Chapter 5: Capital Market — Online MCQ Test
COMMERCE · CLASS 12th · Tamil Nadu State Board
Practice Chapter 5: Capital Market with a free chapter-wise online MCQ test.
This chapter covers: Focusing on long-term funding this chapter covers capital market characteristics structures functions and economic importance. Students examine the historical evolution growth traj....
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Chapter 5: Capital Market — Important Questions & Answers
What is the main function of the capital market?
- A. Providing short-term funds
- B. Providing long-term funds
- C. Selling consumer goods
- D. Collecting taxes
Answer: B. Providing long-term funds
The capital market deals with long-term financial requirements of businesses and governments. It helps in raising funds for investment in fixed assets and expansion.
The capital market deals with long-term financial requirements of businesses and governments. It helps in raising funds for investment in fixed assets and expansion.
Which of the following is a part of the primary market?
- A. Stock exchange
- B. New issue market
- C. Secondary trading market
- D. Commodity market
Answer: B. New issue market
The primary market is also called the new issue market because securities are issued for the first time here.
The primary market is also called the new issue market because securities are issued for the first time here.
In the capital market, the secondary market refers to the market where securities are:
- A. Issued for the first time
- B. Traded among investors
- C. Given as bank loans
- D. Used to pay dividends
Answer: B. Traded among investors
The secondary market is where already issued securities are bought and sold among investors. It provides liquidity to securities.
The secondary market is where already issued securities are bought and sold among investors. It provides liquidity to securities.
Which of the following best distinguishes the capital market from the money market?
- A. Capital market deals with short-term funds, while money market deals with long-term funds
- B. Capital market deals with long-term funds, while money market deals with short-term funds
- C. Both deal only with government securities
- D. Both are the same market with no differences
Answer: B. Capital market deals with long-term funds, while money market deals with short-term funds
The capital market is used for long-term funding, whereas the money market is for short-term financial needs. This is a basic distinction in finance.
The capital market is used for long-term funding, whereas the money market is for short-term financial needs. This is a basic distinction in finance.
Consider the following statements about financial institutions in the capital market: 1. They provide long-term finance to industries. 2. They help in industrial development. 3. They are part of the money market only. Which statement is correct?
- A. 1 and 2 only
- B. 2 and 3 only
- C. 1 and 3 only
- D. 1, 2 and 3
Answer: A. 1 and 2 only
Financial institutions in the capital market provide long-term finance and support industrial development. They are not confined only to the money market.
Financial institutions in the capital market provide long-term finance and support industrial development. They are not confined only to the money market.