Reasons For Est. of SEBI - k-12 - 1-10

Q1:
Question Type: Concept

Question Variety: Text Based
Difficulty: Easy
Expected Time to Solve (in seconds):30
Topic: Business finance and marketing
Concept: Financial markets
Sub Concept: Securities Exchange Board of India
Concept Field: Reasons for establishment of SEBI
Which of the following set up the SEBI?

A. Reserve Bank of India
B. Government of India
C. Bombay stock exchange
D. None of them
Solution: B
Explanation- SEBI is an abbreviation for Securities Exchange Board of India which is
regulatory body of stock exchanges. Securities Exchange Board of India was established by
Government of India.
Q2:

Difficulty: Medium
SEBI was established_________.

A. To regulate securities market
B. To increase market cap
C. To provide trading platform
D. All of the above
Solution: A
Explanation- Securities Exchange Board of India was established to regulate the securities
market so that malpractices can be stopped and investors trust can be build.
Q3:

Difficulty: Easy
When SEBI was established?

A. 1992
B. 1980
C. 1993
D. 1991
Solution: A
Explanation- Securities Exchange Board of India (SEBI) was established on 12 th April 1992
which is separate regulatory body for regulating securities market to ensure fair trade
practices.
.
Q4:

Difficulty: Easy
Determine the consequences of ever expanding investor’s population and market

capitalization.
A. Decrease in regulation
B. Increase in malpractices
C. Decrease in malpractices
D. No change in regulations
Solution: B
Explanation- Due to increase in investor’s population and market capitalization, the
malpractices by companies, brokers, merchant bankers, investment consultants, etc.
Q5:
Question Type: Conceptual

Difficulty: Hard
Assertion (A): SEBI was established by the government to regulate securities market.
Reason (R): Due to rising malpractices investor lost their trust.
Choose the correct answer from the following code:
A. Both (A) and (R) are true and (R) is the correct explanation of (A).
B. Both (A) and (R) are true, but (R) is not the correct explanation of (A).
C. (A) is true but (R) is false
D. (A) is false but (R) is true
Solution: B
Explanation- Due to rising malpractices investor lost their trust. SEBI was established by the
government to regulate securities market and to re-build the trust among investors.
Q6:

Difficulty: Medium
Identify the incorrect statement.
Codes:
I. During 1980s, there was an expansion in the number of investors in capital
market.
II. SEBI was established in 1991.
III. Violation of rules and regulations one of the example of malpractices..
IV. Investors trust has been eroded due increase in malpractices by companies.
Options:
A. Only statement II is incorrect
B. Statement I and II are incorrect
C. Statement II and IV are incorrect
D. None of the statements are incorrect
Solution: A
Explanation- During 1980s, there was an expansion in the number of investors in capital
market. SEBI was established by the government on 12 th April 1992 to ensure fair trade
practices.
Q7:
Difficulty: Easy
Identify the reasons for establishment of SEBI by the government.

A. To ensure fair trade practices
B. To re-build the trust among investors
C. To provide proper redressing for investors grievances
D. All of the above
Solution: D
Explanation- SEBI was established for ensuring fair trade practices, to re-build trust among
capital market investors, to provide proper redressing for investors grievances, etc.
Q8:

Difficulty: Medium
Which of the following is/are example of malpractices?

A. Private placement
B. Rigging of prices
C. Delay in delivery of shares
D. All of the above
Solution: D
Explanation- Due to increased number of investors and market capitalization ther is an
increase in malpractices such as private placements, rigging of prices, insider trading, delay
in delivery of shares, etc.
Q9:

Difficulty: Medium
Why government was insufficient to redress the investor’s problem?

A. Due to lack of access
B. Due to lack of proper penal provisions in existing legislations
C. Due to lack of human resources
D. None of the above
Solution: B
Explanation- The government was unable to redress the problem of investors which arises
due to increase in malpractices because of improper penal provisions in the existing
legislations.
Q10:

Difficulty: Hard
Assertion (A): Increase in malpractices has increased the investor’s distrust and grievances.
Reason (R): Violation of rules and regulations of stock exchanges and listing requirement is a
glaring example of malpractices.
Choose the correct answer from the following code:
A. Both (A) and (R) are true and (R) is the correct explanation of (A).
B. Both (A) and (R) are true, but (R) is not the correct explanation of (A).
C. (A) is true but (R) is false
D. (A) is false but (R) is true
Solution: A
Explanation- Increase in malpractices has increased the investor’s distrust and grievances.
Violation of rules and regulations of stock exchanges and listing requirement is a glaring
example of malpractices.

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Q1:

Question Type: Concept

Which of the following set up the SEBI?

Question Type: Concept

SEBI was established_________.

Question Type: Concept

When SEBI was established?

Question Type: Concept

Determine the consequences of ever expanding investor’s population and market

Question Type: Conceptual

Question Type: Concept

Identify the incorrect statement.

Identify the reasons for establishment of SEBI by the government.

Question Type: Concept

Which of the following is/are example of malpractices?

Question Type: Conceptual

Why government was insufficient to redress the investor’s problem?

Question Type: Conceptual

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