class 04 @06:00 pm financial market

RRB Officer Scale-2 & RRB PO FA Classes

@06:00 PMClass 04Financial Market &Types [Capital& Money Market]

TOPICWISE MCQS DISCUSSION

Q.1. Which of the following is known as the Market Regulator in India?

a. RBI

b. SEBI

c. Central Government

d. SIDBI

SEBI : Securities Exchange Board of India

• Estd.: 1988

1992 (Power)

• HQ: Mumbai

• Chairman: Ajay Tyagi

• Recommended by: Narsimham Committee

Q.2. What is the minimum time period for which a Commercial Paper

can be issued?

a. 1 day

b. 7 days

c. 21 days

d. 91 days

Q.3. Which of the following cannot issue a Commercial Paper?

a. Primary Dealers

b. All Indian Financial Institution

c. Companies

d. Commercial Banks

Q.4. Which of the following is not a money market instruments?

a. Commercial Paper

b. Treasury Bill

c. Certificate of Deposit

d. Equity Share

Q.5 Commercial Paper can be issued

a. By all corporates

b. Only by banks

c. By all corporates with new worth of atleast Rs.5 crore

d. All of the above

Commercial Paper

• Introduced : 1990

• Unsecured form of Promissory Note

• Min amount : 5 Lakh (* Multiple)

• Maturity : 7 days to 1 year

• Issuer : Corporate/ Financial Institution

• Dealt by : Any Commercial Bank

• Issued on Discount to the Face Value

Discount = Bank Rate + Risk

• Eligibility of Issuer :

Net worth : Rs.5 crore

Minimum Credit Rating : A-2

Q.6 What is the maturity period of a Cash Management Bill can be:

a. Less than 14 days

b. Less than 91 days

c. Less than 182 days

d. Less than 364 days

Q.7. Which of the following dealt in Cash management Bill?

a. SEBI

b. Bank

c. IRDA

d. RBI

Q.8. What is the minimum amount of CMB?

a. 10000

b. 25000

c. 1 lakh

d. 5 lakh

Cash Management Bill (CMB)

• Issued by : GoI

• Dealt by: RBI

• Min amount : 25000 (* Multiple )

• Maturity – less than 91 days or max : 90 days

Q.9. What is the meaning of Zero Coupon Bond?

a. No Interest

b. No Premium

c. No Taxes

d. None of these

Q.10. Treasury bill is a

a. Negotiable Security

b. Non- Negotiable Security

c. Gilt- edged security

d. Both a & c

Q.11. What is the minimums denomination amount of a Treasury Bill

?

a. 1 lakh

b. 3 lakh

c. 5 lakh

d. 25000

Q.12. What is the maturity period of Treasury bill issued by Govt. of

India?

a. 14 & 91 days

b. 91 & 182 days

c. 91, 182 & 364 days

d. None of these

Treasury Bill or T – Bill

• Also called Zero Coupon Bond

• ‘Gilt Edged’ Security (Secured form)

• Negotiable Instrument

• Ist time Introduced: 1917

• Issued by : GoI

• Dealt by : RBI

• Min amount : Rs.25000 (* Multiple)

• Max amount : No Limit

• Maturity : 91 Days : Max- Rs.6000 cr ( Every Wednesday of

Reporting Week)

182 Days : Max – Rs.6000 cr. (Every Wednesday of Non

Reporting Week)

364 Days : Max – Rs. 8000 cr. (Every Wednesday )

• Issued on Discount of Face Value

Q.13. What is the minimum amount of Certificate of Deposit?

a. 25000

b. 50000

c. 1 lakh

d. 5 lakh

Q.14. What is the max maturity limit of CD?

a. 90 days

b. 182 days

c. 1 year

d. None of these

Q.15. What is the minimum maturity period of CD?

a. 7 days

b. 14 days

c. 90 days

d. 182 days

Certificate of Deposit (CD) :

• started: in 1989

• Issued by : Banks/NBFCs/ Financial Institutions

• Minimum amount: Rs.5 Lakh(*Multiple)

• Maximum: No Limit

• Maturity:

• Bank –7 days to 1 year

• Financial Institution: 1 year to 3years (Exception)

