CAPITAL MARKET

Multiple Choice Multiple Answer

Question: Describe the regulatory aspects of mutual funds:-
Correct Answer: The Asset management company shall not launch any scheme till approval of trustees and offer document has been filed with the board, With each offer document pay filing fees, Offer document to contain disclosures

Multiple Choice Single Answer

Question: Who forms the Asset management company (AMC)?
Correct Answer: Group of trustees

Select the Blank
Question: The portfolio manager has to place the funds of all their clients in a separate account to be maintained by them with ________.
Correct Answer: Scheduled Commercial Bank

Multiple Choice Multiple Answer
Question: What is the information to be placed before the board of directors as per the Kumarmangalam report?
Correct Answer: Annual operating plans, Capital budgets, Quarterly results

Multiple Choice Multiple Answer
Question: What are ESOP's?
Correct Answer: One of the methods of giving part ownership of the company to the employees, Employees can take part in the prosperity of the company, Is a reward and linked with the increase in the prices of the shares

Match The Following
Question
Correct Answer
Your Answer
A ) Shareholders
Should effectively participate in general body meetings
Should effectively participate in general body meetings
B ) Objective of Audit committeeLook into defaults to depositors creditors shareholders and debenture holders
Look into defaults to depositors creditors shareholders and debenture holders
C ) Reasons of failures of corporate governance in spite of normsSuperficial commitment to vision, mission and values
Superficial commitment to vision, mission and values
D ) Functions of Chief Executive, ED, ManagersAssisting the board in decision making process
Assisting the board in decision making process

Multiple Choice Multiple Answer
Question: How does SEBI react to the Scams in participatory notes issuance?
Correct Answer: Tighten FII regulations, Ensure participatory notes not misused by NRI, OCB controlled by Indians promoters

True/False
Question: Reliance group has added over 10000 crores in market capital.
Correct Answer: True

Select The Blank
Question: An acquirer who holds 15% or more but less than 75% of voting rights can acquire such additional shares as would entitle him to exercise more than ________ of voting rights in an financial year.
Correct Answer: 0.05

Multiple Choice Single Answer
Question: What is the eligibility norm for an unlisted company for making an public issue as regards to its net worth?
Correct Answer: Net worth of the company should not be less than 1 crore

Multiple Choice Single Answer
Question: To make a public announcement the acquirer has to appoint:-
Correct Answer: Merchant Banker

True/False
Question: SEBI has taken an action to ban on Badla.
Correct Answer: True

Multiple Choice Multiple Answer
Question: The benefits of availing depository services are:-
Correct Answer: No stamp duty, Reduction in paperless work, Reduction in transaction cost

Multiple Choice Multiple Answer
Question: What are the facilities offered by NSDL?
Correct Answer: Enable surrender and withdrawal of securities to and from the depository, Maintain the investor's holdings in an electronic form, Effect settlement of securities traded on exchanges

Select The Blank
Question: Directors should not be member of more than________ committees.
Correct Answer: 10

Select The Blank
Question: ________ is an international credit rating company.
Correct Answer: FITSCH

True/False
Question: The acquirer is required to appoint a merchant banker before making a PA.
Correct Answer: True

Select The Blank
Question: Hire Purchase transactions are liable to ________.
Correct Answer: Sales tax

Multiple Choice Single Answer
Question: What do you understand by capital markets?
Correct Answer: Market for long term funds and investments in long term instruments

Multiple Choice Multiple Answer
Question: What must be the quality of a good portfolio manager?
Correct Answer: Sound General knowledge, Analytical ability and marketing skills, Experience

Multiple Choice Single Answer
Question: What is Discretionary Portfolio management service?
Correct Answer: Client gives his money for investment to the portfolio manager and leaves it to him to make all the investment decisions.

True/False
Question: Depositary facilitates transfers without having to handle money.
Correct Answer: False

Multiple Choice Single Answer
Question: What is the amount invested by the FII's in the Indian Capital market?
Correct Answer: US$14 bn

Multiple Choice Multiple Answer
Question: The features of mutual Fund are:-
Correct Answer: A trust that pools in savings and funds from large number of investors who have common financial goal, Issue units to investor which represent right in assets, Investments in mutual funds may be in the form of stock, bond, money market securities

