P9 SET C: Financial Services and Capital Markets

🎯 Exam Master MCQs

Most Repeated & Important Questions!

1. Which term refers to an institutional investor that buys shares a day before an
IPO opens?
(A) Anchor Investor
(B) Lead Investor
(C) Retail Investor
(D) Qualified Institutional Buyer

2. What is the maximum spread between floor price and cap in the price band?
(A) 5%
(B) 10%
(C) 15%
(D) 20%

3. In an INVIT (Infrastructure Investment Trust), the minimum application for

primary and secondary subscribers is:
(A) INR 1 lakh, INR 5 lakh
(B) INR 10 lakh, INR 5 lakh
(C) INR 2 lakh, INR 10 lakh
(D) INR 15 lakh, INR 10 lakh

4. Who calculates the Mumbai Interbank Overnight Rate (MIBOR)?

(A) RBI
(B) NSEIL
(C) CCIL
(D) SEBI

5. What is considered the least preferred exit route for private equity liquidation?
(A) Sale to a Strategic Buyer
(B) Merger or Acquisition
(C) Initial Public Offering
(D) Liquidation

6. What is the rate at which the RBI lends to commercial banks?

(A) Repo Rate
(B) Reverse Repo Rate
(C) Bank Rate
(D) Marginal Standing Facility

7. Who is authorized to issue a certificate of deposit?

(A) Financial Institutions
(B) Commercial Banks
(C) Non-Banking Financial Companies
(D) Public Sector Undertakings

Visit YouTube Channel for more Join

CA Nand Jha Join Telegram
P9 SET C: Financial Services and Capital Markets

8. What type of venture capital financing follows a "Series A" round?

(A) Seed Round
(B) Series B
(C) Series C
(D) Mezzanine Round

9. Which entity is categorized as a zero-debt company?

(A) Indian Oil Corporation
(B) NMCE
(C) TATA Steel
(D) Infosys

10. What is the role of the Clearing House in a financial market?

(A) Issue Securities
(B) Ensure Settlement of Trades
(C) Provide Loans
(D) Regulate Capital Market

11. What is the lock-in period for investments in money market mutual funds?
(A) 30 Days
(B) 46 Days
(C) 60 Days
(D) 90 Days

12. Who typically supports black-check companies (companies with no business

operations)?
(A) Institutional Investors
(B) Retail Investors
(C) Angel Investors
(D) Venture Capitalists

13. Which type of bond allows the issuer to redeem the principal amount early?
(A) Callable Bond
(B) Puttable Bond
(C) Convertible Bond
(D) Zero-Coupon Bond

14. Which platform allows numerous small investors to invest in startups?

(A) Venture Capital Platform
(B) Crowdfunding Platform
(C) Angel Investor Network
(D) Stock Exchange

15. The minimum selected group of people for a private placement is between:
(A) 1-5 people
(B) 50-200 people
(C) 200-500 people
(D) 10-50 people

Visit YouTube Channel for more Join

CA Nand Jha Join Telegram
P9 SET C: Financial Services and Capital Markets

16. What is the standard quantity of crude oil for MCX trading?
(A) 50 barrels
(B) 75 barrels
(C) 100 barrels
(D) 200 barrels

17. Which entity collects applications on behalf of investors in securities issues?

(A) Registrar and Share Transfer Agent
(B) Underwriters
(C) Investment Bankers
(D) Securities Registrar

18. What is considered the most successful exit strategy for private equity investors?
(A) Asset Sale
(B) Initial Public Offering (IPO)
(C) Secondary Sale
(D) Mergers and Acquisitions

19. The concept of a Red Herring Prospectus refers to:

(A) A preliminary document filed by the company during an IPO
(B) A document containing detailed financial information
(C) A marketing tool for private placements
(D) A bond offering statement

20. Which entities are typically associated with managing endowment funds?
(A) Corporates and Governments
(B) Universities, Non-Profit Organizations, Churches, and Hospitals
(C) Private Equity Firms
(D) Hedge Funds

21. In private placement, which entity acts as an intermediary?

(A) Financial Institutions
(B) Investment Banker
(C) Venture Capitalists
(D) Regulatory Authorities

22. A bank has the following data:

• Probability of Default (PD) = 0.03 (3%)

• Loss Given Default (LGD) = 0.60 (60%)
• Exposure at Default (EAD) = ₹10,000,000

What is the Expected Loss (EL3)?

