CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE

QUESTIONS
(UNIT 1 TO 13)

1) The RBI was established on _________ in accordance with the provision of RBI
Act,1934.

A) 1st April, 1934

B) 1st April, 1935
C) 1st April, 1936
D) 1st April, 1940

2) ______________ is the main law that governs the banks of India.

A) Banking Regulation Act, 1949

B) RBI Act, 1934
C) Companies Act, 2013
D) FERA Act, 1973

3) FERA Act was replaced by _____ Act in the year 2000.

A) FEMA
B) RBI
C) SEBI
D) FETA

4) _________ has permitted the banks to exchange mutilated currency notes.

A) SEBI
B) IRDA
C) RBI
D) SBI

5) Public Sector Banks include State bank group, Nationalized banks & Regional rural
banks.

A) True
B) False
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

6) Oriental Bank of Commerce is a ____________ bank.

A) State
B) Regional Rural
C) Foreign
D) Nationalized

7) Regional Rural banks mainly operate in major cities.

A) True
B) False

8) HDFC Bank is a new generation private sector bank.

A) True
B) False

9) Interest on tax savings scheme which are eligible for tax benefit u/s 80C is taxable.

A) True
B) False

10) Savings Bank Account has high liquidity & safety.

A) True
B) False

11) Accounts by HUF not engaged in any trading or business activity can be opened in
the name of Karta of HUF.

A) True
B) False

12) Banks do not pay interest on the balances in current accounts.

A) True
B) False
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

13) Term deposit gives higher rates as compared with a demand deposit.

A) True
B) False

14) The lock in period in Capital Gain Scheme is ____ years.

A) 8
B) 7
C) 5
D) 10

15) Validity of Pay Order is ___ moths.

A) 8
B) 6
C) 12
D) 1

16) A cheque or bill drawn on outstation centres given to bank for collection, is known
as ___________.

A) Inward Bill of lading

B) Outward Bill of lading
C) Outward Bill for collection
D) Inward Bill for collection

17) The following are the examples of plastic money except?

A) Debit Card
B) Credit Card
C) Electronic Banking
D) Smart Card
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

18) _________ is an apex development bank supporting all economic activities in rural
areas, promote integrated & sustainable rural development along with prosperity in
agriculture sector of the country.

A) IFCI (To overcome the scarcity of long-term finance plans in Industries)

B) SIDBI (Promoting Small Scale Industries)
C) NABARD
D) SEBI

19) IFCI stands for _________.

A) Industry Financial Corporation of India

B) Industrial Finance Corporation of India
C) Income Finance Corporation of India
D) Indian Financial Corporation of Income

20) ________ was set up in order to promoting the industries for financing imports &
exports of goods & services with a view to promote international trade.

A) SIDBI
B) EXIM Bank
C) RBI
D) NABARD

21) The policy that covers goods, freight & other interests against the loss or damage to
the goods while transporting through road, air or any other mode is called
___________.

A) Insured Declared Value (IDV)

B) Motor Vehicle Insurance
C) Marine Cargo Policy
D) Protection Cargo Policy
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

22) The ________ was established in the year 1957 to strengthen the export promotion
drive by covering the risk of exporting on credit.

A) Export Cooperation Guarantee Credit of India

B) Export Credit Guarantee Corporation of India (ECGC)
C) Export Consumer Guarantee Corporation of India
D) Export Credit Guarantee Consumer of India

23) _______ enables banks to provide pre-shipment advances to exporters for the
manufacture, processing & packing of goods for the purpose of export against a
firm order.

A) Export Production Finance Guarantee

B) Post-Shipment Credit Guarantee
C) Packing Credit Guarantee
D) Export Finance Guarantee

24) The ________ maintains the credit history of corporate borrower & the individuals
who seek retail loan.

A) SEBI
B) CIBIL (Credit Information Bureau of India)
C) RBI
D) IRDA

25) The Power & functions & the information about Finances, Audit of SEBI is enacted
in Chapter No. ______ & _______ respectively.

