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VISHWAAS 12th Commerce Batch

FINANCIAL MARKET Practice Sheet

1. If a firm requires to two crores for six months’ time 10. SEBI protects the interest of
to keep the stock of raw material, it should approach (1) Investor (3) Brokers
(1) Money market (2) Capital market (2) Companies (4) None of the above
(3) Both (1) and (2) (4) None of the above
11. Conversion of physical form of share certificate into
2. The safest instrument of money market is an electronic entry is called
(1) Call Money (2) Commercial Paper (1) Exchange Mechanism
(3) Treasury Bill (4) Commercial Bill (2) Conversion
(3) Dematerialisation
3. To meet floatation cost, firms generally issue the (4) Rematerialisation
following instrument of money market.
(1) Call Money (2) Commercial Paper 12. To buy securities, i.e., share or debentures, it is
compulsory to open
(3) Treasury Bill (4) Commercial Bill
(1) Current Account
(2) Demat Account
4. Which instrument of money market is also called zero
coupon bond? (3) Fixed Deposit Account
(4) Recurring Account
(1) Call money
(2) Commercial Paper
13. Secondary market is also known as
(3) Certificate of Deposit
(1) Primary Market
(4) Treasury Bill
(2) New Issue Market
(3) Financial Market
5. Under Private Placement, shares are never offered to
(4) Stock Exchange
(1) Institutes (2) Brokers
(3) General Public (4) None of the above
14. Identify the function of stock exchange
(1) Trading and settlement procedure
6. Under secondary market, sale of securities take place
(2) Dematerialisation
between
(3) Pricing of securities
(1) Company and Investors
(4) Depository participants
(2) Company and Company
(3) Investor and other investor
15. Which instrument does not relate to money market
(4) None of the above
(1) Call money (2) Treasury bill
(3) Commercial Bill (4) IPOs
7. In Right Issue, shares are issued to
(1) General public
16. "SEBI is the watchdog of security market".
(2) Existing shareholders
Comment.
(3) Institutes only
(4) None of the above
17. Identify the markets highlighted in following
statements:
8. The economic condition of every country is reflected
(i) This market directly contributes to capital
by dealings in
market.
(1) Stock Market (2) Money Market
(ii) This market deals in instrument whose
(3) Primary Market (4) None of the above
maturity is upto one year.
9. The Apex Body who controls the Capital Market of (iii) It deals in medium- and long-term securities.
our country is (iv) It is also known as Stock Exchange and deals
(1) RBI (2) SBI in sale and purchase of previously issued
(3) SEBI (4) None of the above securities.
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(v) It requires less investment as value of 20. Distinguish between capital market and money
securities is generally low. market.

18. "Money market is essentially market for short term 21. What are the functions of Stock Exchange?
funds". Discuss.
22. Explain the objectives and functions of SEBI.
19. What is treasury bill?
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Answer Key

1. (2) 12. (1)

2. (1) 13. (2)
3. (3) 14. (2)
4. (3) 15. (2)
5. (1) 16. S
6. (1) 17. S
7. (2) 18. S
8. (1) 19. H&S
9. (2) 20. H&S
10. (1) 21. H&S
11. (1) 22. H&S
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Hint and Solution

1. (2) 14. (2)

Capital market Dematerialisation

2. (1) 15. (2)

Call Money Treasury bill

3. (3) 16. S

Treasury Bill SEBI was set up in 1988 to regulate the functions of
the securities market and to protect the interest of
4. (3) investors but SEBI was found ineffective in
Certificate of Deposit regulating the activities of stock market. It was able
to observe and watch only but failed to take
5. (1) corrective measure that is why it was called as
Institutes watchdog. As a result in May 1992, SEBI was
granted legal status. Now it is a body corporate
6. (1) having a separate legal existence and perpetual
Company and Investors succession. Now SEBI is considered as a watchdog
because it performs the following functions to protect
7. (2) stock exchange dealings.
Existing shareholders

8. (1) 17. H&S

Stock Market (i) Primary
(ii) Money Market
9. (2) (iii) Capital Market
SBI (iv) Secondary Market
(v) Stock Exchange
10. (1)
Investor 18. H&S

11. (1) 19. H&S

Exchange Mechanism
20. H&S
12. (1)
Current Account 21. H&S

13. (2) 22. H&S

New Issue Market

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