We are presenting you the Finance MCQ for SEBI Grade A Finance Section of the exam. These Finance MCQ for SEBI Grade A are prepared as per latest syllabus.
Q1. Which of the following is “Not” a function of the Securities and Exchange Board of India (SEBI)?
- Supervising the working of the stock Exchanges
- Underwriting new Capital Issues
- Regulating the working of depositories, custodians of securities
- Promoting the development of a healthy Capital market
- To protect the interests of investors in securities market
Securities underwriting is the process by which investment banks raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt capital). The services of an underwriter are typically used as part of a public offering in a primary market
Q2. Which of the following statement is false?
- SIDBI is the Primary Financial Institution for promoting, developing and financing MSME sector.
- NABARD is an apex Development Bank authorised for providing and developing the agricultural credit functions
- IRDA function is to protect the interest of and secure fair treatment to insurance/assurance policyholders
- Securities and Exchange Board of India (SEBI) is a statutory regulatory body entrusted with the responsibility to regulate the Indian money markets
- RBI’s simultaneous sales and purchases of government securities, termed ‘Operation Twist’ is a way to manage yields in the market
Reserve Bank of India (RBI) is a statutory regulatory body entrusted with the responsibility to regulate the Indian money markets and Securities and Exchange Board of India (SEBI) is a statutory regulatory body entrusted with the responsibility to regulate the Indian capital markets
Q3. The RBI divested its entire stake in NABARD and NHB amounting to Rs 20 crore (Rupee twenty crore) and Rs 1450 crore (Rupees one thousand four hundred and fifty crore) on February 26, 2019 and March 19, 2019 respectively. With this, the Government of India now holds 100% stake in both the financial institutions. The above divestment was done on whose recommendation?
- Narasimham Committee II
- Sivaraman Committee
- C. Rangarajan
- Finance Ministry
Divestment of RBI’s stake in NABARD and NHB has its basis in the recommendation of Narasimham Committee II and the Discussion Paper prepared by RBI on Harmonizing the Role and Operations of Development Financials Institutions and Banks. Based on the recommendation, RBI announced the proposal to transfer ownership of its shares in SBI, NHB and NABARD to the Central Government
Q4. ASBA Stands for
- Applications Supported by Blocked Amount
- Applications Supported by Book Building Amount
- Applications serviced by Blocked Amount
- Applications services by Book Building Amount
- None of the above
Applications Supported by Blocked Amount (ASBA) is a process developed by the India’s Stock Market Regulator SEBI for applying to IPO. In ASBA, an IPO applicant’s account doesn’t get debited until shares are allotted to them.
Q5. Which among the following is/are the feature of Money Market?
a) Money market deals with monetary assets of short-term nature, usually less than a year
b) The participants in the money market can be commercial banks government and private companies as well.
c) Government can borrow short term funds for fulfilling temporary mismatches.
d) Money Market helps corporates in raising long term capital.
- a, b, d
- a, c, d
- a, b, c
- b, c, d
- All of these
Money Market is a segment of the financial market in India where borrowing and lending of short-term funds take place. The maturity of money market instruments is from one day to one year. In India, this market is regulated by both RBI (the Reserve bank of India)
Q6. Mr A, CA of kingfisher ltd. During the course of audit, he comes across loan fraud of the company and observe that when such news becomes public then the share price will fall. Considering it, Mr. A sold a large number of company’s shares in futures market before this news reach the market. Identify the type of trading of shares conducted by Mr A ?
- Swing trading
- Momentum trading
- Position trading
- Day trading
- Insider trading
Insider trading refers to trading of shares by an ‘insider’ based on unpublished price sensitive information (UPSI). It involves buying or selling shares of a listed company using information that can materially impact the stock price, but has not been made public yet.
Q7. Isha ambani grandfather gave her some share certificates on her birthday and told her to sell them to get money out of it. As no physical trading of shares take place at this point of time Isha ambani wants to know by following which process she will be able to deal with share certificates.
- All of the above
- Share must have been transferred to Investor Education and Protection Fund, hence now shares are property of government
Dematerialisation is the process by which a client can get physical certificates converted into electronic balances. An investor intending to dematerialise its securities needs to have an account with a DP.
Q8. In India, NIFTY and SENSEX are calculated on the basis of
- Market Capitalization
- Free-float Capitalization
- Authorized Share Capital of all listed companies
- Subscribed Share Capital of all listed companies
- Paid Up share Capital of all listed companies
Market capitalization is nothing, but the outstanding number of shares, multiplied by the current market price of a stock. Free float market capitalization is very different from full market capitalization and is normally lower than the later.
Free float market capital would exclude the following:
1) Shares that are locked in.
2) Shares that are held by the promoters.
3) Shares that have been acquired through Foreign Direct Investment route.
4) Shares that are held by the government.
In India, NIFTY and SENSEX are calculated on by using Free-float Capitalization.
Q9. Which of the following derivative is not traded on Indian Stock Market?
- Index Options
- Stock Futures
- Index Futures
- Stock Options
- Forward Rate Agreements
Forward rate agreements (FRA) are over-the-counter contracts between parties that determine the rate of interest to be paid on an agreed-upon date in the future. As these are customized agreements (OTC) hence cannot be listed on exchange.
Q10. After successful IPO of WoW MoMos is planning for Further Public Offer. Now issuing of more securities comes with in the ambit of _______ ?
- Primary Market
- Secondary Market
- Indian Market
- Commodity Market
- Futures Market
In a primary market, securities are created for the first time for investors to purchase. New securities are issued in this market through a stock exchange, enabling the government as well as companies to raise capital.
Secondary market is an equity trading avenue in which already existing/pre- issued securities are traded amongst investors.
Since in FPO new securities are created (new share issue) for investors to purchase, hence it comes under the ambit of Primary Market.
These MCQs are prepared by CA Raman Luthra Classes. Subscribe the SEBI Grade A Course by CA Raman Luthra Classes to prepare for SEBI Grade A 2021 exam. Use Coupon Code PTY10 to get instant 10% discount on the course.
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