MCQs on Financial Institutions

Compared to a bond, a debenture is:

Compared to a share, a stock:

What is the primary function of the money market?

• Providing long-term loans for investment

• Mobilizing savings for investment

• Providing capital for day-to-day business operations

• Enhancing good saving habits

An entrepreneur wants to raise short-term funds. Which money market instrument would be most suitable?

• Treasury bill

• Treasury certificate

• Bill of exchange

• Call money funds

Which of the following is NOT an instrument used in the capital market?

• Treasury bill

• Debenture

• Bond

• Development stock

Suppose an institution has surplus funds and wants to invest them in the money market to generate additional income. Which money market instrument would be the most appropriate?

• Treasury bill

• Treasury certificate

• Bill of exchange

• Call money funds

A company wants to raise long-term funds for a new project. Which capital market instrument would be the most suitable?

• Share

• Bond

• Debenture

• Development stock

Which of the following is the primary purpose of the capital market?

• Providing capital for day-to-day business operations

• Providing long-term loans for investment

• Enhancing liquidity

• Mobilizing savings for investment

What is the key difference between a share and a stock?

• Shares are a unit of capital, while stocks are a bundle of shares.

• Shares are fully paid, while stocks are not.

• Shares are issued, while stocks are converted from shares.

• Shares are traded on the stock exchange, while stocks are not.

Which of the following is NOT a function of the capital market?

• Providing long-term loans for investment

• Mobilizing savings for investment

• Helping to grow and develop merchant banks

• Enhancing the liquidity of the money market