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Abhipedia SEBI Test Series
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SEBI: Finance Mock Test
1. With reference to the ‘bottleneck inflation’
which of the following statements is correct? (a) Bottleneck inflation takes place when the
supply falls drastically and the demand remains at the same level.
(b) Bottleneck inflation takes place when the supply falls drastically along with the demand.
(c) Bottleneck inflation takes place when the supply increases rapidly and the demand remains at the same level.
(d) Bottleneck inflation takes place when the supply increases rapidly along with the demand.
2. Which of the following statement is/are correct
about Insurance Regulatory and Development
Authority of India(IRDAI)? 1. The Insurance Regulatory and
Development Authority (IRDA) is a national agency of the Government ofIndia.
2. Insurance Regulatory and Development Authority of India is the regulator of all private sector insurance business and public sector insurance business in India.
3. It regulates the functioning of insurance companies to direct them to work in the public interest.
(a) 1 and 2
(b) 2 and 3
(c) 1 and 3
(d) All of the above
3. Which of the following statement is/are correct
about Financial sector reforms in India ? 1. Financial sector reforms were initiated by
the government since the early 1990’s have
been meet the challenge of a complex financial structure.
2. The Narasimham Committee was established under the former RBI Governor M. Narasimham in August 1991 to look into all aspects of the financial system in India.
3. The Government initiatives to priorities the JAM Trinity- Jan Dhan, Aadhaar and mobile-holds the key to one of the biggest reforms aimed at transformingIndia.
(a) 1 and 2
(b) 2 and 3
(c) 1 and 3
(d) All of the above
4. Which of the following statement is/are correct
about Crypto currencies ? 1. In India, crypto currencies are not officially
recognized, virtual currencies stored in e-wallets are exposed to hacking and users are exposed to a lack of recourse in case of any problem ordisputes.
2. The finance ministry has set up a panel to study regulation of virtual currencies.
(a) only 1
(b) only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
5. What India can do to improve its Financial
sector ? 1. India need to remain vigilant in maintain
an open and integrated global financial system and the effects of reforms on emerging market and developing economies.
2. India should act as facilitator of growth.
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Select the correct answer using the code given below:
(a) only 1
(b) only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
6. Which of the following statement is true about
Primary instruments ? 1. Primary investments like stocks are what
most beginning investors think of when they think about investing.
2. Understanding primary instruments provides the base knowledge for derivatives, whose prices are derived from the primary (underlying)asset.
(a) only 1
(b) only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
7. Which of the following statement is correct
about Derivative Instrument? 1. Derivatives create an alternative product
for investors seeking to benefit from changes in the market value of primary instruments.
2. Derivatives are generally more complex than primary instruments because of the pricing methodologies.
(a) only 1
(b) only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
8. Which of the following statement is correct
about Secondary Market ? 1. The secondary market is the stock market
where existing stocks are brought and sold by the retail investors through the brokers.
2. Secondary market does not controls the price of the stocks.
(a) only 1
(b) only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
9. The shares may be bought back by any
company under the prescribed rule and
regulations depending on- 1. To increase promoters holdings
2. To increase earning per share
3. To pay surplus cash not required by business
Select the correct answer using the code given
below:
(a) 1 and 2
(b)2 and 3
(c)1 and 3
(d)1, 2 and 3
10. In the derivative market trading is done mainly
through - 1. Future contract
2. Option contract
3. Stock contract
(a) 1 and 2
(b) 2 and 3
(c) 1 and 3
(d) 1, 2 and 3
11. The various kinds of equity shares are - 1. Equity Shares
2. Rights Shares
3. Bonus Shares
4. Cumulative Preference Shares
(a) 1 and 3
(b) 2 and 3
(c) 1, 2 and 3
(d) All of the above
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12. Which of the following statement is/are correct
? 1. Debentures are normally secured/charged
against the asset of the company in favors of debenture holder.
