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[Banking Awareness 2015] Quiz on Capital Markets, Derivatives, Futures and Investments

1.

Which among the following denotes the Market Capitalization of a company?
[A]Current market value of its authorized capital
[B]Current market value of its issued shares
[C]Current market value of its paid-up capital
[D]Current market value of issued shares and debentures

Current market value of its issued shares

2.

Which one of the following is an example for Long Term Investment Option?
[A]Fixed deposit
[B]Money market
[C]Public provident fund
[D]Saving accounts

Public provident fund
The short term investment options are savings bank account, money market/liquid funds and fixed deposits with banks. The Long term investments typically comprise the Post Office Savings Schemes, Public Provident Fund, Company Fixed Deposits, Bonds and Debentures, Mutual Funds etc.

3.

Which of the following is not a property of all kind of shares of public company?
[A]They are immovable property
[B]Transferable in manner
[C]Treated as goods
[D]None of the above

They are immovable property
The shares of public company are movable property.

4.

Which one of the following type of companies is not found in India?
[A]Unlimited company
[B]Company limited by shares
[C]Company limited by guarantee
[D]Private company

Unlimited company
Unlimited companies are not found in India; instead, their space is occupied by the proprietary kind of businesses.An unlimited company is a company having no limit on the liability of its members. The members of such a company are liable to the full extent of their fortunes to meet the obligations of the company by contributing to its assets in the event of its being wound up. Thus, such a company does not carry the benefit of limited liability which is available to the members of all the other types of company. So far as the risk of the members is concerned, there is no difference between a partnership firm and an unlimited company.

5.

Which of the following is not a type of mutual fund?
[A]Open-ended scheme
[B]Closed-ended scheme
[C]Long forward scheme
[D]Exchange-traded funds

Long forward scheme
There are three types of mutual fund schemes in which an investor can invest in. These are open-ended schemes, closed-ended schemes, and exchange-traded funds (ETFs).

6.

A customized contract between two parties, where settlement takes place on a specific date in future at a price agreed today is called ___?
[A]Future contracts
[B]Forward contracts
[C]Option contracts
[D]Warrant contracts

Forward contracts
A forward contract is a customized contract between two parties, where settlement takes place on a specific date in future at a price agreed today.

7.

Which one of the following is an example for Long Term Investment Option?
[A]Fixed deposit
[B]Money market
[C]Public provident fund
[D]Saving accounts

Public provident fund
The short term investment options are savings bank account, money market/liquid funds and fixed deposits with banks. The Long term investments typically comprise the Post Office Savings Schemes, Public Provident Fund, Company Fixed Deposits, Bonds and Debentures, Mutual Funds etc.

8.

In which year the first organised future market was established in India?
[A]1855
[B]1875
[C]1919
[D]1956

1875
The first organized futures market in India was established in 1875, under the name of ‘Bombay Cotton Trade Association’ to trade in cotton derivative contracts. This was followed by institutions for futures trading in oilseeds, food grains, etc.

9.

A customized contract between two parties, where settlement takes place on a specific date in future at a price agreed today is called ___?
[A]Future contracts
[B]Forward contracts
[C]Option contracts
[D]Warrant contracts

Forward contracts
A forward contract is a customized contract between two parties, where settlement takes place on a specific date in future at a price agreed today.

10.

Which of the following gives the right, but not an obligation, to buy the underlying at a stated date and at a stated price?
[A]Call Option
[B]Put Option
[C]Forward Option
[D]Forward contract

Call Option
An Option is a contract which gives the right, but not an obligation, to buy or sell the underlying at a stated date and at a stated price.

11.

All mutual funds in India must be compulsorily registered with?
[A]SEBI
[B]IrDA
[C]RBI
[D]Department of Company Affairs

SEBI
Mutual funds are compulsorily registered with the Securities and Exchange Board of India (Sebi), which also acts as the first wall of defence for all investors in these funds.

12.

Which among the following is a correct statement about Open Ended Mutual Fund?
[A]It can be bought and sold any time
[B]It has fixed rates of returns
[C]It has fixed maturity
[D]None of them

It can be bought and sold any time
An open-ended fund is the one which is usually available from a mutual fund on an ongoing basis that is an investor can buy or sell as and when they intend to at a NAV-based price.

13.

Which among the following is NOT a real asset?
[A]House
[B]Jewellery
[C]Gold
[D]Post office savings

Post office savings
A person can invest in Physical assets like real estate, gold/jewellery, and commodities etc or Financial assets such as fixed deposits with banks, small saving instruments with post offices, insurance/provident/pension fund etc. Apart from that an investor can invest in securities market related instruments like shares, bonds, debentures etc.

14.

Which of the following is a major difference between swaps and futures contracts?
[A]Swaps are typically short term, whereas futures contracts tend to extend over several years
[B]Swaps are derivative securities, but futures contracts are not
[C]A futures contract involves only one future transaction, whereas a swap typically involves several future transactions
[D]Swaps are usually marked to market, whereas futures contracts are not

Swaps are usually marked to market, whereas futures contracts are not

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