A level Financial Market Quiz 1

17 Questions

Quiz Description

Here in this quiz, we will be looking at the financial market. Under the financial market, we will be looking at some theoretical aspects such as the role of money, the role of capital, stock exchange, funds, and many others. If you’re a fan of economics, then this quiz is for you.

Financial markets could be defined as the various places and processes facilitating the trading of financial assets between investors. It could also be defined as an institution from which money can be borrowed. An example is a bank. In a financial market, buyers and sellers actively participate in the buying and selling process. There are various types of financial markets, some of which are the stock market, commodities market, bond market, and derivatives market. All of the mentioned types have similarities as well as differences that make each of them unique. One very important advantage of having a financial market is that it lowers the unemployment rate.

This A level economics quiz centered on providing fundamental knowledge on financial markets. Take the quiz and learn a lot of fun stuff. Good luck. 

1:

 Which of the following statements is not true with regard to money market? 


Correct
  • 1:
    It involves low market risk.
  • 2:
    It is situated at specific locations.
  • 3:
    Deals in unsecured and short-term debt instruments.
  • 4:
    The instruments traded are highly liquid.
2:

 Which of the following statements is not true with regard to Treasury bills? 


Correct
  • 1:
    Are issued in the form of a promissory note.
  • 2:
    They are highly liquid and have assured yield
  • 3:
    They carry high risk of default.
  • 4:
    They are available for a minimum amount of ₹25,000 and in multiples thereof.
3:

 Which of the following statements is not true with regard to Commercial paper? 


Correct
  • 1:
    Is a long-term unsecured promissory note with a fixed maturity period.
  • 2:
    It usually has a maturity period of 15 days to one year.
  • 3:
    It is sold at a discount and redeemed at par.
  • 4:
    Companies use this instrument for bridge financing.
4:

 Which of the following statements is not true with regard to Call money? 


Correct
  • 1:
    It is short-term finance repayable on demand.
  • 2:
    Its maturity period ranges from one day to fifteen days.
  • 3:
    There is a direct relationship between call rates and other short-term money market instruments.
  • 4:
    It is used for inter-bank transactions.
5:

 Which of the following statements is not true with regard to primary market? 


Correct
  • 1:
    Is also known as the old issues market.
  • 2:
    It facilitates the transfer of investible funds from savers to entrepreneurs.
  • 3:
    It deals with new securities being issued for the first time.
  • 4:
    It facilitates the transfer of investible funds from savers to entrepreneurs.
6:

 Which of the following statements is not true with regard to capital market? 


Correct
  • 1:
    The funds are raised for a short period of time.
  • 2:
    Both debt and equity funds can be raised.
  • 3:
    It is classified into two types.
  • 4:
    All of the above.
7:

 Which of the following statements is not true with regard to stock exchange? 


Correct
  • 1:
    It provides a platform for buying and selling of new securities.
  • 2:
    It curbs the marketability of the securities.
  • 3:
    By providing a ready market, it extends liquidity to the securities.
  • 4:
    It provides a platform for buying and selling of old securities.
8:

 Which of the following is not a protective function of stock exchange? 


Correct
  • 1:
    Prohibition of fraudulent and unfair trade practices.
  • 2:
    Controlling insider trading.
  • 3:
    Regulation of takeover bids by companies.
  • 4:
    Promotion of fair practices and code of conduct in securities market
9:

 Raj Enterprises wishes to invest ₹1,10,000 in treasury bills. What is the maximum number of treasury bills it can buy with this fund? 


Correct
  • 1:
    6
  • 2:
    7
  • 3:
    4
  • 4:
    2
10:

 Which of the following statements is true with regard to financial markets? 


Correct
  • 1:
    They link the households which save funds and business firms which invest these funds.
  • 2:
    They work as an intermediary between the savers and the investors by mobilising funds between them.
  • 3:
    They allocate funds available for investment into their most productive investment opportunity.
  • 4:
    All of the above
11:

  The allocated function is performed by 


Correct
  • 1:
    Financial market
  • 2:
    Capital market
  • 3:
    Money market
  • 4:
    All of the above
12:

 It is a market for short-term funds which deals in monetary assets whose period of maturity is up to one year. 


Correct
  • 1:
    Primary market
  • 2:
    Secondary market
  • 3:
    Capital market
  • 4:
    Money market
13:

 It is an instrument of short-term borrowing by the Government of India maturing in less than one year. 


Correct
  • 1:
    Commercial bill
  • 2:
    Treasury bill
  • 3:
    Call money
  • 4:
    None of the above
14:

 Who issues a treasury bill? 


Correct
  • 1:
    Any nationalised bank
  • 2:
    Any private sector bank
  • 3:
    Reserve Bank of India
  • 4:
    All of the above
15:

  Suppose an investor purchases a 91 days Treasury bill with a face value of ₹2,00,000 for ₹1,92,000. By holding the bill until the maturity date, the investor receives ₹2,00,000. What is the amount of interest received by him? 


Correct
  • 1:
    ₹8,000
  • 2:
    ₹80,000
  • 3:
    ₹3,92,000
  • 4:
    ₹2,00,000
16:

It is used as an alternative to bank borrowing for large and creditworthy companies,


Correct
  • 1:
    Commercial bill
  • 2:
    Commercial papers
  • 3:
    Call money
  • 4:
    None of the above
17:

 It is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms. 


Correct
  • 1:
    Commercial bill
  • 2:
    Commercial papers
  • 3:
    Call money
  • 4:
    None of the above

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A level Financial Market Quiz 1
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