Multiple Choice Multiple Answer
Question: What qualities do the merchant bankers need to possess?
Correct Answer: Knowledge and information about various aspects of capital markets, Ability to evaluate and analyze, Update the knowledge
Multiple Choice Multiple Answer
Question: Describe the stock lending mechanism:-
Correct Answer: Involves two parties one who is willing to lend and other who wishes to borrow securities at market related rates, Lender is assured of getting equivalent the relevant securities by NSSCL on the settlement date, Lender gets benefit of reasonable return called lending fee

Multiple Choice Multiple Answer
Question: What are the limitations of refinance facility?
Correct Answer: Cannot exceed 5 times NOF, Not to exceed 50% of total Loan funds of HFC's, Not to exceed 15 % of NOF of NHB

Multiple Choice Single Answer
Question: When did the trading in foreign currency options start in India?
Correct Answer: 37809

Multiple Choice Single Answer
Question: What is the main objective of credit appraisal?
Correct Answer: Assess the repayment capacity

Select The Blank
Question: In the L & T reliance case, Reliance was fined ________.
Correct Answer: Rs. 5 lacs

Select The Blank
Question: SENSEX is calculated using ________ method.
Correct Answer: Market capitalization

Multiple Choice Single Answer
Question: Under section 11 B of SEBI act how many issuers were debarred?
Correct Answer: 1

Multiple Choice Single Answer
Question: What is the system of rolling settlement prevalent in the USA?
Correct Answer: Transaction + 3

Multiple Choice Single Answer
Question: What is the most important objective for an investor?
Correct Answer: Protection of the value of the investment



Multiple Choice Multiple Answer

Question: The following are some of the regulations governing the NBFC's issued by RBI:-
Correct Answer: All the NBFC's must register with RBI,Without the registration certificate no company can undertake activities of NBFC, All companies must be liquid assets equal to 15% of deposits

Multiple Choice Single Answer
Question: What do you mean by venture capital?
Correct Answer: Providing seed, start up capital and first stage financing

Multiple Choice Single Answer
Question: What was the turning point in the working of Indian capital markets?
Correct Answer: Establishment of NSE

Select The Blank
Question: The continuing growth in ________ was one of the factors that contributed to the growth of credit rating.
Correct Answer: Information technology

True/False
Question: A portfolio manager has to assure a guaranteed return to his client.
Correct Answer: False

Multiple Choice Multiple Answer
Question: Describe E-trading:-

Correct Answer: Screen based trading in place of traditional ring, communication through the net, Operate in stock market privately through home or office
True/False

Question: The SEBI guidelines do not make it mandatory for the securities purchased under the buy back arrangement to be extinguished and physically destroyed.
Correct Answer: False

Multiple Choice Multiple Answer
Question: What are the SEBI guidelines for issue of debt instruments?
Correct Answer: Credit rating, Maturity more than 18 months appoint debenture trustee, Debenture redemption reserve to be created

Multiple Choice Multiple Answer
Question: Describe in brief the SEBI regulations for venture capital funds:-
Correct Answer: VCF's must be registered, Cannot carry out another activity, Must disclose investment strategy



Multiple Choice Single Answer
Question: What is the minimum number of days for which the bid should remain open in book building?
Correct Answer: 5 days

Match The Following
Question
Correct Answer
A) 10 HDFC foreign currency deal
Global investors pumping funds in India
Specific Funds
B ) 0.57 FII current free float sensex company
FII free float stock
NIFTY companies
C ) 0.45 FII free float stock
NIFTY companies
FII's total free float sex and NIFTY
D) $ 476 mn Global investors pumping funds in India
Specific Funds
HDFC foreign currency deal

Match The Following
Question
Correct Answer
Your Answer
A) Collective investment companies directives
13
B) issuers debarred
1
C ) promoters debarred
2
D) promoters warned
2

Match The Following
Question
Correct Answer
Your Answer
A ) Portfolio
Collection of assets
B) Factors influencing portfolio decisions
Business and Market risks
C) Code of conduct- Portfolio Manager
Observe high standard of integrity and fairness

D) SEBI Regulations Portfolio Manager
must fulfill the capital adequacy norms
To make timely decision regarding sale and purchase of securities

Capital Market

1 .Question – The capital Adequacy ratio for NBFC’s has been at
Correct Answer – 12%

2 .Question – Dematerialized shares have distinctive numbers.

Correct Answer – False

3 .Question – The precautions to be taken with respect to delivery instruction slip are

Correct Answer –

A ) DIS numbers are pre printed

B) Account number to be stamped

C) Investor should fill in target account id

4 .Question – The percentage of funds that should be invested in unlisted companies is

Correct Answer – 74%

5 .Question – The merchant bankers should act as ___________ of the investor’s money and put a lot of responsibility on them.

