WorksheetsMerchant Banking Quiz
Total questions: 50
Worksheet time: 25mins
Finance function primarily deals with _______.
Marketing and HR decisions
Acquiring and utilizing funds
Production and logistics
Government budgeting
Which of the following is not an aim of finance function?
Mobilization of funds
Acceleration of profits
Maximization of firm value
Reduction of product cost
The capital structure of a company represents _______.
Total turnover
Combination of debt, equity, and other financing sources
Market share and profit margins
Annual dividend payout
The cost of capital is influenced by _______.
Interest rates
Dividend policy
Management risk appetite
All of the above
Financial markets facilitate exchange of funds between _______.
Sellers and retailers
Borrowers and lenders
Producers and distributors
Consumers and marketers
Organized markets include which of the following?
Money lenders
Capital markets
Indigenous bankers
Private financiers
The unorganized market consists mainly of _______.
Banks and stock exchanges
Money lenders and indigenous bankers
Financial institutions
Stock brokers
Hundis were primarily used for _______.
Trade transactions and remittances
Insurance coverage
Land acquisition
Tax collection
Capital markets deal with instruments having maturity of _______.
Less than one year
More than one year
Exactly one year
One month
The primary market is also known as _______.
New issue market
Old securities market
Money market
Unorganized market
A debenture acknowledges _______.
Ownership in the company
A loan to the company
Dividend claim
Tax benefit
Debentures can be issued _______.
Only at par
Only at a discount
At par, premium, or discount
Only at premium
The Companies Act 2013 permits issue of debentures under which section?
Section 129(3)
Section 179(3)
Section 197(3)
Section 149(3)
The interest rate on debentures as per SEBI guidelines shall not exceed _______.
10%
12%
15%
20%
Credit rating symbols like CRISIL AAA indicate _______.
High risk
Highest safety
Moderate risk
Very high risk
The first sale of stock by a company to the public is called _______.
FPO
IPO
QIP
Rights issue
A company already listed on the stock exchange issues further shares through a _______.
Rights issue
FPO
Private placement
Bonus issue
In a rights issue, shares are offered to _______.
New investors only
Existing shareholders
Government agencies
Underwriters
The price of shares during a rights issue is generally _______.
At premium
Equal to market price
At a discount
Higher than book value
Fast-track issues are permitted only to companies with _______.
Minimum turnover of ₹100 crore
Excellent investor grievance record and ₹10,000 crore free float
No listed shares
Minimum promoter holding of 5%
Public issue refers to _______.
Issue of shares to select group
Issue of shares to the public at large
Employee stock options
Private subscription
The process of allotting shares to select investors like promoters is known as _______.
Preferential allotment
Book building
Rights issue
Public offer
Qualified Institutional Placements (QIP) can be made to _______.
Retail investors only
Qualified Institutional Buyers (QIBs)
Promoters only
Private individuals
ESOPs are primarily aimed at _______.
Raising funds from the public
Encouraging employee ownership
Reducing share capital
Increasing taxation
The minimum public holding requirement for a rights offer is _______.
₹50 crore
₹250 crore
₹100 crore
₹10 crore
The prospectus must be filed with SEBI when the issue value exceeds _______.
₹10 lakh
₹25 lakh
₹50 lakh
₹1 crore
Draft Offer Document is available for public comments for how many days?
7 days
14 days
21 days
30 days
Which type of prospectus lacks information on price or number of shares?
Offer document
Draft Red Herring Prospectus
Final prospectus
Shelf prospectus
The validity period of SEBI’s observation letter is _______.
6 months
12 months
24 months
36 months
Criminal liability for misstatements in a prospectus may attract imprisonment up to _______.
2 years
5 years
10 years
15 years
Fixed price issue means _______.
Price is decided after listing
Price is pre-determined and disclosed in offer
Price depends on market demand
No price is mentioned
The lowest price in a book-built issue is called _______.
Base price
Floor price
Cap price
Issue price
In a book building process, the issue remains open normally for _______.
1 day
3 days
7 days
10 days
Retail individual investors can bid for shares up to a value of _______.
₹50,000
₹1,00,000
₹2,00,000
₹5,00,000
The percentage of IPO reserved for Qualified Institutional Buyers is _______.
25%
35%
40%
50%
Underwriting means _______.
Guarantee to buy unsold shares
Selling shares at premium
Providing insurance
Allocating shares through lottery
Minimum underwriting obligation by lead merchant banker is _______.
2%
5% or ₹25 lakh, whichever is less
10%
20%
Green Shoe Option allows over-allotment up to _______.
10% of issue size
12% of issue size
15% of issue size
20% of issue size
The commission on underwriting for shares is limited to _______.
1%
1.5%
2%
2.5%
If an issue is subscribed less than 90%, the company must _______.
Proceed with allotment
Refund investor money within 15 days
Extend the issue
Cancel underwriting
Listing refers to _______.
Registration with SEBI
Admission of securities on a stock exchange
Approval of issue price
Filing of prospectus
The opening price on listing day is decided through _______.
Book building
Call auction in pre-open session
Fixed price declaration
SEBI evaluation
The period for call auction order placement for IPOs is approximately _______.
8:30 am to 9:00 am
9:00 am to 9:45 am
10:00 am to 10:30 am
11:00 am to 12:00 pm
In proportional allotment, shares are distributed based on _______.
Random selection
Investor’s relationship with company
Ratio of shares applied to oversubscription
Lottery only
A registrar to an issue is responsible for _______.
Managing company accounts
Processing applications and refunds
Preparing legal notices
Market surveillance
Merchant bankers are also known as _______.
Brokers
Lead managers
Registrars
Underwriters
Net tangible assets are calculated as _______.
Total assets – Intangible assets – Liabilities
Total liabilities – Assets
Current assets – Current liabilities
Fixed assets – Intangibles
The promoters of the issuer must contribute at least _______ of post-issue capital.
10%
15%
20%
25%
Differential pricing allows _______.
Same price for all
Different prices for categories like employees or retail investors
Random pricing
Fixed pricing
The company’s shares become ex-rights on _______.
Record date
Announcement date
Closing date
Listing date
