Capital Market

1.
Capital Market
What was the percentage of public offering under the IPOs through the book building
method? 25%
2.
Match the following:

Objective of audit committee = looks into defaults to depositors, creditors
shareholders and debenture holders
Reasons of failure of corporate governance in spite of norms = superficial
commitment to vision, mission and values
Functions of chief executive, ED, Managers = assisting the board in decision
making process
Share holders = lack of profitability
Describe some of the various types of mutual funds schemes offered: pure income
schemes; tax saving schemes; preference shares schemes
3.
The buy back of shares by Indian corporates has been very successful in India. True
4.
How many companies are there to do business of credit rating? 4
5.
What is the information to be placed before the board of directors as per the
Kumarmangalam report? Annual operating plans; capital budgets; quarterly
results
6.
The process of share buy back must be completed within what period from the date
of passing the resolution? 12 months
7.
The NSE nifty index comprises of 50 companies.
8.
SEBI has to create a proper atmosphere for raising money. The atmosphere consists
of rules regulations, trade practices, customs and relations. True
9.
SEBI creates an environment which would facilitate mobilization of adequate

resources through the securities market and its efficient allocation. True
10. Mergers and amalgamations of companies are also covered under the SEBI
regulations, 1997. False
11. What are the requirements regarding promoters contribution and lock in? in case of
IPO, promoters have to necessarily offer at least 20% of the post issue
capital; in case of listed companies promoters shall participate either to an
extent of 20% of proposed or post issue; in case of any issue of capital the
minimum contribution shall be locked in for a period of 3 years
12. To open a DP account, following things are required: proof of identity; proof of
address; photograph
13. As per RBI regulation, bank borrowing should not exceed how many times of the net
owned funds? 4 times
14. Transactions that involve substantial payment towards goodwill, brand equity or
intellectual property must be placed before the board of directors as per the
recommendations of the Kumarmangalam Birla report. False
15. Since when have the Indian Stock markets risen? Jun-03
16. For an approval of HFC one of the norms is that the promoters contribution has to be
minimum 25% of paid up capital.
17. The IPO size can exceed five times the pre-issue net worth of the company. False
Capital Market
18. Which act defines the term Stock Exchange? Securities and Exchange Board of
India
19. It is the responsibility of the SEBI to ensure the timely returns and allotments of the
securities.
20. What do you understand by capital markets? Market for long term funds and
investments in long term instruments
21. What conditions are to be followed in case of rollover of debentures without the
change in interest rates? Option to redeem debentures; consent of rollovers
22. What is the objective of a public announcement? Ensure that the shareholders of
the target company are aware of the exit opportunity available to them
23. Who takes risk at the time of investment? Investor
24. What is the procedure for action in case of default? Suspension of the certificate;
mutual fund/AMC cease to exist; RBI to take over the mutual fund
25. The certificate of deposit is/are in the form of an usance promissory note payable
after 45 days from the date of issue.
26. Final prospectus in the book building process is to be filed with the SEBI.
27. What are the facilities offered by NSDL? Enable surrender and withdrawal of
securities to and from the depository; maintain the investors holdings in
an electronic form; effect settlement of securities traded on exchanges.
28. What is the main objective of the promoting Discount and Finance House of India
(DFHI)? To control inflation by mopping up the liquidity in the money market
29. While structuring the deal the entrepreneur seeks alternate finance.
30. AA rated companies can raise 2.5 times of its net worth.
31. In case of an IPO of any security of issue size of 1 Crore or more, security shall be
issued only in a Demat form.
32. What is an offer letter? Document addressed to shareholders; containing
disclosures of the acquirer/PAC target company; offer letter is addressed to
the acquirer
33.
34. In February 2004, UTI sought permission of SEBI to prematurely close 7, 10
schemes.
35. Mutual funds have to register with: SEBI
36. The price is determined in an open offer by: negotiated price, price paid by
acquirer, average weekly high low of closing share of the target company
37. The companies that have eroded market capitalization by Rs.20,000 crores: infosys,
satyam, wipro
38. The eligibility norms for a listed company for making a public issue are: if the issue
size is less than five per issue net worth, if the issue size is more than or
equal to five times per issue net worth than the listed company to take
book building route, 60% of issue size to be allotted to QIBs
Capital Market
39. Acquirer cannot make an offer for less than 20% of the shares. True
40. The turning point in the working of Indian capital markets: establishment of NSE
41. The limit for aggregate investment of FIIs NRIs and OCBs: 30%
42. Certain type of acquisitions as stipulated under the regulation 3 of chapter 1 of the
regulations are specifically exempted from the open offer process. True
43. The public cannot give their complaints or comments on the issuer company or
others connected with the issue of SEBI. False
44. As per SEBI regulations, PMS must not be involved in any connected with securities
market.
45. The lease agreement provides for a transfer of ownership to the lessee either at the
end of the period or during the period of lease. False
46. AA rated companies can raise 2.5 times of its net worth.
47. The general obligations of mutual fund are: every AMC should maintain proper
books of accounts, financial year for all schemes to end as on March 31
each year, every mutual fund shall have the annual statements audited by
auditor
48. The concept of corporate governance evolved: during the Watergate scandal
49. Refinance cannot exceed net owned funds of Housing finance companies these many
times. 5 times
50. These HFCs are not eligible to draw further refinance: whose overdue of over 3
months exceed 5% of the aggregate demand of the year
51. The process of securitization involve transfer of assets to a person specially created
called as: special purpose vehicle
MS Verma Committee
Hero Honda
VSNL
Castrol
=
=
Dual flotation
=
FY 2003 03 dividend Rs 187
=
52. Money market mutual funds are not permitted to invest in treasury bills and
commercial paper. False
53. The procedure for making an application to the takeover panel for seeking exemption
is: acquirer to make an application in a standard format of SEBI
54. The setting up of NSE consists of: Set up by SEBI, Equity paid up capital of Rs25
crores, started operations in June 1994
55. The limitations of refinance facility are: cannot exceed 5 times NOF, not to
exceed 50% of total loan funds of HFCs, not to exceed 15% of NOF of NHB
56. An offer letter is: document addressed to the shareholders, containing
disclosures of the acquirer / PAC target company, offer price
57. The system of rolling settlement followed in India is: transaction + 2
Capital Market
58. As per the recommendations of the Kumarmangalam Birla committee report the key
components of an audit committee are: board, internal auditor, external auditor
59. Takeover means: acquirer takes over the control of the target company
60. No mutual fund shall invest more than 10% of its NAV in equity shares. False
61. Credit rating is: An isolated function of credit risk evaluation
62. The IPO size can exceed five times the pre-issue net worth of the company. False
63. The eligibility norms for an unlisted company for making a public issue are: pre
issue net worth not less than 1 crores in the last 3 years, track record of
distributable profits for at least 3 years, issue size shall not exceed five
times of its per issue net worth
64. The merchant bankers should act as Custodian of the investors money and put a
lot of responsibility on them.
65. During the budget 2003-04, finance minister made some announcements which he
hopes will make investors think in terms of returning to stock market: no capital
gains tax on investment made in equity after 1/3/03 held for 1 year,
removal of income tax on dividends in the hands of receiver
66. Information technology, communication and entertainment represent ICE stocks.
67. An offer can be withdrawn when: statutory approvals refused, sole acquirer
being person died, circumstances as in opinion of board
68. RBI has permitted all commercial banks, financial institutions and large corporates to
issue certificate of deposits. False
69. Mortgage backed securitization is: securitization dealing with backing of assets
70. Constant change would be one of the reasons for failure of corporate governance.
True
71. The person who change the composition of securities: fund manager
72. The ESOPs are: one of the methods of giving part ownership of the company
to the employees, employees can take part in the prosperity of the
company, is a reward and linked with the increase in the prices of the
shares
Objective of audit committee
Reasons of failures of corporate governance in
Spite of norms
Functions of chief executive, ED, Managers
Shareholders
=
=
look into defaults to depositors

