Stock Exchange

The Stock Exchange is a setting where securities are exchanged or traded in the market, in compliance with established regulatory norms. Shares, debentures, and corporate bonds are the types of securities exchanged on stock exchanges. Regulatory organisations that govern the exchange operations of stock exchanges have established certain standards for taking part in it. The securities are issued by public firms and governmental agencies to investors for trading. The Securities Exchange Board of India (SEBI) is the regulating agency for stock exchanges in India.

Shares are not possessed by a stock exchange. Rather, it serves as a marketplace for stock buyers and sellers to connect. The New York Stock Exchange (NYSE) and the Nasdaq are two marketplaces where stocks can be transacted.

A stock exchange is a centralised venue that enables investors to purchase and sell securities from enterprises and government bodies. Traders and brokers can physically and orally evoke purchase and sell orders on auction-based trades like the New York Stock Exchange. Since electronic stock exchanges occur via electronic mediums, no centralised physical presence is necessary for trading. By avoiding market makers, digital communication channels link buyers and sellers effectively.

THE OPERATION OF STOCK EXCHANGES

Trades contribute to creating liquidity in the economy, which means that there are sufficient buyers and sellers to conduct exchanges fast and effectively. Exchanges also assure that dealings occur in an organised and reasonable way, permitting investors and financial experts to get vital financial details.

Following a firm’s initial public offering (IPO), stocks are made accessible on an exchange for the first time. In an initial public offering, often referred to as the primary market, a firm sells shares to an initial number of public shareholders. Shares can be bought and sold on an exchange market or the secondary market after the IPO releases shares into the grip of public shareholders.

The exchange marketplace takes account of the distribution of trades for each stock, and the price of a stock is controlled by demand and supply. This price pattern flow may be seen based on the sort of brokerage account users have. 

After going through the basics of the stock exchange, it is time for practicing some MCQ type questions on the topic.

MCQ QUESTIONS ON STOCK EXCHANGE

1.Which of these authorities supervises India’s capital markets?

1. 1. India’s Securities and Exchange Board (SEBI). 
   2. Reserve Bank of India (RBI). 
   3. The Insurance Regulatory and Development Authority (IRDA).
   4. Agriculture and Rural Development National Bank (NABARD).

A is the correct answer.

2. What is the Stock Exchange Sensitive Index’s (Sensex) total number of companies?

1. 1. 40.
   2. 30.
   3. 60.
   4. 40.

B is the correct answer.

3. Which of the below does not have anything to do with a stock exchange?

1. 1. Initial Public Offering (IPO).
   2. Net Asset Value (NAV).
   3. Knowledge Processes Outsourcing (KPO).
   4. The National Stock Exchange (NSE) (NSE).

C is the answer.

4. When was the National Stock Exchange Fifty (NIFTY) founded?
   1. 1982
   2. 1988
   3. 1996
   4. 1992

C is the answer.

5. A ____is a contract signed on a specific date between a purchaser and a seller for a trade that will be executed at a future date.
   1. Contract for the Future.
   2. A contract that is fixed.
   3. Forward Contract 
   4. Contract for Derivatives

A is the answer.

6. India’s _______ was the country’s first digitised stock exchange.
   1. The National Stock Exchange (NSE). 
   2. The Bombay Stock Exchange (BSE).
   3. Multi Commodity Exchange (MCX). 
   4. Over-the-Counter Exchange of India (OCTEI). 

A is the answer.

7. What are the indices NIFTY and SENSEX are dependent on?
   1. Capitalisation based on free float.
   2. The market capitalisation of a company.
   3. Share capital that has been authorised.
   4. Capital that has been paid in full.

A is the answer.

8. Which of these derivatives are not exchanged on the Indian stock markets?
   1. Forward rate agreements.
   2. Stock futures.
   3. Futures based on indices.
   4. Options for indexing

A is the answer.

9. In India, which of the below alternatives is not accessible?
   1. Commodity futures
   2. Options for indexing
   3. Futures based on indices. 
   4. Options on commodities.

D is the answer.

10. Which of the below statements about mutual funds in India is correct?
    1. Exit loading is not permitted.
    2. The entry load is permissible.
    3. In some instances, exit load is enabled.
    4. No entry load is permitted.

C is the answer.