2. A bond investor lends money to the issuer and in exchange, the issuer promises to repay the loan amount on a specified maturity date.
(a) only 1
(b) only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
13. The various types of Bonds are- 1. Zero Coupon Bond: Bond issued at a
discount and repaid at a face value.
2. Convertible Bond: A bond giving the investor the option to convert the bond into equity at a fixed conversion price.
(a) only 1
(b) only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
14. Which of the following statement is/are correct
about Forward derivative ? 1. A forward contract is a contract between
three parties to buy/ sell an asset on a specific date in the future at a determined price.
2. It is mostly used for hedging purposes (insuring against price risk).
(a) only 1
(b) only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
15. Which one of the following provides banking
services to all villages having a population upto
2000? (a) Plan for Financial Inclusion
(b) Plan for Financial Exclusion
(c) Plan for Financial Inclusion Technology
(d) None of the above
16. Consider the following statements regarding
the financial market: 1. Money market and capital market are the
two segments of the financial market of an economy.
2. The long-term financial market is called money market while the short time financial market is called capital market.
Which of the above statement is true?
(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
17. Consider the following statements regarding
the Call Money Market: 1. This is basically an inter-bank money
market where funds are borrowed and lent for one day.
2. Collateral Security is required to borrow from this market.
Which of the above statement is true?
(a) Only 1
(b) Only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
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18. Which of the following amendments have been
made to the GST Bill to be presented in the
Rajya Sabha? 1. 1% entry tax inclusion
2. Full compensation to states for 5 years for any revenue loss
3. Independent Dispute Resolution Mechanism
(a) 1, 2
(b) 1, 3
(c) 2, 3
(d) All of the above
19. What is the purpose of setting up of Small
Finance Banks (SFBs) in India? 1. To supply credit to small business units
2. To supply credit to small and marginal farmers
3. To encourage young entrepreneurs to set up business particularly in rural areas.
Select the correct answer using the code given below:
(a) 1 and 2 only
(b) 2 and 3 only
(c) 1 and 3 only
(d) 1, 2 and 3
20. What does the acronym IFCI mean? (a) International Finance Corporation of India
(b) Industrial Finance Corporation of India
(c) Institute of Financial Consultants of India
(d) Industrial Finance Council of India
21. When did the National Housing Bank start its
operations? (a) July, 1982
(b) July, 1988
(c) April, 1980
(d) March, 1971
22. What distinguishes each type of PPP(Public-
Private Partnership) model from one another is
- (a) the degree of risk and responsibility borne
by the private sector partner
(b) the degree of risk and responsibility borne by the public sector
(c) The private sector partner will bring in most of the investment requirements
(d) none of the above
23. In PPP(Public-Private Partnership) audit, the
emphasis would be - (a) on the means to achieve the PPP
arrangements
(b) on the end results of the PPP arrangements
(c) on the operational risks transferred to the private partner
(d) none of the above
24. Find out the incorrect statement w.r.to
PPP(Public-Private Partnership) audit? (a) value for money is the driver for adopting
the PPP approach rather than capital scarcity
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(b) there is conflicting and fundamentally differing approaches of two partners to the PPP agreement
(c) The relevance of regularity and compliance audit is limited
(d) The private partners are unlikely to resist the move on the plea of commercial confidentiality
Which of following statement is correct about
Leasing? 1. It is a rental agreement that extends for a
year or more and involve fixed monthly payments
2. It is an agreement between two parties – the user (lessee) and the owner (lessor).
(a) only 1
(b) only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
25. Who are Angel Investors? 1. They are group of individuals or an
individual itself who invest their own money.
2. They are involved in the functioning of the company though they may advice and ask for reports and status.
(a) only 1
(b) only 2
(c) Both 1 and 2
(d) Neither 1 nor 2
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ete-Course---Sebi-Grade-A--Assistant-Manager--
-Sebi-1
Q
No Answer Explanation
1 A
This inflation takes place when the
supply falls drastically and the
demand remains at the same level.
