Chapter Exam

Chapter 4: Introduction to Financial Markets — Online MCQ Test

Q: Which market deals with the issue of new securities for the first time?

Answer: A. Primary market — The primary market is where companies issue new shares, debentures, or bonds to raise fresh capital. It is also called the new issue market.

Q: The market in which existing securities are bought and sold is called the ______ market.

Answer: B. Secondary — The secondary market provides a platform for trading securities already issued in the primary market. Stock exchanges are the best example of this market.

Q: A company issues fresh equity shares to the public for the first time. Which market is involved?

Answer: B. Primary market — When a company raises capital by issuing new shares to investors, it uses the primary market. The funds flow directly to the company.

COMMERCE · CLASS 12th · Tamil Nadu State Board

Practice Chapter 4: Introduction to Financial Markets with a free chapter-wise online MCQ test for Tamil Nadu State Board CLASS 12th COMMERCE. This chapter covers: Exploring financial architecture this chapter covers definitions scope types roles and functions of Indian financial markets. Students compare new issue primary markets with second.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 4: Introduction to Financial Markets — Important Questions & Answers (FAQ)

Frequently asked questions from Tamil Nadu State Board CLASS 12th COMMERCE — Chapter 4: Introduction to Financial Markets, with answers and explanations. These are sample questions; the exam has its own separate question set.

Which market deals with the issue of new securities for the first time?

A. Primary market ✓
B. Secondary market
C. Money market
D. Foreign exchange market

Answer: A. Primary market
The primary market is where companies issue new shares, debentures, or bonds to raise fresh capital. It is also called the new issue market.

The market in which existing securities are bought and sold is called the ______ market.

A. Primary
B. Secondary ✓
C. Capital issue
D. Commodity

Answer: B. Secondary
The secondary market provides a platform for trading securities already issued in the primary market. Stock exchanges are the best example of this market.

A company issues fresh equity shares to the public for the first time. Which market is involved?

A. Secondary market
B. Primary market ✓
C. Money market
D. Call money market

Answer: B. Primary market
When a company raises capital by issuing new shares to investors, it uses the primary market. The funds flow directly to the company.

Which of the following is the correct comparison between primary and secondary markets?

A. Primary market is for resale; secondary market is for fresh issue
B. Primary market helps raise fresh capital; secondary market helps in liquidity and price discovery ✓
C. Primary market deals only with bonds; secondary market deals only with shares
D. Primary market and secondary market have no connection

Answer: B. Primary market helps raise fresh capital; secondary market helps in liquidity and price discovery
Primary markets raise new capital for issuers, whereas secondary markets improve liquidity and help determine market prices. Both are essential parts of the financial system.

Which of the following statements is correct about the stock exchange and primary market?

A. Stock exchange is part of the primary market because it sells new shares directly
B. Primary market and stock exchange are identical
C. Stock exchange belongs to the secondary market and helps trade already issued securities ✓
D. Primary market exists only after listing on the stock exchange

Answer: C. Stock exchange belongs to the secondary market and helps trade already issued securities
A stock exchange is a secondary market institution where existing securities are traded. New securities are first issued in the primary market before they may be listed.

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