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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
d. None of the above

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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
d. None of the above

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
d. None of the above

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
d. None of the above

15. On what basis securities are issued through auction?


a. Price basis

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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.
d. None of the above

17. Which of the following issue is on yield 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.
d. None of the above

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


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.
d. None of the above

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
d. None of the above

20. At whose discretion, Allocation of securities are to non competitive bidders are made?
a. SEBI
b. RBI
c. Companies Act,1956
d. None of the above

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

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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?


a. Zero Coupon bonds
b. Floating rate bonds
c. Securities with embedded derivatives
d. Indexed bonds

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

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b. Floating rate bonds
c. Securities with embedded derivatives
d. Indexed bonds

30. Which securities’ interest payments are based on wholesale price index/consume price index.
a. Zero Coupon bonds
b. Floating rate bonds
c. Securities with embedded derivatives
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
d. None of the above

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


a. 21
b. 19
c. 15
d. None of the above

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

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d. None of the above

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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