superficial commitment to vision,
=
=
assisting the board in decision

should effectively participate in
73. In case of a public issue by a listed company, participation by promoters in the

proposed issues in excess of the required minimum percentage shall also be looked
in for a period of 1 year.
74. The maximum percentage of regular expenses of the assets of a scheme is: 3%
75. The person who is responsible to get the securities listed on all the stock exchanges:
Merchant banker
Capital Market
76. With the introduction of DEMAT accounts the complaints about allotments have
surely gone down.
77. The most important objective for an investor is: Protection of the value of the
investment
78. The falling interest rates on bank deposits and bonds have forced many investors to
look at stock market. True
79. Of the net tangible assets the percentage of assets that should be held in monetary
assets for a company to make an IPO is: 50%
80. How are the stages in the process of book building broadly into? Syndicate
formation, issue process, IPO
81. Dematerialized shares have distinctive numbers. False
82. What
are
the
major
factors
influencing
portfolio
decisions?
Investor
characteristics, liquidity needs and tax considerations, investment and

interest rate risk
83. Certain type of acquisitions as stipulated under the regulation 3 of chapter 1 of the
regulations are specifically exempted from the open offer process. True
84. When one decides to have the shares in an electronic form, one has to approach the
DP.
85. What percentage of funds should be invested in unlisted companies? 74%
86. What must be the quality of a good portfolio manager? Sound general knowledge,
analytical ability and marketing skills, experience
Dutch Auction
=
Price of the buy back is done by
Open market purchases
=
no minimum price stipulation
Companies holding more than 90% equity =
can be delisted
Share buy back is a way of
=
returning surplus cash to the
87. How many companies are there to do business of credit rating? 4
88. Final prospectus in the book building process is to be filed with the ROC.
89. An acquirer who holds 15% or more but less than 75% of voting rights can acquire
such additional shares as would entitle him to exercise more than 5% of voting rights
in an financial year.
90. When did the concept of corporate governance evolve? During the Watergate
scandal
91. What should be done if the address of an investor changes? Inform DP and update
records, inform different companies
92. Who suffered heavy losses during the bad times of the stock markets? Small
investors
93. Acquisition finance, which provide funding for acquiring another company are often
closely held or fairly owned. True
94. SEBI cannot investigate the affairs of mutual funds and their trustees and asset
management companies. False
Capital Market
95. SENSEX is calculated using market capitalization method.
96. What conditions are to be followed in case of rollover of debentures without the
change in interest rates? Option to redeem debentures, consent of rollovers,
fresh credit rating
97. ISIN is an unique identification number for security. True
98. An acquirer who holds 75% shares or voting rights of a target company can acquire
further shares only after making PA to acquire at least additional 20% of the target
company from the shareholders through an open offer.
99. Mutual funds can do investments in any security by way of private placement by an
associate or group company of the sponsor. False
100. Sweat equity shares are shares issued by a company to employees or directors at a
discount. True
101. Switching of acceptance between different offers is not possible. False
Overall economic conditions
Minimization of taxes
Rs 25,200
=
First stage financing
=
factor for obtaining value of a firm
=
investors ensures at the time of
SEBI application fee
=
provided to expand initial capital
102. What are the requirements regarding promoters contribution and lock in?: in case
of IPO, promoters have to necessarily offer at least 20% of the post issue
capital; in case of listed company promoters shall participate either to an
extent of 20% of proposed or post issue; in case of an issue of capital the
minimum contribution shall be locked in for a period of 3 years
103. What information is required to be furnished to stock exchanges in compliance of
SEBI regulations 1997?: Details of proposed acquisition need to be filled with
stock exchanges at least four days before the date; any person holding
more than 15% but less than 75% voting rights shall be disclosed within
two days; annual disclosures
104. What is the main advantage of a rolling settlement? Quicker payments
105. If the unlisted company does not satisfy the criteria of net worth profitability and
issue size how can it come out with a public issue? Through book building
process
106. No mutual fund under all its schemes should own more than 10% of any companys
paid up capital carrying voting rights.
107. Among the closed schemes, four long term assurance schemes were launched with a
return ranging between 13 - 14%.
108. Who is required to make a public announcement? Acquirer
109. While structuring the deal the entrepreneur seeks voting control.
110. A trusted deed has to be executed for rollover of debentures without changing
interest rates.
Capital Market
111. What are the different kinds of stock exchanges in India? Voluntary non profit
making organizations, joint stock companies limited by shares, joint stock
companies limited by a guarantee
112. In case of an IPO of any security of issue size of 10 crores or more, security shall be
issued only in a demat form.
113. The Money Market Mutual Funds (MMMFs) can invest the funds in which of these
securities? Call/notice money
114. A manufacturing company whose issue and project have been appraised by a public
financial institution or a bank and has also participated in its funding may get its
shares listed on the stock exchange. True
115. What are the SEBI guidelines for issue of debt instruments? Credit rating, maturity
more than 18 months, appoint debenture trustee, debenture redemption
reserve to be created
116. How much should be the minimum net worth of an AMC? Not less than 10 crores
117. What are the factors that determine the value of a firm? Overall economic
condition; demand and supply capital; degree of popularity of the industry
118. The main features of commercial paper are: short term financial instrument;
negotiable and transferable instrument; companies issue it for raising
short term debt
Factors influencing portfolio decisions
=
business and market risks
Code of conduct- portfolio manager =
observe high standard of
SEBI regulations
=
portfolio manager must fulfil the
Portfolio
=
collection of assets
119. The capital adequacy ratio for NBFCs has been fixed at: 12%
120. A Escrow account is created for the purpose of distributing receivables to the
investors on the securitization deal.
121. BSE introduced an equity stock index known as SENSEX.
122. An option is: a contract which gives the buyer the right to buy, sell specified
quantity of underlying assets at a specific price on or before the specified
time.