Correct Answer – Custodian

6 .Question – Constant change would be one of the reasons for failure of corporate governance

Correct Answer – TRUE

           

7 .Question – RBI permitted all commercial banks, financial institutions and large corporate to issue certificate of deposits.

Correct Answer – FALSE

8 .Question – The obligations of a company in a share buyback are

Correct Answer –

A ) The offer letter should be contain true, factual and material information and should not be misleading

B ) The company must pay the consideration only the way of cash

C) The company should not issue any fresh securities including bonus shares till the date of the closure of the offer.

9 .Question – The VC’s to flourish requires a well developed _____________ .

Correct Answer – Capital market

10 .Question – The underwriter is paid

Correct Answer – Commission

11 .Question –

Correct Answer –

A ) Business analysis                                              Determinates of revenue growth

B ) market position of the company                    Nature and basis of competition

C ) Operating advantage of the company            Technology risk

D ) Financial risk analysis                         Interest coverage

12 .Question – The procedure for action in case of default is

Correct Answer –

A ) Suspension of the certificate

B ) Mutual fund / AMC cease to exist

C) Subject to the direction of the board with regards to records

13 .Question – Renewal of portfolio fund on maturity shall be deemed as a fresh placement for a minimum period of

Correct Answer – 1 year

14 .Question – The acquirer is required to appoint a merchant banker before making a PA.

Correct Answer – TRUE

15 .Question – The acquirer is required to appoint a merchant banker before making a PA.

Correct Answer – TRUE

16 .Question – Letter of offer is?

Correct Answer –

A  ) document addressed to the shareholders,

 B ) containing disclosures of the acquirer/PACs,

C )  offer price

17.Question - Which company was responsible for spreading the equity culture in India ?Correct Answer - Reliance Industries

18.Question – Markets have moved away from Badla system to _________

Correct Answer –Derivatives Trading

19. Question -What are the norms for Approval of Housing finance companies by NHB?Correct Answer -Minimum paid up capital 1 crore , At least 2 directors , Any appointment of auditors

20. Question –These people suffered heavy losses during bad times of stock markets

Correct Answer –Small investors

20. Question –The minimum offer an acquirer can make is

Correct Answer –Min 20%

21. Question -A bidder can request for a transaction registration slip as the proof of his having entered the bid.Correct Answer -True

22. Question – The eligibility norms for an unlisted company for making a public issue are Correct Answer –

A ) Pre issue net worth not less then 1 crores in the last 3 years

B ) Track record of distributable profits for at least 3 years

C ) Issue size shall not exceed 5 time of its pre issue net worth

23. Question – The amount of net tangible assets, a company should have  to make an IPO isCorrect Answer -3 crores

24. Question – The appointment of a _________ is mandatory in a offer process

Correct Answer – Merchant Banker

25. Question – The salient feature of Hire Purchase are

Correct Answer –

A ) Finance company purchases the equipment supplier and lets it on hire

B ) During the contract hirer can opt for an entry repayment and purchase the assts

C ) Hirer may be required to make down payment

26. Question – Acquirer cannot make an offer for less then 20% of the shares.

Correct Answer – True

27. Question – Some of the carious type of mutual fund schemes offered are

Correct Answer –

A ) Open ended vs. closed ended

B ) Pure income schemes

C ) Tax saving schemes

28. Question – The objective of public announcement is

Correct Answer – Ensure that the shareholder of the target company are aware of the exit opportunity available to them.

29. Question – The individual investor can use the book building facility for making an application.

Correct Answer – True

30. Question – No mutual fund under all its schemes should own more then _______ of any company’s paid up capital carrying voting rights.

Correct Answer – 10%

31. Question – The Indian stock markets have risen since

Correct Answer – Jun -03

32. Question – The share of the target company is deemed to be frequently traded.

Correct Answer – if the turnover in the preceding 6 month prior to the month in which PA is more than 5%

33. Question – The mutual funds issue

Correct Answer – Units

34. Question – In case of indirect acquisition of change in control, the PA shall be made by the acquire within three months of consummation of such acquisition.