(A) ₹180,000
(B) ₹300,000
(C) ₹600,000
(D) ₹900,000

Visit YouTube Channel for more Join

CA Nand Jha Join Telegram
P9 SET C: Financial Services and Capital Markets

23. In an operating lease, the right to control the use of the asset belongs to:
(A) Lessor
(B) Lessee
(C) Both Lessor and Lessee
(D) None of the Above
24. Who typically issues commercial papers?
(A) Government Bodies
(B) Corporates
(C) Non-Banking Financial Companies
(D) Banks
25. Alothermic trading is also known as:
(A) Algorithmic Trading
(B) Black Box Trading
(C) Arbitrage Trading
(D) High-Frequency Trading
26. The format for pre-issue advertisement of a public issue is specified in which
part of Schedule X?
(A) Part A
(B) Part B
(C) Part C
(D) Part D
27. In private equity, what is the difference between a General Partner and a
Limited Partner (LP)?
(A) General Partners manage investments, LPs invest capital
(B) General Partners provide capital, LPs manage investments
(C) General Partners are risk-averse, LPs are risk-takers
(D) General Partners and LPs have identical roles
28. FEDAI plays which role in the financial market?
(A) Currency Exchange
(B) Settlement of International Trade
(C) Overseeing Foreign Exchange Transactions
(D) Regulating Banks' Activities
29. In a scenario where a country faces a credit situation, which action may RBI
take to help?
(A) Increase Repo Rate
(B) Reduce Reverse Repo Rate
(C) Reduce Repo Rate
(D) Increase CRR (Cash Reserve Ratio)
30. Which of the following is a participant in the capital market?
(A) Stock Exchanges
(B) Government Agencies
(C) Investment Banks
(D) All of the above

31. The market for short-term funds primarily includes:

(A) Treasury bills and commercial paper
(B) Corporate bonds and equities
(C) Mutual funds and ETFs
(D) Real estate investment trusts (REITs)

Visit YouTube Channel for more Join

CA Nand Jha Join Telegram
P9 SET C: Financial Services and Capital Markets

32. A 'Term Sheet' is typically used to:

(A) Define the terms of a business agreement
(B) Outline a company's annual budget
(C) Determine the market value of stocks
(D) Discuss the roles of company directors
33. HPR (Holding Period Return) is calculated by:
(A) Dividing the total return by the initial investment
(B) Subtracting the cost from the total return
(C) Dividing the price change by the purchase price
(D) Adding dividends to the capital gains and dividing by the initial investment
34. Some common problems in factoring include:
(A) High transaction fees
(B) Inability to collect receivables on time
(C) Loss of control over customer relationships
(D) All of the above
35. The Agridex, launched on 25th January 2020, complies with which type of liquid
commodities?
(A) Energy Commodities
(B) Agricultural Commodities
(C) Precious Metals
(D) Industrial Metals
36. Forfaiting refers to:
(A) A form of short-term borrowing
(B) The sale of future receivables at a discount
(C) A process of trading commodities
(D) A method of increasing shareholder equity
37. Non-Profit Organizations (NPOs) can raise funds through stock exchanges by:
(A) Issuing shares to the public
(B) Participating in bond markets
(C) Listing debt instruments like bonds or debentures
(D) Engaging in crowd funding
38. The role of a merchant banker includes all of the following EXCEPT:
(A) Advising companies on mergers and acquisitions
(B) Underwriting new securities
(C) Lending money to start-ups
(D) Assisting in public offerings and capital raising
39. Revenue from Buy-Back (BBP) shares are typically tendered within:
(A) 1-2 days
(B) 3-5 days
(C) 6-10 days
(D) 10-15 days

40. The concept of factoring refers to:

(A) Buying back securities at a fixed price
(B) Selling receivables to a third party
(C) Merging companies for investment opportunities
(D) Dividing equity shares into smaller lots

Visit YouTube Channel for more Join

CA Nand Jha Join Telegram
P9 SET C: Financial Services and Capital Markets

41. The advantage of demutualization is that it:

(A) Increases market liquidity
(B) Allows for the separation of ownership and management
(C) Helps in the stabilization of stock prices
(D) Reduces stock market volatility
42. The float factor in mutual fund calculations refers to:
(A) The difference between the fund’s NAV and its market value
(B) The time taken for a transaction to clear
(C) The number of shares outstanding in a fund
(D) The liquidity of the underlying assets
43. The process of credit rating evaluation involves assessing:
(A) The creditworthiness of a company
(B) The liquidity of a stock
(C) The profitability of a company
(D) The stock market trend
44. Annual expenses of a mutual fund are typically calculated by:
(A) Dividing the total expenses by the number of investors
(B) Considering the fund's operational costs, management fees, and other charges
(C) Subtracting dividends from the total value
(D) Adding up the profits earned over the year
45. The intrinsic value of a stock refers to:
(A) The current market value of the stock
(B) The calculated fair value based on fundamentals
(C) The value based on the stock’s previous trading history
(D) The price the stock reaches after a dividend pay-out
46. According to Levin, the functions of financial markets include:
(A) Price discovery and capital formation
(B) Risk management and hedging
(C) Allocation of resources to productive uses
(D) All of the above
47. The market index is used primarily for:
(A) Determining interest rates
(B) Measuring the overall market performance
(C) Tracking individual stock movements
(D) Setting stock prices
48. The strike price of an option is:
(A) The price at which the option can be bought or sold
(B) The price at which the option expires
(C) The price at which the underlying asset is purchased
(D) The price paid for the option itself
49. The relationship between credit rating and default probability suggests that:
(A) A higher credit rating implies a lower probability of default
(B) A lower credit rating implies a lower probability of default
(C) Credit rating has no effect on default probability
(D) Default probability is fixed regardless of the credit rating

