to business enterprises (sick and deficit units) through its allocative function ensuring higher rate of return to the savers/household by investing the scarce resources in the enterprises having higher productivity, increasing the rate of capital formation.
(c) The financial market contributes a lot to the development of the entreprenurial class by financing their business requirements. It obtain funds from individual households private and public sector units. Central govt. etc. and supply these funds to those business units who need it for productive purpose.
(d) The components of Financial Market is money market and capital market. It helps in accelerating the rate of industrial and economic development of the country. As a result, the standard of living and social welfare goes up. Thus, Financial market contributes towards the nations growth and development.
MILA is stock exchange not involving which of the following countries stock exchanges ?
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Chile
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Peru
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Colombia
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Cuba
Explanation
The Mercado Integrado Latinoamericano, more commonly known as MILA, is a program that integrates the stock exchangemarkets of Chile, Colombia, Mexico, and Peru.The three forming members of Leona are :
(i) Leona stock exchange
(ii) the Santiago stock exchange
(iii) Colombia stock exchange
Select the proper option for the options given below and rewrite the sentences :
The oldest stock exchange in Asia is ______.
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National Stock Exchange (NSE)
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Bombay Stock Exchange (BSE)
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Calculate Stock Exchange (CSE)
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None of these
Explanation
The Bombay Stock Exchange is the oldest stock exchange in Asia.
Answer the following question.
Primary and secondary markets _______.
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Compete with each other
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Complement each other
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Function independently
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Control each other
Explanation
Primary market deals with the issue of new securities. That is, through the primary market a company raises capital directly from the borrowers. That is, once the securities are issued in primary market, they are then traded in the secondary market. It is in this sense that both the markets complement each other
The capital market consists of
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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.
The allocative function is performed by
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Money market
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Capital market
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Financial market
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All of the above
Explanation
A financial market helps to link the savers and the investors by mobilizing funds between them. In doing so it performs what is known as an allocative function. The process by which allocation of funds is done is
called financial intermediation.
Bids is the _________
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Lowest value the which the seller is willing to sell
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Highest value which the buyer is willing to pay
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Highest value which the seller is willing to sell
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Lowest value which the buyer is willing to pay
Explanation
As we know that,
Bid: The bid price represents the maximum (highest) price that a buyer is willing to pay for a share of stock or other security.
$$\therefore $$ Option B. Higher value which the buyer is willing to pay is correct answer.
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