The phrase "capital market" refers to both the physical locations where various forms of financial instruments are traded as well as the online environments in which these transactions take place. The bond market, stock market, foreign exchange markets, and currency are all conceivable venues. The majority of markets may be found in major financial hubs throughout the world, such as London, New York City, Hong Kong, and Singapore.
Meaning of Capital Market
The capital markets provide a conduit for the flow of savings and investments between those who have capital available to lend or invest and those who are in need of it. These suppliers might be individuals or institutions. Those that supply capital is most often financial institutions and investors, whereas those that want it are often corporations, people, and governments.
Composition of Capital Market
The participants in the capital markets are known as the suppliers and the consumers of funds. Households, through the savings accounts they maintain with banks, are one type of supplier. Other types of organizations, such as pension and retirement funds, life insurance firms, charity foundations, and non-financial corporations that create extra income, are other examples of suppliers. Buyers of homes and automobiles, investors in non-financial enterprises, and governments that are financing infrastructure investment and operational expenditures are all examples of "users" of the money that is dispersed on capital markets. The stock market and the bond market are two of the most prevalent types of capital markets.
Importance of Capital Market
The capital market is constantly looking for ways to streamline its transactional processes. These markets provide a venue for the trading of securities as well as a meeting point for people seeking capital and those who supply goods and services.
The global economy cannot function well without its capital markets. They offer a platform for those who are interested in earning a return on their investments of previously saved money to do so. They have the ability to direct their capital toward individuals and companies who have an immediate need for capital in order to expand. This is the core tenet upon which the expansion of a market-based, capitalist economy is founded.
Following are some of the multiple choice questions on the Capital Markets with answers that will help the students in developing their knowledge.
Capital Markets MCQ
3. Who is the chairman of SEBI?
4. A spot transaction in the foreign exchange market involves the
5. A company can raise capital through the primary market in the form of
6. PK Enterprises Limited has sold an entire lot of 5,00,000 equity shares @ ₹9 each to Prosperous Bank Private Limited. The bank, in turn, will offer the shares to the general public for subscription @ ₹11 per share. Identify the method of floatation being described in the given lines.
7. The reserves of a company rightfully belong to ____________.
8. Compared to money market securities, capital market securities have
9. The securities that are already issued are available for subsequent purchases and sales at:________.
10. Money market securities have all the following characteristics except they are not
11. A basic principle of finance is that the value of any investment is
12. The primary reason that individuals and firms choose to borrow long-term is to
13. What kind of fund collects and invests income for later payments to eligible recipients?
14. The process of holding shares in electronic form is known as
15. _______ a market in which financial capital is loaned and/or borrowed for at least one year
16. Which type of financial organization is a nonprofit service cooperative
17. What is the name of the fee paid for an insurance policy?
18. What is the main advantage of a mutual fund for an investor?
19. When the exchange rate changes from 1.0 euros to the dollar to 0.8 euros to the dollar, the euro has ________ and the dollar has ________
20. If you buy a 30-day Treasury bill for 99.75, the discount yield on this security is closest to:
21. _______ formal contract to repay borrowed money and interest on the borrowed money at regular future intervals
22. Which of the following is an advantage of a 401(k) plan?
23. Which of the following financial organizations specializes in buying installment contracts from merchants who sell on credit?
24. _______ a situation in which the outcome is not certain, but the probabilities can be estimated
25. Typically, the interest rate on corporate bonds will be ________ the more restrictions are placed on management through restrictive covenants, because ________.
26. If you expect that the price of a stock will decline, which of the following are you most likely do?
27. Who is acting as both the broker and jobber?
28. What is the name of fictitious transactions in the share market?
29. The self-regulatory organization for brokers and dealers is the:
30. If the 2005 inflation rate in Britain is 6 percent, and the inflation rate in the U.S. is 4 percent, then the theory of purchasing power parity predicts that, during 2005, the value of the British pound in terms of U.S. dollars will
31. A capital market is ideal when:
32. A commercial bill is used to _____________
33. When a trade bill is accepted by a commercial bank, it is known as a _____
34. Money market deals in _____________________
35. Jayant is holding a hundred shares of a company. He has been given a privileged offered to subscribe to a new issue of shares of the same company in the proportion of 2:1 to the number of shares already possessed by him. Identify the method of floatation being described in the above case.
36. On this day, the exchange will deliver the share or make payment to the other broker
37. It is a legally enforceable document which is issued by a stockbroker within 24 hours of the execution of a trade order.
38. Under this method of floatation in the primary market, a subscription is invited from the general public to invest in the securities of a company through the issue of advertisement.
39. ----------------- is based on the uncertain event whose result determined by chance or accident
40. Professional independent brokers are called------------------
41. The financial results of a company show that it has suffered losses due to decliningmarket share. The price of its equity share drops in the market. This is an example of therole of the market as: _________.
42. When a bear is unable to meet his commitment immediately he becomes--------------
43. A trader use borrowed funds from a broker for purchasing securities. State which type of trading is this?
44. _______ is an agreement to buy or sell at a specific date in the future at a predetermined price
45. _______ stocks that represent ownership shares in corporations
46. _______ the dollars that become available for investors to use when others refrain from consuming
47. _______ a market in which all financial assets can be sold to someone other than the original issuer
48. _______ a strategy of holding different kinds of investments to minimize risk
49. _______ a market in which only the original issuer can sell or repurchase a financial asset
50. The rate of return on a corporate, municipal, or government bond is its _______ .
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