Ramesh Singh Test: Security Market In India - 1


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QUESTION: 1

Consider the following statements.

1. World's first stock exchange was established in London

2. The first stock exchange in India, the Bombay Stock Exchange was also known as the native share and stockbrokers' Association

Which of these statements is/are correct?

Solution:
  • World's first stock exchange was established in Antwerp, Belgium (then part of the Netherlands) in 1631, the London Stock Exchange opened in 1773 and then Philadelphia Stock Exchange (the first in the New World) opened in 1790.

  • The first stock exchange in India, the Bombay Stock Exchange known as The Native Share and Stock Brokers' Association was set up in 1870.

QUESTION: 2

Largest stock exchanges, based on market capitalisation, of the world in their decreasing order are:

1. The New York stock exchange

2. London Stock Exchange

3. Tokyo stock exchange

Choose from the following options.

Solution: Top five largest stock exchanges (based on market capitalisation) of the world in their decreasing order are—the New York Stock Exchange, the NASDAQ, the Tokyo Stock Exchange, the London Stock Exchange and the Bombay Stock Exchange.

QUESTION: 3

S & P CNX - 50 is the index of:

Solution: The National Stock Exchange of India Ltd. (NSE) was set up in 1992 and became operationalised inn1994. The sponsors of the exchange are financial institutions, including IDBI, LIC and GIC with IDBI as its promoter. It has a 50 share index and a 500 share index known as S&P CNX-50 (Nifty Fifty) and S&P CNX-500, respectively.

QUESTION: 4

Consider the following statements.

1. India's first fully computerised stock exchange was Over the Counter Exchange of India Limited.

2. It was promoted by the Reserve Bank of India.

Which of these statements is/are correct?

Solution:
  • Though the Over the Over the Counter Exchange of an Ltd (OTCEI) was set up in 1989, it could commence trading only in 1992.

India's first fully computerised stock exchange was promoted by the UTI, ICICI, SBI Cap among others, to overcome problems such as lack of transparency and delays in settlements prevalent in the older stock exchanges.

QUESTION: 5

Consider the following statements about Bombay Stock Exchange Limited.

1. It started as a regional stock exchange and converted into a National one in 1992.

2. It is the second-biggest stock exchange in India after the National Stock Exchange

Which of these statements is/are correct?

Solution:
  • The Bombay Stock Exchange Ltd. (BSE), earlier a regional stock exchange, converted into a national one in 2002.

  • The biggest in India, it accounts for almost 75 percent of total stocks traded in Indian and is the fifth largest in the world (based on market capitalisation).

QUESTION: 6

Which of the following are correctly matched?

Solution:

There are at present four indices connected with the BSE:

  • Sensex: The sensitive index (i.e., Sensex) is a 30 stocks index of the BSE which was enlarged to include 50 stocks in 2000 but soon was cut down to the original level. This index represents the Indian stock market.

  • BSE-200: This is a 200 stock share index of the BSE (including the 30 stocks of the Sensex) which has its Dollar version too—the Dollex.

  • BSE-500: In mid-1999, the BSE came up with a 500-stock index representing major industries and many sub-sectors of the economy with information technology getting a significant weightage.

  • National Index: An index of 100 stocks being quoted nationwide (Bombay, Delhi, Kolkata, etc.) was developed to give broader/wider representation of the stock market since the Sensex consists of only 30 stocks. The 30 stocks of the Sensex are included in the National Index.

QUESTION: 7

Consider the following statements about Jobber.

1. In the London Stock Exchange he is called a market-maker while in the New York Stock Exchange he is called a specialist.

2. The Bombay Stock Exchange has made it mandatory for every company with a share capital of over Rs. 3 crores

Which of these statements is/are correct?

Solution:
  • A jobber is a broker's broker or one who specialises in specific securities catering to the needs of other brokers—in India also known as Taravaniwallahn (in the BSE).

  • In the London Stock Exchange, he is called a market-maker while in the New York Stock Exchange he is called a specialist.

  • The Bombay Stock Exchange has made it mandatory for every company with a share capital of over Rs. 3 crore to appoint jobbers or market-makers if it seeks enlistment. Such an arrangement enables investors to buy and sell shares on the stock exchange and thus liquidity increases.

 

 

 

QUESTION: 8

In the money market of India, the chief market maker is:

Solution: Functions as an intermediary in the market ready to buy and sell securities. He simultaneously quotes two-way rates-like a jobber basically with the only difference that he quotes two-way rates, for buying and selling at the same time. On the floor of India's OTCEI, only market-makers are allowed to play. In the money market of India, the Discount and Finance House of India (DFHI) is the chief market-maker.'

QUESTION: 9

SEBI was set up as a

Solution: SEBI: Initially set up a non-statutory body set on 12 April 1989 through a government resolution in an effect to give the Indian stock market an organise structure) with its head office in Mumbai.

QUESTION: 10

Consider the following statements.

1. The Forward Markets Commission is a statutory body set up under the Forward Contracts (Regulation) Act, 1952.

2. It functions under the administrative control of the Ministry of Trade and Commerce.

Which of these statements is/are correct?

Solution:
  • The Forward Markets Commission is a statutory body set up under the Forward Contracts (Regulation) Act, 1952. It functions under the administrative control of the Department of Consumer Affairs, Ministry of Consumer Affairs, Food & Public Distribution.