A) IV & VI
B) VI & IV
C) VIA & IV
D) III & VI

26) Section 12 & Chapter No. V deals with the registration of stock broker, share
transfer agents etc.

A) True
B) False
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

27) NBFC mobilize deposits & sanction loans but does not issue cheque books.

A) True
B) False

28) An NBFC is a company registered under __________, 2013.

A) Companies Act
B) SCRA Act
C) Banking Commission Act
D) Banking Laws

29) The following are terms & conditions which are followed by NBFC except?

A) NBFC cannot offer gifts & incentives or any additional benefit to depositors.
B) The deposits with NBFC are not insured.
C) The brokerage payable by NBFC is uniform 2%.
D) The repayment of deposits by NBFC is guaranteed by RBI.

30) The NBFC have to maintain ____ % of their deposits in the form of ________ assets
with the commercial banks.

A) 10, liquid
B) 12.5, liquid
C) 12.5, non-current
D) 10, non-current

31) The NBFC which has valid certificate of registration with authorization to accept
public deposits can only hold/accept public deposits.

A) True
B) False

32) Housing finance companies are regulated by National Housing Bank.

A) True
B) False
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

33) ________ are regulated by Ministry of Corporate Affairs, Govt. of India.

A) Investment Companies
B) Nidhi Companies
C) Private Companies
D) Venture Companies

34) NBFC registered with RBI have been reclassified as the below except:

A) Investment Company
B) Loan Company
C) Deposit Company
D) Asset Finance Company

35) Maximum Interest that NBFC can pay is 11%.

A) True
B) False

36) Venture Capital comes from institutional investors & _________ is pooled together by
dedicated investment firms.

A) Low Net Worth Individuals

B) Medium Net Worth Individuals
C) High Net Worth Individuals (HNI)
D) High Income Earning Individuals

37) _________ comprise of small teams of experts of those with the business training
Or deep industry experience.

A) Small Scale Capitalist

B) Venture Capitalist
C) Large Scale Capitalist
D) Medium Enterprises
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

38) In a Venture Capital Fund, the general partners receive an annual management fee
equal to up to ___ % of the committed capital.

A) 5%
B) 10%
C) 2%
D) 8%

39) The venture funding is an expensive source of capital because:

A) The cost of raising the capital is less.

B) The need for higher returns by the Investors.
C) The Operational cost of companies is always high.
D) The cost of raising the capital is always high as it is financed by debt only.

40) The finance by venture capitalist is in the form of:

A) Debt Participation
B) Equity Participation
C) Mixed of Debt & Equity
D) Loan

41) Investments by venture capitalists are _______ asset & usually requires 3-7 years to
harvest.

A) Liquid,
B) Illiquid
C) Current
D) Partners’ Capital

42) ________ is low level finance needed to prove a new idea often provided by angel
investors.

A) Start-Up (Funds raised for marketing & product development)

B) Third-Round (Mezzanine Financing)
C) Seed Money
D) Bridge Financing (Fourth Round Financing)
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

43) _______ finance is used for nursing sick industries.

A) Buy out
B) Fourth-Round
C) Second-Round
D) Turn around

44) The below mentioned are the guidelines by SEBI regarding Venture Capital Funds:

A) VCF cannot invest more than 25% of their corpus in one company. (Exposure
Norm)
B) VCF should invest minimum 74% in unlisted companies.
C) VCF should not invest more than 25% of corpus in the IPO of companies.
D) All of the above

45) Venture Capital originated in the USA.

A) True
B) False

46) Stock exchange is a place for buying & selling of shares in a _______ market.

A) Primary
B) Secondary
C) Unlisted
D) Tertiary

47) The BSE SENSEX is the short form of _______ Index.

A) Senseful
B) Security
C) Sensitive
D) Secured

48) At present, there are 23 stock exchanges in India & BSE being largest.

