Top 350+ Solved Financial Markets and Institutions MCQ Questions Answer
Q. The sale of government bonds overseas:
a. causes a fall in the domestic money supply.
b. causes a deficit in the balance of payments.
c. causes a smaller increase in interest rates than the sale of bonds to the domestic banking sector.
d. causes a smaller increase in interest rates than the sale of bonds to the domestic private sector.
Q. In indirect finance:
a. lenders loan to borrowers.
b. an institution borrows from the lender and provides funds to the borrower.
c. occurs between a borrower and lender, with or without an intermediary.
d. the borrower is required to have collateral.
Q. Aloan:
a. is an asset for both the lender and the borrower.
b. is an asset for the lender and a liability for the borrower.
c. is a liability for the lender and an asset for the borrower
d. is a liability for both the lender and the borrower.
Q. Which of the following is not a characteristic of a financial instrument?
a. The financial instrument is always issued by a bank.
b. A financial instrument is a written legal obligation of one party to transfer something of value, usually money.
c. The transaction in a financial instrument is specified to take place at a future date.
d. A financial instrument specifies certain conditions.
Q. Securities backed by _______ layed an important role in the financial crisis of 2007- 2009?
a. asset backed securities.
b. bonds.
c. sub-prime mortgages.
d. small business loans
Q. Financial instruments are used
a. as a unit of account, as a store of value, and as a means of payment.
b. as a unit of account, as a means of payment, and to transfer risk.
c. as a store of value, as a means of payment, and to transfer risk.
d. as a unit of account, as a store of value, and to transfer risk.
Q. Two important characteristics of financial instruments are:
a. information communication and risk neutrality.
b. risk neutrality and liquidity.
c. standardization and information communication.
d. liquidity and standardization.
Q. Benefits of the merger between the NYSE and Paris-based Euronext, a pan European stock exchange include:
a. lower costs and speedier transactions for international financial markets.
b. foreign ownership of domestic assets.
c. international consolidation of financial services.
d. greater the uncertainty.
Q. Which of the following increases the value of a financial instrument?
a. smaller payments.
b. payments made further in the future.
c. payments that are made when we need them.
d. payments that are less likely to be made.
Q. An example of financial instruments that are primarily used as stores of value is:
a. insurance contracts.
b. home mortgages.
c. options.
d. futures contracts.
Q. Financial markets serve which three purposes?
a. Financial markets allow-risk sharing, pool and communicate information, and offer stability.
b. Financial markets allow risk sharing, offer stability, and offer liquidity.
c. Financial markets offer stability, pool and communicate information, and offer liquidity.
d. Financial markets allow-risk sharing, pool and communicate information, and offer liquidity.
Q. SEBI operates to fulfill the needs of these three groups, choose the one which is not in those three:
a. the issuers of securities
b. the police
c. the investors
d. the market intermediaries
Q. Which of the following is the disadvantage of SEBI
a. Ease of Trading
b. Tax saving
c. Money Laundering
d. All of them
Q. The difference between a primary market and a secondary market is
a. primary market is the stock market and secondary market is the market for second hand sale of securities
b. a primary market helps in long-term credit and secondary market offers short-term credit
c. a primary market helps in the issue of new securities those which are offered for the first time and the secondary market is for second hand sale of securities listed on the stock exchange
d. a primary market is the unorganized sector and the secondary market is the organized sector for sale and purchase of securities.