123. The features of mutual fund are: a trust that pools in savings and funds from
large number of investors who have common financial goal; issue units to
investor which represent right in assets; investments in mutual funds many
be in the form of stock, bond, money market securities
124. To make a public announcement the acquirer has to appoint: merchant banker
125. A rolling settlement is one in which: trades outstanding at the end of the day
have to be settled
126. To open a DP account, following things are required: proof of identity; proof of
address; photograph
Capital Market
127. The main objective of credit appraisal is to: assess the repayment capacity;
assess the borrowing capacity; assess the installment being paid
128. The right to buy is called call option.
129. The benefits of availing depository services are: no stamp duty; reduction in
paperless work; reduction in transaction cost
130. In the book building process pricing is determined on the basis of investor
feedback.
131. The refinance made available to any HFC is not to be more than: 60% of its
outstanding housing loans
132. A rated company can raise deposit worth these may times its net worth: 2 times
133. The banks are flushed with funds due to less credit off take. True
134. Under employee stock purchase scheme the share can be allotted without any
waiting period. True
135. Reporting is mandatory under regulation 3(4) in respect of acquisitions arising out of
firm allotment in public misuses right issues inter-se transfer etc.: True
136. The procedure for action in case of default is: suspension of the certificate;
mutual fund / AMC cease to exist; subject to the directions of the board
with regard to records
137. The percentage that RBI has permitted the banks to invest in the capital market. 5%
138. The NSE Nifty Index comprises of 50 companies.
139. Sweat equity means: equity shares issued by the company to the employee;
equity issued to directors at a discount; equity issued to students
140. The time frame to submit a report to SEBI for acquisition transactions arising out of
firm allotment in public issues, right issues etc. 21 days
141. Companies are not allowed to buy back securities: through any/ own subsidiary
company; through any/ group of investment company; if default subsists in
respect of repayments of deposits, term loans to any financial institutions
and redemption of preference shares or debentures
142. SEBI has recently allowed book building upto an extent of: 100%
143. A mutual fund shall not invest more than 10% of its NAV in equity shares in cases of
open ended schemes. True
144. A mutual fund scheme shall not invest more than 10% of its NAV in unrated debt by
a single issuer.
145. As per RBI regulation, bank borrowings should not exceed these many times of the
net owned funds. 5 times
recommendations of the Kumarmangalam Birla report. True
147. An AMC fees has to be borne by: the individual schemes
Capital Market
148. The individual investor can use the book building facility for making an application.
True
149. The mutual funds issue: Units
150. The portfolio manager has to place the funds of all their clients in a separate account
to be maintained by them with: Scheduled Commercial Bank.
151. ISIN is a unique identification number for security. True
152. The reason for not introducing
153. SEBI
has
taken
an
action
to
ban
on
Badla.
True
1.
Which Act defines the term Stock Exchange? Securities Contract Regulation Act
2.
What are the preconditions for trading on the net? A net connection , A registered
account with a broker and a demat account , Bank payment gateway or online
banking facility
3.
What do you understand by capital markets ?Market
for
long
term
funds
and

4.
Sweat equity shares are shares issued by company to employees or directors to

discount. True
5.
Money market mutual funds are not permitted to invest in treasury bills and
6.
7.
Under various SEBI regulations how many brokers suspended?

Describe the regulatory aspects of mutual funds :- The
Asset
management
company shall not launch any scheme till approval of trustees and offer document
has been filed with the board , With each offer document pay filing fees , Offer
document to contain disclosures
8.
Who forms the Asset management company (AMC)?
9.
The portfolio manager has to place the funds of all their clients in a separate
account to be maintained by them with ________.
Group of trustees
Scheduled Commercial Bank
10.
What is the amount invested by the FII's in the Indian Capital market? US$14 bn
11.
Under which regulation is reporting mandatory in respect of acquisitions arising out

of firm allot meant in public issues and rights issues etc?
12.
Regulation (3) 4
Book building is a process whereby the price is determined on the basis of actual
demand as evident from the offers given by the various institutional investors and
underwriters.
13.
True
The Money market mutual funds (MMMFs) can invest the funds in which of these
securities?
14. Call/notice money

15.
Kumarmangalam report? Annual operating plans , Capital budgets , Quarterly results
16.
Bidder cannot revise his bids.
False
17.
Capital Market
What are ESOP's ? One of the methods of giving part ownership of the company to
the employees , Employees can take part in the prosperity of the company , Is a
reward and linked with the increase in the prices of the shares
Match The Following

Shareholders
= Should effectively participate in general body meetings
Objective of Audit committee
= Look into defaults to depositors creditors shareholders
and debenture holders

Reasons of failures of corporate governance in spite of norms
= Superficial commitment
to vision, mission and values

Functions of Chief Executive, ED, Managers
= Assisting the board in decision making
process
1.
How does SEBI react to the Scams in participatory notes issuance?
Tighten
FII
regulations , Ensure participatory notes not misused by NRI , OCB controlled by

Indians promoters
2.
While structuring the deal the entrepreneur seeks ________.
3.
DRR is treated as part of general reserve for consideration of bonus issue of

proposals.
4.
Voting control
True
What must be the quality of a good portfolio manager?
Sound
General
knowledge , Analytical ability and marketing skills , Experience

5.
What precautions are to be taken with respect to delivery instruction slip?

DIS numbers are pre printed , Account number to be stamped , Investor
should fill in target account id
6.
Reliance group has added over 10000 crores in market capital.
True
7.
An acquirer who holds 15% or more but less than 75% of voting' rights can acquire
such additional shares as would entitle him to exercise more than ________ of voting
rights in an financial year.0.05
8.
________ is an international credit rating company.
FITSCH
9.
The appointment of a ________ is mandatory in a offer process.
Merchant Banker
10. What is the eligibility norm for an unlisted company for making an public issue as
regards to its net worth? Net worth of the company should not be less than 1 crore
to be maintained by them with ________.
12. To make a public announcement the acquirer has to appoint :-
Merchant Banker
13. What is a more contemporary definition of corporate governance?

