NCFM MODEL TEST PAPER

Financial Markets: A Beginners' Module


Maximum Marks: 100 Pass Marks: 50
Test Duration: 60 minutes Time Left: 43:00 minutes
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Correct answers are shown.

Q1
Capital Employed is equal to _________. [ 2 Marks ]

(b) Fixed Assets + Current Assets - Current Liabilities


Q2
If a client buys shares worth Rs. 2,55,000 and sells shares worth Rs. 3,45,000 through a broker, then the maximum brokerage payable to the broker is _____________. [ 2 Marks ]


(b) Rs. 15000


Q3
Return on Total Asset is equal to __________. [ 2 Marks ]


(d) Net income /Average Total Asset


Q4
Which of the following is a benefit of participation in a depository? [ 1 Mark ]

(a) No stamp duty on transfer of securities.
(b) Elimination of risks associated with physical certificates such as bad delivery, fake securities,etc.
(c) Nomination facility.
(d) All of the above


Q5
The benchmark stock market index of India is ________. [ 1 Mark ]

(d) the Nifty


Q6
Which of the following is not true about offer of shares through normal public issue? [ 2 Marks ]

(a) In normal Public issue, investors bid for shares at the floor price or above and after the closure of the process the price is determined for allotment of shares.



Q7
At 8% annual inflation rate, an item costing Rs. 100 today, would cost Rs. _______ after one year. [ 3 Marks ]

(a) Rs. 108


Q8
At 6% annual inflation rate, an item costing Rs. 100 today, would cost Rs. _______ after two years. [ 3 Marks ]


(b) Rs. 112.36


Q9
The Margin which takes care that all daily losses must be met by the investor by depositing of further collateral by the close of business, the following day is known as _________. [ 1 Mark ]

(a) Mark to Market Margin


Q10
What is the present value of Rs. 6000 receivable after two years at a discount rate of 5% under continuous discounting? [ 2 Marks ]

(a) Rs. 5429.02


Q11
What is the dividend yield of ABC Co Share having a face value of Rs 100, market value of 360 and an annual dividend of Rs 10? [ 1 Mark ]


(b) 2.77%


Q12
Earnings Per Share (EPS) is calculated by _________. [ 2 Marks ]


(d) Net Profit / No. of Ordinary shares outstanding


Q13
Which amongst these is not a Debt market instrument? [ 1 Mark ]


(c) FIIs


Q14
Which rate of return accounts for intra-year compounding? [ 2 Marks ]

(a) Effective


Q15
___________ is a good indicator of the stock market behaviour. [ 1 Mark ]


(d) Nifty index


Q16
Market Capitalisation is _____________. [ 2 Marks ]


(b) No. of shares issued by a company multiplied by it's market price


Q17
What is the present value of Rs 10000 receivable after 1 year discounted at 10% p.a.? [ 2 Marks ]


(d) 9090.9


Q18
What factor/s affect the interest rate? [ 3 Marks ]

(a) Government borrowings
(b) Supply of money
(c) Inflation rate
(d) All of the above


Q19
Which of the following needs to be considered by an investor, while investing? [ 3 Marks ]

(a) Assess risk-return profile of the investment.
(b) Know the liquidity and safety aspects of the investment.
(c) Obtain written documents explaining the investment.
(d) All of the above


Q20
Money market mutual funds can invest in _______. [ 3 Marks ]

(a) treasury bills
(b) certificate of deposits
(c) commercial paper
(d) All of the above


Q21
Which of the following is not true about a debt instrument? [ 1 Mark ]

(a) It signifies a ownership right in the company.


Q22
Which type of corporate action splits the existing shares of a particular face value into smaller denominations? [ 1 Mark ]

(a) Stock Split


Q23
How many securities are there in Nifty index? [ 1 Mark ]


(d) 50


Q24
Which of the following is TRUE about Primary Markets? [ 2 Marks ]


(c) Primary Markets refer to the mobilization of funds from the public by corporates through the issue of shares / debentures.

