Capital Market

Capital markets may be defined as the place where investments and savings are routed between supplier institutions or people with wealth to invest or lend and those who need financial support. Suppliers are basically investors and banks, while on the other hand, people or organizations who need capital or financial support are generally businesses, individuals, and governments.

Capital markets are basically financial markets or platforms which bring sellers and buyers with each other to trade stocks, currencies, bonds, and other financial belongings. Capital markets contain the bond market and the stock market, commonly known as the primary capital market and secondary capital market. Furthermore, the capital market assists individuals with new and unique concepts to become businesspersons and helps trades develop into big businesses. The capital market also provides and helps common people like you and me chances to invest and save for futures.

Multiple Choice Questions

1. Which of these is NOT a part of capital receipt?

1. 1. Recovery of loan 
   2. Disinvestment
   3. Borrowing
   4. Tax

Ans: (D) Tax

Tax is considered as the part of revenue receipt and many more such as profits, interest earned incomes from other sources, etc.

2. Capital markets denote the places where funds are swapped between
3. 1.  suppliers of capital
   2.  Borrower of capital
   3. Those who request capital investments.
   4. Both (a) & (c)

Ans: (D) Both (a) & (c)

Capital markets are also considered as the financial markets which bring sellers and buyers with each other to trade stocks, currencies, bonds, and other economic possessions. Capital markets generally comprise the bond market and the stock market.

3. Primary capital markets are the platform where:
4. 1. New securities are issued
   2. New securities are sold
   3. New securities are borrowed
   4. Both (a) Both (a) and (b)

Ans: (D) Both (a) & (b)

The primary capital market is defined as when the company first time publicly vends the new bonds and stocks, which takes place in the primary capital market. The primary capital market is also known as the new issues market. Furthermore, the new issue converts into the initial public offering (IPO).

4. The secondary market is a platform in which

1. 1. Only earlier allotted securities are being traded among investors.
   2. Investors trade in new securities
   3. Individually cannot participate
   4. None of these

Ans: (A) Only earlier allotted securities are being traded among investors.

The secondary market is also known as the stock market in which safeties are transacted after the corporation has sold its contribution in the primary market.

5. What are the best-known capital markets?

1. 1.  The stock market
   2. The bond markets
   3. A depository account with any of the depositories in India
   4. Both (a) & (b)

Ans: (D) Both (a) & (b)

Due to the vital functioning of the bond market and stock market, they are also known as the primary and secondary capital markets.

6. Businesses in capital markets are normally managed by

1. 1. Governmental treasury departments and sometimes accessed by the public, also
   2. Private bodies in the financial sectors
   3. International bodies and businesses
   4. None of the above

Ans (A) Governmental treasury departments and sometimes accessed by the public also

The capital market is the governmental organization that deals in the connection of buyers and suppliers and also provides financial support to the required businesses.

7. What is Net Present Value?

1. 1. Net present value is, which displays the cash flow.
   2. Value for both outflow and inflow.
   3. Net Present Value is the sum of the available values of cash flow
   4. None of the above

Ans: (C) Net Present value is the sum of the available values of cash flow.

NVP (Net present value) is defined as the alteration between the present value of cash outflows and the present value of cash inflows during a period of time.

8. Which is the standardized process for the analysis of capital budgeting and also known as future cash flow subtracted from the purchase price?

1. 1. SEBI
   2. Net Present Value NPV
   3. RBI Reserve Bank Of India
   4. IRDA

Ans: (C) RBI Reserve Bank Of India.

The RBI (Reserve Bank of India) is India’s only central bank and governing body accountable for guidelines of the banking systems of India. RBI is under the regulations and ownership of the Finance Ministry of the government of India.

9. What “rights issue” do the shareholders of a company have under the Companies Act, 1956?
10. 1. Voting rights of the shareholder members of each affiliate of a public company that contains the shares equity and possesses votes in proportions.
    2. First Board Meeting: The board meeting was held, and the resolution for issuing the right shares was passed, and the right issue does not need the approval of shareholders.
    3.  Issue a letter of the offer without the approval of shareholders
    4. None of the above

Ans: (A) Voting rights of the shareholder members of each affiliate of a public company that contains the shares equity and possesses votes in proportions.