Such situations arise due to supply-
side accidents, hazards or
mismanagement which is also known
as ‘structural inflation’. This could be
put in the ‘demand-pull inflation’
category.
2 D
Insurance Regulatory and
Development Authority of
India(IRDAI):
1. The Insurance Regulatory and
Development Authority (IRDA) is a
national agency of the Government
ofIndia.
2. It was formed by an Act of Indian
Parliament known as IRDA Act
1999, which was amended in 2002 to
incorporate some
emergingrequirements.
3. It headquarter is located in
Hyderabad.
4. It comprised of the Indian
Parliamentary Act and was passed
duly by the Indiangovernment.
5. Insurance Regulatory and
Development Authority of India is
the regulator of all private sector
insurance business and public sector
insurance business in India.
6. IRDA issues guidelines for various
insurance companies.
7. It regulates the functioning of
insurance companies to direct them
to work in the public interest.
3 D
Financial sector reforms in India: -
Financial sector is the mainstay of
any economy and it contributes
immensely in the mobilization and
distribution ofresources.
Financial sector reforms have long
been viewed as a significant part of
the program for policy reform in
developingnations.
The main objective of the financial
sector reforms are to allocate the
resources efficiently, increasing the
return on investment and accelerate
growth of the real sectors in
theeconomy.
Financial sector reforms were
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initiated by the government since the
early 1990’s have been meet the
challenge of a complex
financialstructure.
The Union Government has
proposed last year setting up
Financial Data Management Centre
(FDMC) based on recommendation
of a committee set up under the
Department of Economic Affairs
(DEC). The Committee was headed
by Ajay Tyagi, Additional Secretary
in Union Finance Ministry and has
submitted its report and a draft bill
titled The Financial Data
Management Centre Bill2016? ? The
Narasimham Committee was
established under the former RBI
Governor M. Narasimham in August
1991 to look into all aspects of the
financial system inIndia.
Forex market reform: Forex market
reform took place in 1993 and the
successive adoptions of current
account convertibility were the
acmes of the forex reform introduced
in the Indianmarket.
The Government initiatives to
priorities the JAM Trinity- Jan Dhan,
Aadhaar and mobile-holds the key to
one of the biggest reforms aimed at
transformingIndia.
Government’s million towards a
cashless economy is the significant
move in this direction.
4 C
Crypto currencies:- In India, crypto
currencies are not officially
recognized, virtual currencies stored
in e-wallets are exposed to hacking
and users are exposed to a lack of
recourse in case of any problem
ordisputes.
The RBI has been cautioning users
about the risk of dabbling in virtual
currencies that it does not recognise,
since 2013.
The finance ministry has set up a
panel to study regulation of virtual
currencies.
5 C
Financial sector is backbone of the
Indian economy. India need to
remain vigilant in maintain an open
and integrated global financial
system and the effects of reforms on
emerging market and developing
economies.
The role of India’s financial sector
regulators need to be change from
restrictors to facilitators and creators.
They should act as facilitator of
growth.
6 C
Primary instruments are standard
financial investments. They often
trade on mainstream exchanges with
high levels of liquidity. Their market
value is determined based on
assumptions about their individual
characteristics.
Primary investments like stocks are
what most beginning investors think
of when they think about investing.
This is because investing in primary
instruments often requires only a
general knowledge of markets and
investment principles.
Understanding primary instruments
provides the base knowledge for
derivatives. Derivatives were created
to hedge against some of the risks of
primary instruments. Derivatives
also provide products for alternative
investing strategies that are based on
the speculation of values of
underlying primary instruments.
.A primary instrument is a financial
investment whose price is based
directly on its marketvalue.
.Primary instruments include cash-
traded products like stocks, bonds,
currencies, and spotcommodities.
.Understanding primary instruments
provides the base knowledge for
derivatives, whose prices are derived
from the primary (underlying)asset.
