Chapter Exam

Chapter 3 COMMERCE : Financial Markets and Instruments — Online MCQ Test

Q: Which of the following is primarily a component of the Money Market?

Answer: C. Treasury Bills — Treasury bills are short-term debt instruments issued by the government, which are key components of the money market.

Q: What is the maximum duration for instruments traded in the money market?

Answer: A. One year — Money market instruments are short-term debt securities with a maturity period of one year or less.

Q: Commercial paper is an instrument used by companies to meet:

Answer: B. Short-term working capital requirements — Commercial paper is an unsecured, short-term promissory note issued by corporations to meet immediate working capital needs.

Q: Consider a situation where a company intends to raise capital for a 10-year factory expansion project. Which market instrument is most appropriate?

Answer: C. Equity Shares or Debentures — Long-term projects require long-term capital, which is facilitated by capital market instruments like shares or debentures.

COMMERCE · CLASS 12 INTER II YEAR · Andhra State Board

Practice Chapter 3 COMMERCE : Financial Markets and Instruments with a free chapter-wise online MCQ test for Andhra State Board CLASS 12 INTER II YEAR COMMERCE. This chapter covers: This chapter covers money market and capital market operations. AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 3 COMMERCE : Financial Markets and Instruments — Important Questions & Answers (FAQ)

Frequently asked questions from Andhra State Board CLASS 12 INTER II YEAR COMMERCE — Chapter 3 COMMERCE : Financial Markets and Instruments, with answers and explanations. These are sample questions; the exam has its own separate question set.

Which of the following is primarily a component of the Money Market?

A. Equity Shares
B. Debentures
C. Treasury Bills ✓
D. Preference Shares

Answer: C. Treasury Bills
Treasury bills are short-term debt instruments issued by the government, which are key components of the money market.

What is the maximum duration for instruments traded in the money market?

A. One year ✓
B. Five years
C. Ten years
D. Lifetime

Answer: A. One year
Money market instruments are short-term debt securities with a maturity period of one year or less.

Commercial paper is an instrument used by companies to meet:

A. Long-term fixed capital requirements
B. Short-term working capital requirements ✓
C. Permanent capital needs
D. International trade tariffs

Answer: B. Short-term working capital requirements
Commercial paper is an unsecured, short-term promissory note issued by corporations to meet immediate working capital needs.

How does the Capital Market differ from the Money Market in terms of risk?

A. Capital markets have lower risk
B. Money markets have higher risk
C. Capital markets generally have higher risk and higher return ✓
D. Both markets have zero risk

Answer: C. Capital markets generally have higher risk and higher return
Capital market instruments involve longer terms and greater market volatility, leading to higher risks and potential returns compared to the relatively safer money market.

Consider a situation where a company intends to raise capital for a 10-year factory expansion project. Which market instrument is most appropriate?

A. Treasury Bills
B. Call Money
C. Equity Shares or Debentures ✓
D. Commercial Paper

Answer: C. Equity Shares or Debentures
Long-term projects require long-term capital, which is facilitated by capital market instruments like shares or debentures.

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