A) True
B) False
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

49) Trading Members are recognized members of NSE.

A) True
B) False

50) The customer can also do an intra-settlement trading up to 3 to 4 times of available

funds. This is known as _______ trading.

A) Cash
B) Order
C) Margin
D) Profit

51) Cash Trading is a delivery-based system.

A) True
B) False

52) ________ is a type of Order which is also known as Trigger Price.

A) Stop Loss Order

B) Limit Order
C) Sell Order
D) Buy Order

53) _________ is a facility for holding securities in the electronic form.

A) E-Banking
B) Securitization
C) Depository
D) Investment
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

54) A ___________ is an agent of the depository & gives authorized services to investors.

A) Depository Participant
B) Depository Manager
C) Depository Investor
D) Depository Minister

55) ________ are the ideal benchmark for fund managers to compare the performance of
their mutual funds.

A) Market Information
B) Market Judgement
C) Market Indexes
D) Market Schemes

56) Market Capitalization – Weighted Index of 30 component stocks is BSE SENSEX &
50 components is NSE Fifty.

A) True
B) False

57) The Rule of 72 states the formula for doubling interest is 72/Rate of Interest.

A) True
B) False

58) Money Market is controlled by _____ & Capital Market is controlled by ______.

A) SEBI, RBI
B) RBI, SEBI
C) NASBA, RBI
D) SBI, RBI

59) Treasury Bills, Certificate of Deposits are examples of Money Market.

A) True
B) False
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

60) The objectives of SEBI are as follows except:

A) To protect the interests of investors

B) To promote development of securities market
C) To regulate securities market
D) To allow Insider trading

61) The ceiling price should not be more than 120% of Floor Price in case of book
building transaction.

A) True
B) False

62) Call Money means Overnight funds, notice money deals with funds for 2-14 days &
Terem money is the money lent for 15 days or more in Interbank market.

A) True
B) False

63) The minimum CRR to be maintained by banks with RBI is minimum 3% & maximum
up to 15% & for SLR the minimum is 25% & maximum is 40%.

A) True
B) False

64) SEBI guidelines insist that all issues of banks should be managed by at least one
authorized merchant banker.

A) True
B) False

65) The ________ agrees to subscribe directly or to procure subscription of

unsubscribed portion of issue.

A) Underwriter
B) Agent
C) Principal
D) Manager
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

66) The benefits of mutual funds include all of the below except:

A) Variety
B) Affordability
C) Liquidity
D) Dynamic

67) A ________ is the total amount of money that a fund has at any given point of time.

A) Portfolio
B) Unit
C) Corpus
D) Budget

68) An entry load paid on purchase of units of mutual fund schemes & exit load charged
on sale is basically in the type of Sales Commission.

A) True
B) False

69) ______ are promoters of the company.

A) Trustees
B) Sponsors
C) Agents
D) Custodian

70) The different types of mutual funds schemes are:

A) By Investment Objective
B) By Constitution
C) By Structure
D) All of the above
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

71) ________ based mutual fund schemes are ideal for investors who have a long-term
investment horizon.

A) Open-Ended Schemes (Highly liquid to investors & units are available for sale &
repurchase any day at NAV based price)
B) Closed-Ended Schemes (Here, the unit capital is fixed & it is more liquid as
compared to Open ended schemes as it is traded in discount to the NAV)
C) Equity Based Schemes
D) Sector Specific Schemes

72) _______ Schemes invest in sovereign securities issued by central government to

generate credit risk returns & maintain high liquidity.

A) Gilt
B) Real Estate
C) Indexed
D) Money Market

73) Market Value of Investment = Rs.500 crores

Outstanding expenses = Rs.50 crores
The scheme has 100 crore units.
You have invested all the funds in shares & debentures. Calculate the NAV.

a) Rs.45
b) Rs.4.5
c) RS.0.5
d) Rs.5

74) Applicable NAV at the redemption = Rs.40.85

Applicable NAV at the time of purchase = Rs.38.55
Calculate the growth/return on investment?