Q25
The future value of a Rs.10,000 investment done today, which gives an annual rate of return of 20% per annum, after one year should be ____________. [ 3 Marks ]


(c) Rs. 12,000


Q26
Which of the following problems have been eliminated by Depositories? [ 1 Mark ]

(a) Reduction in the share transfer time to the buyer.
(b) Risk of stolen, fake, forged shares.
(c) Stamp duty on transfer of shares in dematerialized form.
(d) All of the above


Q27
Which of the following is not a benefit of investing in mutual funds? [ 2 Marks ]

(a) Investment in Mutual funds leads to diversification of holdings.
(b) Mutual funds are managed by professional fund managers.
(c) Mutual Funds regularly provide investors with information on the value of their investments.
(d) None of the above


Q28
Funds which invest only in the stocks comprising an index and aim to give returns commensurate with the index returns are called _________. [ 2 Marks ]

(a) Index Funds


Q29
Depositories are like banks for securities. [ 1 Mark ]

(a) TRUE


Q30
At 12% annual inflation rate, an item costing Rs. 100 today, would cost Rs. _______ after one year. [ 3 Marks ]


(b) Rs. 112


Q31
The future value of a Rs.10,000 investment, which gives an annual rate of return of 20% per annum, after two years would grow to _________ (assume discrete compounding) [ 3 Marks ]

(a) Rs. 14,400


Q32
An investment should provide an after-tax return which is ________. [ 3 Marks ]

(a) at least higher than the rate of inflation


Q33
Which of the following is not true about ADR? [ 1 Mark ]


(b) ADRs may be used in public or private markets inside or outside US.


Q34
What are the segments of Securities Market? [ 1 Mark ]

(a) Primary market and Secondary market


Q35
Which instrument among these is considered the most challenging and rewarding investment option, when compared to other investment options? [ 3 Marks ]

(a) Equity


Q36
'Bid' means the _____________. [ 3 Marks ]

(a) Seller's price

(d) Buyer's price


Q37
Profit and Loss account of a company shows _______. [ 2 Marks ]

(a) The revenues and expenses during particular period of time.


Q38
Which instrument among these have historically shown to give the highest returns when invested over long periods? [ 3 Marks ]


(b) Equity


Q39
The lenders use ______________ ratio to assess debt servicing capacity of a firm. [ 2 Marks ]

(a) Interest Coverage ratio


Q40
_______ funds do not have a fixed date of redemption. [ 2 Marks ]

(a) Open ended funds


Q41
'Ask' means the ________. [ 3 Marks ]


(b) Seller's price


Q42
________________ is maintained by NSE to make good investor claims, which may arise out of non-settlement of obligations by the trading member, who has been declared defaulter, in respect of trades executed on the Exchange. [ 1 Mark ]


(d) Investor Protection Fund (IPF)


Q43
At 10% annual inflation rate, an item costing Rs. 100 today, would cost Rs. _______ after one year. [ 3 Marks ]


(b) Rs. 110


Q44
What is the present value of Rs. 3000 receivable after two years at a discount rate of 5% under continuous discounting? [ 2 Marks ]


(b) Rs. 2714.51


Q45
The future value of a Rs.12,000 investment made today, which gives an annual rate of return of 10% per annum, after one year should be _________. [ 3 Marks ]


(c) Rs. 13,200


Q46
Nifty index is used in _________. [ 1 Mark ]

(a) Derivatives
(b) Index Funds
(c) Exchange Traded Funds (ETFs)
(d) All of the above


Q47
Demutualisation of stock exchanges refer to _________. [ 3 Marks ]

(a) the legal structure of an exchange whereby the ownership, the management and the trading rights at the exchange are segregated from one another

Q48
Which securities can an investor invest in? [ 1 Mark ]

(a) Shares
(b) Debentures
(c) Mutual Funds
(d) All of the above


Q49
_____________ gives the buyer the right, but not the obligation to sell a given quantity of underlying asset at a given price on or before a given future date. [ 1 Mark ]

(a) Put Option


Q50
The holders of which instrument are members of the company and have voting rights? [ 3 Marks ]


(d) Equity

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