11. The spot exchange rate is the rate at which two currencies are exchanged for the purpose of ___. 
    1. For future delivery at a specific location. 
    2. For delivery in the future. 
    3. For instantaneous delivery. 
    4. None of the above. 

C is the answer.

12. Which of these exchanges permits you to exchange securities having a maturity period of less than a year?
    1. The world market.
    2. The money market. 
    3. The market for transactions. 
    4. The capital market.

B is the answer.

13. The marketplace in which instruments of securities are exchanged directly between the fundraiser and the purchaser is termed as?
    1. The primary market
    2. The tertiary market
    3. The secondary market
    4. The relative market

A is the answer.

14. The London Stock Exchange’s Stock Market Index is known as
    1. Brent
    2. The Sensex
    3. Footsie (FTSE).
    4. NIFTY

C is the answer.

15. The UP Stock Exchange is located in which of the below cities?
    1. Kanpur
    2. Bangalore
    3. Mumbai
    4. Mangalore

A is the answer.

16. Where is the National Stock Exchange headquartered?
    1. The city of Madras.
    2. Himachal Pradesh.
    3. The city of Mumbai.
    4. The city of Hyderabad.

C is the answer.

17. In the capital markets, the primary suppliers of trading instruments are___ .
    1. Privately owned enterprises
    2. Enterprises owned by the government
    3. Enterprises that manufacture goods
    4. None of the above

B is the answer.

18. ________ is not the concern of the Securities and Exchange Board of India (SEBI).

1. 1. Ensure that businesses operate in an ethical manner
   2. Investor protection is crucial.
   3. Raising the earnings of the company’s shareholders
   4. Brokers promoting efficient services

C is the answer.

19. Which terminology best defines the payments paid to shareholders in exchange for their share of the company’s profits?

1. 1. Coupon
   2. Interest
   3. Dividends
   4. None of the above

A is the answer.

20. The feature of shares in primary markets that makes it very easy to sell recently issued securities is known as____.
21. 1. Large fund
    2. Liquidity increase
    3. Reduction in liquidity
    4. The flow of money

B is the answer.

21. _________ is the National Securities Exchange’s promoter.
22. 1. The Life Insurance Company (LIC) and the General Insurance Company (GIC).
    2. State Bank of India (SBI).
    3. Industrial Development Bank of India (IDBI).
    4. All of the aforementioned.

D is the answer.

22. Which of these merchants is licenced to deal in equity markets and commodity derivatives by the Securities Exchange Board of India (SEBI)?
23. 1. Non-Banking Financial Institution (NBFC).
    2. Clearing members.
    3. Brokers.
    4. Both b and c are correct.

D is the answer.

23. _______ is the financial institution that has urged middlemen and enterprises to make regulatory payouts in digital format.
24. 1. The National Stock Exchange (NSE)
    2. The Reserve Bank of India (RBI).
    3. The Bombay Stock Exchange (BSE).
    4. Securities Exchange Board of India (SEBI).

D is the answer.

24. Which market can entities under scrutiny for a gross breach pursue a settlement provided they pay buyers for their losses in accordance with Securities Exchange Board of India Regulations?
25. 1. The capital market
    2. The money market 
    3. The stock market
    4. None of the above

A is the answer.

25. Which of the below statements regarding the Securities and Exchange Board of India (SEBI) is not correct?
26. 1. It is a legal entity.
    2. In 1992, an ordinance granted it statutory authority.
    3. It is a non-statutory organisation.
    4. None of the above

C is the answer.

26. Which of the below could cause a stock market to abruptly lose its value?
27. 1. A terrorist attack occurrence.
    2. A significant firm’s insolvency
    3. Fear of a worldwide economic recession
    4. all of the above

D is the answer.

27. Which of these factors drives the Sensex to fluctuate?
28. 1. Government monetary policy
    2. Fiscal policy
    3. Instability in politics
    4. All of the above

D is the answer.

28. The rate of exchange between any 2 currencies that is____ is known as the forward exchange rate.
29. 1. Available today for immediate delivery
    2. Will prevail at some time in the future
    3. Prevailing currently for delivery in future
    4. None of the above

C is the answer.

29. The worth of a derivative contract ________ throughout the term of the contract.
30. 1. Increases.
    2. Decreases.
    3. Varies in accordance with the price of the contract’s “underlying” worth.
    4. None of the above.

C is the answer