A) 5.97%
B) 5.88%
C) 5.79%
D) 5.29%
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

75) Calculate the Applicable NAV at time of sale if:

NAV on sale = Rs.50
Exit Load = 5% on sale.
A) Rs. 1,000
B) Rs. 2.5
C) Rs. 47.5
D) Rs.52.5

76) ________ is the apex body of all Asset Management Companies.

A) Association of Mutual Funds in India (AMFI)

B) SEBI
C) RBI
D) CIBIL

77) _______ trading is also known as margin trading & where the buying & selling within
the same working day.

A) Interday
B) Instant day
C) Intraday
D) Ontime day

78) The computation of Initial margin on the futures market is done through the
concept of ________.

A) Value-at-variance
B) Value-at-risk
C) Value-at-mean
D) Value-at-audit

79) ________ margin is the margin to be maintained at the time of placing an order.

A) Inter
B) Intra
C) Initial
D) Standard
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

80) The Intrinsic value of an option must be positive or zero & it cannot be negative.

A) True
B) False

81) Mr. Arjun has purchased a Put Option for 100 shares of Infosys at a price of Rs.800
per share on 1-3-2023. He had paid a premium of Rs.20 per share. Calculate the
Gain or Loss on if the closing price of shares is Rs.750 per share.

A) Loss of Rs.2500
B) Loss of Rs.3000
C) Profit of Rs.2500
D) Profit of Rs.3000

82) The credit rating agencies are regulated by _______.

A) RBI
B) SEBI
C) CRISIL
D) NABARD

83) CRISIL has rated _______ debt instruments covering the entire market debt.

A) 25,000
B) 28,000
C) 30,000
D) 33,000

84) Ratings of _____ & above are considered as Investment grade.

A) BBB
B) BB
C) AA
D) A
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

85) Ratings of _____ & below are non-investment grade or “speculative” grade.

A) BB
B) BBB
C) AAA
D) NR

86) D credit rating is known as Default Risk.

A) True
B) False

87) Investment & return on interest for ELSS is tax free.

A) True
B) False

88) Sales = Rs.1,50,000

Brokerage paid at Purchase = Rs. 2000
Purchase = Rs. 1,25,000
Brokerage paid at Sales = Rs. 1000
Calculate the Capital Gain?

A) Rs. 22,000
B) Rs. 49,000
C) Rs. 25,000
D) RS. 1,000
CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

CASE STUDIES
Insurance is a tool to manage the risk. Risk means uncertainty. It means what
you get may be different from what you expect. Risk means the possibility of
loss or damage to the asset. Insurance does not prevent loss. It compensates
the loss. People who are exposed to risk come together and contribute certain
sums called premium which is used to compensate the losses suffered by any
of them. The risk is spread among the community. The likely big loss for any one
is reduced to manageable small losses for all. Insurance is considered as a
social security tool. Insurance is defined as an economic device whereby the
individual substitutes a small certain cost (the premium) for a large uncertain
financial loss (the contingency insured against) which would exist if it were not
for the insurance contract. It is an economic device for reducing and eliminating
risk through the process of combining a sufficient number of homogeneous
exposures into a group in order to make the losses predictable for the group as
a whole. Insurable interest means the possibility of a financial loss to an
individual which can be protected against through insurance. Insurance
Company is an organization chartered to operate as an insurer. Any corporation
primarily engaged in the business of furnishing insurance protection to the
public is called Insurance Company.

