General Awareness Quiz on Financial Market- 4th December 2020

Q1.Define Financial Market-
(a)A market form wherein a market or industry is dominated by a small group of large sellers.
(b)A market structure where competition is at its greatest possible level
(c)A market in which people trade financial securities and derivatives at low transaction costs.
(d)An economic system in which the decisions regarding investment, production and distribution are guided by the price signals created by the forces of supply and demand.
(e)All of the above

Q2.What is/are the Features of Financial Markets?
(a)It connects the investors to the borrowers and bridge the gap between the two for mutual benefits.
(b)These markets are readily available anytime for both the investors and the borrowers.
(c)The government controls the operations of a financial market in the country by imposing different rules and regulations.
(d)For the investors, financial markets provide an opportunity of putting in their funds into various securities or schemes for short or long-term investing benefits.
(e)All of the above

Q3.Financial market consists of how many types of institutions?
(a)2
(b)3
(c)4
(d)5
(e)6

Q4.Which is Not a type of Depository Institution?
(a)Commercial Banks
(b)NABARD
(c)Mutual Savings Banks
(d)Credit Co-operative Societies
(e)Savings and Loan Associations

Q5.Define Non-Depository Institutions-
(a)These institutions take deposits from the investors, i.e. individuals and organizations and further invest this fund into debt instruments.
(b)The financial institutions which accept deposits from the individuals or firms (investors) and utilize this money to grant loans and advances
(c)It is an association formed and managed by individuals who pool in their savings to provide the funds for mortgage loans and benefit from such advances.
(d)The institutions which function as financial intermediaries and not as banks, and hedges the risk of loss at the same time.
(e)All of the above

Q6.Which of the following is/are called non-depository institutions?
(a)Commercial Banks
(b)Pension Fund Institutions
(c)Insurance Companies
(d)Only (a) & (c)
(e)Only (b) & (c)

Q7.Which of the following is Not a type of financial market?
(a)Cash or Spot Market
(b)Forward or Futures Market
(c)Oligopoly Market
(d)Money Market
(e)Capital Market

Q8.What is an Equity Market?
(a)The financial market which facilitates the trading of debt instruments or instrument with fixed interest such as bonds, fixed deposits, debentures are called debt market.
(b)The financial market which provides very short-term loans or advances having a maturity period within a year of issue is termed as a money market.
(c)This market exists for the trading of medium and long-term financial instruments between the individuals and financial institutions.
(d)This market deals in financial instruments or securities whose value keeps on fluctuating and the claimant receives the amount which persists on the date of redemption.
(e)It is a spot or real-time market where all the trading and transactions are executed or take place immediately.

Q9.In a financial market, when the listed companies issue new securities, or new companies take entry with new stocks, it is called as a-
(a)Cash or Spot Market
(b)Primary Market
(c)Secondary Market
(d)Money Market
(e)Capital Market

Q10.What is/are the Functions of Financial Markets?
(a)Facilitate Price Determination and Discovery
(b)Mobilize Savings
(c)Accelerate Economic Development
(d)Provide Liquidity to Financial Assets
(e)All of the sbove

Q11.The most common financial market is REITs, Expand the abbreviation “I” in REIT’s-
(a)Income
(b)Interesting
(c)Initial
(d)Interest
(e)Investment

Q12.Financial markets require financial intermediaries such as –
(a)Bank
(b)Non-banking financial companies
(c)Stock exchanges
(d)Mutual fund companies
(e)Any of the above

Solutions

S1.Ans.(c)
Sol.A financial market is a market in which people trade financial securities and derivatives at low transaction costs.

S2.Ans.(e)
Sol.The Features of Financial Markets are-
(a)It connects the investors to the borrowers and bridge the gap between the two for mutual benefits.
(b)These markets are readily available anytime for both the investors and the borrowers.
(c)The government controls the operations of a financial market in the country by imposing different rules and regulations.
(d)For the investors, financial markets provide an opportunity of putting in their funds into various securities or schemes for short or long-term investing benefits.

S3.Ans.(a)
Sol.The financial market consists of majorly two types of institutions. The first one is depository institutions, and the other is non- depository institutions.

S4.Ans.(b)
Sol.NABARD is Not a type of Depository Institution.

S5.Ans.(d)
Sol.The institutions which function as financial intermediaries and not as banks, and hedges the risk of loss at the same time are called non-depository institutions.

S6.Ans.(e)
Sol.Some of the well known non-depository institutions are as follows-
(a)Pension Fund Institutions
(b)Mutual Fund Companies
(c)Insurance Companies
(d)Brokerage Firms

S7.Ans.(c)
Sol.Any market which deals in financial assets is a financial market. The following are the different types of financial market-
(a)Cash or Spot Market
(b)Forward or Futures Market
(c)Money Market
(d)Capital Market
(e)Primary Market
(f)Secondary Market
(g)Debt Market
(h)Equity Market
(i)Exchange-Traded Market
(j)Over-The-Counter Market

S8.Ans.(d)
Sol.This market deals in financial instruments or securities whose value keeps on fluctuating and the claimant receives the amount which persists on the date of redemption.

S9.Ans.(b)
Sol. In a financial market, when the listed companies issue new securities, or new companies take entry with new stocks, it is called as a primary market.

S10.Ans.(e)
Sol.The Functions of Financial Markets are-
(a)Facilitate Price Determination and Discovery
(b)Mobilize Savings
(c)Accelerate Economic Development
(d)Provide Liquidity to Financial Assets
(e)Reduce Transaction Cost
(f)Capital Formation
(g)Create New Assets and Liabilities
(h)Determine Capital Formation Rate

S11.Ans.(e)
Sol.The most common financial market is Real Estate Investment Trusts (REITs). It initiates investments from small investors who are interested in real estate investing but lack sufficient funds for the purpose. These trusts pool in the funds collected from such investors into profitable real estate projects.

S12.Ans.(e)
Sol.These markets require financial intermediaries such as a bank, non-banking financial companies, stock exchanges, mutual fund companies, insurance companies, brokers, etc. to function.

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