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 12 of 15

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Q111.
What regulatory approval is required for the issuance of Global Depositary Receipts (GDRs) or Foreign Currency Convertible Bonds (FCCBs)?

a.

Approval from the Securities and Exchange Board of India (SEBI)

b.

Approval from the Ministry of Finance and permission from the Reserve Bank of India (RBI)

c.

Approval from the Ministry of Corporate Affairs

d.

Approval from the Board of Directors only

Discuss
Answer: (b).Approval from the Ministry of Finance and permission from the Reserve Bank of India (RBI) Explanation:Issuing GDRs/FCCBs requires approval from the Ministry of Finance and permission from the RBI, among other regulatory requirements.
Q112.
Under which scheme do Indian companies raise foreign capital through ADRs/GDRs?

a.

Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt mechanism) Scheme 1993

b.

Foreign Currency Exchangeable Bonds Scheme, 2008

c.

Foreign Investment Promotion Scheme

d.

Securities Market Regulation Scheme

Discuss
Answer: (a).Foreign Currency Convertible Bonds and Ordinary Shares (through Depository Receipt mechanism) Scheme 1993 Explanation:Indian companies raise foreign capital through ADRs/GDRs under the Foreign Currency Convertible Bonds and Ordinary Shares Scheme 1993.
Q113.
When is an unlisted company required to obtain listing in the domestic market when issuing ADRs/GDRs?

a.

After making a profit in the global market

b.

Before issuing ADRs/GDRs

c.

Simultaneously with the issuance of ADRs/GDRs

d.

Within three years of issuing ADRs/GDRs or making a profit, whichever is earlier

Discuss
Answer: (c).Simultaneously with the issuance of ADRs/GDRs Explanation:An unlisted company is required to obtain prior or simultaneous listing in the domestic market when issuing ADRs/GDRs.
Q114.
What restriction is imposed on the deployment or investment of funds raised through ADRs/GDRs?

a.

No restrictions

b.

Restrictions on real estate investment only

c.

Restrictions on stock market investment only

d.

Ban on deployment or investment in real estate or the stock market

Discuss
Answer: (d).Ban on deployment or investment in real estate or the stock market Explanation:Funds raised through ADRs/GDRs cannot be deployed or invested in real estate or the stock market.
Q115.
What is the basis for determining the ratio for issuing ADRs/GDRs by an Indian company?

a.

Ratio set by the Ministry of Finance

b.

Ratio set by the Securities and Exchange Board of India (SEBI)

c.

Ratio worked out by the Indian company in consultation with the Lead Manager to the issue

d.

Ratio set by the Reserve Bank of India (RBI)

Discuss
Answer: (c).Ratio worked out by the Indian company in consultation with the Lead Manager to the issue Explanation:The ratio for issuing ADRs/GDRs is worked out by the Indian company in consultation with the Lead Manager to the issue.
Q116.
What is the maximum maturity period for treasury bills and other monetary instruments where funds from ADRs/GDRs can be invested?

a.

3 years

b.

5 years

c.

1 year

d.

2 years

Discuss
Answer: (c).1 year Explanation:Funds from ADRs/GDRs can be invested in treasury bills and other monetary instruments with a maturity of one year or less.
Q117.
According to the rules, what is the pricing mechanism for ADR/GDR issues?

a.

Determined by the market conditions

b.

Set by the Securities and Exchange Board of India (SEBI)

c.

Based on the company's preference

d.

Made at a price determined under the provisions of the Scheme and guidelines issued by the Government of India and RBI

Discuss
Answer: (d).Made at a price determined under the provisions of the Scheme and guidelines issued by the Government of India and RBI Explanation:Pricing of ADR/GDR issues should be made at a price determined under the provisions of the Scheme and guidelines issued by the Government of India and RBI.
Q118.
How can an Indian company issue ADR/GDR through the sponsor mechanism?

a.

By directly offering ADR/GDR to foreign investors

b.

By submitting shares to a domestic custodian bank

c.

By offering resident shareholders the option to submit shares for ADR/GDR issuance

d.

By obtaining approval from the Ministry of Finance

Discuss
Answer: (c).By offering resident shareholders the option to submit shares for ADR/GDR issuance Explanation:An Indian company can issue ADR/GDR through the sponsor mechanism by offering resident shareholders the option to submit shares for ADR/GDR issuance.
Q119.
What approval is required for issuing depository receipts, according to the Companies (Issue of Global Depository Receipts) Rules, 2014?

a.

Approval from the Ministry of Finance

b.

Approval from the Reserve Bank of India (RBI)

c.

Approval from the Securities and Exchange Board of India (SEBI)

d.

Approval from shareholders by a special resolution at a general meeting

Discuss
Answer: (d).Approval from shareholders by a special resolution at a general meeting Explanation:According to the rules, a company intending to issue depository receipts must obtain approval from its shareholders by a special resolution passed at a general meeting.
Q120.
Where are the underlying shares of depository receipts kept, according to the Companies (Issue of Global Depository Receipts) Rules, 2014?

a.

Overseas depository bank

b.

Domestic custodian bank

c.

Reserve Bank of India (RBI)

d.

Ministry of Finance

Discuss
Answer: (b).Domestic custodian bank Explanation:The underlying shares of depository receipts are kept in the custody of a domestic custodian bank, as per the rules.
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