Governance
is
all
about
promoting
corporate
fairness,
Corporate
transparency
and
accountability
SEBI regulations 1997 ?
Details of proposed acquisition need to be filed with Stock
Capital Market
exchanges at least 4 days before the date , Any person holding more than 15% but
less than 75% voting rights shall be disclosed with 2 days , Annual disclosures
15. Which company was responsible for spreading the equity culture in India ?
Reliance Industries
16. The merger of GTB and UTI was called off due to intervention of ________
SEBI
and RBI
17. The Merchant banker will incorporate in the letter of offer the comments made by
SEBI and then send within ________ days from the date of PA to all shareholders
whose names appear in the register of the company.
18. When can an offer be withdrawn?
45
Statutory approvals refused , Sole acquirer
being person died , Circumstances as in opinion of board

others connected with the issue to SEBI.
20. SEBI has taken an action to ban on Badla.
False
True
21. The benefits of availing depository services are :-
No stamp duty , Reduction in
paperless work , Reduction in transaction cost

22. What are the facilities offered by NSDL?
Enable surrender and withdrawal of
securities to and from the depository , Maintain the investor's holdings in an

electronic form , Effect settlement of securities traded on exchanges
issue certificate of deposits.
False
24. Directors should not be member of more than________ committees.

25. What
was
the
turning
point
in
the
working
of
Indian
10
capital
markets?
Establishment of NSE
26. Under section 11 B of SEBI act how many issuers were debarred?
27. A portfolio manager need not necessarily sell or purchase securities separately for
each client.
28. False
29. A portfolio manager has to assure a guaranteed return to his client.
30. What is a call option?
False
Right to buy
31. For an approval of HFC one of the norms is that the promoter's contribution has to be
minimum
32. ________ of paid up capital.
33. What
was
the
turning
0.3
point
in
the
working
of
Indian
capital
markets?
34. What is the time frame stipulated by SEBI for members intending to avail of the buy
back
35. offer? Minimum 15 days and not exceeding 30 days
Capital Market
36. How does SEBI react to the Scams in participatory notes issuance?
Tighten
FII

Indians promoters
37. What is government's move towards Stock Exchanges ?
Demutulisation
38. What is the main objective of credit appraisal ?
Assess
the
repayment
capacity
39. What are the norms for Approval of Housing finance companies by NHB?
Minimum paid up capital 1 crore , At least 2 directors , Any appointment of
auditors
40. A bidder can request for a transaction registration slip as the proof of his having
entered the
41. bid.
True
42. What are the major factors influencing portfolio decisions? Investment
and
interest
rate risk , Investor characteristics , Liquidity needs and tax considerations

closely held or fairly owned.
True
44. As per SEBI regulations, PMS must not be involved in any litigation connected with
________. Securities markets
45. In February 2004, UTI sought permission of SEBI to prematurely close ________
schemes.
46. At the inception of the hire purchases transaction the finance company records the
hire purchase installment receivable as current asset.
True
47. The company intending to buy back their shares must open a ________ account as per
SEBI
48. regulations. Escrow
Match The Following
Correct Answer Your Answer
Rs. 8000 crores
= Current shortfall in UTI schemes
0.1 = Government decided to pay dividend

0.15 = MF cannot invest as percentage of NAV in debt instrument issued by single issuer
Annual statement of accounts of MF = To be audited by auditor
1.
The right to buy is called ________.
Call option
2.
The buy back of shares by Indian corporates has been very successful in India.
False
3.
In order to dematerialize the securities one has to fill DRF. True
4.
What are the SEBI guidelines for issue of debt instruments?
Credit
rating
Maturity more than 18 months appoint debenture trustee , Debenture redemption

5.
Capital Market
Since when have the Indian Stock markets risen ?
6.
SEBI has taken an action to ban on Badla.
7.
The VCs to flourish requires a well developed ________.
37775
True
Capital market
Match The Following

Rematerialisation
RRF
NSE Settlement cycle

RBI
Gilt securities mobilization
Non corporate benefit

1.
T + 3 Settlement
Bonus
In 2001 a case of rigging and short selling based insider trading was noticed in the
case of proposed merger of ________.
2.
UTI Bank with GTB
The benefits of availing depository services are :-
Reduction in paperless work ,
Reduction in transaction cost , No stamp duty

3.
For issues upto Rs. 50 crores the number of lead managers will not exceed ________.
2
4.
How is a share buy back a useful mechanism in preventing hostile takeovers? Share
buyback reduces the floating stock in the market thereby reducing the scope for a
raider to acquire enough stock to gain management control.
5.
To open a DP account, following things are required :-
Proof of identity , Proof of
address , Photograph
6.
What is the objective of a credit information company?
To
ascertain
the
credit
worthiness of individuals/organizations and make the data available to all banks

7.
Sound
General

8.
Mutual funds can do investments in any security issued by way of private placement
by an associate or group company of the sponsor.
9.
False
Which company was responsible for spreading the equity culture in India ?
Reliance Industries

Details of proposed acquisition need to be filed with Stock
11. Book building is a process whereby the price is determined on the basis of actual
underwriters.
True
Capital Market
14. Which acts were amended to remove some of the hurdles to corporatisation and
demutualisation of stock exchanges?
SCRA , Depository Act
15. What are the stages in the process of book building broadly divided into?
Syndicate formation , Issue process
16. What are the eligibility norms for an unlisted company for making a public issue?
Pre issue net worth not less than 1 crores in the last 3 years , Track record of
distributable profits for at least 3 years , Issue size shall not exceed five times of its
pre issue net worth
17. What is the most common complaint of the investors?
Non
receipt
of
refund
orders and allotment advise

