HEC GROUP OF INSTITUTIONS, HARIDWAR

TEST SERIES -2

(2020-2021)

B.COM HONS. VTH SEM

FINANCIAL MARKET AND INSTITUTION

Q.NO.1 Relate the following statements:

Statement I – The money market provides a focal point for the RBI to intervene to
influence the liquidity and general levels of interest rates in the economy.

Statement II – RBI is a major constituent of the money market.

(A) Both statements are true

(B) Only I is true
(C) Both are false
(D) II is true and I is false

Q.NO.2 Relate the following statements :

Statement I – Money market deals with short – term market instruments.

Statement II – It influences RBI monetary policy.

(A) Both statements are false

(B) Both are true
(C) Statement II is false and I is true
(D) None of the above

Q.NO.3 Characteristics of the money market are :

I. Short term
II. Discount pricing
III. Safety
IV. No brokers

Combination are :

(A) I,III,IV
(B) I,II,III,IV
(C) IV,II,III
(D) I,II,IV
Q.NO.4 This is the safest investment option with liquidity and safety.

(A) Treasury bill

(B) Equity shares
(C) Debentures
(D) Company deposit

Q.NO.5 This instrument is normally issued at a discount by RBI and redeemed at par and
difference constitutes the return on it.

(A) Equity shares

(B) Treasury bill
(C) Debenture
(D) Commercial paper

Q.NO.6 Market for short term financial assets that are close substitute for money.

(A) Call money market

(B) Debt market
(C) Equity Market
(D) Forex market

Q.NO.7 In notice money market the duration of lending is

(A) One day

(B) Exceeds one day but less than fifteen days
(C) More than 15 days
(D) No duration is specified

Q.NO.8 This is not money market instrument.

(A) Commercial paper

(B) Money at call
(C) Credit card
(D) Treasury bills

Q.NO.9 If RBI increases repo rate, the following normally happens.

(A) Commercial banks decrease interest rates to borrowers

(B) Commercial banks increase interest to borrowers
(C) Liquidity in market increases
(D) Interest rates on deposit decrease

Q.NO.10 RBI provides overnight borrowing through this instrument, without collateral
security , to commercial banks under exceptional circumstances only when all its other
avenues are exhausted.

(A) Commercial paper

 (B) Money at call
(C) Marginal standing facility
(D) Repo rate

Q.NO. 11 Through this instrument money is lent for one day in the inter bank market.

(A) Term money

(B) Call money
(C) Money at call
(D) None of the above

Q.NO.12 Instrument provides access to those entities that have restricted participation to the
call money market.

(A) CBLO
(B) Marginal standing facility
(C) Commercial paper
(D) Credit card

Q.NO.13 The following is not the participant in the money market.

(A) Commercial banks

(B) Acceptance houses
(C) Non – banking finance companies
(D) None of the above

Q.NO.14 This is the safest money market instrument issued by the government of India
through the RBI.

(A) Commercial paper

(B) Treasury bill
(C) Certificate of deposit
(D) Marginal standing facility

Q.NO.15 A corporate is eligible to issue commercial paper if its tangible net worth, as per the
latest audited balance sheet, is.

(A) Not less than rupee 4 crore

(B) Not less than rupee 3 Crore
(C) Not less than rupee 2 crore
(D) No limit

Q.NO.16 A company can issue commercial paper if the following condition is satisfied :

(A) Net worth of company is not less than 4 crore

(B) Credit rating is not less than P2 of CRISIL or its equivalent
(C) Advance is classified as standard asset by the lending bank
(D) All of the above
Q.NO.17 This institution facilitates dealings and settlements in the government securities to
banks and primary dealers at economic transaction costs.

(A) CCI
(B) SBI Capital markets ltd
(C) RBI
(D) NABARD

Q.NO.18 Commercial banks are not allowed to lend below this rate.

(A) Repo rate

(B) Reverse repo rate
(C) Marginal standing facility
(D) Base rate

Q.NO.19 Repo rate and reverse repo operations fall in this category:

(A) Liquidity adjustment facility

(B) Marginal standing facility
(C) Commercial paper
(D) Bankers acceptance

Q.NO.20 Money market provides a market for deployment of this type of funds

(A) Long term requirements

(B) Short term requirements
(C) Both a and b
(D) None of the above

Q.NO.21 Which of the following is related to primary market.

(A) IPO
(B) FPO
(C) A and B both
(D) None of the above

Q.NO.22 Capital market includes :

(A) High risk and high return

(B) Low return and high risk
(C) Low risk and low return
(D) High return and low risk

Q.NO.23 Instrument of capital market are :

(A) Long term instruments

(B) Short term instruments
(C) Short term and long term instruments
 (D) None of the above

Q.NO.24 participating institution of capital market are:

(A) Commercial banks, primary dealers

(B) Stock brokers , underwriters, mutual funds
(C) Stock brokers, primary dealers
(D) Both a and b

Q.NO.25 Regulator of the secondary market?