Visit YouTube Channel for more Join

CA Nand Jha Join Telegram
P9 SET C: Financial Services and Capital Markets

50. In BECR (Bond Equivalent Conversion Rate), from the lessee's point of view, the
primary consideration is:
(A) The total cost of leasing
(B) The tax implications of leasing
(C) The profitability of the leasing arrangement
(D) The financial impact on the balance sheet
51. The Sharpe ratio is a measure of:
(A) A stock’s volatility relative to the market
(B) A portfolio's excess return per unit of risk
(C) The growth rate of a company
(D) The average return of a market index
52. Lease rent is typically calculated based on:
(A) The book value of the asset
(B) The market value of the asset
(C) The initial cost of the asset
(D) The expected useful life of the asset
53. CII (Cost Inflation Index) is used to calculate:
(A) Real estate returns
(B) The adjusted cost of assets for tax purposes
(C) The current value of fixed assets
(D) Inflation-adjusted bond yields
54. The functions of a financial market include all of the following EXCEPT:
(A) Facilitating the buying and selling of securities
(B) Providing a platform for commodity trading
(C) Offering loans to government institutions
(D) Ensuring liquidity for financial instruments
55. The clean price of a bond is calculated as:
(A) The price excluding accrued interest
(B) The price including accrued interest
(C) The price including the bond's face value
(D) The price after factoring in the call option
56. The document used in a book-built public issue where all relevant details except
the price or the number of shares being offered are disclosed is known as:
(A) Prospectus
(B) Abridged Prospectus
(C) Red Herring Prospectus
(D) Letter of Offer
57. Which exchange has received permanent approval from the government?
(A) MCX
(B) NCDEX
(C) ICEX
(D) IEX
58. Which of the following statements is true regarding rolling returns?
(a) It measures the performance of the growth option NAV from the start date to
today’s date, annualized.
(b) It measures returns over successive periods (from the start date to the next date,
then the next period, and so on) and takes their average.
(c) It measures returns over successive short-term periods (for example, week-to-
week) and takes their average.
(d) All of the above.

Visit YouTube Channel for more Join

CA Nand Jha Join Telegram
P9 SET C: Financial Services and Capital Markets

59. Which one of the following is not a Credit Rating Agency?

(A) Fitch
(B) Credit Analysis & Research Ltd.
(C) CIBIL
(D) Standard & Poor
60. Reverse Repo and Repo are defined as follows. Which option correctly states
their definitions?
(A) Reverse repo is the rate at which commercial banks lend to the RBI, and Repo is
the rate at which the RBI lends to commercial banks.
(B) Reverse repo is the rate at which commercial banks borrow from the RBI, and
Repo is the rate at which the RBI borrows from commercial banks.
(C) Reverse repo is the rate at which commercial banks lend to each other, and Repo
is the rate at which the RBI lends to the government.
(D) Repo is the rate at which commercial banks lend to the government, and Reverse
repo is the rate at which the RBI lends to commercial banks.
61. An extract from a term sheet states: "In the event that the company issues
additional securities at a price less than the current Series A preferred
conversion price, such conversion price shall be reduced to the price at which the
new shares are issued." This clause indicates:
(A) Broad-based weighted average anti-dilution protection
(B) Narrow-based weighted average anti-dilution protection
(C) No anti-dilution protection
(D) Full-ratchet anti-dilution protection
62. Which of the following is not considered an intermediary in the capital market?
(A) Merchant bankers
(B) Underwriters
(C) Debenture trustees
(D) Venture capitalist
63. Which of the following is a common challenge when calculating the Bond
Equivalent Conversion Rate (BECR) from a lessee's perspective?
(A) Determining the appropriate discount rate
(B) Accurately converting lease payments into bond-equivalent yields
(C) Estimating the asset’s residual value
(D) Adjusting for market volatility
64. The concept of promoters’ contribution refers to:
(A) The share of equity held by promoters during an IPO
(B) The capital that promoters invest in the company during its initial public offering
(C) The proportion of debt financing provided by promoters
(D) The dividend pay-out ratio among promoters
65. Non-profit organizations can raise funds through the stock exchange by using:
(A) An Initial Public Offer (IPO)
(B) A Social Stock Exchange
(C) A Rights Issue
(D) A Bond Issuance

Visit YouTube Channel for more Join

CA Nand Jha Join Telegram