Q.16. The Treasury bills are issued at a

a. Discount

b. Premium

c. Face value

d. Both a & b

Q.17. Money lent for 15 days or more in Interbank market is known as

a. Call Money

b. Notice Money

c. Term Money

d. All of these

Q.19.Money lent for 1 day in Interbank market is known as

a. Call Money

b. Notice Money

c. Term Money

d. All of these

Q.20. Money lent for more than 1 day and less than 15 days in

Interbank market is known as

a. Call Money

b. Notice Money

c. Term Money

d. All of these

Call Money: Borrowed from One Bank/Banks

• also known as Inter bank Market

• Tenure: 1 day

e.g. MIBOR : Mumbai Inter-Bank Offer Rate

• Decided by: NSE

• Average Interest Rate of all the Call Money Rate of Big Bank

Notice Money : Borrowed from other banks

• Tenure: 2 to 14days

Term Money : Borrowed from other banks

• Tenure: 15 days to 1 years

Q.21. Which of the following government can borrow through Ways &

Means Advances?

a. Central Government

b. State Government

c. Both a & b

d. None of these

Q.22 What is the penalty rate incase of Overdraft in Ways and Means

Advances for 10 days?

a. 1% + Repo Rate

b. 2% + Repo Rate

c. 3% + Repo Rate

d. 5% + Repo Rate

b. Ways & Means Advances (WMA) : Temporary loan facility by RBI to

Center / State Govt.

• Introduced : 1997

• Maturity : Max – 90 days

• Interest = Repo Rate

For State Govt : Special & Normal WMA

• Special WMA : against the Collateral of the govt securities held by

State Govt.

• Normal WMA : Based on 3- year avg of Actual Revenue & Capital

Expenditure of the State

• Overdraft : by RBI to Govt

• Max : 10 Days

• Interest : 2% + Repo Rate

• After this time period :

Interest : 5% + Repo Rate

Government RBI

Capital Market

Partnership Debt

Shares Debenture

Venture Capital Bonds

Angel’s Fund

ADR, GDR, IDR

FII, FDI & NRI Deposit

Q.23 First share market in India was established in?

a. New Delhi

b. Mumbai

c. Kolkata

d. Chennai

Q.24 In a company the use of price sensitive corporate information by

the company people to make gains of cover losses is known as?

a. Insider Trading

b. Future Trading

c. Current Trading

d. None of the above

Q.25 SEBI allows investors to apply for shares in IPO without offering

actual transfer of their funds from their account. It is known as?

a. ASBA

b. ELSS

c. Hedge Funds A/c

d. None of these

Q.26 What is Indian Depository Receipt?

a. A deposit A/c with Public Sector Bank

b. It is an instrument in form of deposit receipt issued by Indian

Depositors

c. It is a depository account with any of depositors in India

d. None of these

ADR : American Depository Receipt

GDR: Global Depository Receipt

IDR: Indian Depository Receipt

Q.27 What is arbitrage meaning in terms of Capital market?

a. Sale of Securities to reduce the loss om purchase

b. Purchase of securities to cover the sale

c. Simultaneous purchase & sale of securities to make profit from

price

d. All of the above

Q.28 How many members are there is SEBI Board as per SEBI Act

1992?

a. 5

b. 6

c. 7

d. 9

Q.29 Which of the following is the component of capital market?

a. Equity market

b. Debt market

c. Derivative market

d. All of the above

Q.30 Which of the following is most risky?

a. Equity Shares

b. Preference Shares

c. Zero Coupon Bonds

d. Venture Capital

A. Shares

1. IPO : Initial Public Offering :

When an Unlisted company offers its shares first time.

2. FPO : Follow- on Public Offer

When an listed company offers fresh issue of its shares.

3. Right Issue:

When a company offers its shares to only existing shareholders.

4. Private Placement:

When a company offers its shares to only selected shareholders

among existing holders.

5. Offer for Sale:

• Introduced in 2012 by SEBI

• When promoters of the company sells their shares for sale.

B. Venture Capital:

• Funding for a new or growing business.

• Venture Capital gives funding to company in exchange for equity in

company

• Active Partners

Q.31 Which is an example of Stock Index in India:

a. BSE

b. Nifty

c. NSE

d. MCX

Q.32 ___ is the process of converting physical securities into electronic

format?

a. Materialization

b. Dematerialization

c. Securitization

d. E- Securitization

Demat A/c : Dematerialised account

• Demat Account is an account that is used to hold shares and

securities in electronic format

• Free Demat A/c through depositories such as NSDL and CDSL

through intermediaries / Depository Participant / Stock Broker

• National Securities Depository Ltd.

• Central Depository Securities Ltd.

Q.33 The market in which new securities are issued by the

corporations to raise funds are called:

a. Primary markets

b. Secondary markets

c. Wholesale markets

d. Proceeds market

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