Capital market and its regulation. - One Line Questions
1.
What is a 'bearer bond'? —
A bond where ownership is not registered and the physical possession of the bond determines the owner.
2.
SEBI's regulations aim to prevent market manipulation and fraudulent practices. Which of the following is an example of market manipulation? —
Spreading false rumors to influence a stock's price.
3.
What is a 'derivative' in the capital market? —
A security whose value is derived from an underlying asset, such as stocks, bonds, or commodities.
4.
What is an 'Exchange Traded Fund' (ETF)? —
A type of investment fund that holds assets like stocks, bonds, or commodities, and trades on stock exchanges like a stock.
5.
Which of the following best defines a capital market? —
A market where long-term debt and equity-backed securities are traded.
6.
What does 'equity market' refer to? —
A market where shares of ownership in companies are bought and sold.
7.
What is the 'book-building' process in the context of an IPO? —
A process where investors submit bids for shares at different prices, helping to determine the final issue price.
8.
What is a 'demutualized' stock exchange? —
An exchange that has separated the ownership, management, and trading rights of its members.
9.
What does 'market maker' refer to in the capital market? —
An entity that quotes both buy and sell prices for a particular security, ready to trade on either side.
10.
What is a 'rights issue'? —
An offer to existing shareholders to purchase additional shares, usually at a discount.
11.
What is a 'short selling' strategy in the capital market? —
Selling a security that the seller does not own, with the expectation of buying it back later at a lower price.
12.
Which of the following is a primary market transaction? —
A company issuing new shares through an IPO.
13.
Which market is characterized by the trading of financial instruments with maturities of less than one year? —
Money Market
14.
Which of the following is regulated by SEBI? —
All of the above
15.
Which of the following is a type of security that represents a loan made by an investor to a borrower (typically corporate or governmental)? —
Bond
16.
Which of the following is an example of a debt instrument traded in the capital market? —
Government Bonds
17.
Which of the following is a function of the secondary market? —
Providing liquidity to investors by allowing them to sell their existing securities.
18.
What is the purpose of a 'prospectus' issued during a public offering? —
It is a document containing detailed information about the company and the securities being offered, for potential investors to make informed decisions.
19.
Which regulatory framework aims to ensure transparency and fairness in financial reporting by listed entities? —
SEBI (Listing Obligations and Disclosure Requirements) Regulations
20.
Which market segment deals with the trading of securities that are not listed on a formal stock exchange? —
Over-the-Counter (OTC) Market
21.
Which market segment deals with the trading of securities that have already been issued? —
Secondary Market
22.
Stock exchanges like the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) primarily operate in which market? —
Secondary Market
23.
Distinguish between the primary market and the secondary market. —
Primary market issues new securities; secondary market trades existing securities.
24.
Which regulatory body is primarily responsible for regulating the capital market in India? —
Securities and Exchange Board of India (SEBI)
25.
Which of the following is a key participant in the capital market? —
Investors, issuers, and intermediaries.
26.
Which of the following is an example of a capital market intermediary? —
Mutual Fund
27.
Which type of investor typically seeks high returns and is willing to take on higher risks in the capital market? —
Speculator
28.
Which of the following is a key function of SEBI? —
Registering and regulating market intermediaries like brokers and mutual funds.
29.
What does 'market capitalization' represent? —
The total value of a company's outstanding shares of stock.
30.
What is the purpose of an Initial Public Offering (IPO)? —
To enable a company to raise capital by issuing new shares to the public for the first time.
31.
What is the role of a 'merchant banker' in the capital market? —
To act as an intermediary, advising companies on raising capital and underwriting new issues.
32.
What is the primary objective of SEBI's regulations on mutual funds? —
To protect the interests of investors in mutual funds and promote their orderly growth.
33.
What does SEBI's regulation on 'Corporate Governance' aim to achieve? —
To ensure that companies operate efficiently and ethically, with accountability to stakeholders.
34.
What is the primary objective of SEBI's regulation of the capital market? —
To protect the interests of investors, promote the development of the securities market, and regulate the securities market.
35.
What is the primary function of the capital market? —
To mobilize savings and channel them into productive investments.
36.
Which of the following is a primary function of the capital market in economic development? —
To facilitate the efficient allocation of capital for long-term growth.
37.
What is the purpose of a 'circuit breaker' in a stock exchange? —
To temporarily halt trading when prices fall or rise by a predetermined limit, to curb excessive volatility.
38.
What is the main role of a stockbroker in the capital market? —
To act as an intermediary, facilitating the buying and selling of securities on behalf of clients.
39.
What is the primary function of a stock exchange? —
To provide a regulated platform for buying and selling existing securities.
40.
Which of the following is a key responsibility of SEBI regarding listed companies? —
To ensure compliance with listing requirements and disclosure norms.
41.
What is the purpose of 'underwriting' in the primary market? —
To guarantee the sale of new securities by purchasing them from the issuer at a fixed price.
42.
What is the role of a 'venture capitalist' in the capital market? —
To invest in startups and early-stage companies with high growth potential.
43.
What is the purpose of SEBI's 'Takeover Code'? —
To provide guidelines and regulations for the acquisition of shares or control of listed companies.
44.
What is the primary role of SEBI in ensuring market integrity? —
To establish and enforce rules against insider trading and market manipulation.
45.
What is the function of a 'credit rating agency' in the capital market? —
To assess and provide opinions on the creditworthiness of debt issuers.
46.
What is the role of a 'custodian' in the capital market? —
To hold securities safely on behalf of investors.
47.
What is the role of the 'Registrar and Transfer Agent' in the capital market? —
To manage the issuance and maintenance of share registers and facilitate the transfer of securities.
48.
What does 'insider trading' refer to in the context of capital market regulation? —
Trading of securities by individuals with access to non-public, material information about a company.
49.
Which of the following is a type of security traded in the capital market? —
Equity Shares