7 C
Derivatives create an alternative
product for investors seeking to
benefit from changes in the market
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value of primary instruments. They
are known as non- primary
instruments. Call and put options,
and futures are some of the
derivatives that can be used to profit
from primary instruments.
Derivatives get their name because
they are derived from the primary
(underlying)asset. Derivatives are
generally more complex than
primary instruments because of the
pricing methodologies. Derivative
products have values that are
generated from the primary
instrument. Options on stocks are
some of the most common derivative
products used by alternative
investors. Black Scholes is the main
methodology for calculating the price
of derivative options on stocks. It
determines the price of a derivative
product by considering five input
variables: the strike price offered by
the option, the current stock price, the
time to expiration of the option, the
risk-free rate and volatility.
8 A
The secondary market is the stock
market where existing stocks are
brought and sold by the retail
investors through the brokers. It is the
secondary market that controls the
price of the stocks. Generally when
we speak about investing or trading
at the stock market we mean trading
at the secondary stock market. It is
the secondary market where we can
invest and trade in the stocks to get
the profit from our stock market
investment.
9 D
The shares may be bought back by
any company under the prescribed
rule and regulations depending one or
more of the following reasons:
1. To increase promotersholdings,
2. To increase earning pershare,
3. Rationalise the capital structure by
writing off capital not represented by
availableassets,
4. To support share value,
5. To pay surplus cash not required
bybusiness.
10 A
In the derivative market trading is
done mainly through two instruments
– the Future contract and the Option
contract. In both these types of
contracts the stocks are bought and
sold in lot. The number of stocks for
each lot depends on the valuation of
the stock and the valuation of the lot
is determined by the number of the
stocks in a lot multiplied with the
current market price of the stock. For
trading in derivative market you have
to buy either the future contract or the
option contract. In a future contract
you are bound to close the deal within
a specific time and at a fixed arte.
While in case of option contract you
can also choose to ignore the
contract.
11 D
The various kinds of equity shares
are-
Equity Shares: An equity share
commonly referred to as ordinary
share also represents the form of
fractional ownership in which a
shareholder, as a fractional owner,
undertakes the maximum
entrepreneurial risk associated with a
business venture. The holders of such
shares are members of the company
and have voting rights.
Right Issues/Rights Shares The issue
of new securities to existing
shareholders at a ratio to those
already held.
Bonus Shares: Shares issued by the
companies to their shareholders free
of cost by capitalization of
accumulated reserves from the
profits earned in the earlier years.
Preferred Stock/Preference shares:
Owners of these kinds of shares are
entitled to a fixed dividend or
dividend calculated at a fixed rate to
be paid regularly before dividend can
be paid in respect of equity share.
They also enjoy priority over the
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equity shareholders in payment of
surplus. But in the event of
liquidation, their claim rank below
the claims of the company’s
creditors, bond
holders/debentureholders.
Cumulative Preference Shares: A
type of preference shares on which
dividend accumulates if remains
unpaid. All arrears of preference
dividend have to be paid out before
paying dividend onequity shares.
Cumulative convertible Preference
Shares: A type of preference shares
where the dividend payable on the
same accumulates, if not paid. After
a specified date, these shares will be
converted into equity capital of
thecompany.
Participating Preference Shares: The
right of certain preference
shareholders to participate in profits
after a specified fixed dividend
contracted far is paid. Participation
right is linked with the quantum of
dividend paid on the equity shares
over and above a particular
specifiedlevel.
12 C
Debentures: Bonds issued by a
company bearing a fixed rate of
interest usually payable half yearly
on specific dates and principal
amount repayable on particular date
on redemption of the debentures.
Debentures are normally
secured/charged against the asset of
the company in favour of debenture
holder.
Bond: A negotiable certificate
evidencing indebtedness. It is
normally unsecured. A debt security
is generally issued by a company,
municipality or government agency.
