Practice Set 1 Welcome to WORLDONOMICS! Practice Set of Securities MarketsTotal Number of Questions: 40Time: 40 MinutesAll the best...Kind RegardsCMA Madhuri Kashyap & CMA Sandeep Kumar - Founder - International Navodaya Chamber of Commerce Name Email 1. What is the primary market also called? Stock market Securities exchange New issue market Equity market None 2. Who regulates the primary market for equity shares in India? Reserve Bank of India SEBI Ministry of Finance IRDA None 3. What is a key function of the primary market? Facilitating trade of already-issued securities Enabling issuers to raise fresh capital Managing mutual funds Regulating secondary market prices None 4. Which type of issue involves securities offered to a select group of institutional investors? Public issue Rights issue Private placement Preferential issue None 5. What does the term "going public" refer to? Listing securities on stock exchanges Issuing securities for the first time Trading in the secondary market Raising debt capital None 6. Which of the following is NOT a type of primary market issue? Public issue Bonus issue Secondary issue Rights issue None 7. What is the role of merchant bankers in the primary market? Preparing issue documents Advising on pricing Underwriting the issue All of the above None 8. What is the purpose of SEBI regulations in the primary market? To ensure fair pricing To protect investors' interests To enforce eligibility norms All of the above None 9. Which type of investor is categorized based on investing more than Rs. 2 lakhs in a single issue? Retail individual investor Qualified institutional buyer Non-institutional buyer Association of persons None 10. What document provides critical information to investors in a public issue? Prospectus Prospectus Annual report Registration certificate None 11. What is a rights issue? Securities offered to the general public Additional securities offered to existing shareholders Bonds offered to financial institutions Preferential allotment to employees None 12. Who participates in the competitive bidding process for government securities? Retail investors Scheduled commercial banks Cooperative societies Resident individuals None 13. What is the maximum limit for retail individual investors in a primary issue? Rs. 1 lakh Rs. 2 lakh Rs. 5 lakh No limit None 14. What is the purpose of a credit rating in debt securities? To determine the interest rate To assess issuer credibility To enable competitive pricing All of the above None 15. Who facilitates the dematerialization process? Depository Bankers to the issue Brokers SEBI None 16. What is book building in a public issue? Fixed pricing of shares Price discovery based on investor demand Issuing bonus shares Trading in the secondary market None 17. What is a Fixed Price Issue? An issue where the price is determined after subscription An issue where shares are issued at a predetermined price An issue with variable pricing An issue only for institutional investors None 18. Which entity ensures compliance with regulations during a public issue? Registrar of Companies SEBI Lead manager Depository participant None 19. In a public issue, underwriters are responsible for what? Listing securities Pricing securities Guaranteeing subscription to the issue Trading securities None 20. What is the role of a registrar in a primary issue? Managing the trading process Finalizing allotment of shares Monitoring stock prices Acting as a custodian None 21. What is the purpose of listing securities on a stock exchange? To increase share prices To provide liquidity and marketability To attract foreign investors only To raise additional capital immediately None 22. What is the Green Shoe Option in a public issue? Over-allotment to stabilize share prices Discount offered to retail investors Fixed pricing for initial investors Issuing shares only to promoters None 23. What is a qualified institutional placement (QIP)? Issue to retail investors Preferential allotment to institutions Open market purchase of shares Debt issuance by government agencies None 24. Which of the following investors is a Qualified Institutional Buyer (QIB)? Retail individual investor Domestic mutual fund Partnership firm HUF (Hindu Undivided Family) None 25. What is an IPO? Initial Private Offering Initial Public Offering Institutional Public Offer International Public Offer None 26. What is the lock-in period for promoters’ contribution in a public issue? 1 year 2 year 3 year No lock-in None 27. Which document contains details of an IPO? Memorandum of association Draft red herring prospectus (DRHP) Articles of association Annual financial report None 28. Which type of securities are issued in a rights issue? Debt instruments Securities offered to existing shareholders Securities offered only to QIBs Only convertible debentures None 29. What is the primary benefit of a bonus issue? Increases debt financing Capitalizes free reserves Attracts new investors Reduces existing liabilities None 30. What is a Public Issue through Book Building? Fixed price at issuance Price discovery through investor bids Issuance only to promoters Allotment based on company discretion None 31. What is the minimum subscription required for a public issue to be successful? 50% 70% 90% 100% None 32. What is meant by dilution of equity? Issuing additional shares Decreasing shareholding percentage of existing shareholders Repurchasing shares Reducing the company’s assets None 33. What is the primary role of depositories in the primary market? Trading securities Facilitating electronic holding of securities Fixing security prices Registering company details None 34. What is a Preferential Allotment? Issue to pre-identified investors at a discounted price Offering shares to all retail investors Issuing shares in the secondary market Listing securities for the first time None 35. Who is responsible for ensuring a fair price mechanism during an IPO? Merchant banker SEBI Underwriters Brokers None 36. What is the purpose of issuing convertible debentures? Raise debt capital only Provide investors an option to convert into equity Reduce financial liability Increase dividend payouts None 37. What is a "Bid Lot" in an IPO? Number of shares allotted to retail investors Minimum number of shares an investor can apply for All shares available for subscription Reserved quota for institutional investors None 38. What is the role of SEBI in the public issue process? Approving prospectus Regulating intermediary conduct Monitoring post-issue disclosures All of the above None 39. What is an FPO?** Fixed Price Offering Follow-on Public Offering Foreign Public Offer Forward Placement Offer None 40. Who is responsible for pricing the securities in a public issue? Issuer and merchant banker Underwriter Depository SEBI None 41. Which type of investor is categorized based on investing more than Rs. 2 lakhs in a single issue? Retail individual investor Qualified institutional buyer Non-institutional buyer Association of persons None Time's upTime is Up!
