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Test: Financial Market- Assertion & Reason Type Questions - Commerce MCQ


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15 Questions MCQ Test - Test: Financial Market- Assertion & Reason Type Questions

Test: Financial Market- Assertion & Reason Type Questions for Commerce 2024 is part of Commerce preparation. The Test: Financial Market- Assertion & Reason Type Questions questions and answers have been prepared according to the Commerce exam syllabus.The Test: Financial Market- Assertion & Reason Type Questions MCQs are made for Commerce 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Test: Financial Market- Assertion & Reason Type Questions below.
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Test: Financial Market- Assertion & Reason Type Questions - Question 1

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Screen-based trading system cuts down on time, cost and risk of error as well as on the chances of fraud.

Reason (R): Screen-based trading system electronically matches the buyer and seller in an order-driven system.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 1
SBTS electronically matches the buyer and seller in an order-driven system or finds the customer the best price available in a quote-driven system, and hence cuts down on time, cost and risk of error as well as on the chances of fraud.
Test: Financial Market- Assertion & Reason Type Questions - Question 2

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): The objective of SEBI is to maintain a balance between statutory regulations and self regulation.

Reason (R): The objective of the Primary Market Advisory Committee is to advise SEBI on issues related to the development of primary market in India.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 2
The SEBI has formed two advisory committees. They are the Primary Market Advisory Committee and the Secondary Market Advisory Committee. The objectives of these two committees is to advise SEBI on issues related to the development of primary market in India.
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Test: Financial Market- Assertion & Reason Type Questions - Question 3

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): The returns on Treasury Bills are not that attractive.

Reason (R): They are zero-risk instruments.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 3
U.S. Treasuries are indeed risk-free for individuals who hold individual bonds until maturity. For those who sell their bonds before maturity or invest in long-dated Treasury funds, there is a risk.
Test: Financial Market- Assertion & Reason Type Questions - Question 4

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Controlling insider trading and imposing penalties for such practices is a protective function of SEBI.

Reason (R): Registration of collective investment schemes and Mutual Funds is a development function of SEBI.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 4
Registration of collective investment schemes and Mutual Funds is a regulatory function of SEBI. Regulatory functions involve establishment of rules and regulations for the financial intermediaries along with corporates that helps in efficient management of the market.
Test: Financial Market- Assertion & Reason Type Questions - Question 5

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Treasury Bills are issued by Central Government.

Reason (R): Treasury Bills are one of the safest money market instruments.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 5
In India, the Central Government issues both, treasury bills and bonds or dated securities while the State Governments issue only bonds or dated securities, which are called the State Development Loans (SDLs).
Test: Financial Market- Assertion & Reason Type Questions - Question 6

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Government of India decided to setup a separate regulatory body known as Securities and Exchange Board of India.

Reason (R): SEBI was set up to prevent trading malpractices and achieve a balance between self regulation by the securities industry and its statutory regulation.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 6
Many malpractices started taking place such as rigging of prices, non-adherence of provisions of the Companies Act, violation of rules and regulations of stock exchanges etc. Due to these malpractices, people started losing confidence in the stock market. The government felt a sudden need to set up an authority to regulate the working and reduce these malpractices. As a result, the Government came up with the establishment of SEBI.
Test: Financial Market- Assertion & Reason Type Questions - Question 7

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Sale and lease back technique is a type of lease agreement.

Reason (R): It enables the lessee to improve their liquidity.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 7
The sale and leaseback definition is a transaction in which a company sells its property to another company and then leases that property. The company that sells the asset becomes the lessee, and the company that purchases the asset becomes the lessor.
Test: Financial Market- Assertion & Reason Type Questions - Question 8

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Demat account refers to an account which an Indian citizen must open with the DPs to trade in listed securities in electronic form.

Reason (R): Depository is like a bank in which an investor can deposit and withdraw his shares.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 8
Investors who want to get securities in electronic form opens a Demat Account. From this account one can hold shares of various companies in the dematerialised/ electronic form.
Test: Financial Market- Assertion & Reason Type Questions - Question 9

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Exchanges of debentures and shares are done industrial securities market.

Reason (R): Exchanges of shares and debentures are divided in two markets: primary market and secondary market.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 9

The correct answer is Option 2: Both A and R are true and R is the correct explanation of A. Exchanges of debentures and shares are done in the industrial securities market, which is a part of the secondary market. The secondary market is divided into two markets: the primary market and the secondary market. The primary market is where new securities are issued, while the secondary market is where existing securities are traded.

Test: Financial Market- Assertion & Reason Type Questions - Question 10

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Stock exchange provides safety to dealings and investment.

Reason (R): Transactions on the stock exchange are conducted only amongst its members with adequate transparency.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 10
Stock exchange provides safety, security and equity in dealings as transactions are conducted as per well defined rules and regulations. Transactions on the stock exchange are conducted in strict conformity to its rules and regulations which include the procedure and timings of delivery and payment to be followed.
Test: Financial Market- Assertion & Reason Type Questions - Question 11

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Accounts of shareholders are in electronic forms which is called D-mat.

Reason (R): Now, sale and purchase of shares are in electronic forms.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 11
Demat Account is short for dematerialisation account and makes the process of holding investments like shares, bonds, government securities, Mutual Funds, Insurance and ETFs easier, doing away the hassles of physical handling and maintenance of paper shares and related documents.
Test: Financial Market- Assertion & Reason Type Questions - Question 12

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Stock exchange is an unorganised market.

Reason (R): Stock exchange makes complete information available to public in regard to prices and volume of transactions taking place every day.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 12
A stock exchange is generally organised as an association, a society or a company with a limited number of members. It is open only to these members who act as brokers for the buyers and sellers.
Test: Financial Market- Assertion & Reason Type Questions - Question 13

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Sensex is measured by sensory index.

Reason (R): Currently 150 companies are listed in sensex.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 13
Value of Sensex = (Total free float market capitalization/ Base market capitalization) * Base period index value. The base period (year) for Sensex calculation is 1978-79. The base value index is 100. Using the above formula, one can calculate the value of BSE Sensex.
Test: Financial Market- Assertion & Reason Type Questions - Question 14

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Stock exchange contributes to economic growth.

Reason (R): Through the process of disinvestment and reinvestment savings get channelised into their most productive investment avenues.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 14
Stock exchange offers a platform for trading of securities of the various companies. This process of trading involves continuous disinvestment and reinvestment, which offers opportunities for capital formation and subsequently, growth of the economy.
Test: Financial Market- Assertion & Reason Type Questions - Question 15

Direction: In the question given below are two statements labelled at Assertion (A) and Reason (R). In the context of the two statements, which one of the following is correct?

Assertion (A): Capital market is the biggest source for growth of an economy.

Reason (R): Capital market provides long-term funds to organised and unorganised sectors.

Detailed Solution for Test: Financial Market- Assertion & Reason Type Questions - Question 15
The capital market effectively transfers monetary purchase power from surplus funds of investors to those with deficits for a fixed period in exchange for greater future purchasing power. They play a major role in recapitalizing and privatization of large infrastructure projects and industries.
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