A bond investor lends money to the
issuer and in exchange, the issuer
promises to repay the loan amount on
a specified maturity date. The issuer
usually pays the bond holder periodic
interest payments over the life of the
loan.
13 C
The various types of Bonds are as
follows:
1. Zero CouponBond: Bond issued at
a discount and repaid at a face value.
No periodic interest is paid. The
difference between the issue price
and redemption price represents the
return to the holder. The buyer of
these bonds receives only one
payment, at the maturity of thebond.
2. ConvertibleBond: A bond giving
the investor the option to convert the
bond into equity at a fixed conversion
price.
14 A
The basic types of derivatives are
forward, futures, options, and swap.
Forward -
1. A forward contract is a contract
between two parties to buy/ sell an
asset on a specific date in the future
at a pre-determinedprice.
2. It is mostly used for hedging
purposes (insuring against price risk).
For example: If you are a farmer
producing onions and are concerned
about the volatility in the prices of
onions, you may enter into a forward
contract. A contract to sell 100 kgs of
onions to Arvind @ 40 per kg
on1/1/2018.
3. The contract will hedge the farmer
against the possible decline in prices.
But, for a contract to make sense, it
must be beneficial to both the parties.
Arvind must have entered the
contract as he thinks that the prices of
onion will be greater than Rs.40 on
1/1/2018 and he will not incur any
losses.
15 A
'Financial Inclusion' is the latest
powerful tool adopted by Reserve
Bank of India to fulfill the basic
objective of connecting every Indian
to the country's banking system.
Financial inclusion intends to help
people secure financial services and
products at economical prices such as
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deposits, fund transfer services,
loans, insurance, payment services,
etc. It aims to establish proper
financial institutions to cater to the
needs of the poor people.
16 A
In a financial market of an economy,
funds are transacted between the
fund-surplus and fund-scarce
individuals and groups on the basis of
either interest or dividend. Financial
might be an institutionalised or a non-
institutionalised will serve the motive
of supply of funds for the desired
time period. The time period can be a
long-term and a short-term.
Financial markets in every economy
are having two separate segments
today, one catering to the
requirements of the short-term funds
and the other to the requirements of
the long-term funds. The short-term
financial market is known as the
money market while the long-term
financial market is known as the
capital market. The money market
fulfils the requirements of funds for
the period up to 364 days (i.e. short-
term) while the capital market does
the same for the period above 364
days (i.e., long-term).
17 C
This is basically an inter-bank money
market where funds are borrowed
and lent for one day. Also known as
over-night borrowing (called as
money at call) and for a period up to
14 days (called short notice). No
collateral is required to borrow from
this market. Funds are usually raised
from this market up to three days—
the higher the interest, the longer the
period for which the funds have been
borrowed.
The scheduled commercial banks,
co-operative banks operate in this
market as both the borrowers and
lenders while LIC, GIC, UTI, IDBI
and NABARD are allowed to operate
as only lenders in this market. The
interest rate in this market depends
upon the demand and supply of the
funds on a particular day which is
market determined.
18 C
The planned amendments will seek to
withdraw the 1 per cent additional tax
(entry tax) proposed earlier;
Guarantee the States full
compensation over a period of five
years for any losses from the shift to
the new tax;
Propose a new mechanism for
dispute resolution, in which the
States will have greater say;
Introduce fresh assurance in the
amendment that the GST rate will
neither lead to revenue losses for
states not hurt the consumers.
19 A
The need for setting up small finance
banks in the country is for providing
financial assistance to people who are
unable to avail the facilities in the
unorganized sector.
The small finance banks are very
effective for promoting business of
industries which are part of the
unorganized sector and operate
through low cost operations and
traditional technologies.
The different forms of small fiance
banks operating in the country are the
Suryoday Small Finance Bank Ltd,
Ujjivan Small Finance Bank Ltd,
Utkarsh Small Finance Bank Ltd and
many others.
