Banking Financial Awareness · Economics

Financial Markets and Instruments

1,985 Questions

Financial markets and instruments cover mutual funds, risk management, portfolio optimization, and investment strategies. These topics are critical for banking and financial awareness sections in competitive exams. Practice these questions to understand operational risk, asset valuation, and market regulations.

Portfolio optimizationOperational risk managementMutual funds valuationInvestment income typesHedging strategies

Financial Markets and Instruments Questions

Multiple choice

What are 'Defensive Shares'?

  1. Shares purchased as a defensive strategy.

  2. Shares which are more stable than others, providing safe returns.

  3. Shares which cannot be bought or sold for some time.

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Defensive shares are stocks of companies that provide steady earnings and regular dividends regardless of the overall conditions of the stock market, protecting investors during downturns.

Multiple choice

What is a 'flip-flop' bond?

  1. A bond which is not adequately described in its public offering.

  2. A bond which can be easily converted into another type of debt instrument and back again.

  3. A bound with a mixture of advantages of ordinary shares and debentures.

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

A flip-flop bond is a financial instrument that allows the holder to switch between two different types of debt or interest rate structures at specified intervals.

Multiple choice

A chance of loss without any possibility of gain is

  1. Pure Risk

  2. Speculative risk

  3. Fundamental risk

  4. External Risks
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Right answer because in pure risk, there is no chance of gain by that risk. For ex- there can be loss only by fire, accident etc and there is no chance of gain.

Multiple choice

Which of the following is a financial asset?

  1. Gold;

  2. silver;

  3. Shares in a demat account;

  4. Land & buildings
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A financial asset is a non-physical asset whose value is derived from a contractual claim, such as stocks or bonds. Gold and land are physical assets.

Multiple choice

Which of the following options can change the fixed capital of partners?

  1. Cash withdrawn for personal use

  2. Goods taken for personal use

  3. Asset taken for personal use

  4. Additional capital introduced

  5. Interest on capital provided to the partners
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

There are only two options that can change the fixed capital of the partners, i.e., additional capital introduced or capital withdrawn permanently.

Multiple choice

Who is the regulator of the Indian MF industry?

  1. AMFI

  2. SEBI

  3. SAIL

  4. TRAI
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The Securities and Exchange Board of India (SEBI) is the statutory regulator for the securities market in India, which includes the mutual fund industry.

Multiple choice

What stand for 'W' in SWOT analysis?

  1. Wealth

  2. Worries

  3. Weaknesses

  4. Worth
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

 The SWOT analysis indicates that some areas of an organization have weaknesses and  needs to be improved.

Multiple choice

What is the significance of Liquidity Adjustment Fund?

  1. To ensure smooth transactions

  2. To keep pace with technology upgradation

  3. To know about the difference of total receipts and total expenditure

  4. Both (1) and (2)

  5. All of the above
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Yes, this is the correct option. LAF ensures smoother transactions by adding some amount in the system and also drawing the excess money from the banks in order to meet the security purposes.

Multiple choice

Investment depends mainly on

  1. Past levels of income.

  2. Future expected profits

  3. Present national income levels.

  4. Historic data
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Right answer because investment depends heavily on expectations of future returns.

Multiple choice

Which of the following are current assets?

  1. Long term investments

  2. Bank loans for three years

  3. Debentures seeking fund investment

  4. Accounts receivable
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Accounts receivable are amounts owed by customers for goods or services sold on credit and are expected to be converted into cash within one year, making them current assets.

Multiple choice

Planning for capital expenditure is

  1. strategic planning

  2. tactical planning

  3. short term planning

  4. specific planning
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Capital expenditure planning involves long-term investments and is a core component of strategic planning.

Multiple choice

Trading on equity is calculated by

  1. operating ratio

  2. expenses ratio

  3. capital gearing ratio

  4. quick ratio
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

We can find trading on equity,  only by using the capital gearing ratio.

Multiple choice

Short term financial solvency is calculated by

  1. Current Ratio

  2. Fixed asset Ratio

  3. Liquidity Ratio

  4. Current and Liquid Ratio
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

We can analyze the short term financial solvency with the current ratio and liquid ratio.