Financial Market Class 12 MCQ Business Studies includes Multiple choice questions on Financial Market – Concept, Functions and Types, Money, Markets and Instruments, Capital Market, Stock Exchange, and Securities and Exchange Board of India (SEBI). Answers to MCQ of Financial Market Class 12 MCQ Business Studies CBSE are available after clicking on the answer.
| Category | Business Studies Class 12 MCQs |
| Subject | Business Studies |
| Chapter | Financial Market Class 12 MCQ |
Financial Market Class 12 MCQ
Topic 1 – Financial Market – Concept, Functions, and Types
1. Which of the following claims about financial markets is correct?
(a) They serve as a link between households that save money and businesses that invest it.
(b) They act as a link between savers and investors by facilitating the transfer of funds.
(c) They invest the money they have available in their most profitable investment option.
(d) All of the above
Answer
Answer: (d) All of the above
2. Which of the following is a financial market’s function?
(a) Price fixation
(b) Providing liquidity to financial assets
(c) Mobilization of savings
(d) All of the above
Answer
Answer: (d) All of the above
3. Which of the following is not a financial market function?
(a) Price determination of securities
(b) Floating of companies
(c) Lowering transaction cost
(d) Mobilisation of savings
Answer
Answer: (b) Floating of companies
4. Which among the following is a major component of the financial system?
(a) Financial institutions
(b) Financial securities
(c) Financial market
(d) All of these
Answer
Answer: (d) All of these
5. In a finance publication, a well-known essay was published. The following is a section of that article:
The financial market is not like any other market where you can buy commodities; it’s a unique area where you can get all the information you need about the many securities traded in the market. On the one side, buyers learn about the securities and have access to a location where they may sell them, saving time, effort, and money. Financial experts claim that if this had not been the case, the task of those involved in securities transactions would have been extremely difficult. Securities are traded on a shared platform between a buyer and a seller, allowing for quick conversion of securities into cash. Funds are frozen in economies where there is no stock exchange. Money that has been locked in residences should be released and allowed to move freely in the economy, where it can be invested in company shares to achieve maximum value. People have a strong desire to sell stocks on their own terms. There is no way for the government to foresee the price of securities. The stock market is a market that is driven by the dynamics of supply and demand, with a security’s price determined by its demand. One could wonder how a company’s economics could grow without the presence of a financial market.
Determine the role of the financial market mentioned in the previous example.
(a) The financial market aids in the discovery of financial asset prices.
(b) Establishing a nationwide trading
(c) Reducing the cost of trading
(d) Both a and c
Answer
Answer: (d) Both a and c
Topic 2 – Money, Markets, and Instruments – Financial Market Class 12 MCQ
1. Which of the following statements about the money market is false?
(a) It has a low market risk.
(b) It is located in specific areas.
(c) Deals in short-term and unsecured debt products.
(d) The instruments that are traded are quite liquid.
Answer
Answer: (b) It is located in specific areas.
2. Which of the following claims about Call money is not correct?
(a) It is a short-term loan that can be repaid on demand.
(b) It has a maturation period of one to fifteen days.
(c) Call rates and other short-term money market products have a direct relationship.
(d) Inter-bank transactions are carried out using it.
Answer
Answer: (c) Call rates and other short-term money market products have a direct relationship.
3. Asweon Ltd. wants to buy treasury bills for Rs.125,000. What is the maximum number of Treasury Bills that this fund can purchase?
(a) 4
(b) 3
(c) 5
(d) 7
Answer
Answer: (c) 5
4. It’s a market for short-term funds that deal in monetary assets with a one-year maturity period.
(a) Primary market
(b) Secondary market
(c) Capital market
(d) Money market
Answer
Answer: (d) Money market
5. A treasury bill is issued by –
(a) National banks
(b) Private sector banks
(c) Reserve bank of India
(d) All of the above
Answer
Answer: (c) Reserve bank of India
6. For large and creditworthy enterprises, it is utilized as an alternative to bank borrowing. What exactly is it?
(a) Commercial papers
(b) Call money
(c) Commercial bill
(d) None of the above
Answer
Answer: (a) Commercial papers
7. It is a way by which banks borrow from one another in order to keep their cash reserve ratios in check-
(a) Commercial bills
(b) Commercial paper
(c) Call money
(d) None of the above
Answer
Answer: (c) Call money
8. As call money rates rise, other forms of financing, such as commercial paper and certificates of deposit, become –
(a) more expensive.