Governance
is
all
about
promoting
corporate
fairness,
Corporate
transparency
and
19. What are the eligibility norms for a listed company for making a public issue? If
the
accountability
issue size is less than five times pre issue net worth , If the issue size is more than or
equal to five times pre issue networth then the listed company to take book building
route , 60% of issue size to be allotted to QIB's
21. What do you understand by capital markets ?Market
for
long
term
funds
and

22. What is the underwriter paid ?
Commission
23. ________ is an international credit rating company.
FITSCH
24. The acquirer is required to appoint a merchant banker before making a PA.
25. Hire Purchase transactions are liable to ________.
True
Sales tax
for
long
term
funds
and

27. What must be the quality of a good portfolio manager?
Sound
General

28. What is Discretionary Portfolio management service ?
Client gives his money for
investment to the portfolio manager and leaves it to him to make all the investment
decisions.
29. Depositary facilitates transfers without having to handle money.
False
30. What is the amount invested by the FII's in the Indian Capital market? US$14 bn
31. As per the reports and the letter of intent filed with SEBI, what amount is expected to
be paid from the primary market during this year?
32. The features of mutual Fund are :-
15000 crores
A trust that pools in savings and funds from
large number of investors who have common financial goal , Issue units to investor
Capital Market
which represent right in assets , Investments in mutual funds may be in the form of
stock, bond, money market securities
33. If the credit rating is obtained from two different agencies in case of issue of debt
instruments, all the ratings need not be disclosed in the document.
False
________.Securities markets
35. What qualities do the merchant bankers need to possess? Knowledge
and
information about various aspects of capital markets , Ability to evaluate and analyze
, Update the knowledge
36. Describe the stock lending mechanism:-
Involves two parties one who is willing
to lend and other who wishes to borrow securities at market related rates , Lender is
assured of getting equivalent the relevant securities by NSSCL on the settlement
date , Lender gets benefit of reasonable return called lending fee
37. What are the limitations of refinance facility? Cannot exceed 5 times NOF , Not to
exceed 50% of total Loan funds of HFC's , Not to exceed 15 % of NOF of NHB
38. The process of share buy back must be completed within what period from the date
Match The Following
10 HDFC foreign currency deal Global investors pumping funds in India Specific Funds
0.57 FII current free float sensex company FII free float stock NIFTY companies
0.45 FII free float stock NIFTY companies FII's total free float sex and NIFTY
$ 476 mn Global investors pumping funds in India Specific Funds HDFC foreign currency
deal
1.
When did the trading in foreign currency options start in India?
2.
What is the main objective of credit appraisal ?
37809
Assess
the
repayment
capacity
3.
SEBI cannot investigate the affairs of mutual funds and their trustees and asset
4.
In the L & T reliance case, Reliance was fined ________.
Rs. 5 lacs
5.
Recently many banks have started issuing ________ which could also be used as a
debit card. ATM card
6.
A ________ means any persons connected with a company and who is reasonably
having access to unpublished price sensitive information. Insider
7.
SENSEX is calculated using ________ method. Market capitalization
8.
Match The Following
9.
10. Share buy back is a way of Returning surplus cash to the shareholders Returning
surplus cash to
Capital Market
11. the shareholders
12. Dutch Auction Price of the Buy back is done by the shareholders Price of the Buy
back is done by
13. the shareholders
14. Open market purchases No minimum price stipulation No minimum price stipulation
15. Companies holding more than 90% equity Can be delisted Can be delisted
False
each client. False
False
20. Book building is a process whereby the price is determined on the basis of actual
underwriters.
True
21. What is the system of rolling settlement prevalent in the USA ?

22. What is the most important objective for an investor?
+3
Protection of the value of
the investment
23. The following are some of the regulations governing the NBFC's issued by RBI :All the NBFC's must register with RBI , Without the registration certificate no
company can undertake activities of NBFC , All companies must be liquid assets
equal to 15% of deposits
24. What do you mean by venture capital?
Providing seed, start up capital and first
stage financing
25. What
was
the
turning
point
in
the
working
of
Indian
capital
markets?
26. The continuing growth in ________ was one of the factors that contributed to the
growth of credit rating. Information technology
27. In case of a public issue by a listed company participation by promoters in the
in for a period of ________. 1 year
29. Describe E-trading :-
False
Screen based trading in place of traditional ring ,
Communication through the net , Operate in stock market privately through home or
office
30. The Kumarmangalam Birla report stressed on the importance of ________ with respect
to AGM's. Proxy voting / ballot systems
31. The SEBI guidelines do not make it mandatory for the securities purchased under the
buy back arrangement to be extinguished and physically destroyed.
False
Capital Market
32. What are the SEBI guidelines for issue of debt instruments?
Credit
rating

Reliance Industries
34. Describe in brief the SEBI regulations for venture capital funds :- VCF's
must
be
registered , Cannot carry out another activity , Must disclose investment strategy
35. What is the minimum number of days for which the bid should remain open in book
building?
5 days
36. As per RBI regulation, bank borrowings should not exceed how many times of the net
37. With the introduction of ________ accounts the complaints about allotment have
surely gone down. DEMAT
38. Information technology, communication and entertainment represent ________
stocks.
ICE
False
40. In order to dematerialize the securities one has to fill DRF. True
41. In case of an IPO of any security of issue size of Rs________ or more security shall be
issued only in demat form.
10 crores
42. What are the obligations of a company in a share buy back?
The
offer
letter
should contain true, factual and material information and should not be misleading. ,
The company must pay the consideration only by the way of cash , The company
should not issue any fresh securities including bonus shares till the date of the
closure of the offer.
43. The DP opens investor account in the system and gives an account number also
known as ________. BO ID
45. What are the factors that determine the value of a firm?
Degree
of
popularity of the industry , Overall economic condition , Demand and supply capital
Match The Following
Portfolio
= Collection of assets
Factors influencing portfolio decisions = Business and Market risks

Code of conduct- Portfolio Manager
SEBI Regulations
1.
= Observe high standard of integrity and fairness
= Portfolio Manager must fulfill the capital adequacy norms
What are the major factors influencing portfolio decisions? Investor characteristics ,
Liquidity needs and tax considerations , Investment and interest rate risk
2.
Capital Market
The refinance made available to any HFC is not to be more than :-
60%
of
its

3.
Information technology, communication and entertainment represent ________

stocks.
4.
ICE
The public cannot give their complaints or comments on the issuer company or
False
5.
The right to buy is called ________.
Call option
6.
What percentage of funds should be invested in unlisted companies?
7.
Who is responsible to get the securities listed on all the stock exchanges?
0.74
Merchant banker
8.
A mutual fund scheme shall not invest more than ________ of its NAV in unrated debt
by a single issuer. 0.1
9.
10. The depository can legally transfer beneficial ownership.

