Q.1 What is the primary function of a stock exchange?
To issue government bonds
To facilitate the buying and selling of securities
To regulate commercial banks
To provide insurance services
Explanation - A stock exchange provides a platform where buyers and sellers can trade securities like shares and bonds efficiently.
Correct answer is: To facilitate the buying and selling of securities
Q.2 Which institution regulates the functioning of commercial banks in India?
SEBI
RBI
IRDAI
NABARD
Explanation - The Reserve Bank of India (RBI) is the central bank responsible for regulating and supervising commercial banks in India.
Correct answer is: RBI
Q.3 Which of the following is a money market instrument?
Equity shares
Treasury bills
Corporate bonds
Debenture
Explanation - Treasury bills are short-term money market instruments issued by the government for raising short-term funds.
Correct answer is: Treasury bills
Q.4 The primary objective of SEBI is to:
Regulate insurance companies
Regulate and develop the securities market
Control fiscal deficit
Provide loans to farmers
Explanation - SEBI (Securities and Exchange Board of India) regulates and develops the securities market to protect investors.
Correct answer is: Regulate and develop the securities market
Q.5 Which of the following is a derivative instrument?
Mutual funds
Futures contract
Equity shares
Fixed deposits
Explanation - A derivative derives its value from an underlying asset. Futures contracts are common derivative instruments.
Correct answer is: Futures contract
Q.6 What is the role of a merchant bank?
Providing long-term loans to industries
Accepting deposits from the public
Issuing debit cards
Managing insurance policies
Explanation - Merchant banks primarily provide finance and advisory services to corporations, especially for long-term capital needs.
Correct answer is: Providing long-term loans to industries
Q.7 Which of the following is not a function of the RBI?
Issuing currency notes
Regulating the money supply
Setting fiscal policy
Maintaining financial stability
Explanation - Fiscal policy, which involves government spending and taxation, is determined by the government, not the RBI.
Correct answer is: Setting fiscal policy
Q.8 Commercial papers are issued by:
Banks
Corporate companies
Mutual funds
Insurance companies
Explanation - Commercial papers are short-term unsecured promissory notes issued by corporations to raise funds for short-term needs.
Correct answer is: Corporate companies
Q.9 Which market deals with long-term funds?
Money market
Capital market
Commodity market
Foreign exchange market
Explanation - The capital market facilitates trading of long-term securities like equity and bonds for investment purposes.
Correct answer is: Capital market
Q.10 Repo rate is related to:
Income tax
Bank lending rate to customers
Rate at which RBI lends to commercial banks
Rate of dividend on shares
Explanation - Repo rate is the rate at which the Reserve Bank of India lends short-term funds to commercial banks against government securities.
Correct answer is: Rate at which RBI lends to commercial banks
Q.11 Which of the following is a financial intermediary?
Mutual fund
Individual investor
SEBI
Stock exchange
Explanation - Mutual funds pool funds from investors and invest them in diversified financial instruments, acting as financial intermediaries.
Correct answer is: Mutual fund
Q.12 The term 'bull market' refers to:
A declining market
A stagnant market
A rising market
A speculative market only
Explanation - A bull market is characterized by rising prices and investor confidence, typically in the stock market.
Correct answer is: A rising market
Q.13 Which of the following is issued by the government to borrow money from the public?
Debenture
Treasury bills
Post office savings bonds
Commercial paper
Explanation - Treasury bills are short-term government securities issued to raise funds from the public and institutional investors.
Correct answer is: Treasury bills
Q.14 Which financial institution primarily provides credit to agriculture in India?
NABARD
RBI
SEBI
IRDAI
Explanation - NABARD (National Bank for Agriculture and Rural Development) provides credit and development support to agriculture and rural sectors.
Correct answer is: NABARD
Q.15 Which of the following is a characteristic of a liquid market?
High transaction costs
Easy buying and selling of securities
Low number of participants
Strict government control
Explanation - A liquid market allows securities to be easily bought and sold with minimal price fluctuations and costs.
Correct answer is: Easy buying and selling of securities
Q.16 Which market facilitates short-term borrowing and lending?
Money market
Capital market
Commodity market
Equity market
Explanation - The money market deals with short-term financial instruments like treasury bills, commercial papers, and certificates of deposit.
Correct answer is: Money market
Q.17 Which of the following institutions is a development bank in India?
ICICI
RBI
SEBI
BSE
Explanation - ICICI Bank was originally established as a development finance institution to provide long-term finance for industrial development.
Correct answer is: ICICI
Q.18 The term 'NASDAQ' is associated with:
Indian stock exchange
US stock exchange
Commodity market
Government bond market
Explanation - NASDAQ is a major American stock exchange that deals primarily with technology and growth-oriented companies.
Correct answer is: US stock exchange
Q.19 Which of the following instruments represents ownership in a company?
Debenture
Equity shares
Bonds
Certificate of deposit
Explanation - Equity shares represent a shareholder's ownership in a company and entitle them to profits and voting rights.
Correct answer is: Equity shares
Q.20 Which rate is used by RBI to control inflation through open market operations?
Repo rate
Cash reserve ratio
Bank rate
SLR
Explanation - Bank rate is the rate at which RBI lends long-term funds to commercial banks, helping in controlling inflation and liquidity.
Correct answer is: Bank rate
Q.21 Which of the following is a type of non-banking financial company (NBFC)?
LIC
HDFC
SBI
BSE
Explanation - HDFC is a non-banking financial company that provides financial services like loans and investments but does not hold a banking license.
Correct answer is: HDFC
Q.22 Which financial market deals with foreign currencies?
Capital market
Money market
Foreign exchange market
Commodity market
Explanation - The foreign exchange market (Forex) is where currencies are traded internationally for purposes of trade, investment, or speculation.
Correct answer is: Foreign exchange market
Q.23 Which of the following is a function of a development financial institution?
Providing long-term finance to priority sectors
Issuing equity shares
Trading in commodities
Providing insurance
Explanation - Development financial institutions provide long-term financial support to sectors like agriculture, industry, and infrastructure to promote economic growth.
Correct answer is: Providing long-term finance to priority sectors
Q.24 Certificate of Deposit (CD) is issued by:
Commercial banks
Mutual funds
Insurance companies
Stock exchanges
Explanation - Certificates of Deposit are short-term, negotiable money market instruments issued by commercial banks to raise funds.
Correct answer is: Commercial banks
Q.25 Which of the following is a government-backed bond in India?
Savings bonds
Debenture
Equity shares
Commercial paper
Explanation - Savings bonds are government-backed fixed-income securities issued to the public to raise long-term funds.
Correct answer is: Savings bonds