(b) less expensive.
(c) Other sources are unaffected by this.
(d) None of the above
Answer
Answer: (b) less expensive.
9. The RBI sells Naman a financial asset. This financial asset is a short-term borrowing instrument. He bought it because he doesn’t want to take any risk and wants a guaranteed profit. A promissory note is a type of financial instrument. It’s a very liquid substance. Zero-Coupon Bond is another name for this instrument. T-65 is inscribed on this instrument.
I. In the example above, which financial asset is mentioned?
(a) Call money
(b) Treasury bills
(c) Commercial paper
(d) Commercial bill
Answer
Answer: (b) Treasury bills
II. Who does the RBI issue this instrument on behalf of?
(a) State government
(b) Government of India
(c) State bank of India
(d) None of these
Answer
Answer: (b) Government of India
III. What is the smallest sum that this instrument can be purchased for?
(a) 50,000
(b) 25,000
(c) 35,000
(d) 40,000
Answer
Answer: (b) 25,000
Topic 3 – Capital Market – Concept, Types, Methods of Floatation in the primary market – Financial Market Class 12 MCQ
1. Which of the following statements about the capital market is false?
(a) The funds are only raised for a limited time.
(b) It is possible to raise both debt and equity financing.
(c) It is divided into two categories.
(d) All of the above
Answer
Answer: (a) The funds are only raised for a limited time.
2. The capital market is made up of-
(a) Development banks
(b) Commercial banks
(c) Stock exchanges
(d) All of the above
Answer
Answer: (d) All of the above
3. This form of primary market floatation involves requesting subscriptions from the general public to participate in a company’s securities through the publication of advertisements-
(a) Private placement
(b) Offer through a prospectus
(c) Offer for sale
(d) All of the above
Answer
Answer: (b) Offer through the prospectus
4. In the primary market, a company can raise funds in the form of-
(a) Equity shares
(b) Preference shares
(c) Debentures
(d) All of the above
Answer
Answer: (d) All of the above
5. When a corporation needed money, it turned to facilities and institutional arrangements for long-term funds (debt + equity) to be raised and invested. There was a lot of debate over whether the company should have gone with debt or stock. Finally, it made the decision to pursue equity. The company’s owner made the decision to follow SEBI requirements. Which financial market principle is highlighted at the start of the case?
(a) Money market
(b) Stock exchange
(c) SEBI
(d) Capital market
Answer
Answer: (d) Capital market
Topic 4 – Stock Exchange – Meaning, Functions, and Trading Procedure – Financial Market Class 12 MCQ
1. Which of the following statements about the stock exchange is false?
(a) It acts as a marketplace for the purchase and sale of new securities.
(b) It reduces the securities’ marketability.
(c) It increases the liquidity of the securities by offering a ready market.
(d) It acts as a marketplace for the purchase and sale of old securities.
Answer
Answer: (b) It reduces the securities’ marketability.
2. Which of the following is not a stock exchange’s protective function?
(a) Fraudulent and unfair business activities are prohibited.
(b) Keeping an eye on insider trading.
(c) Companies’ takeover proposals are regulated.
(d) Fair practices and a code of behavior in the securities industry are promoted.
Answer
Answer: (c) Companies’ takeover proposals are regulated.
3. The Stock Exchange is a method for valuing securities using the dynamics of supply and demand. Determine the purpose of stock exchanges in this regard.
(a) Providing liquidity and marketability of securities
(b) Safety of transaction
(c) Pricing of security
(d) Spreading of the equity cult
Answer
Answer: (c) Pricing of security
4. It functions as a bank, storing securities in electronic form on behalf of investors-
(a) Depository participant
(b) Depository
(c) Stock exchange
(d) None of the above
Answer
Answer: (b) Depository
5. It acts as a link between the investor and the depository, which is authorized to keep track of dematerialized shares’ accounts.