11. Since when have the Indian Stock markets risen ?
True
37775
12. Describe the regulatory aspects of mutual funds :- The
Asset
management
13. Describe in brief the SEBI regulations for venture capital funds :- Must
disclose
investment strategy , VCF's must be registered , Cannot carry out another activity
15. When can the American style option exercised?
On or before the expiry date

17. What is the estimated figure of credit card defaults in India?
False
800 crores
18. Depositary facilitates transfers without having to handle money. False

19. AA rated companies can raise ________ of its net worth.
2.5 times
office
21. What are the eligibility norms for an unlisted company for making a public issue?
22. Pre issue net worth not less than 1 crores in the last 3 years , Track record of
distributable profits for at least 3 years , Issue size shall not exceed five times of its
pre issue net worth
23. Markets have moved away from Badla system to ________ .Derivatives Trading
24. During the budget 2003 - 04, Finance Minister made some announcements which he
hopes will make investors think in terms of returning to stock market :- No
capital
gains tax on investment made in equity after 1/3/03 held for 1 year , Removal of
income tax on dividends in the hands of receiver
Capital Market
25. How many members are appointed by the central government?
26. Which acts were amended to remove some of the hurdles to corporatisation and
demutualisation of stock exchanges?
SCRA , Depository Act
Match The Following

Shareholders
Should effectively participate in general body meetings
Objective of Audit committee = Look into defaults to depositors creditors shareholders and
debenture holders
Reasons of failures of corporate governance in spite of norms = Superficial commitment to
vision, mission and values
Functions of Chief Executive, ED, Managers Assisting the board in decision making process
= Decision making
1.
Which companies have eroded market capitalization by Rs20 000 crores?
Infosys
, Satyam , Wipro
2.
What does SEBI do with its power?
Cancel
certificate
issued
to
custodian
Inspect books of DP , issuers or beneficiary owners , Investigate an acquirer

3.
Amendment to SCRA will facilitate derivatives trading in interest rate futures and
options if there is an underlying asset. True
4.
In order to dematerialize the securities one has to fill DRF. True
5.
What are the obligations of a company in a share buy back?
The
offer
letter
should contain true, factual and material information and should not be misleading. ,
The company must pay the consideration only by the way of cash, The Company
should not issue any fresh securities including bonus shares till the date of the
closure of the offer.
6.
The DP opens investor account in the system and gives an account number also
7.
As per RBI regulation, bank borrowings should not exceed how many times of the net
8.
What are the factors that determine the value of a firm? Overall economic condition ,
Demand and supply capital , Degree of popularity of the industry
1.
What are the major factors influencing portfolio decisions? Investor characteristics ,
Liquidity needs and tax considerations , Investment and interest rate risk
2.
The refinance made available to any HFC is not to be more than :-
60%
of
its

3.
RBI has permitted all commercial banks, financial institutions and large corporates to
4.
False
What do you understand by capital markets ?Market

for
long
term
funds
and
5.
Capital Market
Physical certificates converted into electronic from ,
What is dematerialization ?
Credited into investors account with his/ her DP

6.
________ is in the form of a usance promissory note payable after 45 days from the
date of issue. Certificate of Deposit
7.
Which company was responsible for spreading the equity culture in India?
Reliance Industries
8.
What
was
the
turning
point
in
the
working
of
Indian
capital
markets?
9.
What is the amount of net worth accompany should have for opting for an IPO ?
1 Crore
10. The process of securitisation involves transfer of assets to a person specially created
called as ________. Special purpose vehicle
11. A mutual fund shall not invest more than 10% of is NAV in equity shares in cases of
open ended schemes.
12. What is a put option?
True
Right to sell
13. Venture capital finance is risk finance for entrepreneurial growth oriented companies.
True
14. Who can change the composition of securities?
Fund manager
15. Employee stock option scheme granted to the employee is transferable.
False
16. The following are some of the regulations governing the NBFC's issued by RBI :Without the registration certificate no company can undertake activities of
NBFC , All companies must be liquid assets equal to 15% of deposits , All the NBFC's
must register with RBI
18. What
was
the
turning
point
in
the
working
of
Indian
capital
markets?
19. Deposits can be accepted for a maximum period of :-
5 years
Reliance Industries
37775
22. In the wake of boom of which sector the Indian mutual fund launched various sector
specific schemes? Software
23. In 2001 a case of rigging and short selling based insider trading was noticed in the
UTI Bank with GTB
24. ________ are a kind of portfolio schemes.

25. What is equipment leasing ?
Contractual
Mutual funds
agreement
where
equipment transfers the right to use the equipment to the lessee
the
lessor
of
Capital Market
Overall
economic
condition , Demand and supply capital , Degree of popularity of the industry

regulations 1997. False
28. No mutual fund under all its schemes should own more than ________ of any
company's paid up capital carrying voting rights.
0.1
Sound
General

31. Communication through the net , Operate in stock market privately through home or
office
issue size how can it come out with a public issue? Through book building process
33. Which is the favorite destination for venture funds? BPO
34. Who issues participatory notes? Associates of India based foreign brokerages ,
Domestic institutional brokerages
35. For a VCF to be registered with SEBI what is the registration fee ?
5 lacs
Match The Following