Correct Answer – TRUE

35. Question – The preconditions for Trading on the net are

Correct Answer –

A ) A net connection

B ) A registered account with a broker and a demat account

C ) Bank payment gateway or online banking facility

36. Question – Crisil’s AAA rating stands for

Correct Answer – Highest safety

37 .Question – The eligibility norms for an unlisted company for making a public issue are Correct Answer -   

A ) Pre issue net worth not less than 1 crors in the last 3 years

B) Track record of distributable profits for at least 3 years

C ) Issue size shall not exceed five times of its pre issue net worth

38. Question – Crisil’s AAA rating stands for

Correct Answer – Highest safety

39. Question -What are the objectives of NHB?Correct Answer –

A) To promote, establish, aid in promotion and support of housing finance institutions,

B) To make loans advances or render any other form of financial assistance to focusing finance institutions,

C) To guarantee financial obligations

40.Question - What is the time frame to submit a report to SEBI for acquisition transactions arising out of firm allotment in public issues right issues etc?Correct Answer -21 days
Your Answer -21 days
41.Question – A mutual fund scheme shall not invest more than ______ of its NAV in unrated debt by a single issuer.Correct Answer – 10%

42. Question – The difference in buying and selling dematerialized shares lies in

Correct Answer –

A) Process of delivery

B ) Receipt of securities

C ) Pledging the share

43.Question – The merchant banker will incorporate in the letter of offer the comments made by SEBI and then send _________ days from the date of PA to all shareholders whose name in  register in the companyCorrect Answer – 45

44 .Question – The time frame stipulated by SEBI for members intending to avail of the buyback offer. Correct Answer -   Minimum 15 days and not exceeding 30 days
45 .Question – SEBI has a prescribed format of application for various reports or documents. Correct Answer -   TRUE
46 .Question –                                                       Correct Answer

A)   Inter corporate deposit                               Source of funds for finance

B)   Leasing                                                          Service tax imposed on interest

C)   Stock on Hire                                               Hire purchase price less the

D)  Insurance                                                      In faver of lessor and lessor’s

E)  

47. Question – The reason for not introducing rolling settlements earlier in India was

Correct Answer – Lack of depositories

Capital Market

LIST OF ATTEMPTED QUESTIONS AND ANSWERS
1 .Question – In case of an IPO of any security of issue size of _________ or more security shall be issued only in demat form..
Correct Answer - 10 corers

2 .Question – The system of rolling settlement prevalent in the USA is
Correct Answer -   Transaction + 3

3 .Question – The eligibility norm for an unlisted company for making a public issue as regards to its net worth is
Correct Answer -   Net worth of the company should not be less than 1 crore

4 .Question – Employee stock option scheme granted to the employee is transferable. Correct Answer -   FALSE

5 .Question – The time frame stipulated by SEBI for members intending to avil of the buyback offer.
 Correct Answer -   Minimum 15 days and not exceeding 30 days

6 .Question – SEBI has a prescribed format of application for various reports or documents. Correct Answer -   TRUE

7 .Question –                      Correct Answer
A ) MS Verma committee             Dual Flotation
B ) Hero Honda                               FY 203-03 Dividend Rs 187
C) VSNL                                             FY 203-03 Dividend Rs 172
D) Castrol                                          FY 203-03 Dividend Rs 145

8 .Question – Refinance cannot exceed net owned funds of Housing Finance Companies these many times
Correct Answer -   5 times

9 .Question – AA rated companies can raise _____ of its net worth.
Correct Answer -   2.5 times

10 .Question – Final prospectus in the book building process is to be filed with the ______. Correct Answer -   ROC

11 .Question – Directors should not be member of more then ______ committee.
Correct Answer -   10

12 .Question – The share of the target company is deemed to be frequently traded.
 Correct Answer -   if the turnover in the preceding 6 months prior to the month in which PA is made is more than 5%

13 .Question – The person responsible for maintaining an Escrow account in the process of securitization is
 Correct Answer -   Trustee

14 .Question – The setting up of NSE consists of
Correct Answer -   
A ) Set up by IDBI
B) Equity paid up capital of Rs 25 crores
C )Started operations in June 1994

15 .Question – The limitations of refinance facility are  
Correct Answer -   
A ) Cannot exceed 5 time NOF
B) Not to exceed 50% of total Loan funds of HFC’s
C ) Not to exceed 15% of NOF of NHB

16 .Question – VCF’s are entitled to get its units listed on Stock exchange
Correct Answer -   After expiration of 3 years form date of issuance of units

17 .Question – The general obligation of mutual fund are  
Correct Answer -   
A ) Every AMC should maintain proper books of accounts
B) Financial year for all schemes to end as on march 31 each year
C ) Every mutual fund shall have the annul statement audited by auditor

