Chapter Exam

Chapter 5: Capital Market — Online MCQ Test

Q: What is the main function of the capital market?

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.

Q: Which of the following is a part of the primary 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.

Q: In the capital market, the secondary market refers to the market where securities are:

Answer: B. Traded among investors — The secondary market is where already issued securities are bought and sold among investors. It provides liquidity to securities.

Q: 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?

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.

COMMERCE · CLASS 12th · Tamil Nadu State Board

Practice Chapter 5: Capital Market with a free chapter-wise online MCQ test for Tamil Nadu State Board CLASS 12th COMMERCE. 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.... AI-generated questions from basic to board-exam level, with instant results and explanations.

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Chapter 5: Capital Market — Important Questions & Answers (FAQ)

Frequently asked questions from Tamil Nadu State Board CLASS 12th COMMERCE — Chapter 5: Capital Market, with answers and explanations. These are sample questions; the exam has its own separate question set.

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.

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.

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.

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.

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.

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Chapter 6: Money Market