Ready forward transaction (Repo)
= Interbank sale and repurchase of securities
Commercial paper
= Means of raising short term debt by companies
STCI
= Operations in call money markets
Market stabilsation
1.
= Bonds Launched in fiscal 2004-05
Money market mutual funds are not permitted to invest in treasury bills and
2.
What are the norms for Approval of Housing finance companies by NHB?
auditors
3.
Describe the regulatory aspects of mutual funds :- The
Asset
management
4.
What is the limit for aggregate investment of FII's NRI's and OCB's?
5.
Acquisition finance, which provide funding for acquiring another company are often
6.
0.3
True
As per the reports and the letter of intent filed with SEBI, what amount is expected to
15000 crores
7.
Capital Market
The acquirer is required to make the PA within ________ working days of entering into
an agreement to acquire shares or deciding to acquire share's voting rights of target
company.
8.
What is the objective of public announcement?
Ensure
that
the
shareholders of the target company are aware of the exit opportunity available to
them
9.
A portfolio manager has to assure a guaranteed return to his client.
False
11. Who can change the composition of securities?
False
Fund manager
12. Employee stock option scheme granted to the employee is transferable.
False
13. The following are some of the regulations governing the NBFC's issued by RBI :All the NBFC's must register with RBI , Without the registration certificate no
15. What
was
the
turning
point
in
the
working
of
Indian
capital
markets?
16. Deposits can be accepted for a maximum period of :-
5 years
Reliance Industries
37775
19. In the wake of boom of which sector the Indian mutual fund launched various sector
specific schemes? Software
20. In 2001 a case of rigging and short selling based insider trading was noticed in the
UTI Bank with GTB

22. What is equipment leasing ?
Contractual
Mutual funds
agreement
where
the
lessor
of
equipment transfers the right to use the equipment to the lessee

Overall
economic
condition , Demand and supply capital , Degree of popularity of the industry

regulations 1997.
25. Correct Answer False
26. The DP opens investor account in the system and gives an account number also
27. Constant change would be one of the reasons for failure of corporate governance.
True
Capital Market
28. In case of an IPO of any security of issue size of Rs________ or more security shall be
issued only in demat form.
10 crores
29. The company opting for an IPO should have net worth of at least Rs. 1 crore in each
of the preceding two years.
True

must
be
for
long
term
funds
and

34. When did the trading in foreign currency options start in India?
35. What is dematerialization?
37809
Credited into investors account with his/ her DP ,
Physical certificates converted into electronic from

36. No mutual fund under all its schemes should own more than ________ of any
company's paid up capital carrying voting rights.
0.1
Sound
General

office
issue size how can it come out with a public issue? Through book building process
40. Which is the favorite destination for venture funds? BPO
41. Who issues participatory notes? Associates of India based foreign brokerages ,
Domestic institutional brokerages
42. For a VCF to be registered with SEBI what is the registration fee ?
5 lacs
43. Match The Following

44. Correct Answer Your Answer
45. Ready forward transaction (Repo) Interbank sale and repurchase of securities
46. Interbank sale and repurchase of securities
47. Commercial paper Means of raising short term debt by companies Means of
48. raising short term debt by companies
49. STCI Operations in call money markets Operations in call money markets
50. Market stabilsation Bonds Launched in fiscal 2004-05 Launched in fiscal 2004-05
Capital Market
52. What are the norms for Approval of Housing finance companies by NHB?
auditors
True
Asset
management
55. What is the limit for aggregate investment of FII's NRI's and OCB's?
0.3
True
15000 crores
58. The acquirer is required to make the PA within ________ working days of entering into
an agreement to acquire shares or deciding to acquire share's voting rights of target
company.
59. What is the objective of public announcement?
Ensure
that
the
shareholders of the target company are aware of the exit opportunity available to
them
False
False
Tighten
FII

Indians promoters
63. When one decides to have the shares in an electronic form one has to approach
________.
DP
Tighten
FII

Indians promoters
65. When one decides to have the shares in an electronic form one has to approach
________.
DP
66. Which Act defines the term Stock Exchange? Securities Contract Regulation Act
67. What are the preconditions for trading on the net? A net connection , A registered
banking facility
for
long
term
funds
and

69. Sweat equity shares are shares issued by company to employees or directors to
discount. True
Capital Market
71. Under various SEBI regulations how many brokers suspended?
Asset
management
Match The Following
Charge card
= Form of plastic money
Warning Bulletin
= Authenticity test
Credit information company
= SBI, HDFC bank
Credit card issuing company
= Visa/Master Card
1.
2.
The portfolio manager has to place the funds of all their clients in a separate account
Group of trustees
3.
4.

5.
(3) 4
underwriters.
6.
True
7.
Kumarmangalam report? Annual operating plans , Capital budgets , Quarterly results
8.
False
9.
What are ESOPs? One of the methods of giving part ownership of the company to
1.
Tighten
FII

Indians promoters
2.
3.

proposals.
4.
Voting control
True
Sound
General
5.
Capital Market
What precautions are to be taken with respect to delivery instruction slip ?
DIS
numbers are pre printed , Account number to be stamped , Investor should fill in
target account id
6.
True
7.
rights in an financial year. 0.05
8.
FITSCH
9.
Merchant Banker
Merchant Banker

Governance
is
all
about
promoting
corporate
fairness,
Corporate
transparency
and
accountability
SEBI regulations 1997? Details of proposed acquisition need to be filed with Stock
Reliance Industries
SEBI
and RBI
45

False
True
21. The benefits of availing depository services are :-
paperless work , Reduction in transaction cost


False
Capital Market
25. What
was
the
turning
point
in
the
working
of
Indian
10
capital
markets?
each client. False
28. Which Act defines the term Stock Exchange? Securities Contract Regulation Act
29. What are the preconditions for trading on the net? A net connection , A registered
banking facility
for
long
term
funds
and

31. Sweat equity shares are shares issued by company to employees or directors to
discount. True
33. Under various SEBI regulations how many brokers suspended?
34. Describe the regulatory aspects of mutual funds :- Answer The Asset management
1.
2.
The portfolio manager has to place the funds of all their clients in a separate account
Group of trustees
3.
4.