20 B
IFCI Ltd. was set up in 1948 as
Industrial Finance Corporation of
India, a Statutory Corporation,
through `The Industrial Finance
Corporation of India Act, 1948’ of
Parliament to provide medium and
long term finance to industry.
It was the first Development
Financial Institution established by
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the Indian government after
independence.
Until the establishment of ICICI in
1956, IFCI remained solely
responsible for implementation of the
government's industrial policy
initiatives.
In 1993, it was reconstituted as a
company to impart higher degree of
operational flexibility and named as
IFCI Ltd.
Functions :
The functions of the IFCI are as
follows :
The corporation grants loans and
advances to industrial concerns.
Granting of loans both in rupees and
foreign currencies.
The corporation underwrites the
issue of stocks, bonds, shares etc.
The corporation can grant loans only
to public limited companies and co-
operatives but not to private limited
companies or partnership firms.
IFCI Ltd -
Founded : 1948
21 B
he National Housing Bank, the apex
institution of housing finance in
India, is a wholly-owned subsidiary
of RBI.
It started operating from 9th July,
1988 with an authorized paid-up
capital of RS. 450 crore.
It was set up under the National
Housing Bank Act, 1987.
NHB registers, regulates and
supervises Housing Finance
Company (HFCs), keeps surveillance
through On-site & Off-site
Mechanisms and co-ordinates with
other Regulators.
NHB – National Housing Bank :-
Founded - July 9, 1988
Headquarters - New Delhi, India
22 A
Public-private partnership (PPP) is a
model where the government
associates with private companies to
accomplish infrastructure projects.
This alliance between both the
parties, ensure financing, designing,
flourishing and maintaining of the
infrastructural amenities within the
country.
The PPP approach initiates the
efficient facilitation of public goods
to the people. This is because, such
projects are handed over to the
relevant private entities, who hold
expertise and knowledge in their
field.
23 B
Public Private Partnerships offer a
unique and innovative method of
involving the private sector in the
nation building activity and in
accelerating the delivery of public
goods and services of high quality
through joint enterprises, without
spreading the limited available
resources too thin.
In order to sustain the high annual
growth rate, Public Private
Partnership (PPP) will be an
attractive option in meeting this
challenge.
24 D
A sound framework should
encourage proactive information
disclosure of both the project contract
and the project’s performance. This is
done in order to promote
transparency and gain an acceptance
of the PPP model by the general
public as well as allowing for
performance auditing of the PPP
program. However, disclosure of the
contract will need to be limited to
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protect the legitimate interests of the
private partner in keeping
commercial information confidential,
as well as the need for the public
partner to protect its position for
future negotiations.
Contracts should clearly establish the
information disclosure requirements
as well as any exceptions from
disclosure.
Some countries include the suggested
extent of information disclosure by
the private partner in their PPP
guidelines and standards. This
includes templates for gathering and
collecting the relevant information
from the contract, suggested contents
of a project summary that should be
made available to the public, and
standard provisions for the contract
in this respect. In this sense,
publishing the full contract is not
universal and it is usually done with
redactions. However, publishing a
project summary or contract
summary is quite common and good
practice. Another recommended
approach is to require the private
partner to establish a website about
the project and its evolution,
especially during the Construction
Phase.
25 C
Leasing (Asset based Lenders)-
1. It is a rental agreement that extends
for a year or more and involve fixed
monthly payments.
2. It is an agreement between two
parties – the user (lessee) and the
owner (lessor). The lessor grants the
lessee right to use the property of the
lessor for a defined period. The lessee
just has the rights to use but does not
have the ownership rights.
3. In return Lessee agrees to pay
series of fixed payments to the lessor.
Lessor is also called Asset based
lender in this case.
26 A
Angel Investors:-
1. They are group of individuals or an
individual itself who invest their own
money
2. Angel Investors invest in the early
(concept) Stages of the company and
in return take a share in the company
3. They invest typically less money
than the Venture Capitalists
4. They are not involved much in the
functioning of the company though
they may advice and ask for reports
and status
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