Securities Market Mock Test Chapter 4

Securities Market Mock Test Chapter 4
1. What does NDS stands for?

a. Negotiated Dealing System
b. National Dealing System
c. Negotiated Delivery System
d. None of the above
2. The settlement system for transaction in government securities was standardized to___cycle.
a. T+1
b. T+2
c. T+3
d. T+4
3. Government securities form the oldest and most dominant part of the debt market in India.
a. True
b. False
4. Which of following segment is comparatively less dominant?

a. Bonds
b. Commercial paper
c. Certificates of deposits
d. Government Securities
5. In which segment only short term instruments are traded?

a. Bonds
b. Indian debt market
c. Commercial paper
d. Certificates of deposits
6. Debt instruments represents contracts whereby one party tends money to another on______with
regards to rate of interest to be paid, the periodicity of such interest payment and installments.
a. Prevailing terms
b. Predetermined terms
c. Future terms
d. Any terms
7. Terms to maturity of a bond changes from the date of issue of the bond until its maturity.
a. Every day
b. Only at the end
c. Only in the beginning
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8. Coupon rate is the rate at which interest paid and usually represented as a percentage of the
______value of a bond.
a. Redeemable
b. Par
c. Issue
9. Who are main investors of Debt Markets?

a. Banks
b. Financial institution, insurance companies
c. Mutual funds, Provident Funds
d. All of the above
10. How dealings are done in Secondary market?

a. On telephone
b. On Internet
c. Physically
d. All of the above
11. How performance of Primary Dealers (PD’s) is assessed by RBI?

a. On the basis of their Returns
b. On the basis of Degree of risk involved
c. On the basis of their bidding commitments
12. Who are largest investors in Debt market?

a. Corporate
b. Banks
c. Mutual Funds
d. All of the above
13. The non-competitive bids up to a maximum of the notified amount are accepted at the weighted
average cut off price/yield?
a. 10%
b. 15%
c. 20%
d. 5%
14. What is the minimum amount of government securities?

a. Rs.25000
b. Rs.10000
c. Rs.30000
15. On what basis securities are issued through auction?

a. Price basis

b. Yield basis
c. Either of A & B
d. Both A & B
16. Which of the following issue is on price basis?

a. The coupon is pre-determined and the bidders quote price per Rs.100 face value of the security at
which they desire to purchase the security.
b. The coupon of the security is decided is own auction and security carries the same coupon till
maturity.
c. RBI determines the maximum rate of yield or the minimum offer price as the case may be.
17. Which of the following issue is on yield basis?

maturity.
18. Which of the following issue is on the basis of bids received?

maturity.
19. If bids quoted higher than the maximum rate of yield or lower than the minimum price, the such bids
are________
a. Accepted
b. Rejected
c. Freezed
20. At whose discretion, Allocation of securities are to non competitive bidders are made?
a. SEBI
b. RBI
c. Companies Act,1956
21. At a price higher than the weighted average price arrived at on the basis of the competitive bids
accepted at the auction.
a. True
b. False

22. The National amount of securities that would be allocated to retail investors on non competitive
basis is restricted to a maximum_____% of the aggregate nominal amount of the issue.
a. 10%
b. 15%
c. 25%
d. 5%
23. For what period tap sales may be extended?

a. 11 days
b. 21 days
c. 1 day
d. 30 days
24. On what basis new securities in conversion of maturing treasury bills be issued?
a. Auction basis
b. Pre announced coupon basis
c. Both A & B
d. Either of A & B
25. Allotment of securities to RBI are made at the __________

a. Cut off price/Yield emerging in the auction
b. Any Price/Yield decided by the government
c. Either of A,B
d. Both of the above
26. Securities with fixed coupon rates can be issued at ______ and redeemed at_____
a. Discount, par
b. Par, Par
c. Premium, Par
d. Any of the above
27. Which securities carry a coupon rate which arises according to the base rate to which it is related?
a. Zero Coupon bonds
b. Floating rate bonds
c. Securities with embedded derivatives
d. Indexed bonds
28. Which securities are issued at a discount and redeemed at par?

d. Indexed bonds
29. Which securities are repaid at the option of government/holder of the security, before the specified
redemption date?

d. Indexed bonds
30. Which securities’ interest payments are based on wholesale price index/consume price index.
d. Indexed bonds
31. Non-competitive bidders do not face any uncertainty in purchasing the desired amount of T-bills
from the auctions.
a. True
b. False
32. At what rate T-bills are issued and redeemed?

a. Discount, Par
b. Premium, Par
c. Discount, Premium
d. Par, Par
33. How to compute cut off yield?

a. (100-price)*365/price*No. of days of issue
b. (100-redeemable price)*365/Redeemable price*no. of days to maturity
c. (100-price)*365/price*no. of days to maturity
34. How many Primary dealers are operating in the market?

a. 21
b. 19
c. 15
35. How underwriting commitment of each Primary Dealer is decided?

a. On the basis of its size
b. Its holding strength
c. The committed amount of bids
d. All of the above
36. RBI provides liquidity support to the PD’s through LAF against collateral of government securities.
a. True
b. False
37. PD’s can also raise funds through_____

a. Certificate of Deposits
b. Commercial Paper
c. Bonds

38. In which Exchange government securities in demat form has started on automated order driven
system?
a. NSE
b. BSE
c. OTCEI
d. All of the above
39. What is the settlement period of repo transactions in government securities?

a. T+0,T+1
b. T+1,T+2
c. T+2,T+3
d. T+3,T+4
40. In whose terms a transaction is a repo or reverse repo is determined?

a. Who ends the first leg of transaction?
b. Who ends the second leg of transaction?
c. Who initiates the first leg of transaction?
d. Who initiates the second leg of transaction?


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Securities Market Mock Test Chapter 4

1. What does NDS stands for?

4. Which of following segment is comparatively less dominant?

5. In which segment only short term instruments are traded?

1 Roots Institute of Financial Markets RIFM

9. Who are main investors of Debt Markets?

10. How dealings are done in Secondary market?

11. How performance of Primary Dealers (PD’s) is assessed by RBI?

12. Who are largest investors in Debt market?

14. What is the minimum amount of government securities?

15. On what basis securities are issued through auction?

2 Roots Institute of Financial Markets RIFM

16. Which of the following issue is on price basis?

17. Which of the following issue is on yield basis?

18. Which of the following issue is on the basis of bids received?

3 Roots Institute of Financial Markets RIFM

23. For what period tap sales may be extended?

25. Allotment of securities to RBI are made at the __________

28. Which securities are issued at a discount and redeemed at par?

4 Roots Institute of Financial Markets RIFM

32. At what rate T-bills are issued and redeemed?

33. How to compute cut off yield?

34. How many Primary dealers are operating in the market?

35. How underwriting commitment of each Primary Dealer is decided?

37. PD’s can also raise funds through_____

5 Roots Institute of Financial Markets RIFM

39. What is the settlement period of repo transactions in government securities?

40. In whose terms a transaction is a repo or reverse repo is determined?

6 Roots Institute of Financial Markets RIFM

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