5.
Regulation (3) 4
underwriters.
6.
True
7.
False
8.
What are ESOPs? One of the methods of giving part ownership of the company to
1.
Tighten
FII

Indians promoters
2.
Voting control
3.
Capital Market
proposals. True
4.
Sound
General

5.
What precautions are to be taken with respect to delivery instruction slip ?
DIS
numbers are pre printed , Account number to be stamped , Investor should fill in
target account id
6.
True
7.
rights in an financial year. 0.05
8.
FITSCH
9.
Merchant Banker
Merchant Banker

Governance
is
all
about
promoting
corporate
fairness,
Corporate
transparency
and
accountability
Details of proposed acquisition need to be filed with
Stock exchanges at least 4 days before the date , Any person holding more than 15%
but less than 75% voting rights shall be disclosed with 2 days , Annual disclosures
Reliance Industries
SEBI
and RBI
45

False
True
21. The benefits of availing depository services are :paperless work , Reduction in transaction cost
Capital Market
False

25. What
was
the
turning
point
in
the
working
of
Indian
10
capital
markets?
each client.
28. False
FITSCH
True
Sales tax
for
long
term
funds
and

Sound
General

decisions.
False
15000 crores
False
________.Securities markets
and
Capital Market
45. When did the trading in foreign currency options start in India?
46. What is the main objective of credit appraisal ?
37809
Assess the repayment capacity
47. SEBI cannot investigate the affairs of mutual funds and their trustees and asset
48. In the L & T reliance case, Reliance was fined ________.
Rs. 5 lacs
49. Recently many banks have started issuing ________ which could also be used as a
debit card. ATM card
50. A ________ means any persons connected with a company and who is reasonably
having access to unpublished price sensitive information. Insider
51. SENSEX is calculated using ________ method. Market capitalization
1.
The public cannot give their complaints or comments on the issuer company or
False
2.
Under section 11 B of SEBI act how many issuers were debarred?
3.
A portfolio manager need not necessarily sell or purchase securities separately for
each client. False
4.
RBI has permitted all commercial banks, financial institutions and large corporates to
5.
False
underwriters.
True
6.
What is the system of rolling settlement prevalent in the USA ?
7.
What is the most important objective for an investor?
Transaction + 3
Protection of the value of
the investment
8.
The following are some of the regulations governing the NBFC's issued by RBI :All the NBFC's must register with RBI , Without the registration certificate no
9.
What do you mean by venture capital?
Providing seed, start up capital and first
stage financing
10. What
was
the
turning
point
in
the
working
of
Indian
capital
markets?
11. The continuing growth in ________ was one of the factors that contributed to the
growth of credit rating. Information technology
Capital Market
12. In case of a public issue by a listed company participation by promoters in the
in for a period of ________. 1 year
False
office
15. The Kumarmangalam Birla report stressed on the importance of ________ with respect
to AGM's. Proxy voting / ballot systems
16. The SEBI guidelines do not make it mandatory for the securities purchased under the
buy back arrangement to be extinguished and physically destroyed.
17. What are the SEBI guidelines for issue of debt instruments?
False
Credit
rating

Reliance Industries
must
be
20. What is the minimum number of days for which the bid should remain open in book
building?
5 days
22. With the introduction of ________ accounts the complaints about allotment have
surely gone down. DEMAT
FITSCH
True
Sales tax
for
long
term
funds
and

Sound
General

decisions.
False
15000 crores
Capital Market
False
________. Securities markets
and
39. What was the objective of setting up the Securities Trading corporation of India Ltd?
To promote secondary market in government securities
40. What are the salient features of Hire Purchase ?
Finance company purchases the
equipment supplier and lets it on hire , During the contract hirer can opt for an early
repayment and purchase the asset , Hirer may be required to make down payment
41. A mutual fund shall not invest more than 10% of is NAV in equity shares in cases of
open ended schemes.
True
Mutual funds
43. Who takes risk at the time of investment ?
Investor
44. MIBOR is a security. Derivatives based on this interest rate have legal recognition
under SCRA. False
45. It is the responsibility of the ________ to ensure the timely refunds and allotments of
the securities. Lead managers
46. A credit card is a payment mechanism which enables the holder to buy goods and
services on credit. True
47.

Capital Market

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1.

Match the following:

How many companies are there to do business of credit rating? 4

The NSE nifty index comprises of 50 companies.

SEBI creates an environment which would facilitate mobilization of adequate

look into defaults to depositors

assisting the board in decision

73. In case of a public issue by a listed company, participation by promoters in the

characteristics, liquidity needs and tax considerations, investment and

What do you understand by capital markets ?Market

investments in long term instruments

Sweat equity shares are shares issued by company to employees or directors to

Under various SEBI regulations how many brokers suspended?

Who forms the Asset management company (AMC)?

Scheduled Commercial Bank

Under which regulation is reporting mandatory in respect of acquisitions arising out

14. Call/notice money

Bidder cannot revise his bids.

Match The Following

= Should effectively participate in general body meetings

Objective of Audit committee

= Look into defaults to depositors creditors shareholders

and debenture holders

to vision, mission and values

= Assisting the board in decision making

How does SEBI react to the Scams in participatory notes issuance?

regulations , Ensure participatory notes not misused by NRI , OCB controlled by

While structuring the deal the entrepreneur seeks ________.

DRR is treated as part of general reserve for consideration of bonus issue of

What must be the quality of a good portfolio manager?

knowledge , Analytical ability and marketing skills , Experience

What precautions are to be taken with respect to delivery instruction slip?

Reliance group has added over 10000 crores in market capital.

________ is an international credit rating company.

The appointment of a ________ is mandatory in a offer process.

Scheduled Commercial Bank

12. To make a public announcement the acquirer has to appoint :-

13. What is a more contemporary definition of corporate governance?

Details of proposed acquisition need to be filed with Stock

Statutory approvals refused , Sole acquirer

being person died , Circumstances as in opinion of board

21. The benefits of availing depository services are :-

No stamp duty , Reduction in

paperless work , Reduction in transaction cost

Enable surrender and withdrawal of

securities to and from the depository , Maintain the investor's holdings in an

24. Directors should not be member of more than________ committees.

regulations , Ensure participatory notes not misused by NRI , OCB controlled by

38. What is the main objective of credit appraisal ?

rate risk , Investor characteristics , Liquidity needs and tax considerations

= Current shortfall in UTI schemes

0.1 = Government decided to pay dividend

The right to buy is called ________.

In order to dematerialize the securities one has to fill DRF. True

What are the SEBI guidelines for issue of debt instruments?

Maturity more than 18 months appoint debenture trustee , Debenture redemption

SEBI has taken an action to ban on Badla.

The VCs to flourish requires a well developed ________.

Match The Following

NSE Settlement cycle

Gilt securities mobilization

Non corporate benefit

UTI Bank with GTB

The benefits of availing depository services are :-