Unit 1

Fill in the blanks:

1. ________________ enables the transfer of money between investor and borrower.
(financial system)
2. Financial system divided into four components they are
______________,_____________,_______________,&__________(financial services,
financial institution, financial market, financial assets or instruments)
3. Financial institutions are of two types____________&_________
(Banking and non-banking institutions)
4. Money market is further divided into two they are __________&___________
(organised market and unorganised market)
5. Capital market is for trading ____________ financial assets. (long term)
6. Money market is for trading _____________financial instruments. (short term)
7. Capital market is divided into two they are ____________&____________
(primary market and secondary market).
8. _______________ provides claims against a person or financial institution to pay either
specific amount on a certain future date or to pay the principal amount along with
interest. (financial asset/instrument)
9. Services offered by banking and financial institution are ___________(financial services)
10. Financial services are divided into two _______________&____________
(Fund based and fee-based services)
11. ____________ is presented in the form of matrix by placing sources and utilization of
funds statement of different sectors side by side. (flow of funds Matrix)
12. Financial system bridges gap between __________&__________(savings and
investment)
13. _____________ is a short-term govt. Security usually for a term period 91D,182D, 364
days Sold by central bank on behalf of government. (Treasury bills)
14. ____________ refers to funds provided for short period of time usually less than a week,
where borrower and lender are banks. (Call money)
15. _____________ facilities many financial institution and investment banks which are
responsible for underwriting, setting initial share price and selling securities directly to
the prospective investors. (Primary market)
16. ______________is concerned with issue of new securities and listing of new shares on
stock exchange. (primary market)
17. In _____________ those securities are traded which had been initially offered to public
in primary market or listed in stock exchange. (secondary market)
18. Secondary market is categorised into __________&_________on basis of Nature of
securities traded.(equity market & debt Market)
19. Cash deposit, checks, loans , bank notes are the example of _______(financial assets)
20. Lease and hire purchasing are the example of _____________(fund based services)
Multiple choice questions:
1. Commercial bills are a part of
which market: (_a_)
a) Organised money market
b) Unorganised money market
c) Stock market
d) None
2. Among the following which option denotes primary function of financial market:
_ ( c)
a) Provided highest return for a given level of risk
b) Low cost transaction and information
c) Facilities the transfer of funds from supply sector to defectors (lenders to borrower)
d) To link participation of market by formal trading rules
3. Well-functioning financial market_______ (_d_)
a) Cause inflation
b) Eliminate the needs of indirect finance
c) Political instability
d) Stable prices
4. Which of the following is a money market instrument: (_a__)
a) Commercial bills
b) Shares
c) Debentures
d) Bonds
5. Which of the following is issued by RBI on behalf of government: (__a__)
a) Treasury bills
b) Certificate of deposit
c) Commercial paper
d) Call money
6. Unorganised market consists of (__a__)
a) Money lenders and indigenous bankers
b) Money lenders and commercial banks
c) Money lenders and scheduled banks
d) None
7. Organised market is divided into two:(__a_)
a) Capital market & secondary market
b) Money market & secondary market
c) Capital market and money market
d) None
8. Which of the following comes under financial institution (_d_)
a) Capital market
 b) Co-operative banks
c) Commercial banks
d) Option b & c
9. Which of the following is a recent development of Indian financial system :(__d__)
a) Setting up of legal status for Rs 500 and Rs 1000 notes
b) Setting up of monetary policy committee
c) Passage of insolvency and bankruptcy code
d) All of the above
10. Weakness of Indian financial system are : (__c___)
a) Inactive irregular capital market
b) Imprudent financial practice
c) Both a & b
d) None
11. RBI functions are classified into (_a_)
a) Supervisory & regulatory
b) Promotional & development
c) Refinance activities
d) All
12. The flow of funds Matrix accounting system is presented by placing _________of funds
(_b_)
a) Segment and utensils
b) Sources and utilisation
c) Investment and savings
d) None
13. Withdrawal of legal tender status of Rs 500 and Rs 1000 was declared by prime minister on
(_d_)
a) 8 th August,2016
b) 8 th September,2015
c) 8 th December,2016
d) 8 th November,2016
Short questions :
1.capital Market
2.Financial institution
3.Two advantages of flow of funds Matrix
4.financial instruments
5. Money market
6.primary market
7. secondary market
8.Two Functions of Indian financial system