Primary and Secondary Market

The capital markets consist of the primary market and secondary market. Which of the following statements is TRUE regarding the differences between the two markets?

• A. New issues are distributed to investors in the primary market while existing securities are traded in the secondary market.

• B. Existing securities are traded in the primary market while new issues are distributed to investors in the secondary market.

• C. New issues are traded in the primary market while existing securities are distributed in the secondary market.

• D. Existing securities are distributed to investors in the primary market while new issues are traded in the secondary market.

Which of the following does financial services industry consist of?

I.Telecommunication

II. Insurance

III. Fund Management

IV. Trusts

• A. I and II I

• B. III and IV

• C. I, II and II

• D. II, III and IV

Financial intermediation is the process that the financial intermediaries connect ________________ and _____________ by transferring funds from one side to another.

• A. Banks and account holders

• B. Borrowers and lenders

• C. Borrowers and securities firms

• D. Investors and lenders

Which of the following indexes is generally used as the measure to reflect changes in the price level of consumer goods and services purchased by households?

• A. Hang Seng Index

• B. Consumer Price Index

• C. Producer Price Index

• D. Consumer Confidence Index

Which of the following statements is not true with regard to money market?

• (a) It involves low market risk.

• (b) It is situated at specific locations.

• (c) Deals in unsecured and short-term debt instruments.

• (d) The instruments traded are highly liquid.

Which of the following statements is not true with regard to capital market?

• (a) The funds are raised for a short period of time.

• (b) Both debt and equity funds can be raised.

• (c) It is classified into two types.

• (d) All of the above.

Which of the following is not a protective function of stock exchange?

• (a) Prohibition of fraudulent and unfair trade practices.

• (b) Controlling insider trading.

• (c) Regulation of takeover bids by companies.

• (d) Promotion of fair practices and code of conduct in securities market.

Raj Enterprises wishes to invest ₹1,10,000 in treasury bills. What is the maximum number of treasury bills it can buy with this fund?

• (a) 6

• (b) 7

• (c) 4

• (d) 2

The allocated function is performed by

• (a) Financial market

• (b) Capital market

• (c) Money market

• (d) All of the above

Who issues a treasury bill?

• (a) Any nationalised bank

• (b) Any private sector bank

• (c) Reserve Bank of India

• (d) All of the above