1) Insurance is a tool to manage:

A) Risk
B) Uncertainty
C) Office
D) Home

2) Risk means the possibility of:

A) Loss of Asset
B) Profit to the Asset
C) Damage to the Asset
D) Balance-sheet the Asset

3) Insurance is also Called as:

A) Business
B) Industry
C) Social Tool
D) Security Tool
CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

4) It is an economic device for:

A) Increase
B) Reducing Risk
C) Eliminating Risk
D) Hide

5) Any corporation primarily engaged in the business of furnishing insurance

protection to the public is called as:

A) Bank
B) Non-Banking Financial Institution'
C) Insurance Company
D) Insurance Agency
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

Financial markets play a crucial role in the economy by facilitating the flow of funds
between investors and borrowers. Two key components of these markets are the Money
Market and the Capital Market. The Money Market deals with short-term debt
instruments, while the Capital Market focuses on long-term securities. The Money
Market and the Capital Market are integral components of the financial system. The
Money Market specializes in short-term debt instruments and serves as a platform for
trading instruments like Treasury Bills and Commercial Papers. It plays a crucial role in
providing liquidity to financial institutions and corporations. On the other hand, the
Capital Market deals with long-term securities such as stocks and bonds, facilitating the
issuance of capital for businesses. It supports economic growth by enabling companies
to raise funds for expansion and development. Understanding the distinctions between
these markets is essential for making informed financial decisions and navigating the
complexities of the financial landscape. The money market & capital market is
controlled by RBI & SEBI respectively. Answer the multiple-choice questions using the
details from above Paragraph.

1) Which of the following characteristics is associated with the Money Market &
Capital Market?

A) Short term debt instruments

B) Medium term debt instruments
C) Long term debt instruments
D) High-risk investments

2) Which of the following types of instruments are traded in the Money Market?

A) Commercial Papers
B) Treasury Bills
C) Corporate Bonds
D) Corporate Stocks

3) What role does capital markets play in the economy?

A) Facilitating short-term borrowing and lending

B) Regulating interest rates
C) Facilitating the issuance of capital for businesses
D) Supports economic growth
 CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

4) What is the usual maturity period of securities in the Capital Market?

A) Less than one year

B) Short term
C) Long term
D) Over ten years

5) The money market & capital market is controlled by?

A) RBI
B) SEBI
C) SBI
D) CRISIL
CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

The Reserve Bank of India (RBI) plays a pivotal role in the money market,
acting as the central regulatory authority and custodian of monetary stability
in the country. The primary objective of the RBI in the money market is to
regulate liquidity and interest rates, thereby ensuring the smooth functioning
of the financial system. One of its key functions is conducting open market
operations, where it buys and sells government securities to control the
money supply. Additionally, the RBI employs various monetary policy tools,
such as the repo rate and reverse repo rate, to influence short-term interest
rates and manage inflation. Furthermore, the RBI acts as a lender of last
resort, providing financial institutions with liquidity during times of crisis to
maintain stability in the money market.

1) What is the primary role of the Reserve Bank of India (RBI) in the money
market?

A) Regulating Liquidity & Interest Rates

B) Ensuring smooth functioning of the financial system
C) Managing government infrastructure projects
D) Maintaining stability by focusing on capital market as well

2) How does the RBI influence short-term interest rates in the money
market?

A) Through regulating stock prices

B) By conducting open market operations
C) Using various monetary policies
D) Through direct lending to businesses

3) Which monetary policy tool is used by the RBI to control inflation in the
money market?

A) Repo rate
B) Discount rate
C) Reverse repo rate
D) Savings rate
CAPITAL & FINANCIAL MARKETS – FINANCIAL MANAGEMENT PRACTICE
QUESTIONS
(UNIT 1 TO 13)

4) In times of financial crisis, what role does the RBI play in the money
market?

A) Acting as a lender of last resort

B) Assisting the Financial institutions with liquidity
C) Facilitating short-term borrowing and lending
D) Managing long-term securities

5) RBI acts as:

A) Central Authority
B) Custodian
C) Lender of last resort
D) Govt. agency

THANKING-YOU

CREATED BY ARJUN IYER:

TO SUPPORT ALL DPU MBA FINANCE STUDENTS.