The Rights issue is commonly known as the summons to the current shareholders to buy more new shares in part to their current shareholding

10. What are the eligibility criteria for a listed company to make a public issue?
11. 1.  Company should have predictable and consistent revenue, and the company should have enough money to pay for the process of IPO. Moreover, companies should be key players in the industry.
    2. The company should contain a minimum of Rs 3 crore in net tangible possessions in the recent three years
    3. The company’s continuous growth is not required.
    4.  Both (a) & (b)

Ans: (D) Both (a) & (b)

11. Which of the subsequent establishments delivers a guarantee or assurance to the exporters?
12. 1. Exim Bank
    2. Director General Foreign Trade
    3. Reserve Bank of India
    4. Export Credit Guarantee Corporation (E C G C)

Ans: (D) Export Credit Guarantee Corporation (E C G C)

Maintained by the Government of India and was established in 1957 with the aim of promoting exports from the nation by managing and providing export-related services and credit risk insurance.

12. Which of the succeeding administrations issues the guidelines for global trade?
13. 1. World Bank
    2. World Trade Organization
    3. Foreign Exchange Dealers’ Association
    4. Directorate General of Foreign Trade

Ans: (B) World Trade Organization

WTO is the only global worldwide organization working with the guidelines and rules of businesses and trades between the nations.

13. What is a cross-border exchange?
14. 1. Trading of foreign currency in India.
    2. The trading of the Indian rupee in exchange for other currencies/ goods.
    3. Hawala transactions in Indian rupee.
    4. Unauthorised remittance of the Indian rupee.

Ans: (B) The trading of the Indian rupee in exchange for other currencies/ goods.

The cross-border exchange may be defined as the exchange of goods and services between the two countries is known as the cross-border exchange.

14. The capital market is organized in India by?

1. 1. RBI
   2. NABARD
   3. SEBI
   4. IRDA

Ans: (C) SEBI

SEBI is known as an important part of the Indian financial system as it regulates and monitors the stock market and defends the benefits of the investors by imposing certain rules and protocols.

15. SEBI was developed in which year?

1. 1. 1990
   2. 1989
   3. 1992
   4. 1988

Ans: (D) 1988

SEBI was established in 1988 to regulate and manage India’s capital market.

16. How many corporations are involved in the BSE Sensex?
17. 1.  25
    2. 30
    3. 50
    4. 111

Ans: (B) 30

Companies are selected for Sensex based on 

several criteria such as the company are mega-cap or large, contains a healthy and good balance sheet, solid revenue margins, the company should be registered in the BSE, and the company should be the leading player in the operating market.

17. Which of the following is not part of the stock exchange?
18. 1. KPO
    2.  IPO
    3.  NSE
    4.  NAV

Ans: (A) KPO

Knowledge process outsourcing, also known as KPO, is a contract-based and knowledge-based task for capable subject material experts. Companies operate KPO when they need particular expertise and knowledge and when the company is lacking skilled professionals on staff.

18. Which of the below-mentioned is not the objective of SEBI?
19. 1. To regulate the securities market
    2. To protect the interests of inventors
    3.  To promote individual businesses
    4. To promote the development of the market

Ans: (C) To promote individual businesses

SEBI may be defined as a government organization that works on assisting in providing investments to the investors in a totally transparent environment of investment.

19. Which of the succeeding are liable for the variations in the Sensex?

1. 1. Monetary policy
   2. Political instability
   3. Rain
   4. None of the above

Ans: (A) Monetary policy

The higher monetary policy resulted in the increased rate at which firms’ future cash movements are capitalized, triggering stock prices to drop.

20. Nifty was founded in a year?

1. 1. 1952
   2. 1965
   3. 1996
   4. None of these

Ans: (C) 1996

Nifty was founded by Shiv Kapoor in 1996. Nifty means ‘National Stock Exchange Fifty and is also the National Stock Exchange index.

21. Which one of the below mentioned is known as the global stock market index?

1. 1. Sensex
   2. FTSE100
   3. OTCEI index
   4. Nifty

Ans: (B) FTSE100

The FTSE100 is also known as Footsie, which is an index that trajectories the 100 major public companies with the help of market capitalization that works on the LSE (London Stock Exchange). The FTSE 100 signifies nearly 80 percent of the London stock exchange market capitalization.