What are the two primary markets in the securities market, and how do they differ?

Two main securities markets exist.

• Primary market issues new securities.

• Secondary market trades existing securities.

• Different roles for investors involved.

Fill in the blank: The National Stock Exchange of India (NSE) was set up in ___ and became operational in ___.

1992; 1994

What is the role of a broker in the stock exchange?

Brokers facilitate stock transactions.

• Act as intermediaries for clients.

• Execute buy/sell orders efficiently.

• Charge commissions on transactions.

What is the purpose of the Financial Stability Development Council (FSDC)?

FSDC enhances financial stability and coordination.

• Strengthens financial stability mechanisms.

• Promotes inter-regulatory coordination.

• Supports financial sector development.

True or False: The Interconnected Stock Exchange of India (ISE) was set up to allow for a single trading platform for 10 regional stock exchanges.

False. The ISE was set up as a single trading platform for 15 regional stock exchanges.

What is the significance of the book building process in Initial Public Offerings (IPOs)?

Book building is crucial for IPOs.

• Measures share demand effectively.

• Helps set market-driven prices.

• Facilitates investor participation.

Fill in the blank: The Securities and Exchange Board of India (SEBI) was established under the ___ Act of ___.

Securities and Exchange Board of India; 1992

What are the characteristics of a credit default swap (CDS)?

A credit default swap transfers risk.

• Provides protection against defaults.

• Used by investors for risk management.

• Involves premiums paid for coverage.

What is a Participatory Note (PN) and who issues it?

Participatory Notes are issued by FIIs.

• Used by foreign investors.

• Facilitates investment in India.

• Avoids direct security holding.

True or False: The corporate bond market in India has grown rapidly and is among the largest in the world.

False. The corporate bond market in India has languished compared to the equity market.

What is the primary function of spot exchanges?

Spot exchanges enable immediate transactions.

• Facilitates quick commodity trades.

• Enables spot delivery contracts.

• Similar to stock exchange trading.

Fill in the blank: The Reserve Bank of India launched inflation-indexed bonds (IIBs) to provide returns that are always in excess of ___.

Inflation

What is the primary difference between a public issue and private placement in capital raising?

Public issues are open to all.

• Public issues attract more investors.

• Private placements target specific groups.

• Regulations differ for each method.

True or False: The Financial Action Task Force (FATF) is responsible for enforcing regulations in the Indian financial market.

False

FATF does not enforce Indian regulations.

• FATF sets global standards.

• Focuses on money laundering.

• Does not enforce locally.

What is the impact of foreign portfolio investment (FPI) on the Indian financial markets?

FPI enhances Indian market liquidity.

• Increases market depth.

• Attracts global investors.

• Boosts economic growth.

The primary market is where securities are traded directly between the capital raiser and the purchaser. True or False?

True. The primary market involves the direct transaction of securities between issuers and investors.