Capital Markets & Debt Markets GK MCQs With Answer & Explanation in English offers a comprehensive resource for anyone interested in understanding these vital components of the financial system. This article provides multiple-choice questions (MCQs) covering key concepts in capital and debt markets, accompanied by detailed explanations and answers to support your learning.
Perfect for students, professionals, and exam aspirants, this guide helps you strengthen your knowledge of how these markets function, the instruments involved, and their impact on the economy. Dive in to build a solid foundation in capital and debt markets.
1. Which statement about Masala Bonds is incorrect?
- They allow Indian companies to raise overseas debts in Indian currency.
- Interest payment on Masala Bonds is in Indian Rupee.
- The most popular market for Masala Bonds is New York currently.
- All of the above are correct statements.
Show Answer
Answer: The most popular market for Masala Bonds is New York currently.
Masala bonds, also known as rupee-denominated bonds, are a financial instrument that allows Indian companies to raise funds from international markets in the Indian currency, the rupee (INR). These bonds offer protection to issuers against currency fluctuations because the interest payments and redemption are made in rupees. This means that the companies issuing Masala bonds do not face exchange rate risk, which is a significant advantage. One of the most prominent markets for Masala bonds is London, where these bonds are traded and where Indian entities have raised significant funds.
2. What is the lock-in period for ELSS Investments currently?
- 2 years
- 3 years
- 4 years
- 5 years
Show Answer
Answer: 3 years
Equity-Linked Savings Scheme (ELSS) is a tax-saving investment option under Section 80C of the Income Tax Act in India. ELSS investments have a lock-in period of three years, which is the shortest among the various investments eligible for deductions under Section 80C. In contrast, other popular Section 80C investments like the Public Provident Fund (PPF) and National Savings Certificate (NSC) come with longer lock-in periods.
3. Which stocks are not considered for calculation of “Bank NIFTY”?
- Kotak Mahindra Bank
- Punjab National Bank
- Yes Bank
- Bank of India
Show Answer
Answer: Yes Bank
The Bank NIFTY index is a benchmark index that tracks the performance of the banking sector in India. It includes 12 of the most liquid and large-capitalized stocks from the banking industry. It’s important to note that Yes Bank, which is one of the banks in India, is not considered when calculating the “Bank NIFTY” index, as it did not meet the eligibility criteria for inclusion in this particular index.
4. Which currency is not included in the Special Drawing Rights (SDR) Currency Basket?
- Indian Rupee
- British Pound
- Japanese Yen
- Chinese Renminbi
Show Answer
Answer: Indian Rupee
The Special Drawing Rights (SDR) basket is a reserve asset created by the International Monetary Fund (IMF). It consists of five major international currencies: the U.S. dollar (USD), the Euro (EUR), the Chinese Yuan (Renminbi, CNY), the Japanese Yen (JPY), and the British Pound (GBP). The value of SDRs is determined based on these currencies’ exchange rates.
5. In the capital market, simultaneous purchase and sale of securities to reduce the loss on purchase is known as ____?
- Arbitrage
- Hedging
- Trend following
- Shorting
Show Answer
Answer: Arbitrage
Arbitrage is an investment or trading strategy where an investor simultaneously buys and sells a financial instrument (such as stocks, bonds, or currencies) in different markets to take advantage of price differences for the same asset. Arbitrage opportunities often arise due to market inefficiencies, and arbitrageurs seek to profit from these price disparities.
6. In which year was the Bombay Stock Exchange established?
- 1865
- 1875
- 1880
- 1890
Show Answer
Answer: 1875
The Bombay Stock Exchange (BSE) is one of the oldest stock exchanges in Asia, established in 1875. It is also one of the world’s largest stock exchanges, ranking as the tenth largest by market capitalization. The BSE plays a crucial role in the Indian financial markets, facilitating the trading of various financial instruments, including stocks, derivatives, and commodities.
7. In which year was NSE (National Stock Exchange) established?
- 1978
- 1985
- 1994
- 2000
Show Answer
Answer: 1994
The National Stock Exchange (NSE) of India was established in 1992 and officially commenced its operations in 1994. It is India’s first dematerialized electronic exchange and has grown to become one of the country’s leading stock exchanges. The NSE offers a platform for trading various financial instruments, including equities, derivatives, and exchange-traded funds.
8. Which is the highest credit risk rating awarded by CRISIL?
- AAA
- AAA+
- AA+
- A++
Show Answer
Answer: AAA
Credit rating agency CRISIL assigns ratings to debt instruments based on their creditworthiness. The highest credit risk rating awarded by CRISIL is ‘AAA,’ indicating that the issuer has the lowest credit risk. Investors often consider ‘AAA’ rated securities as the safest in terms of timely repayment of principal and interest.
9. Which organization calculates LIBOR (London Interbank Offered Rate)?
- Bank of England
- ICE
- European Banking Federation
- European Central Bank
Show Answer
Answer: ICE
The London Interbank Offered Rate (Libor) is a widely used benchmark interest rate that banks charge each other for short-term loans. It was calculated and published by the Intercontinental Exchange (ICE) Benchmark Administration. Libor served as a reference rate for various financial products, including loans, mortgages, and derivatives. However, it has been phased out, and alternative reference rates are being used due to concerns about its reliability and manipulation.
10. Which organization publishes LIBOR (London Interbank Offered Rate)?
- Refinitiv
- ICE
- European Banking Federation
- European Central Bank
Show Answer
Answer: Refinitiv
Libor is calculated by the Intercontinental Exchange (ICE) and published by Refinitiv.
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