18 .Question – High risk rating of Crisil indicated by
 Correct Answer -   B

20 .Question – Companies are not allowed to buy back securities  
Correct Answer -   
A ) Through any / own subsidiary company
B) Through any / group of investment company
C ) if default subsists in respect of repayments of deposit, term loans to any financial instructions and redemption of preference shares or debenture

21 .Question – The information that is required to be furnished to stock exchanges in compliance of SEBI regulations 1997 are  
Correct Answer -   
A ) Details of proposed acquisition need to be filed with  stock exchanges at least 4 days before the date
B) Any person holding more than 15% but less than 75% voting rights shall be disclosed with 2 days
C ) Annual disclosures

22 .Question – The issue price for placement portion and net offer to public are not the same.
Correct Answer -   False

23 .Question – Certain type of acquisitions as stipulated under the regulation 3 of Chapter 1 of the regulations are specifically exempted from the open offer process.
Correct Answer -   TRUE

24 .Question – The Company opting for an IPO should have net worth of at least Rs 1 crore in each of the two years.
Correct Answer -   TRUE

25 .Question – The transposition cum demat form
Correct Answer -   
A ) Helps in effect change in the order of names
B) Dematerializes the securities
C ) Pledging the shares
26 .Question – A _______ account is created for the purpose of distributing receivable to the investors on the securitization deal.
Correct Answer -   Escrow

27 .Question – The different type of stock exchanges in India are
Correct Answer -   
A ) Voluntary non profit making organizations
B) Joint stock companies limited by shares
C ) Joint stock companies limited by guarantee

28 .Question – The IPO size can exceed five times the pre-issue net worth of the company.
Correct Answer -   FALSE

29 .Question – As per the report and the letter of intent filed with SEBI, the amount that is expected to be years.
Correct Answer -   15000 crores

30 .Question – A more contemporary definition of corporate governance is
Correct Answer -   corporate governance is all about promoting corporate fairness, transparency and accountability.

31 .Question – The person who change the composition of securities.
Correct Answer -   Fund manager

32 .Question – The percentage that RBI has permitted the banks to invest in the capital market
Correct Answer -   5%

33 .Question –                      Correct Answer
A ) 57%                                  FII current free float sensex
B )  45%                                 FII free float stock NIFTY
C)  $476 mn                          Global investors pumping funds
D) 10                                      HDFC foreign currency deal

34 .Question – Crisils BBB rating stands for
Correct Answer -   High risk

35 .Question – The ESOP’s are
Correct Answer -   
A ) One of the methods of giving part ownership of the company to the employees
B) Employees can take part in the prosperity of the company
C ) Is a reward and linked with the increase in the prices of the shares

36 .Question – The following are some of the regulations governing the NBFC’s issued by RBI
Correct Answer -   
A ) All the NBFC’s must register with RBI
B) Without the registration certificate no company can undertake activities of NBFC
C ) All company must be liquid assets equal to 15% of deposit

37 .Question –Market have moved away from Badla system to ________ .
Correct Answer -   Derivatives Trading

38 .Question – The features of Mutual Fund are
Correct Answer -   
A ) A trust that pools in saving and funds from large number of investors who have common financial goal
B) Issue units to investor which represent right in assets
C ) Investments in mutual funds may be in the form of stock, bond, money market securities

39 .Question –In the book building process pricing is determined on the basis of ________
Correct Answer -   Investor feedback

40 .Question – The refinance made available to any HFC is not to be more than
Correct Answer -   60% of its outstanding housing loans

41 .Question – Sweet equity shares are shares issued by a company to employees or directors to discount.
Correct Answer -   TRUE

42 .Question – One of the process pf book buildings is that the issuer appoints a ___________ also known as the book runner.
Correct Answer -   Lead manager

43 .Question – The eligibility norms for an unlisted company for making a public issue are Correct Answer -   
A ) Pre issue net worth not less than 1 crors in the last 3 years
B) Track record of distributable profits for at least 3 years
C ) Issue size shall not exceed five times of its pre issue net worth

44 .Question – The Company which come out with the unique product of bonus debentures is
Correct Answer -   Hindustan lever

45 .Question – A bidder can request for a transaction slip as the proof of his having entered the bid.
Correct Answer -   TRUE

46 .Question – A bidder can request for a transaction slip as the proof of his having entered the bid.
Correct Answer -   TRUE

47 .Question – A custodian can transfer beneficial ownership legally.
Correct Answer -   FALSE

48 .Question – The percentage of public offering under the IPOs through the book building method
Correct Answer -   10%