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Question 1. Raising of funds to meet floatation cost of new issues is known as ___. 
  1.    Price rigging 
  2.    Bridge financing 
  3.    Price fixing 
  4.    None of the above
Answer: Option B
: B

Raising funds to meet floatation cost of new issues is known as bridge financing.

Question 2. Accrual bond are also known as ____________.
  1.    Zero Coupon Bonds
  2.    Fixed interest Bonds
  3.    Low Interest Bonds
  4.    Flate Rate Bonds
Answer: Option A
: A

A zero-coupon bond, also known as an "accrual bond," is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value.

Question 3. What is the meaning of right issue?
  1.    Securities are not issued to existing shareholders at all
  2.    Company offers new shares to its existing shareholders
  3.    Company sells the securities to some selected institutions
  4.    None of these
Answer: Option B
: B

A rights issue is a dividend of subscription rights to buy additional securities in a company made to the company's existing security holders. When the rights are for equity securities, such as shares, in a public company, it is a non-dilutive pro rata way to raise capital.

Question 4. Instruments with a maturity period of less than one year are traded in  ______.
  1.    Capital Market
  2.    Money market
  3.    Stock Exchange
  4.    NSEI
Answer: Option B
: B

As money became a commodity, the money market became a component of the financial markets for assets involved in short-term borrowing, lending, buying and selling with original maturities of one year or less.

Question 5. A capital market is ideal when:
  1.    All of these
  2.    Financial institutions are sufficiently developed
  3.    Finance is available at reasonable cost
  4.    Capital is most productively allocated
Answer: Option A
: A

An ideal capital market is defined by a set of five assumptions. 1: Capital markets are frictionless 2: All market participants share homogenous expectation, value relevant information is costlessly available to all market participants. 3: All market participants are atomistic. No single market participant can affect the market price of a security via trades. 4: The firm’s investment program is fixed and known. 5: The firm’s financing is fixed. Once chosen, the firm’s capital structure is fixed.

Question 6. To eliminate the problems of theft, forgery, transfer delays, etc, an electronic book-entry form of holding and transferring securities has been introduced. This is known as ___ of securities.
  1.    Dematerialisation 
  2.    Depository 
  3.    Settlement 
  4.    Clearing 
Answer: Option A
: A

To eliminate the problems of theft, forgery, transfer delays, etc, an electronic book-entry form of holding and transferring securities has been introduced. This is known as dematerialisation of securities.