(a) Depository participant
(b) Depositary
(c) Stock exchange
(d) None of the above
Answer
Answer: (a) Depository participant
6. The stock exchange assigns a number to each transaction, which is printed on the contract note. It is called-
(a) PAN Number
(b) Unique order code
(c) Contract note
(d) None of the above
Answer
Answer: (b) Unique order code
7. When opening a Demat account, an investor must supply which of the following information to the broker-
(a) Date of birth and address
(b) Residential status
(c) PAN number
(d) All of these
Answer
Answer: (d) All of these
8. It’s a legally binding document issued by a stockbroker within 24 hours of a trading order being executed-
(a) Unique order code
(b) PAN number
(c) Contract note
(d) Bank account details
Answer
Answer: (c) Contract note
9. The exchange will deliver the stock or make payment to the other broker on this day-
(a) Transaction day
(b) Same day immediately
(c) Pay-in day
(d) Pay-out day
Answer
Answer: (d) Pay-out day
10. _______ is used to describe organizations and entities that give long-term funding.
(a) Capital market
(b) Money market
(c) Primary market
(d) Secondary market
Answer
Answer: (a) Capital market
11. Ejaz, a stock exchange broker, is confronted with difficult questions from society. His own family occasionally presses him to reconsider his decision to work as a broker. He, on the other hand, has complete faith in the stock exchange. He is aware that stock exchange membership is strictly regulated in accordance with the law, and that the public investing in securities is safe. His children once inquired about the reasons behind the stock market’s ups and downs. He dispelled their doubts by explaining that the secondary market’s pricing is determined by supply and demand forces. He has just decided to write a book about the stock exchange and its importance in the Indian economy. He is attempting to demonstrate in his book how existing securities are sold and resold, and savings are channeled into the most profitable prospects, through the process of investment and disinvestment. Ejaz is clearly justifying his presence at work.
Identify the functions of stock exchange highlighted in the above case-
(a) Ensuring safety of transactions
(b) Helping in contributing to economic growth
(c) Helping in deciding prices of securities
(d) All of the above
Answer
Answer: (d) All of the above
Topic 5 – Securities and Exchange Board of India (SEBI) – Objectives and Functions
1. When the Securities and Exchange Board of India inspects a stock exchange, one of the most prevalent irregularities found is that the exchange is dealing with unregistered sub-brokers. Determine the Securities and Exchange Board of India’s associated function.
(a) Regulatory function
(b) Protective function
(c) Developmental function
(d) None of the above
Answer
Answer: (a) Regulatory function
2. SEBI is the regulating body of-
(a) Money market
(b) Commodity market
(c) Capital market
(d) Overseas market
Answer
Answer: (c) Capital market
3. Which among the following is not a protective function of SEBI?
(a) Controlling insider trade
(b) Promotion of fair practices
(c) Reducing penalties for insider trades
(d) Ensuring investor protection
Answer
Answer: (c) Reducing penalties for insider trades
4. SEBI was found in order to ensure-
(a) Investor protection
(b) Orderly and healthy growth for the market
(c) Carry out functions in an easy and fair manner
(d) All of the above
Answer
Answer: (d) All of the above
5. Rajan was reluctant to buy stock in the stock market since he had heard that it is a location where various malpractices occur. He chooses to speak with a friend about the situation, who explains how SEBI protects investors’ interests. In the following scenario, determine the type of SEBI function.
(a) Protective function
(b) Regulatory function
(c) Development function
(d) Both a and b
Answer
Answer: (a) Protective function
6. SEBI is serious about training intermediaries and deciding their code of conduct, according to an article published in a magazine. There has been a lot of research in several relevant fields, and the knowledge that is valuable is being published so that various individuals can benefit from it. In the following scenario, determine the type of SEBI function.
(a) Regulatory function
(b) Protective function
(c) Developmental function
(d) None of these
Answer
Answer: (c) Developmental function
Term 2 – MCQs Business Studies Class 12
- Staffing Class 12 MCQs
- Directing Class 12 MCQs
- Controlling Class 12 MCQs
- Financial Management Class 12 MCQs
- Financial Markets Class 12 MCQs
- Consumer Protection Class 12 MCQs