(A) RBI and SEBI

(B) SEBI
(C) IRDA
(D) None of the above

Q.NO.26 Statement I – Primary market facilitates companies to issue new stocks to raise
money, directly, from the public for formation or its expansion.

Statement II – The primary market is also a channel for the government to raise funds
from the public to finance the public sector projects.

(A) Both statements are false

(B) Only I is true
(C) II is true and I is false
(D) Both are true

Q.NO.27 . The objectives of SEBI include -------------.

(a) To protect interests of inventors
(b) To regulate securities market
(c) To promote the development of the market
(d) All of the above

Q.NO.28 Bulls and bears are -------------.

(a) Ordinary investors (b) Government agencies c) Speculators (d) Money lenders

Q.NO.29 QIB stands for

(a) Qualified Institutional Buyer (b) Qualified Institutional Bonds (c) Qualified Information
for

Q.NO30 Shares can be distributed through outright sale by companies to select group of
persons,this is known as
(a) Public issue (b) Private placement (c) Institutions (d) Underwriting

Q.NO.31. Market for borrowing and lending short term funds is called
(a) Money market (b) Capital market (c) Derivative market (d) Forex market

Q.NO32 . Who controls money market?

(a) RBI (b) SBI (c) DFHI (d) SIDBI
Q.NO33 Which of the following markets help RBI in implementing its monetary policies?
(a) Money market

(b) Capital market

(c) Forex market

(d) Debt market

Q.NO.34 What is the minimum issue size of commercial papers?

(a) 10 lakh (b) 5 Lakh (c) 5crore (d) 2 lakh

Q.NO.35 An important money market is instrument by the government to bridge the deficit
between the revenue and expenditure in the budget.
(a) T-bills (b) Bonds (c) CDs (d) CPs

Q.NO.36. Which of the following is not true regarding NBFCs :

I. NBFCs cannot accept demand deposits.

II. NBFCs are not a part of the payment and settlement system.
III. NBFCs cannot issue cheques drawn on itself
IV. The deposit insurance facility of deposit insurance and credit guarantee
corporation is not available for NBFC depositors unlike in banks.

Codes-

(A) I,II,III
(B) I,II,III,IV
(C) I,IV,
(D) None of the above

Q.NO.37 Residuary non – banking company falls in this category

(A) Investment company

(B) Asset financing company
(C) Loan company
(D) Other than the above three categories

Q.NO.38 Every NBFC must register with the following to commence or carry on its business
:

(A) RBI
(B) SEBI
(C) NHB
(D) Any one of the above

Q.NO.39 Regulator of NBFCs :

 (A) RBI
(B) SEBI
(C) IRDA
(D) A and B both

Q.NO. 40 Category of NBFCs are :

I. Asset finance company

II. Investment company
III. Loan company
IV. Residuary non – banking company

Codes are :

(A) I,II,III
(B) Only IV
(C) II,III
(D) A and B both

Q.NO.41 Which document is not considered in KYC norms?

(A) Driving license

(B) PAN card
(C) Pension payment order
(D) Bill of exchange

Q.NO.42 Scheduled banks are

(A) Nationalized banks

(B) Included in the IV schedule of RBI
(C) Included in the II schedule of RBI
(D) None of the above

Q.NO.43 Identify the correct one of the following :

(A) NABARD was set up in order to provide credit for the promotion of the
activities like rural crafts and agriculture.
(B) NABARD was set up in order to provide credit to poorer section of rural
India.
(C) NABARD was set up in order to assist banks specially meant to surve rural
India.
(D) All of the above

Q.NO.44 Which of the following organizations is associated with the micro financing
regulation authority.

(A) SIDBI
(B) NABARD
 (C) RBI
(D) IDBI

Q.NO.45 The NABARD was established in the :

(A) 12 January 1982

(B) 12 July 1982
(C) 1 January 1982
(D) 1 July 1982

Q.NO.46 Export – Import (EXIM) bank of India was set up on.

(A) 1 January 1982

(B) 12 January 1982
(C) 1 July 1982
(D) 1 June 1982

Q.NO.47 International finance corporation was established for the promotion of :

(A) Public sector

(B) Private sector investment
(C) Financing of government projects
(D) Joint sector projects investment

Q.NO.48 The first development bank of our country:

(A) IDBI
(B) SIDBI
(C) ICICI
(D) IFCI

Q.NO.49 Computerisation in banks was started mainly on the recommendation of committee

(A) Narashimhan committee

(B) Chore Committee
(C) Rangarajan
(D) Tandon

Q.NO.50 Regulatory authority of Regional rural banks is

(A) State Government

(B) Central Government
(C) NABARD
(D) IDBI