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Money Market, Capital Market and SEBI
Practice money-and-capital-market with 20 free MCQ questions covering economics. Detailed explanations in English and Hindi, perfect for UPSC, SSC, and competitive exam preparation.
money-and-capital-market — Answer Key & Explanations (20 Questions)
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Attempt the quiz above first, then review every question with its correct answer and a short explanation below.
Q1.The money market deals with funds for:
- A.short-term borrowing and lending (up to one year)✓ Correct Answer
- B.long-term investment above ten years
- C.foreign currency only
- D.agricultural land only
Explanation: The money market trades short-term instruments; the capital market deals with long-term funds.
Q2.The capital market deals mainly with:
- A.overnight loans
- B.long-term funds such as shares and debentures✓ Correct Answer
- C.daily wages
- D.retail goods
Explanation: Companies raise long-term capital by issuing shares and debentures.
Q3.The securities market in India is regulated by:
- A.SEBI✓ Correct Answer
- B.RBI
- C.IRDAI
- D.NABARD
Explanation: The Securities and Exchange Board of India protects investors and regulates stock exchanges.
Q4.The Sensex is the benchmark share index of the:
- A.Bombay Stock Exchange✓ Correct Answer
- B.National Stock Exchange
- C.Reserve Bank of India
- D.Multi Commodity Exchange
Explanation: The BSE Sensex tracks 30 large companies; the NSE index is the Nifty.
Q5.The Nifty 50 is the benchmark index of the:
- A.Bombay Stock Exchange
- B.National Stock Exchange✓ Correct Answer
- C.Calcutta Stock Exchange
- D.Reserve Bank of India
Explanation: The Nifty 50 tracks 50 large stocks listed on the NSE.
Q6.The Bombay Stock Exchange (BSE), established in 1875, is regarded as:
- A.the largest bank in India
- B.the oldest stock exchange in Asia✓ Correct Answer
- C.a government department
- D.the first commodity exchange in the world
Explanation: BSE began as the Native Share and Stock Brokers' Association in 1875.
Q7.SEBI was given statutory powers through an Act of Parliament in:
- A.1956
- B.1992✓ Correct Answer
- C.1988
- D.2005
Explanation: SEBI was set up in 1988 and became a statutory body under the SEBI Act, 1992.
Q8.Treasury bills issued by the Government of India are available for maturities of:
- A.1, 5 and 10 years
- B.3, 6 and 9 years
- C.91, 182 and 364 days✓ Correct Answer
- D.15, 20 and 30 years
Explanation: T-bills are short-term government securities issued at a discount to face value.
Q9.A commercial paper is:
- A.a long-term bond issued by the government
- B.a share certificate
- C.an unsecured short-term promissory note issued by a company✓ Correct Answer
- D.a bank passbook
Explanation: Companies with good credit use commercial paper to raise short-term funds.
Q10.A certificate of deposit (CD) is a money market instrument issued by:
- A.banks and financial institutions✓ Correct Answer
- B.individual farmers
- C.municipal corporations only
- D.insurance agents
Explanation: CDs are negotiable time deposit certificates issued by banks.
Q11.The call money market deals with loans lasting from:
- A.one to five years
- B.five to ten years
- C.more than ten years
- D.overnight up to 14 days✓ Correct Answer
Explanation: Call money is overnight lending; notice money is for 2 to 14 days.
Q12.The primary market is the market in which:
- A.existing shares are traded among investors
- B.only gold is traded
- C.only foreign currency is traded
- D.new securities are issued for the first time, such as in an IPO✓ Correct Answer
Explanation: In the secondary market, already-issued securities are bought and sold.
Q13.A "bull market" refers to a market in which share prices are generally:
- A.falling
- B.fixed by the government
- C.rising✓ Correct Answer
- D.unchanged for years
Explanation: A bear market is the opposite: prices are falling.
Q14.Mutual funds in India are regulated by:
- A.NABARD
- B.IRDAI
- C.the Ministry of Agriculture
- D.SEBI✓ Correct Answer
Explanation: SEBI's Mutual Fund Regulations govern the formation and working of mutual funds.
Q15.A demat account is used to hold:
- A.securities in electronic form✓ Correct Answer
- B.physical share certificates only
- C.foreign currency notes
- D.gold bars
Explanation: Dematerialisation converts physical certificates into electronic holdings.
Q16.A debenture represents:
- A.ownership in the company
- B.a government licence
- C.a debt owed by the company to the holder✓ Correct Answer
- D.a bank guarantee
Explanation: Debenture holders are creditors, whereas shareholders are owners.
Q17.The base year of the BSE Sensex, with a base value of 100, is:
- A.1947-48
- B.1978-79✓ Correct Answer
- C.1991-92
- D.2000-01
Explanation: The Sensex was launched in 1986 with 1978-79 as its base year.
Q18.The Nifty index was launched by the National Stock Exchange in:
- A.1986
- B.1992
- C.2004
- D.1996✓ Correct Answer
Explanation: The NSE, set up in 1992, began trading in 1994 and introduced the Nifty in April 1996.
Q19.The law that regulates the working of stock exchanges and the trading of securities in India is the:
- A.Banking Regulation Act, 1949
- B.Companies Act, 1913
- C.FEMA, 1999
- D.Securities Contracts (Regulation) Act, 1956✓ Correct Answer
Explanation: The SCRA, 1956 regulates the trading of securities and recognises stock exchanges.
Q20.India's first depository, which started operations in 1996 after the Depositories Act, was:
- A.CDSL
- B.CCIL
- C.NSDL✓ Correct Answer
- D.SIDBI
Explanation: The National Securities Depository Limited began in 1996; CDSL followed in 1999.