Capital Market Multiple Choice Questions:

What is Capital Market?

• Capital markets are places where savings and investments are managed between suppliers who have capital and need capital. 
• These places may include the stock market, currency and foreign currency exchange markets, and bond markets, etc. 
• The capital market in India is controlled by SEBI and SEBI was established in 1988.
• Entities that have capital include retail and institutional investors. Whereas those who need capital include businesses, governments and ordinary people. 
• Capital markets are made up of primary (primary) and secondary (secondary) markets. 
• Primary markets are those where new securities are issued and sold. 
• Secondary markets are those where already issued securities are traded among investors. 
• These markets bring together those who have capital and those who want capital, and provide a place where entities exchange securities.
• Most of the markets take place in major financial centers including Mumbai, New York, London, Singapore and Hong Kong. 
• Capital markets are made up of suppliers and users of funds. 
• Suppliers include homes and the institutions that serve them—pension funds, life insurance companies, charitable foundations and nonfinancial companies—that generate cash far more than their investment needs. 
• Users of the funds include home and motor vehicle buyers, nonfinancial companies and governments that invest in infrastructure and finance operating expenses.
• The key players of capital market is corporations, institutions, banks and Public accounting.
• There are some problems of capital market such as Lack of diversity in the financial instruments, Lack of control over the fair disclosure of financial information, Poor growth in the secondary market.

Capital Market MCQ with Answers Pdf:

1. What is Capital Market?

(1) Market in which securities are bought and sold.

(2) A financial market in which long-term debt or equity-backed securities are bought and sold.

(3) Entrepreneurs in one country copy an existing market.

(4) A market structure is defined by a large number of small firms competing against each other.

Answer: 2

2. The capital market in India is controlled by?

(1) RBI

(2) NABARD

(3) SEBI

(4) IRDA

Answer: 3

3. SEBI was established in which year?

(1) 1990

(2) 1989

(3) 1992

(4) 1988

Answer: 4

4. Which is the first stock exchange of India?

(1) The Bombay Stock Exchange

(2) National Stock Exchange

(3) SEBI

(4) NIFTY50

Answer: 1

5. What is the simple example of Stock Index in India:

(1) NSE

(2) Sensex

(3) BSE

(4) SEBI

Answer: 2

6. What are the types of capital market?

(1) Primary 

(2) Secondary

(3) Quaternary 

(4) Both 1 and 2

Answer: 4

7. Who are the players in capital market?

(1) corporations, 

(2) institutions, 

(3) banks and Public accounting.

(4) All of these 

Answer: 4

8. How many companies are included in the BSE Sensex ?

(1) 25

(2) 30

(3) 50

(4) 111

Answer: 2 

9. Who regulates the capital market?

(1) Ministry of Finance, 

(2) The Securities and Exchange Board of India.

(3) The Reserve Bank of India.

(4) All of these 

Answer: 4

10. Which of the following is a capital market instruments?

(1) equity shares, 

(2) debentures, bonds, 

(3) preference shares

(4) All of the above 

Answer: 4

11. Which among the following is not an objective of SEBI?

(a) To regulate securities market

(b) To protect interests of inventors

(c) To promote individual businesses

(d) To promote the development of the market

Answer: 3

12. Which of the following are responsible for the fluctuations in the Sensex?

(a) Monetary policy

(b) Political instability

(c) Rain

(d) None of the above

Answer: 1

13. What are 2 types of capital?

(1) financial 

(2) human.

(3) Both

(4) None

Answer: 3

14. Nifty was established in which year?

(a) 1952

(b) 1965

(c) 1996

(d) None of these

Answer: 3

15. In capital market the major suppliers of trading Instruments are:

(1) Government and corporations

(2) Liquid Corporations

(3) Instrumental Corporations

(4) Manufacturing Corporations

Answer: 1

16. What is Sensex?

(1) A financial market in which long-term debt or equity-backed securities are bought and sold.

(2) The equity benchmark index of the National Stock Exchange.

(3) Figure indicating the relative prices of shares.

(4) All of the above.

Answer: C

17. The Component of Capital Market are:

(1) Equity Market

(2) Debt Market

(3) Derivative Market

(4) All of the above

Answer: D

18. Which of the following statements is true?

(1) SEBI was established in 1988

(2) The Harshad Mehta share scandal happened in 1992

(3) Unit Trust of India was established in 1954

(4) SEBI is not a constitutional body

Answer: C

19. What is the problem of capital market?

(1) Lack of diversity in the financial instruments. 

(2) Lack of control over the fair disclosure of financial information. 

(3) Poor growth in the secondary market.

(4) All of these 

Answer: 4

20. Which is not one of the development steps taken for Capital Market?

(1) Open Outcry

(2) Book Building

(3) Establishing SEBI

(4) Screen Based Trading

Answer: 1

21. When was nifty established?

(1) The NIFTY 50 index was launched in 1996 by NSE. 

(2) The NIFTY 50 index was launched in 2000 by NSE. 

(3) The NIFTY 50 index was launched in 1996 by BSE. 

(4) The NIFTY 50 index was launched in 1996 by Sensex. 

Answer: 1

22. What are the benefits of capital market?

(1) Capital markets allow traders to buy and sell stocks and bonds, and enable businesses to raise financial capital to grow. 

(2) Businesses also have reduced risk and expenses in acquiring financial capital because they have reliable markets where they can obtain funding.

(3) Both 1 and 2 

(4) None of these 

Answer: 3

21. What are the features of capital market?

(1) Connects savers and entrepreneurial borrowers

(2) Deals in medium and long-term investments.

(3) Presence of intermediaries

(4) All of these 

Answer: 4

24. What is the limitation of capital market?

(1) Capital market investment is very risky because of its very volatile at the time of price variations. 

(2) As the capital market is very fluctuating in terms of price, investment won’t give you fixed income.

(3) Both 1 and 2

(4) None of these 

Answer: 3

25. What are the disadvantages of capital?

(1) It limits the efficiency of the business.

(2) It limits growth opportunities.

(3) It can limit diversification.

(4) All of these 

Answer: 4

26. Who are called intermediaries in capital markets in India?

(1) Stock Broker. 

(2) Depository or Depository Participant. 

(3) Bank.

(4) All of these 

Answer: 4