Indian Capital Market MCQs

Welcome to our comprehensive collection of Multiple Choice Questions (MCQs) on Indian Capital Market, a fundamental topic in the field of IC 89 Management Accounting. Whether you're preparing for competitive exams, honing your problem-solving skills, or simply looking to enhance your abilities in this field, our Indian Capital Market MCQs are designed to help you grasp the core concepts and excel in solving problems.

In this section, you'll find a wide range of Indian Capital Market mcq questions that explore various aspects of Indian Capital Market problems. Each MCQ is crafted to challenge your understanding of Indian Capital Market principles, enabling you to refine your problem-solving techniques. Whether you're a student aiming to ace IC 89 Management Accounting tests, a job seeker preparing for interviews, or someone simply interested in sharpening their skills, our Indian Capital Market MCQs are your pathway to success in mastering this essential IC 89 Management Accounting topic.

Note: Each of the following question comes with multiple answer choices. Select the most appropriate option and test your understanding of Indian Capital Market. You can click on an option to test your knowledge before viewing the solution for a MCQ. Happy learning!

So, are you ready to put your Indian Capital Market knowledge to the test? Let's get started with our carefully curated MCQs!

Indian Capital Market MCQs | Page 10 of 15

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Q91.
What controls the interest rates in the financial market, including both equity and debt funds?

a.

Government regulations

b.

Market conditions based on demand and supply

c.

SEBI's guidelines

d.

Fixed deposit rates

Discuss
Answer: (b).Market conditions based on demand and supply Explanation:The interest rates in the financial market are controlled by market conditions based on the demand and supply of funds.
Q92.
In a bank deposit, why might the rate of return for the savings bank account be lower than the interest rate the bank receives in the call market?

a.

Bank deposits have fixed rates

b.

The bank keeps savings deposits outside the market

c.

Call market rates are not applicable to banks

d.

Savings bank depositors control market conditions

Discuss
Answer: (b).The bank keeps savings deposits outside the market Explanation:Savings bank depositors remain outside the market, accepting a fixed rate of return, while the bank engages in the market based on demand and supply, influencing call market rates.
Q93.
What is a characteristic of a debt fund's portfolio?

a.

It only buys equity securities

b.

It is closed-ended

c.

It pools money and buys debt securities

d.

It doesn't earn interest income

Discuss
Answer: (c).It pools money and buys debt securities Explanation:A debt fund pools money and creates a portfolio by buying debt securities issued by the government, banks, and companies.
Q94.
How is the interest income accounted for in a debt fund?

a.

It is accounted for annually

b.

It is not accounted for in NAV

c.

It is accounted for on a daily basis

d.

It is accounted for only when there is a default

Discuss
Answer: (c).It is accounted for on a daily basis Explanation:Interest income in a debt fund is accounted for on a daily basis, reflecting the open-ended nature of the fund.
Q95.
What is a major risk associated with debt funds?

a.

Currency risk

b.

Inflation risk

c.

Interest rate risk

d.

Liquidity risk

Discuss
Answer: (c).Interest rate risk Explanation:Interest rate risk is a major risk in debt funds, especially when interest rates change.
Q96.
Why might the price of a bond in a debt fund fall when interest rates move up?

a.

The bond pays higher interest

b.

The bond becomes more valuable

c.

The bond pays less interest than the market rate

d.

The bond has a higher credit rating

Discuss
Answer: (c).The bond pays less interest than the market rate Explanation:When interest rates move up and a bond pays less interest than the market rate, its price falls.
Q97.
What can cause interest rates to change in the market?

a.

Annual market trends

b.

Changes in inflation expectations

c.

Fixed expectations of market participants

d.

Consistent interest rate policies

Discuss
Answer: (b).Changes in inflation expectations Explanation:Changes in inflation expectations can lead to modifications in expectations for interest rates, causing them to change.
Q98.
According to mutual fund managers, which type of funds have outperformed equity markets recently?

a.

Long-term debt funds

b.

Hybrid funds

c.

Short-term debt funds

d.

Equity funds

Discuss
Answer: (c).Short-term debt funds Explanation:Mutual fund managers suggest that short-term debt funds have outperformed equity markets in the last year.
Q99.
In which types of instruments do short-term debt fund schemes invest?

a.

Long-term government bonds

b.

Certificate of deposits (CDs), commercial papers (CPs), and bonds with less than one-year maturity

c.

Equity shares of large-cap companies

d.

Foreign currency assets

Discuss
Answer: (b).Certificate of deposits (CDs), commercial papers (CPs), and bonds with less than one-year maturity Explanation:Short-term debt fund schemes invest in certificate of deposits (CDs), commercial papers (CPs), and bonds with less than one-year maturity.
Q100.
What is the expected impact of liquidity conditions on interest rates?

a.

Liquidity conditions are expected to ease, leading to lower interest rates

b.

Liquidity conditions are expected to remain tight, putting pressure on interest rates

c.

Liquidity conditions have no impact on interest rates

d.

Interest rates are expected to remain stable regardless of liquidity conditions

Discuss
Answer: (b).Liquidity conditions are expected to remain tight, putting pressure on interest rates Explanation:Fund managers expect liquidity to remain tight, putting pressure on interest rates.
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