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 7 of 15

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Q61.
What is one of the important functions of the stock exchange in terms of securities trading?

a.

Index compilation and disclosure

b.

Providing ready market for financial assets

c.

Technical analysis on various funds

d.

Promoting saving habits

Discuss
Answer: (b).Providing ready market for financial assets Explanation:One of the important functions of the stock exchange is providing a ready market for the purchase and sale of financial assets and instruments.
Q62.
What is the primary role of the secondary market in terms of capital formation for companies?

a.

Directly provides additional capital to companies

b.

Indirectly contributes to capital raising by providing liquidity

c.

Blocks investment for a long period

d.

Only allows investment through IPOs

Discuss
Answer: (b).Indirectly contributes to capital raising by providing liquidity Explanation:The secondary market indirectly contributes to capital raising by providing liquidity and marketability to securities.
Q63.
How does the existence of a secondary market benefit investors in terms of liquidity and marketability?

a.

Investors can only get back their investment after the redemption period

b.

Investors can convert securities into cash at their convenience

c.

Investors are forced to hold securities until the company gets dissolved

d.

Investors can only make profits through primary market investments

Discuss
Answer: (b).Investors can convert securities into cash at their convenience Explanation:The secondary market allows investors to convert securities into cash whenever they want, providing liquidity and marketability.
Q64.
Why is a stock exchange often referred to as a "mirror of the economy"?

a.

It reflects the policies of the government

b.

It measures the economic condition of a country

c.

It directly influences economic policies

d.

It mirrors the performance of individual companies

Discuss
Answer: (b).It measures the economic condition of a country Explanation:A stock exchange is considered a reliable barometer to measure the economic condition of a country.
Q65.
How does the stock market assist in pricing securities in the secondary market?

a.

By imposing taxes on securities

b.

By directly setting the prices of securities

c.

Based on demand and supply factors

d.

By blocking investment for a long period

Discuss
Answer: (c).Based on demand and supply factors Explanation:Securities in the secondary market are priced based on demand and supply factors.
Q66.
What is the primary function of the stock market in terms of liquidity?

a.

Restricts investment to long-term projects

b.

Ensures healthy speculation of securities

c.

Converts long-term investment into short-term and medium-term

d.

Permits unlimited speculation on securities

Discuss
Answer: (c).Converts long-term investment into short-term and medium-term Explanation:The stock market ensures liquidity by allowing investors to convert long-term investments into short-term and medium-term as needed.
Q67.
How does the stock market contribute to the safety of security transactions?

a.

By allowing unlimited listing of securities

b.

By trading unlisted securities with caution

c.

By conducting thorough scrutiny of listed companies

d.

By avoiding adherence to laid down norms

Discuss
Answer: (c).By conducting thorough scrutiny of listed companies Explanation:Only listed securities are traded on the stock market after careful scrutiny of the financial strength and soundness of a company.
Q68.
Who ensures the close supervision of stock exchange activities to ensure safety in dealing with securities?

a.

Ministry of Finance

b.

Stock exchange authorities

c.

Reserve Bank of India (RBI)

d.

Securities and Exchange Board of India (SEBI)

Discuss
Answer: (d).Securities and Exchange Board of India (SEBI) Explanation:SEBI ensures close supervision of stock exchange activities to maintain safety in dealing with securities.
Q69.
What measures are mentioned in the circular (MRD/DP/15/2014) issued by SEBI to ensure smooth transactions for Foreign Portfolio Investors (FPIs)?

a.

Unlimited trading for FPIs in the Cash Market

b.

Merging of trades undertaken by FPIs in the Equity Derivatives Segment

c.

No position limit for FPIs in the Interest Rate Futures

d.

No requirement for allocation of trades for FPIs

Discuss
Answer: (b).Merging of trades undertaken by FPIs in the Equity Derivatives Segment Explanation:The circular includes measures such as merging of trades undertaken by FPIs in the Equity Derivatives Segment.
Q70.
How does the stock exchange contribute to economic growth?

a.

By limiting disinvestment and reinvestment

b.

By reducing capital formation opportunities

c.

By facilitating the process of disinvestment and reinvestment, leading to capital formation and economic growth

d.

By discouraging investment in the corporate sector

Discuss
Answer: (c).By facilitating the process of disinvestment and reinvestment, leading to capital formation and economic growth Explanation:The stock exchange facilitates disinvestment and reinvestment, leading to capital formation and economic growth.
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